Procurement Strategies: 5 Ways Automobile Industry Can Unlock Savings and Add Value

The automotive industry is one of the surest bellwethers for our economy. The rollercoaster ride the automotive industry has been through in the past two years is symbolic of our efforts to reimagine the future of mobility. The demand for vehicles saw a sharp surge in 2021 and continues to hold ground this year. In 2021, the supply side was dealt a significant blow due to the global semiconductor shortage that affected most OEMs, exposing the frailty of portions of the supply chain.

Procurement Strategies for Automobile Industry to Unlock Cost Savings and Add Value

The cost of vehicle production is merely 20% of the total lifetime cost of ownership. With rising fuel costs, this divide will increase further. The automobile industry must revise its  procurement strategy to keep costs down to keep pace with the demand and provide better customer RoI perception. Here are some ways the industry can offer better value to consumers:

1. Vendor Consolidation

A vehicle has thousands of moving parts supplied by hundreds of vendors. An end-to-end, digital vendor management platform like we offer can help brands track and optimize the supply chain efficiently.

2. Digital Procurement Transformation

As part number complexity increases, it becomes more challenging for the OEM to optimize orders and delivery cycles to meet just-in-time production principles. Digitizing the procurement process provides better visibility and offers flexibility for bottle-necks.

3. Use of Clean Procurement Data

OEMs need to have dependable vendor performance metrics to predict profitable outcomes offer vendor assistance to scale and make customer commitments. A digitized procurement process allows for required analytics and data modeling.

4. Vendor Managed Inventory

OEMs are constantly stretched for inventory management with multiple parts, space and time-based requirements on the assembly line. With more than 40 warehouses located in preferable production geographies across India, Moglix offers OEMs unparalleled inventory management options. 

5. Site Aggregation

As modular and decentralized manufacturing become the norm for OEMs, the need for a single window and seamless experience for multi-location procurement becomes essential. By ensuring that the best performing vendors can supply material and parts to all production locations without worrying about product quality standards, we bring further optimization and cost reduction. 

With the rise of electric vehicles, the automotive industry is going through a critical evolution cycle. As the customer demand for better value increases, OEMs should audit and revamp their procurement strategy for the next decade.

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