U.S. automakers poised for comeback

As the U.S. economy continues to recover, supply chain analysts are suggesting that the nation’s moribund auto industry has learned from its past mistakes.

“This particular sector is approaching a ‘new normal’ as it readjusts to rising consumer demand,” said Kelly Thomas, Senior Vice President, Manufacturing, JDA Software Group, Inc.

He added that opportunities for automakers to differentiate themselves through improved supply chain management has never been better, while they are faced with a unique opportunity to improve revenue while reducing costs and improving asset throughput.

“A lot of lessons embraced by the car-makers reflect the best practices of the high-tech sector,” he said. “They are now flattening inventories and going to a cash-to-cash model with their suppliers.”

According to Kelly, the auto industry is also becoming more sensitive to risk management, as it evaluates country profiles and distribution networks.

“For obvious reasons, Toyota and Honda were the leaders in this regard,” he said. “But it doesn’t take an earthquake or a flood to get this kind of program in place now.”

Other recommendations contained in the JDA report include the following:

· Synchronize sales and marketing forecasts with parts flowing in from suppliers. This challenge calls for an integrated demand management platform. ?
· Link the supply chain to new product programs to manage total enterprise cost. In essence, constraint management needs to be driven further upstream into the product development decision making process. ?
· Manage capacities and materials across the global network. Automotive companies need a global view of demand in a common format to make decisions on capacity management, sourcing and profitable allocation of vehicle and option content.

· Optimize prices, channel inventories and order-to-delivery process. In the auto industry, customers expect more content for less money, and regulators expect more safety, lower emissions and higher fuel economy. All of these have a significant impact on supply chain operations. It is critical for automakers to implement retail category management and pricing optimization best practices, and link these capabilities to the order-to-delivery process.

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