How to Optimise Your Automotive Supply Chain Processes

The automotive industry’s continued utilisation of just-in-time (JIT) manufacturing processes has made smooth and reliable supply chains necessary. The coming together of various trading partners from across the globe, each with their own set of preferences, priorities, and techniques, also makes optimisation essential to the efficiency of automotive supply chains. 

Unfortunately, global supply chain complexities and the disruption caused by both Brexit and COVID-19 have contributed to a growing number of automotive supply chain challenges. Furthermore, increasing demand for hybrid and electric vehicles (EV) has complicated matters further by necessitating the onboarding of new supply chain partners.

Even industry leaders are experiencing delays, meaning that processes which ensure timely delivery in line with consumer demands are crucial. As a result, a sharper focus on the optimisation of an auto supply chain strategy is essential in order to remain agile and competitive.

In this article, we’re going to consider five ways the industry can ensure supply chains are being operated at maximum efficiency. Let’s get started.

The importance of an optimised supply chain

When we look at the challenges COVID-19 presented to a whole host of industries, the importance of optimisation speaks for itself. Global supply chains simply can’t function without smooth operations that allow supply chain managers to foresee and respond to unexpected events. 

Research has also shown 79% of companies with high-performing supply chains achieve revenue growth greater than the average within their industry, demonstrating the importance of supply chain optimisation to a successful enterprise.

For the automotive industry, achieving the levels of optimisation that might have helped mitigate the estimated $60 billion global chip shortage still causing production line issues is imperative. Lean logistics, market insights, and increased visibility are among the benefits of optimisation that stand to provide automotive manufacturers, OEMs, and suppliers with a far better opportunity to access the estimated 9% of market growth experts have recently predicted.

Optimising your supply chain

Significant shake ups within the automotive industry may make it seem like optimisation is further out of reach than ever. However, these ongoing challenges highlight the importance of positive change, and provide an incentive to place more focus on optimisation. 

Fortunately, there are a number of ways automotive supply chain managers can enhance the flow of parts through optimised processes. Let’s take a look at some of the most effective and straightforward to implement for rapid results. 

1. Use electronic data interchange

One of the most effective methods the automotive industry can deploy to combat the issues that have plagued supply chain operations is the implementation of electronic data interchange (EDI).

EDI is the computer-to-computer exchange of business documents that enables the free flow of information between different companies in a single supply chain. The multiple advantages of EDI implementation within automotive supply chains include:

  • Higher levels of efficiency
  • Increased supply chain visibility
  • Simplified processes
  • Greater flexibility

The improved planning and simplified communications that are made possible with EDI are particularly useful within the context of JIT inventories utilised within the automotive industry.

Unfortunately, issues with legacy EDI, including complex onboarding processes and an inability to accommodate the full range of EDI standards and protocols, have hindered its potential for optimisation across the supply chain.

That’s not to say that EDI isn’t worth pursuing if you’re looking to optimise your supply chain processes to improve business outcomes. Rather that modern challenges require modern solutions. 

Here at Data Interchange, we’ve responded to the deficiencies in legacy EDI by developing a new solution that we refer to as EDI-as-a-Service. By accommodating a range of standards and protocols, our 21st-century EDI overhaul enables agile onboarding processes for partners regardless of their prior EDI experience. This has allowed suppliers to begin receiving, processing, and creating EDI documents much quicker than was previously possible with legacy solutions.

In addition to this, the deployment of managed services allows partners to develop a customised hybrid EDI solution to meet the specific demands of their supply chain. Moreover, our team delivers EDI-as-a-Service by helping to ensure that the system runs smoothly at all times, whilst also liaising with customers and suppliers to ensure EDI messages are sent in the correct format.

2. Deploy analytics tools

Proactive and predictive analytics help automakers to better manage the efficient and precise JIT inventories that we’ve touched on above. Furthermore, harmonised analytics databases are key to managing internal and external operations. This includes not only inventory optimisations, but also flexibility of service, on-demand deliveries, and informed investments into new models, like EVs. 

Unfortunately, access to large reams of data has the potential to overwhelm before it informs supply chain process optimisation. As a result, systems that simplify the management and oversight of crucial analytics are also essential.

3. Implement artificial intelligence

The effective utilisation of artificial intelligence (AI) has the potential to allow the automotive industry to begin the automation of both warehouse and inventory management. This frees up both time and resources, which can then be directed elsewhere to drive further efficiencies across the organisation. 

Further to this, systems that also incorporate predictive analytics and machine learning (ML) have the capacity to make significant improvements to both planning and decision-making processes moving forward.

4. Foster productive supplier relationships

Mutually beneficial and collaborative relationships with supply chain partners are essential in order to improve automotive supply chain processes, and can be achieved with supplier relationship management (SRM). Deploying SRM helps determine the performance and contribution of each trading partner with the following steps:

  1. Categorising partners in order of importance to overall success.
  2. Using data insights to develop supplier strategies to help build successful long-term relationships through increased trust and simple communication.
  3. Deploying SRM strategies while monitoring to ensure immediate recognition of deficiencies.

Given the centralised communications it allows within supply chains, EDI-as-a-Service helps ensure effective SRM. Furthermore, EDI-as-a-Service can take SRM to the next level by:

  • Increasing supply chain visibility, making it easier to understand supplier contributions.
  • Allowing effective two-way communication between supply chain partners.
  • Merging communication, visibility and automation for increased control and reduced costs.

These benefits come together to ensure increased collaboration, resulting in stronger, more effective strategic partnerships across the supply chain.

5. Focus on agile supply chains

Agile supply chains capable of responding to disruptive events have the capacity to mitigate and overcome the lost production that has plagued the automotive industry since the onset of the pandemic. Responsive supply processes should now be a priority in the face of new challenges, such as:

  • The emergence of different suppliers in light of EV evolutions.
  • Requirements for alternative routes as supply shortages and Brexit delays put an end to existing partnerships.
  • The pursuit of new lines of business, such as online trade, EVs, and technological developments.

By delivering rapid onboarding processes and real-time communication between supply chain partners, EDI-as-a-Service offers an adaptable and agile alternative to previously inflexible processes. 

Furthermore, the managed services element of EDI-as-a-Service opens the door to industry-leading expertise. This includes custom EDI mapping that allows multiple EDI standards to be converted to in-house formats that integrate with existing systems. These custom EDI maps can help traditional automotive companies deal with new suppliers, like those who deliver electric vehicle components, for example, with limited industry experience. 

Suggested reading: For more on the importance of an agile supply chain, check out our free eBook — Agile Supply Chain

A modern solution for modern supply chains

As we have seen above, there are various ways the automotive industry can look to optimise supply chain processes to drive improved performance. As well as offering its own unique set of benefits within the supply chain, EDI implementation complements a number of the other methods businesses can deploy as they look to enhance their supply chain outcomes.

Even with the vast potential EDI has in the context of automotive supply chain process optimisation, carefully choosing the right EDI provider and solution is essential to success. Whilst legacy EDI provides clear benefits to businesses, global automotive supply chains require an up to date solution. That’s where EDI-as-a-Service can help.
Our modern approach to EDI makes complete supply chain visibility a reality, facilitates more agile supplier relationships, and provides a cost-effective way to observe and oversee supply chain operations. The final result is more opportunities for efficiency, reinvestment and optimisation. See for yourself how your business could access these benefits and more by talking to an expert today.

Transform your approach to supply chain management

Talk to an Expert








    Epicor values your privacy. Website terms and conditions.

    RELATED ARTICLES

    EDI vs API: What’s the Best Method for B2B Integrations?

    EDI 214 T-Set: Structure, Benefits & Use Cases

    The ANSI X12 EDI 862 T-Set: Structure, Benefits & Use Cases

    The ANSI X12 856 T-Set: Structure, Benefits & Use Cases

    ANSI X12 EDI 846 T-Set: Structure, Benefits & Use Cases

    855 T-Set: Structure, Benefits & Use Cases

    Making the Move to Cloud-Based EDI Solutions

    EDI 940 T-Set: Structure, Benefits & Use Cases

    ANSI X12 EDI 865 T-Set: Structure, Benefits & Use Cases

    The VDA 4987 Message: Structure, Benefits & Use Cases

    Top EDI Solution Providers in 2024

    ANSI X12 EDI 850 T-Set: Structure, Benefits & Use Cases

    The VDA 4938 Message: Structure, Benefits & Use Cases

    The EDIFACT DELJIT T-Set: Structure, Benefits & Use Cases

    The EDIFACT DELFOR T-Set: Structure, Benefits & Use Cases

    The VDA 4915 Message Explained

    The VDA 4905 Message Explained

    T-Sets | ANSI X12 810

    How to optimise your EDI and ERP system integration

    T-Sets | ANSI X12 997

    T-Set | EDIFACT INVOIC

    T-Set | EDIFACT DESADV

    Exploring Cloud EDI Services in ERP: Architecture, Security, and Scalability

    VDA Explained: Message Standards and Transaction Sets

    ANSI X12 Explained: Message Standards and Transaction Sets

    EDIFACT Explained: Message Standards and Transaction Sets

    The Power of Web EDI for Global Supply Chains

    How to Get the Most Out of AS2

    How EDI Simplifies Transactions in the Manufacturing Sector

    Why Your Automotive Supply Chain Needs an OFTP2 Connection

    Digital Supply Chain Trends Impacting 2023 and Beyond

    How to Manage Global Supply Chain Complexities

    How to Overcome Supply Chain Risk

    What is the Future of Supply Chain Management in 2023?

    How to Improve your Supply Chain Strategy

    Why Scalable EDI is Integral to Rapid Business Growth

    How to Pick the Right EDI File Transfer Protocol

    An Introduction to OFTP2 (Odette File Transfer Protocol)

    What are the Costs of EDI Implementation?

    What is PEPPOL?

    A Guide to EDI Protocols

    EDI VAN Costs: Get the Right Solution for your Business

    How Much Does EDI Cost?

    How Do On-Premise EDI Solutions Work?

    Our Plan at Data Interchange to Change EDI and Supply Chain Management

    Integrating EDI with your ERP

    In-house vs Managed Service EDI

    What is an API Integration? And how does it affect EDI?

    Epicor Acquires EDI Provider Data Interchange

    6 Benefits of EDI in the Logistics Industry

    4 Challenges Facing the Logistics Industry and How to Overcome Them

    Solving Supply Chain Problems in the Logistics Industry

    B2B EDI Integration Best Practices in 2023

    How to Choose The Right EDI Provider in 2022

    Supply Chain Analytics Trends in 2022

    Future-proof your business: Take Advantage of Market Growth

    Announcement: Andrew Filby becomes CEO of Data Interchange

    7 Advantages of EDI in The Automotive Industry

    Consumer Expectations cause Demand for Integrated Data

    Post-Pandemic Supply Chain Challenges Increase the Pressure

    EDI Made Simple for the Automotive Industry

    Overcoming Supply Chain Visibility Issues in the Automotive Industry

    Complex Supply Chain Problems and Simple Solutions

    Supply Chain Flexibility: Why your customers need it

    5 Automotive Supply Chain Challenges Facing the Industry

    Supplier Performance Management Reimagined in 2023

    How to Unite Emerging Supply Chain Management Technology Trends

    Meet the Team: Marketing

    Supplier Management Best Practices after COVID-19

    The Future of EDI: Looking Beyond 2025

    The top three supply chain data exchange requirements

    The Advantages of EDI in E-Commerce: How to Gain a Competitive Advantage Online in 2021

    A Crash Course on EDI Industry Standards: ANSI x12 vs EDIFACT vs OFTP and more

    What is EDI Mapping?

    What is EDI: The History and Future of Electronic Data Interchange

    The Future of the Automotive Supply Chain

    Supplier Relationship Management: How to reduce risk and improve performance

    How EDI-as-a-Service Changes Supply Chain Best Practices in 2021

    Agile Supplier Onboarding: Supply Chain Security in Uncertain Times

    The impact of failed EDI on Supply Chain

    Cloud-Based EDI Solutions vs On-Premise

    Different Types of EDI Compared

    5 Most Common EDI Implementation Issues and How to Solve Them

    Are your EDI documents ready for the new EU/UK customs border?

    B2B Integration Challenges

    EDI vs API: Bridge the B2B connectivity gap

    Ten things to look for in an EDI Managed Service Provider

    World Mental Health Day 2020

    Logicalis & Data Interchange – partnering for success

    EDI – A data integration service critical to business success

    Joining forces with SnapLogic: bringing together market leading iPaaS and EDI solutions

    Joining Data Interchange: My lockdown experience

    Data Interchange announces strategic partnership with SmarterPay

    Access new trading partners quickly for COVID-19 support

    Keeping supply chains moving

    Our Web EDI solution gets a makeover

    Coronavirus: Our Business Continuity Plan

    With love from Data Interchange ♥

    A new decade, renewed ambition and the next generation

    Brexit and EDI

    Data Interchange transform their Support service for an improved customer experience

    Interview: An update on Data Interchange’s new CEO, Robert Steiner

    Data Interchange appoints Robert Steiner as new CEO

    MQ messages over ENX – Renault

    Five key questions for your EDI provider

    Data Interchange at the Odette Conference 2018

    How to select the right EDI provider

    Future proof your EDI and unleash growth

    EDI: the Supply chain performance enhancer

    Taking cost out of the chain

    Non-EDI users held up in the mail

    Over 41% of companies at risk without EDI

    ​Consolidating VAN providers

    Increase visibility and productivity of supply chain logistics with Data Interchange’s B2B integration solutions

    Data Interchange wins large business of the year award

    Data Interchange launch new Support Portal

    Data Interchange will be showcasing our EDI solution offerings and promoting the benefits of MMOG/LE

    Metaldyne receive special recognition from Ford for 11th consecutive year

    Top 5 reasons to switch to EDI Managed Services

    Data Interchange to power QAD Managed EDI On Demand