Buying into the benefits of a sustainable future
Buying into the benefits of a sustainable future
One of the clear messages from the Automotive Logistics and Supply Chain Global conference held in Detroit last month was that the daily disruption and risk defining the delivery of parts these days is changing the way the automotive sector does business. In North America, that is also being affected by the latest legislation designed to localise content and remove lead time risk at a time of political and trade uncertainty.
Covid and its consequences has forced carmakers to come up with ever more resilient compensating strategies to protect production, while at the same time bringing sustainable benefits along with the drive for cost savings and efficiency.
That is certainly the case at Audi and in this edition the carmaker’s head of procurement, Marco Philippi details the long-term structural changes the company is making in both its production and supply chain toward risk-free and sustainable material sourcing. An important part of Audi’s procurement strategy is gaining greater transparency of risk right along the supply chain, a major undertaking that requires the essential participation of supply chain partners and logistics providers, as well as the use of the latest digital technology.
The onslaught of disruption has also prompted significant changes in supply chain design and operations at GM, and like Audi, a strategic focus on resiliency is being coordinated by GM’s Global Purchasing and Supply Chain organisation. In this issue, Edgard Pezzo, GM’s executive director of global logistics and containerisation, talks about the carmaker’s investments in visibility, extra logistics capacity and supplier collaboration, and the importance of much closer partnerships with GM’s logistics partners.
Closer collaboration between OEMs and suppliers for the benefits of a more sustainable supply chain is the main directive of the Supplier Partnership for the Environment. In this edition we learn from GM and tier one supplier Magna about the latest developments aimed at reducing packaging waste in the automotive sector. Jeremy Galanty, sustainability analyst at GM, joins Bridget Grewal, director of packaging continuous improvement at Magna International, to point to the big wins that can be quickly realised in diverting packaging from landfill through better guidance.
The automotive industry’s new focus on strengthening a more sustainable supply chain are being backed up, or in fact driven by, government regulation. In the US this is most recently seen in the signing of the Inflation Reduction Act (IRA), which in part aims to clean up the transport industry by tying investment and tax incentives to stringent rules on local content for the manufacturing of electric vehicles. It is not just the vehicles that need to be cleaner, the industry needs to decarbonise at a system level, in the production, logistics and supply chain, but IRA is causing some near-term headaches for an industry that has still to develop fully localised content for EV production.
Government legislation in the US is also having an impact on the rail freight industry, which has been suffering from labour shortages and the threat of strike action. Finished vehicle moves have been compromised by a decline in services from an rail sector slow to adapt to the changes underway in the automotive industry and moving closer to a monopoly. The US authorities are now introducing legislation designed to “create a fair marketplace” for Class 1 freight railroads and the companies using them.
One of the other clear messages from this year’s conference in Detroit was that the automotive industry is in dire need of greater diversity in its workforce. Providing career opportunities for women that takes into account better conditions is more important than ever as the logistics sector struggles to retain and recruit talent. In a special panel at this year’s conference, leading female executives from across the supply chain established some priorities for a more equitable workforce based on clearer communication and improved opportunities.
Disruption in the automotive supply chain is now headline news but that has a positive potential in generating interest in the sector and attracting a younger generation of women who want to find out more and engage with the current challenges.
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