Over the past few years, we have seen the strength of the automotive industry’s global supply chains being tested in ways we could only have dreamed of before. Major and diverse crises, including the COVID-19 pandemic and the ongoing conflict in Ukraine, have affected supply chains globally. As a result, vehicle sales have been constrained by a lack of inventory and consumers have been forced to endure long wait times or settle for vehicles that lack features main
While the shortage of semiconductors used in on-board vehicle computers has received the most attention, of equal importance to many segments of the automotive industry, including manufacturers, retailers and the aftermarket, are important chemical products and materials such as butyl rubber and synthetic-based stocks. used in oils, lubricants and fats. For example, butyl rubber products help vehicles maintain constant air retention in tires, which contributes to fuel efficiency in internal combustion engines (ICEs) and longer battery life in electric vehicles (EV).
Despite the crises of the last two years, our supply chains have proven to be resilient and agile enough to meet the needs of the automotive industry. This reliability is not due to luck. Rather, it is the result of strategic and generational investments in analytics, relationships and global capability.
Use of digital tools to improve logistics management
When Winter Storm Uri hit us living on the Gulf Coast last year with freezing temperatures, the entire chemical value chain around the world was disrupted. ExxonMobil, for example, overcame this disruption by combining digitization efforts and a deep institutional understanding of supply chain logistics.
On a macro scale, digital mapping of a value chain, back to our raw material suppliers, can help companies anticipate problems and provide a reliable supply of products to customers. With access to a global breadth, the doors open to a wide variety of internal and external data sources for market intelligence. This keeps automotive companies one step ahead of potential disruptions and provides the ability to quickly identify potential raw material shortages and proactively mitigate disruptions to end-user needs.
These digitization efforts have the ability to identify those areas that lack multiple sources of raw materials and offer the ability to preemptively find alternative sources of limited raw materials before production is affected. With multiple sources for many of the ingredients used in the production of our products, a value chain becomes more resilient.
Developing deep relationships with suppliers and customers
Ensuring the reliability of the automotive supply chain depends on the balance of relationships. Creating an “ecosystem of relationships” provides a framework for developing strategic partnerships with suppliers, investing in their business to secure future supply as a connection for mutual growth. These partnerships result in smarter business decisions based on clearer, earlier vision lines. They have also been particularly important as the automotive industry undergoes a profound shift from ICE to electric vehicles.
It’s not just downstream though, it’s important to build deeper relationships with customers to have more transparent discussions about their needs, so we can better forecast demand. Investing in the long-term success of both suppliers and customers is key to growth and progress. A purchase history with a supplier is not the same as a long-term relationship. When push comes to shove and you’re in the thick of it, you can’t ask for a purchase history, but you can ask for a relationship.
Leveraging our unique global footprint and scale
One of the lessons of the semiconductor shortage is the importance of visibility across the extended supply chain, which digitization and relationship-building efforts are providing. But, we must also recognize the inherent flaws of just-in-time manufacturing, as it is a methodology that only works with predictable demand and limited supply variability. For example, the ability to quickly react to changing customer needs during the COVID-19 pandemic helped ExxonMobil ensure capacity, inventory and supply to mitigate risks. As customers encountered supply issues from other butyl rubber vendors, they were able to assist them by leveraging their integrated digital value chain and sourcing from other regions.
The size and location of plants is undoubtedly a key component in ensuring a reliable supply chain in the automotive industry, so that when one region encounters challenges, other regions can step in and continue to supply products. The many sources of production offered by a global footprint allow for diversity to maintain productivity, even in the face of future complications or limitations.
The recent disruptions will only continue for the foreseeable future and will lead to both known and unknown complications. Embracing the future of supply chain through institutional expertise, advanced analytics, an ecosystem of trusted partners, global inventory and capability can build long-term resilience for years to come.
