Dive Brief:

• Major storms have boosted the need for vehicle replacements, allowing U.S. vehicle manufacturers to enjoy a sales increase of up to 12% over 2016 sales, according to an Evolution Time Critical press release. Annual sales rates for light commercial vehicles also jumped to more than 18.5 million.
• However, the automotive supply chain is also dealing with fallout and damages from storms Harvey and Irma, and is struggling to keep up.
• Accordingly, further pressures will challenge automakers. An additional sales increase could hinder suppliers’ agility and speed, two factors that are now considered indispensable for maintaining healthy production standards.

Dive Insight:

Anticipating risk within the supply chain is a necessary part of planning since disruption can strike at any time in any form.

The types of risks affecting the supply chain run the gamut from labor strikes resulting from an overstressed production team to technological risks posed by cybercrime. Strategies to combat risk include everything from a shorter, quicker supply chain to achieving full visibility. And while the auto supply chain is generally highly resilient and redundant due to its just-in-time nature, excess demand appears to be the problem now.

"The issue is that, following natural disasters such as the recent hurricanes, the extent of possible disruption to vehicle manufacturers’ supply chains takes time to become certain," said Evolution Time Critical Managing Director Brad Brennan.

"Modern automotive supply chains are vast, highly complex operations and it is impossible to quickly and precisely glance at affected ports, airports and road networks to establish the extent of possible disruption — careful analysis can provide a crucial headstart, but even that is not infallible," he said. "It is only when the impact on Tier 3 or 4 suppliers — or beyond — emerges that the potential effect to vehicle manufacturers becomes apparent."

Thanks to heavy back stock, the industry has thus far been able to keep pace with need, but should any other disruption occur, automakers must be ready.

"The implementation of suitable contingency plans can protect otherwise fragile supply chains and help sustain automotive production at times of uncertainty," said Brennan. Of course, with every new disruption there is a silver lining. "This experience makes the automotive industry one of the more robust when it comes to protecting its supply chain and recovering swiftly from natural disasters.”