Under the big newsy economic supply chain headlines in manufacturing, production, transportation, and workforce availability are bigger problems for the automotive industry. Raw materials, a tropical tree fungus, aluminum production vs. CO2 struggle, and a voracious consumer appetite for all things electronic contribute to supply chain tribulations.
Tropical Blight
Rubber is a high-demand product in many automotive components, including door seals, wiper blades, and tires. Natural rubber supplies are suffering from floods and South American Leaf Blight, a rubber tree fungus ravaging the Para tree, which thrives in countries such as Thailand and Indonesia. The shortage is further squeezed by the pandemic and a global increase in rubber gloves and other PPE gear.
China’s Cleaner Skies
Each winter, the Chinese government attempts to reduce the number of dangerous smog days in the country. Chinese President Xi Jinping extend
ed output caps on polluting industries to ensure more blue sky days for the Olympics, including steel and aluminum. China produces over 50% of the world’s aluminum. The shift towards sustainability has dramatically changed the quantity of what is available and the available stock price.
Chip Powered
The demand for semiconductor chips is at an all-time high. With more time spent at home, the consumer demand for cell phones, televisions, computer equipment, and appliances is higher than ever. These same chips are needed for navigational units, safety systems, and a wide variety of the technical features commonly available in today’s automobile.
Any one of these shortages would stress the industry, but this is turning into a triple threat. Waiting it out is not a solution. Investing in sustainability and green initiatives will help mitigate future shocks.
Moving from manual and spreadsheet-based inventory and record-keeping to data-driven technology solutions allows for supply chain visibility to make accurate forecasting and corrections to solve today’s problems and prepare for tomorrow’s growth.
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