Evolution Time Critical highlights the key supply issues that can cause production delays pre and post European summer car manufacturing shutdowns
Evolution Time Critical is advising car makers and Tier 1 suppliers to ensure they have adequate contingency plans in place as manufacturers and suppliers across Europe prepare for summer shutdowns. The emergency logistics specialist has highlighted a number of key supply challenges facing European vehicle manufacturers in the next few weeks. These include additional deliveries of components both pre and post shutdown, shortages caused by Tier 1 and Tier 2 suppliers with different shutdown dates, quality issues raised by the use of skeleton staff, temporary packaging and inadequate labelling, and the difficulty of acquiring parts needed for engineering changes.
"The summer shutdown period regularly causes headaches for manufacturers as shortages resulting from this annual supply chain disruption threaten to cause production delays," comments Brad Brennan, managing director, Evolution Time Critical. "This has become more challenging since the recession, as suppliers have tended to reduce their stock holdings, which has affected their flexibility at this time of year. Many European countries are also starting to introduce tighter vehicle restrictions across their borders during the summer holiday period. This has increased the demand for smaller transport vehicles or airfreight rather than articulated lorries.
"We hear from our customers that production hikes immediately before and after the shutdowns often result in requirements for extra stock in a short space of time. Production planning at this time of year can be very challenging, particularly when building cars to order, as it is quite common for Tier 1 and 2 suppliers to shut down during different weeks. Tier 2 shutdowns are often not confirmed until a few months into the year, leaving little time for planning. Although suppliers and OEMs do meet to plan how to meet additional requirements, long periods of disruption can often be experienced, as up to five weeks of stock can be required in one go, resulting in a significant strain on the supply chain."
Many suppliers have employed skeleton crews in recent years in order to be able to continue a manufacturing and distribution operation during the summer shutdowns. However, manufacturers have reported issues arising from short-term infrastructures of this kind, including part-fulfilled shipments and inaccurate labelling. The increase in demand for components before and particularly after shutdowns often causes suppliers to stock out of standard reusable packaging and resort to temporary packaging that may not be sufficient to protect the goods in transit. This often results in a requirement for emergency deliveries to make up the shortfall once production recommences.
Evolution’s team of emergency logistics analysts typically records an increase in demand for emergency and premium freight deliveries pre and post summer shutdowns. In addition to the shortages caused by temporary labour, the team also receives enquiries when urgent shipments are required due to suppliers requesting longer periods of time to build up additional stocks, and when stockpiling takes place at additional locations further away from the supplier’s premises. Additionally, new parts required to comply with engineering changes are often not available immediately after the shutdowns, as delays to component manufacture prevent adequate quantities of parts from filtering through the supply chain in time.
"Clearly, holding extra inventory is not ideal for manufacturers, and neither is the additional decanting involved in receiving supplementary deliveries," continues Brennan. "Accurate contingency planning is the key to making sure that disruption is minimised and production can continue as smoothly as possible following the summer shutdown period."