The traditional models for both automotive manufacturing and supply have for a while lacked a degree of flexibility the industry can no longer go without. Rigidity won't do in 2017. New and familiar challenges alike will push automotive manufacturing to adapt or run the risk of being left in their competitors' dust.
Will carmakers and automotive suppliers steer into the skid when they encounter trouble in the coming year? Or will they merely brace for the financial impact?
Global automotive revenues will increase by up to 50 percent between now and 2020.
Stretched thin by globalization
Slowly but steadily, the automotive industry is recovering from the economic collapse in 2008. A McKinsey report projects that revenues for global automotive manufacturers will increase by up to 50 percent between now and 2020.
Growth of that magnitude signals a push into new and/or emerging markets with their soon-to-be-acquired capital. What then will happen to an industry already plagued by long, complex supply chains spanning the globe?
Whiplashed by the price of steel
While many automotive OEMs have experimented with innovative materials for lightweighting and other purposes, steel still drives the industry - more to the point, the price of steel, which fluctuates tremendously year after year.
2017 will be no different. After 2016's low prices, Metal Miner anticipates a steep rise in steel prices thanks to economic activity in China. The world's largest steel producer plans to scale back its coal-burning steel operations and invest in infrastructure and construction, thereby driving up steel prices for the rest of the world. Automakers everywhere will need to contend with this upswing in cost by managing spend more closely, perhaps cutting opex drastically. In the past, steel prices vacillated by as much as 30 percent in as little as one year's time.
Surviving the skills gap
Will U.S. manufacturing, automotive and supply included, experience a surplus of unfilled skilled-labor positions? Although industry leaders go back and forth on the severity of the gap in question, there can be no doubt one is imminent, especially in the auto sector.
With the rise of telematics, autonomous driving technology and other dashboard-bound gadgetry, the complexity of automotive assembly will require a trained workforce, one that receives timely updates to their knowledge base as new tech arrives on the scene. How will car companies free up employee schedules and provide data-driven support on the production line?
Let ERP ride shotgun for greater flexibility
For these reasons and more, automakers turn to advanced enterprise resource planning solutions, such as abas ERP. End-to-end integration enhances data visibility from every node in the supply chain and automated features funnel valuable information directly to the people who need to see it most. Want to know more? Click here to learn more about abas ERP for automotive and supply.