Building Advanced Supply Chain Capabilities

In the past, automotive supply chains were relatively stable. But shifting consumer habits mixed with dramatic changes in the economic and geopolitical climate have led to considerable uncertainty for automakers. Amidst this growing uncertainty, many are recognizing the need to enable advanced supply chain capabilities.

While most organizations are clear about the benefits of enabling these capabilities—from improved supply chain visibility that allows automakers to track and monitor the status of orders and shipments to more accurate demand forecasting that reduces waste and inventory—many are equally unclear about how to proceed, especially when day-to-day operations are affected directly.

The first step, according to Frank Stegherr, SVP of Supply Chain Management and Logistics at Schaeffler, a German multinational automotive and industrial supplier, is to understand the organization’s pain points and the planning software vendors that can help address them.

“When selecting a new planning tool, I recommend starting with an understanding of your pain points. Understand who the vendors are that can help you address them. And most importantly, it is critical to be able to implement such a system in a fast way and avoid waiting two or seven years to run the project. Be aware that it is a journey, there is a starting point, and you will develop during the journey by adding new capabilities to optimize your processes further.”

— Frank Stegherr,
SVP of Supply Chain Management
and Logistics at Schaeffler

Once pain points have been identified and maturity has been assessed, rather than embarking on a multi-year ‘big bang’ transformation or attempting to stitch a tangled mess of disconnected IT systems together, one way forward is to leverage a “building-block” approach. Such an approach enables foundational capabilities, such as AI/ML-driven demand planning, first to add incremental value in the short term while building more advanced capabilities on top as needs materialize and customers become more aware.

When organizations prioritize and deploy the right foundational building blocks in the right order, it paves the way for more advanced capabilities in the future, allows automakers to capture incremental value while transforming their operating models, and helps them better manage increasing volatility and complexity.