Global auto makers are shifting from ‘just in time’ to ‘just in case’ approach, survey says

Supply chain disruption and rising material costs are causing the global automotive industry to re-evaluate lean manufacturing principles, a new survey commissioned by ABB Robotics says. Shifting from ‘just-in-time’ to ‘just in case’ strategies, manufacturers are holding more stock to protect against unplanned disruptions.

Produced in partnership with industry publication Automotive Manufacturing Solutions, the survey was completed by a mix of global industry experts from vehicle manufacturers, suppliers and engineering. Nearly two thirds (62%) of respondents cited ongoing supply chain concerns when asked to select their top three challenges to automotive manufacturing, while 41% cited the impacts of material and component price increases and 31% pointed to growing labor costs and shortages. The survey also revealed how manufacturers were turning to increased stock-holding and bulk material purchasing to limit their exposure to disruption elsewhere in the supply chain, while working with a wider network of suppliers to ensure sufficient availability of parts.

The survey highlighted how the rising cost of raw materials (62%) had already overtaken energy costs (59%) as the industry’s chief concern. Energy efficiency continues to be important, while an identical number of respondents (17%) felt that tighter cost management was crucial to the industry’s response.

When asked how significant technologies will be in changing automotive manufacturing, 50% of respondents indicated that ‘digitalisation and data management’ would be ‘extremely significant’ with another 37% stating ‘significant’. Forty-three per cent of respondents stated that ‘automation and robotics’ would be ‘extremely significant’ with another 41% stating ‘significant’. Forty-one per cent of respondents believed that ‘sustainability targets’ would be ‘extremely significant’ with another 40% stating ‘significant’. Thirty-nine per cent of respondents thought that ‘modular and flexible manufacturing ‘would be ‘extremely significant’ with another 46% stating ‘significant’. Thirty-eight per cent of respondents took the view that ‘industry 4.0’ would be ‘extremely significant’ with another 39% stating ‘significant.‘

Asked about how realistic it is for industry to shift to 100% electric vehicle (EV) production by the target dates, ranging between 2030 and 2040, respondents were pessimistic, with more than half believing that 100% electrification is not realistic by the target dates. Of the responses, the only positive views were 11% for “definitely yes” followed by 28% saying “yes, but it won’t be easy.” Those that thought the target dates would not be met included 41% selecting, “possibly, but not by the target dates,” 18% saying they don’t see this happening, ever, and 2% who were not sure. When those results are grouped together, a total of 39% believe that target dates will be met with a varying degree of difficulty. By contrast, a total of 59% believe that targets either will not be met by the given date, or will not be met ever.

When asked about the specific barriers in the way of achieving 100% electrification by the target dates, the major responses were “adapting to the new battery supply chain” (19%), “other” (19%), “high levels of capital investment required” (16%), “too rapid a pace of change” (14%), and “refitting and adapting existing production lines and plants” (8%).

Questioned more broadly about the constraints to EV growth, respondents cited “lack of charging infrastructure” (26%), “high battery and EV prices” (17%), “slow technological advances in EV range & charging performance” (12%), “constrained upstream battery supply chain” (8%), “consumer resistance to EVs” (7%), and “lack of battery cell Gigafactory capacity” (7%).

Questioned about labour and skills the responses led with 56% ‘specific skills shortages’, but followed by quite a wide spread of other challenges such as 48% ‘new skillsets required’, 38% ‘general labour shortages’, 35% ‘lack of education, training & qualifications’, 33% ‘competition from other industries’, and 29% ‘uncompetitive pay and conditions.’

Respondents were broadly positive about the prospects of achieving sustainability targets with 16% ‘yes definitely’, 51% ‘yes but it won’t be easy’, 29% ‘possibly but with great difficulty’, 4% ‘No I don’t see this happening’, and 1% ‘I’m not sure’. Overall, therefore 96% of respondents believed it’s possible to meet sustainability targets, albeit with varying degrees of difficulty.

Questioned about the barriers to achieving sustainable manufacturing, the responses were led by 24% ‘high levels of capital investment required’, 15% ‘sourcing renewable energy’, 12%’ ‘recycling challenges’, 11% ‘implementing new manufacturing processes’, 10% ‘reducing energy consumption’, and 8% ‘difficulty conducting a carbon impact assessment.

The ABB survey includes close to 600 global industry experts, from vehicle manufacturers to suppliers at all levels of management and engineering, and other key professionals throughout the automotive world.

For more information on the survey, click on this link.