Worldwide Fires Add to Automotive Supply Chain Chaos

The trend of automotive supply chain disruptions due to unexplained factory damage is not limited to the U.S., with the worldwide 88% increase due in large part to the largest rash of industrial fires in history.

The automotive manufacturing industry is in the middle of an inventory crisis as a result. Car dealerships are reporting that up to 33% of purchases are “order to delivery,” meaning consumers are foregoing the usual lot purchase and going directly to the source.

The disorder has caused consumers to shift to prioritizing buying used cars instead. This, along with general inflationary pressures, has caused the price of previously owned automobiles to surge by 40.5% in one year.

Both old and new car owners are suffering from a dearth of available car parts. Typical delays of a day or so are now stretching into weeks due to a lack of simple parts such as oil filters.

The automotive industry has relied upon a stable global supply chain for decades. The current chaos has resulted in a call for involved suppliers to have open lines of communication to deal with the new reality.

To combat the shortages many manufacturers are switching from a “just in time” inventory model to ordering a surplus, especially semiconductor chips. Orders are up to 30% over demand this year alone.

One positive result of the disruptions is that suppliers at every level are reexamining how they do business. The result will be a more robust manufacturing base once the current crisis is resolved.