WionDrive News Desk 
Paris: As automotive supply chains regain stability, automakers are directing their attention toward long-term resilience. According to a recent report by the Capgemini Research Institute, automotive organizations have grown more confident in their ability to handle future disruptions, as they’ve reduced backlog orders by 61%. They anticipate a further 39% reduction in the coming year.
Shift Towards Nearshoring and Offshore Procurement Reduction
A global shift toward nearshoring is underway, with a 22% reduction in offshore procurement over the past two years. Europe leads this trend with a 25% reduction since 2021, followed by APAC and the US at 20% and 18%, respectively. Automotive organizations expect a 19% reduction in offshore procurement by 2025, driven by the surge in electric vehicle production and the relocation of key electronics component fabrication.
Sustainability Initiatives Face Challenges
Sustainability and circular economy efforts have faced setbacks due to successive supply chain crises, diverting focus and investment. Currently, only 37% of respondents consider sustainability issues, such as carbon footprint management and environmental risk, when making supply chain decisions. While OEMs’ total investment in supply chain sustainability remains steady, suppliers’ annual investment has decreased by 17%.
Semiconductor and EV Supply Chain Transformations
The increasing demand for software-based features and services has raised the average proportion of vehicle value attributed to semiconductors and sensors by 51% over the last two years. This is expected to rise by another 46% between 2023 and 2025. However, concerns about semiconductor supply security persist, with 70% of respondents sourcing the majority of their supply from China, Taiwan, Japan, and Korea. OEMs are exploring alternative supply methods to enhance supply security.
Challenges with Inventory Building
While inventory building has stabilized supply chains, it is not a sustainable long-term strategy. Half of OEMs believe they could avoid 60% of the revenue loss incurred in 2022 if similar scenarios, including the semiconductor shortage, occurred today. Building inventories has been the primary strategy to address operational and logistical issues. Still, it poses risks to automotive organizations’ operational and financial well-being.
The Role of Data-Driven Intelligent Supply Chains
A lack of data-driven intelligent supply chains hinders the automotive industry’s quest for long-term resilience. Only 53% of respondents have mature intelligent supply chains, enabling data-driven decision-making and the integration of technologies like AI and data analytics. Embracing standardized, open, and trusted data ecosystems can bolster resilience and sustainability efforts.
Alexandre Audoin emphasizes the need for a long-term, intelligent, and data-driven strategy that incorporates circularity as an essential component to build resilience and competitive advantage in the automotive industry. This strategy is vital for navigating regulatory changes, integrating new players in the supply chain ecosystem, and achieving ambitious climate targets.
