The Future Is Now for Automotive Supply Chain

The Future Is Now for Automotive Supply Chain

An industrial revolution is happening in automotive supply chain. It’s having its Kodak moment. But can the industry get ahead of the curve to avoid a similar fate?

Traditional OEMs are feeling the pressure from electric vehicle (EV) startups. Dealing with disruptive, innovative new entrants is nothing new for most industries, but it feels fresh for automotive.

In round two of this special Auto Supply Chain Prophets interview, we’re rejoined by veteran auto writer and editor Gary Vasilash to talk about the automotive supply chain future that’s already arrived.

Themes discussed in this episode: 

  • How traditional OEMs can adapt supply chain strategies in preparation for the EV revolution.
  • Why creating a stable supply chain for EV isn’t the same as for the internal combustion engine.
  • Why managing supplier performance is new ground for automotive, and how to learn from other industries — or even pivot into them.
  • How distinctive premium products might kill the mass market.
  • Why separating product and process is all in the execution.


Featured on this Episode  

Name: Gary Vasilash

Title: Transportation Editor, Gardner Business Media

About: Gary Vasilash has been working for Gardner Business media for 30 years, where he writes about design, engineering, manufacturing and management within the automotive industry. He also co-hosts Autoline After Hours, a weekly podcast for car lovers and auto industry enthusiasts.

Connect: LinkedIn 


Episode Highlights

Timestamped inflection points from the show



[1:25] Here today, gone tomorrow: Is EV technology a revolution for the automotive industry? Gary seems to think so, and explains how.

[3:11] Ch-ch-changes: EV is shifting strategy for automotive supply chain in some obvious (and some surprising) ways. It all depends on what you’re making and how you’re making it.

[6:01] Keeping it stable: OEMs creating a capable, stable supply chain when it comes to EV isn’t going to be the same as the internal combustion engine — especially in light of all the new startup entrants.

[9:35] Have faith: With all this change, managing supplier performance isn’t new for most industries but it is a new challenge for automotive.

[11:47] (Trying to) stay alive: Are new EV startups niche players in the making? Will traditional OEMs buy them up or merge with them? It’s like automotive in the Great Depression. Maybe the future isn’t in economies of scale but in charging for a distinctive, premium product that isn’t a mass product.

[13:58] The rules they are a-changin’: Right in front of our eyes, traditional automotive giants have pivoted into software to drive revenue.

[15:09] Premium models: Batteries — and the plants that build them — are what costs the most in EVs, which drives a high-end market. Gary explains it has little to do with tax breaks or the Inflation Reduction Act.

[18:30] The one thing: Automotive supply chain leaders need “to separate the product from the process.” It’s all in the execution, whether the vehicle’s electric, hydrogen fuel cell or internal combustion engine based. With the right resources from a process standpoint, they’ll get costs right and profit.


Top quotes

[1:25] Cathy: “EV [is] the automotive industry’s Kodak moment: [It’s] here today, gone tomorrow — in terms of a technology.” 

[2:59] Gary: “The auto industry is doing better than other industries did, in terms of saying, Hey, we're going to make our future. We're not going to be reacting to the future.” 

[4:15] Gary: “If this is revolution — as we submit — there are substantial changes such that what you used to be doing may not be relevant, and this is devastating for a lot of people. What did those people who were making horses and buggies do? … What happened to sailing ships when Robert Fulton said, Hmm, steamships might be a better way of going? Did the sailmakers continue in their robust way? Did the people who were making the masts continue in their robust way? No, I don't think so. And this is what the auto industry is facing right now. ”

[10:52] Gary: “This is nothing new for different industries — this is something new for the automotive industry. Many of the new entrants don't have legacy in terms of practices, therefore [it’s not as] much of an issue for them as for traditional manufacturers. But traditional manufacturers all have a solid manufacturing footprint, so they're going to continue to work the way they work.”

[18:32] Gary: “What [automotive supply chain leaders] need to do is to separate the product from the process … It all comes down to the execution: If their needs, requirements and capabilities are different in terms of process for the electric vehicle, they need to identify and acquire that … By having the resources on the process side that will put them in a position to cost effectively and — profitably — do what needs to be done.”

DOWNLOADABLE RESOURCES

White Paper
for Leveraging Risk Management in Automotive

Download here

Operational Restart Readiness
Checklist

Download here

The 24 Essential Supply Chain
Processes

Download here

STAY IN TOUCH

Keep in touch with Auto Supply Chain Prophet's co-hosts Terry Onica and Jan Griffiths on LinkedIn.

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