Forecast in Bonn is Sunny: Positive Outlook from Automotive Logistics Europe

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While I was traveling to Bonn, Germany for Automotive Logistics Europe, I decided to look up the conference hashtag #ALEurope. The first thing I saw was the following snowy scene from last year's conference:

As a Canadian trying to escape the snow, I was extremely excited to see the sun when I landed. The conference kicked off just as well. The keynote was presented by Andrea Eck, General Manager Outbound Logistics, Volkswagen and followed by Michael Gartside, Senior Automotive Analyst, PwC. We heard from Gartside that 2013 marked the sixth consecutive year of a decline in vehicles sales in Europe. Like the weather though, this year's economic situation is looking brighter than last year's - things are looking up for 2014 and beyond. He presented that there is a return to growth in many EU countries, vehicle sales and production are rising in Europe, and present forecasts predict increases over the next decade. To illustrate, from a climate perspective, just how different things were, here's a picture I took during a conference break:

Another interesting aspect of the conference was a live survey the organizers prepared. The question that resonated with me was: "What would make the biggest difference to improving automotive logistics in Europe?" The top answer from voters called for better 'IT systems and software' for improving automotive logistics. As a company that delivers S&OP and supply chain solutions for large enterprises, this response definitely peaked my interest.

To address some of the challenges facing automotive supply chains, my colleague Aamer Rehman presented "Aftersales & Service Parts: Serving the customer and the supply chain" ...to speak about using technology to help solve complex supply chain issues. He believes that service parts supply chains are gaining importance and that a fundamental change is required in supply chain management.  OEMs and suppliers need global visibility in order to align and synchronize multi-tiered supply chains for fast responses to demand and supply changes, and to make intelligent tradeoff decisions based on real insights. In Rehman's opinion, the automotive sector needs significant improvement in some critical enterprise competencies:

  • Improving visibility, alignment and synchronization across functions, and more importantly across the supply chain, and with a focus on customer service.  This is critical given gradual reduction in vehicle inventory in the channel and working capital reduction pressure across all supply chain stakeholders.
  • Supply risk management – where companies need to develop core capabilities to detect supply and capacity problems, assess the impact, come up with business tradeoffs and publish the change.
  • Speed and accuracy of decision making is critical.  In this case, automotive companies need to focus on capacity planning and capacity constraint management disciplines and processes in order to remove unnecessary latency and lack of visibility across the value chain.
  • Collaboration across stakeholders – collaboration is not merely passing data between partners.  It is about context and content specific collaboration to understand who is impacted by a change and mutually resolve it inside and outside the enterprise.
  • Companies need to eliminate information latency between strategic, tactical and execution windows and eliminate the artificial boundaries.  For example, a static monthly S&OP reporting cadence is not sufficient.  Tying it to weekly and daily execution is critical.  A seamless flow through planning time frames is possible only if companies diligently work towards removing the patchwork of applications and Excel.  S&OP, capacity planning, constraint management and inventory management processes need to be revisited to establish discipline and alignment in decision making required for globally distributed supply chains.

For more information, you can check out his presentation slides below.

You can also see some of photos from the Automotive Logistics conference on our Facebook page. Enjoy!

   

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