The automotive industry is hitting a speed bump in 2024. Automotive manufacturers must now contend with increasing demands such as reducing their carbon footprint, integrating new innovations like self-driving technology, and fulfilling bespoke orders from e-commerce platforms (yes, a customer just asked for a pink pickup truck!)

While these demands may seem disconnected, they are all navigable via one common route: Supply Chain Management. As a result, automotive manufacturers who revamp their supply chain, which hasn't seen significant changes since Henry Ford's time, will gain the agility to cruise into a green-demand-driven-just-in-time-supply-chain era smoothly. In other words, these manufacturers will be in pole position for success.

To transform their supply chain, automotive manufacturers need a pit crew – a logistics software designed for this rapidly evolving industry. The prime pick for the job? A transportation management system (TMS) with strong capabilities under the hood, geared towards the core of supply chain operations. While TMS is already a household name in other sectors, it is set to turbocharge the growth of automotive manufacturers through enhanced efficiency and transparency.

A TMS will provide unprecedented transparency

For example, Uber founder Travis Kalanick once stated that the company has access to a “God view,” which was a real-time map showing the pinpoint location of all their cars as they picked up and delivered passengers across a given city — the ultimate level of insight and transparency.

This reference is notable because Uber has a level of insight into its vehicles that enterprise manufacturers have struggled to develop on a much higher level. This lack of transparency was best exemplified during the COVID-19 pandemic when many automotive companies were caught blindsided by a shortage of crucial chips. With people working and studying from home, these chips had been diverted into the production of desktops and laptops.

Without the chips necessary for many components, automotive companies had to make dramatic pivots, none of which would yield immediate results. Some had to adopt a build-shy strategy, wherein they assembled the cars and then had them sit in parking lots while awaiting final chips. Others explored the possibility of designing components requiring fewer chips, stockpiling chips when they became available, or even getting involved in manufacturing. For example, cars were sold with a manual window system instead of an electric system, a feature that has been standard on new vehicles, but was a luxury decades ago.

While a shortage of chips caused the previous disruption, the next one will surely be another component. Gaining real-time visibility into the inbound- and outbound supply chain is a critical factor in helping manufacturers better plan their production, as we have learned with the chip shortages during the pandemic. A TMS will give enterprise manufacturers better insight into the status and whereabouts of their incoming materials, which allows them to battle these challenges in a more structured and timely manner. With Cargobase, for example, automotive companies gain visibility across all modes of transport, such as airfreight (MAWB), car haulers, specialty trailers, rail, ocean freight (container & vessel) and parcel.

This level of granularity provides actionable information. Suppose an enterprise manufacturer sees that the number of forthcoming steering wheels coming in by ocean freight will not meet their just-in-time needs, for example. In that case, they can order additional supplies delivered with another fast mode of transport, either on a contract or at a spot-buy rate. Comparing omni-modal contract and spot-buy rates is a feature that Cargobase also supports. Through spot-buy freight, enterprises receive an average of 3.2 quotes, 75% of which comes within the first hour, creating a savings of 18%.

This competitive bidding process is one of Cargobase’s three ROI levers. Coupled with the other two soon-to-be-discussed - end-to-end workflows and visibility into LSP performance - automotive companies who use our TMS will see a healthy return on their investment.

A TMS works seamlessly for all automotive workflows

When consumers evaluate cars on a dealership lot, they may not realize the complexity of bringing the vehicle to that point. The supply chain for the automotive industry is one of the most intricate of any sector in the world.

As a multi-tier supply chain, original equipment manufacturers (OEM) must deal with dozens of Tier 1 suppliers, who must also deal with their own network of Tier 2 suppliers and so on. This tiering can get very deep. For example, an original equipment manufacturer may source headlamps from a Tier 1 supplier, which sources the bulbs from a Tier 2 supplier, which sources the glass, plastics, and connectors from a Tier 3 supplier. A disruption at a Tier 3 supplier can have an impeccable impact on the delivery schedule to the OEM; hence full transparency in the supply chain is vital to avoid production delays.

Key to this complexity is logistic services providers (LSPs). After all, it does not matter if a supplier has a given component but cannot deliver it efficiently to the next stage. For better or for worse, a multi-tier supply chain lives and dies on the strength of its LSPs. Through a TMS, an enterprise manufacturer can seamlessly manage these LSPs across all the different workflows of their supply chain.

Cargobase, for example, is integrated with over 1,200 LSPs, so enterprise manufacturers can easily coordinate shipments across any workflow. These workflows include regular inbound of raw materials organized and/or paid by the manufacturer or supplier, regular outbound of semi- or finished goods, non-production shipments organized by engineers, marketing or other business areas for prototypes, trade shows, production lines, etc.

Cargobase does not take a one-size-fits-all approach to these workflows - each is designed to fulfill (pun intended) its unique demands. With inbound shipments booked by a supplier but paid by the manufacturer, for example, there is little insight into the shipment status, estimated time of arrival or associated cost because traditionally, the organization is done manually by email and spreadsheets with or without all stakeholders in copy. Cargobase addresses this problem by allowing the supplier to create a shipment record in Cargobase, where the system will automatically apply any routing guide if available (if not a spot-buy request) and inform all stakeholders accordingly. As a result, there is complete transparency in inbound supply chain flow and any related accruals and information.

The same applies to shipments booked and paid by a supplier where you only receive a tracking number for reference. Manufacturers typically have to track these shipments on third-party websites. Given the number of suppliers and the long list of LSPs they use, everyone will need help to juggle their way to tens of tracking websites. With Cargobase, manufacturers can create a record with this tracking number in the platform, and it can now be followed alongside other shipments. Logistics professionals are spared the hassle of jumping from one third-party site to another. All your shipments and statuses are now visible on one single screen.

By enabling manufacturers to house all their workflows on one TMS, they can better control the multi-tier supply chain to drive better results for their stakeholders and customers.

A TMS will improve productivity

The success of every enterprise manufacturer is ultimately based on its throughput. For direct-to-consumer brands, it could be: How many cars did they make? For a tier one supplier, it will be: How many headlamps did they supply? These figures matter to OEMs and suppliers at every tier because they directly translate to revenue.

A TMS will help OEMs and suppliers at every stage increase their productivity. Because a TMS facilitates collaboration and communication with suppliers and provides greater insight into where goods are, they can ensure the production line operates without disruption, no matter the production model.

Because headlamps are universal for a given car, they most likely follow just-in-time production. Therefore, there need to be regular delivery cadences of headlamps to minimize inventory at the assembly site while ensuring enough to be fitted onto the line of cars. If an OEM sees that delivery of headlamps will be late, it can use spot-buy freight to source a delivery from the same supplier via another channel or a different supplier.

The same goes for just-in-sequence production. If an OEM notices that a supply of engines and powertrains is still with the exclusive supplier, it can immediately work with them to use an LSP to deliver them much more quickly. While en route, OEMs also spend 80% less time communicating with a given LSP, leading to 18% savings. This occurs because OEMs know where the supply is and can be confident that it will arrive in time to be assembled with their designated cars. Fitting the correct part to the right car is aided by a module for automated vehicle identification number (VIN) lookup.

A TMS, in short, equips manufacturers with supply chain resilience to maintain business continuity no matter what production challenges they face.

Get down to the basics

In the fast lane of the automotive industry, it's easy to feel overwhelmed by the speed and scale of changes. But there's no need to hit the brakes. Instead, by focusing on their supply chain, manufacturers can ensure they're not just keeping up, but actually taking the lead.

A TMS can help manufacturers to navigate these winding roads. With the right TMS, they can take full control over their multi-tier supply chain, have unparalleled insight into cargo locations regardless of freight mode, manage all workflows from a single system, and above all, boost productivity for just in time or just in sequence production models.

Manufacturers willing to shift into high gear with a TMS will get a head start over their industry peers. As they say, in the driving world, they'll be in the driver's seat.