Supply chain issues afflicting the global automotive industry range from semiconductor shortages to geopolitical upheavals, which are making both automakers and suppliers rethink about their supply chain strategies. First came the COVID-19 pandemic which subdued demand for vehicles, and in its aftermath the automotive industry is still reeling under the effects of the semiconductor shortages with no immediate relief in the short-term. Secondly, the current Ukraine-Russia conflict has already led to dire projections about a further fall in demand for vehicles owing to non-availability of metals like Nickel, and Palladium as well as Neon gas used in semiconductor manufacturing.
The current Russia-Ukraine war will likely exacerbate the already vulnerable state of the automotive supply chain with the issue extending to precious metals as well.
Partner, EMA & German Head of ESG and Automotive,
What strategies can automakers and suppliers implement to overcome the uncertainty posed by these issues? How can they make their supply chains more resilient and flexible? What are the possible aftereffects of some of the futuristic scenarios in which new geopolitical conflict zones exist, the role of ESG becomes more manifest, manufacturers further expand their footprint to developing regions, and alternate maritime trade routes become available?
UK’s Modern Slavery Act and Germany’s Supply Chain Act are making sure that automotive companies also comply with the ‘S’ component of ESG.
Director, Consulting, Value Chain Transformation,
KPMG in Germany
In this brief study, KPMG professionals not only explore the challenges faced by automotive companies in their global supply chains, but also present viable solutions which they can adopt to overcome the issues. Furthermore, we look at additional challenges from a futuristic viewpoint and how can automakers be well-prepared to make their supply chain more resilient. The roles of digital transformation (for supply chain visibility and transparency), strategic partnerships (for risk-sharing), workforce readiness (for operating new digital technologies), and regulations (for ensuring compliance especially w.r.t ESG) are also explored.
“Vulnerable supply” is one of the themes that we have identified as pivotal in shaping the future of the global automotive industry – from KPMG’s survey of global automakers and suppliers running in its 22nd year.