Driving optimization across the finished vehicles logistics chain
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Driving optimization across the finished vehicles logistics chain

In addition to yard management, transportation management and network planning, optimization software also enhances inventory management, workshop management, real-time damage reporting and visibility, and electronic proof of delivery (ePOD).

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November 19, 2021

It’s been a challenging period for automobile manufacturers. The pandemic intensified supply chain challenges and introduced new disruptions in finished vehicles logistics. Managing different modes of transport, carriers, and contract terms while balancing production processes, emission certifications, damage handling, quality actions, hold management and cost containment is complexed under normal circumstances. Transport Intelligence cited pandemic-related impacts causing automotive logistics contracted by 20.4% in 2020.

The global technology research and advisory firm, Technavio, which has been monitoring the finished vehicles logistics market, projects growth through 2024 at a CAGR of over 5% to USD 113.17 by 2024 compared to its 2019 size of USD 87.00. Digitalization and advanced technologies such as optimization software, powered by artificial intelligence (AI), machine learning and proprietary algorithms, will play a major role. Understanding current market dynamics and how optimization software is helping automobile manufacturers drive advancements across their finished vehicles logistics is important for original equipment manufacturers (OEMs) to remain competitive.

Market overview

Prior to the pandemic, the world’s automotive logistics market was tested by outside factors ranging from the U.S.-China trade war and Brexit to economic uncertainties and insufficient intermodal terminal capacity. There’s pressure on automobile OEMs because of their reduced network capacity, lower load capacities due to larger and heavier vehicles, and driver shortages. Balancing these pressures, along with sustainability goals for reducing CO2 emissions, remains an ongoing challenge.

There has been growing vehicle registration in developing nations. Finished vehicle logistics have been helped through the broader offerings of third-party logistics firms (3PLs), introducing new supply chain enhancements such as integrated warehousing and transportation solutions. Intermodal freight transportation has been growing, supporting the finished vehicles logistics market’s growth. Today’s challenging market conditions are also causing manufacturers to be proactive in seeking out solutions for improving their operations, benefiting from the increased supply chain visibility and real-time decision-making support that intelligent, optimization software provides.

Optimization software revving up finished vehicle logistics

Yard/compound management

Advanced optimization software targets key processes in finished vehicle logistics such as yard management, transport management, network planning, vehicle processing center (VPC) scheduling, and workforce optimization, contributing to sustainability. A yard management solution optimizes vehicle yard operations, benefitting OEMs, ports, terminal operators, and other service providers. It delivers real-time, end-to-end monitoring, planning, and optimization of their vehicle logistics processes. The solutions facilitate optimal distribution of parking spaces in the yard, staff work assignments, workshop operations, and outbound vehicle loading to both trucking and rail. They can direct workers in the movement of vehicles in the best sequence and workflow, thereby achieving maximum efficiency for the task at hand, while saving time, costs and emissions through reduced moves and distances. OEMs gain increased competitive lead times and reduced movements that can help lower damage potential, enhancing customer service and satisfaction.

Transport management

It is critical that vehicles arrive on-time and at the right location. Given the multi-modal transportation involved in finished vehicle logistics, it is critical that all vehicles are properly factored into loading and transport route decisions. An intelligent transport management solution takes these and other factors such as fleet and driver management into consideration and optimizes the process and route configurations with full transparency and process support. It calculates and provides an optimized dispatch plan conveying load configurations for each transport vehicle, real-time visibility of the vehicles in the distribution network, and individual loads, modes of transportation, and distances. These solutions track empty miles and truck efficiency while optimizing communications via an online platform with standard electronic interfaces accessible by all partners in the supply chain. The transport management solution can also address specific restrictions imposed by different regions and/or contract terms while supporting secondary or overflow carrier relationships as well. Automobile manufacturers are empowered with real-time data and vehicles visibility, and from their optimum allocation of resources, enhanced KPI metrics and related reporting, delivering cost savings from the selection of transport routes, service providers, and network locations.

Network planning

Efficient finished vehicle logistics depend on optimized networks that can function under a myriad of real-world conditions. Optimization software helps automobile manufacturers address the “what if” scenarios that can occur at any point in the vehicle’s delivery. Transportation means, transport times, emissions and carbon footprint, contract terms, and carrier-related factors such as on-time performance and potential damages must be accounted for along the delivery cycle. Sustainability has become an increasingly important consideration in finished vehicles logistics. Applying mathematical optimization algorithms based on operations research, various scenarios are addressed through complex simulations and supported with digital decision-making. Optimized decisions as to what transport volumes should be implemented, over which routes and through which ports, are all considered and supported. With the application of strategic planning solutions, simulations can be created to determine the most feasible network and how to achieve concurrent or even contrary goals, what adjustments to lead times can be made without increasing emissions, the most cost optimal model, or a combination of performance-driven models with cost being a close second. These simulations with the improved decision-making lead to shorter transportation lead times, lower costs and substantially reduced carbon emissions. When network planning tools are accessible to all partners in the process, the resulting insights, communication, and collaborations can be even more significant in driving greater cost-efficiencies, resiliency, and sustainability across the finished vehicles logistics supply chain

Fully automated, visible supply chain for optimized finished vehicle logistics

In addition to yard management, transportation management and network planning, optimization software also enhances inventory management, workshop management, real-time damage reporting and visibility, and electronic proof of delivery (ePOD). It enables an immediate response to deviations enabling automobile OEMs to intercept them before they can escalate into problems. Measurable improvements can be seen in productivity, quality control, management, and customer satisfaction. For those OEMs that have already adopted optimization and real-time visibility solutions, their ability to be more proactive and able to withstand any unforeseen disruptions or bottlenecks has been vastly improved.