The number of cars produced and affected by semiconductor shortages decreased from 11.3 million in 2021 to 7 million in 2022.
After experiencing two years of semiconductor shortages and recent labor strikes, it’s fair to say that the automotive industry is also facing similar disruptions. The industry has quickly collaborated with semiconductor manufacturers, but there are other strategies to minimize waste and maximize flexibility throughout the entire manufacturing process. What measures can automotive manufacturers take to achieve this goal?
Semiconductor Shortages in the Automotive Industry
If there is one major concern for every car manufacturer today, it is supply shortages. The demand for new cars remains strong in the market, but manufacturers still cannot obtain enough semiconductor chips and electronic components at a fast enough pace to keep up with market demand. Since the peak of the chip shortage in 2020, the situation has somewhat improved. The number of cars affected by production halts due to semiconductor shortages decreased from 11.3 million in 2021 to 7 million in 2022.
While manufacturing may be starting to recover, global supply chains may never fully return to their original state. If car manufacturers want to thrive in this competitive global market, they must adapt to long-term supply chain disruptions.
Fine-Tune Quality Control Processes
Quality control (QC) is crucial for any vehicle, but car manufacturers need to prioritize it even more to thrive in the face of supply interruptions. Component shortages limit the agility and flexibility of car manufacturers in the supply aspect. They need to be more cautious and strategic in resource utilization, including strengthening quality control processes. As car manufacturers compete with consumer electronics giants for the same off-the-shelf components, ensuring the feasibility of components during the manufacturing process makes sense.
Car manufacturers can improve quality control and reduce defects in various ways. For example, ensuring that manufacturing employees have tools that maximize the feasibility of reducing production errors. This may include maintenance equipment, cleaning materials, and sensor devices for measuring component attributes.
Employees can use these tools to immediately address quality discrepancies and ensure that each component is in optimal condition. For instance, compressed air is one of the most effective tools for cleaning PCBs and other precision electronic components. Electronic components are also among the parts most prone to delays. Car manufacturers should pay special attention to maximizing the value of each product.
Proactive quality control is a good way to prevent defects. Car manufacturers can also leverage emerging technologies to detect defects faster and more efficiently. Artificial intelligence computer vision platforms are excellent solutions for automated QC.
Car manufacturers only need to install cameras at quality control checkpoints and transmit real-time information from the cameras to artificial intelligence. The algorithm quickly analyzes images of each unit captured by the camera and flags units with obvious signs of defects. This is a significantly faster unit inspection method compared to manual alternatives.
Minimize Operational Waste
Adapting to component shortages requires increasing the visibility of resource utilization and minimizing waste as much as possible. This is crucial to ensuring that every shortage component is put to use.
Reducing waste is closely related to quality control. Effective quality control should reveal how car manufacturers can efficiently reduce production waste. Optimizing quality control processes will make it easier to collect data on key metrics, such as defect frequency and high-risk components.
Car manufacturers can also use tools like IoT sensors to monitor resource consumption. Integrating IoT sensors throughout the manufacturing process is a good way to increase visibility. Manufacturers can analyze sensor data to identify trends in resource utilization, including areas with high waste levels.
By increasing visibility, car manufacturers can take action to address and minimize waste, saving costs and intelligently utilizing components.
Choose More Diverse Suppliers
Supplier diversification is key to adapting to component shortages. In the past, car manufacturers may have relied on a single supplier for certain components. This is no longer feasible. A more diverse supplier mix can enhance resilience and agility in responding to shortages.
Several factors need to be considered when choosing new suppliers. In this process, looking beyond the car manufacturer itself and comprehensively examining the entire supply chain is crucial.
For example, car manufacturers should analyze the supply chain resilience of their key partners. Key partners are the suppliers that car manufacturers depend on the most. If a key supplier is struggling to adapt to supply chain challenges, it could increase the likelihood of delays for its customers.
Car manufacturers can even combine artificial intelligence and IoT to collect data on the supply chain and identify high-risk partners. For instance, IoT monitoring tags may show that one transportation partner is more prone to losses or damages than another. Such risk signal data can help manufacturers make informed decisions about key partners.
The diversification process should also include identifying critical components and trade-offs. Which components are most challenging to replace? Which are the most crucial in the manufacturing process? Car manufacturers should prioritize supplier diversification for these components first. They should also be aware of where they are willing to compromise to minimize supply disruptions.
Adopt AI Predictions and Digital Twins
Manufacturers can derive many potential benefits from artificial intelligence and digital twins. Car manufacturers can use AI to analyze their current operations and future supply chain challenges.
For example, manufacturers can enhance the resilience of the automotive supply chain by improving predictive capabilities. With AI, manufacturers can infer insights from various data sources to predict future supply chain conditions. A larger volume of data enables algorithms to detect potential trends and make more accurate predictions.
With the help of AI predictions, car manufacturers are more likely to accurately forecast electronic component shortages. Early warnings can give them time to switch to alternative suppliers and prevent supply interruptions.
Car manufacturers can also use AI to optimize their manufacturing processes. Digital twins use machine learning to simulate real-world systems. Manufacturers can use them to digitally optimize their operations and then translate these updates into the real world.
Industry experts report that digital twins have reduced waste for consumer electronics manufacturers by 20%. Therefore, manufacturers can increase efficiency while simultaneously minimizing production waste. Both outcomes bring higher flexibility and greater resilience to supply chain-related interruptions.
Build Resilience into the Automotive Supply Chain
Semiconductor shortages have put pressure on automotive manufacturers worldwide, but there are ways to adapt and thrive. Building resilience into the automotive supply chain is about maximizing the value of each component. Car manufacturers can achieve this goal by rethinking supplier choices, optimizing operations, fine-tuning quality control, minimizing waste, and adopting emerging technologies such as artificial intelligence and digital twins.