The coronavirus pandemic. Houthi attacks on Red Sea shipping routes. The Baltimore bridge collapse.

This is merely an abbreviated list of events the automotive industry and its byzantine supply chains have weathered in the last few years. Individually, they are challenging; taken together, they reflect what one expert told Tech Brew is the auto industry’s “decentralization and fragmentation” and the need to overhaul logistics strategies as a result.

“Automotive is a far cry from the Model T days where they had vertical integration all the way back to the trees for the rubber,” said Jason Clark, global VP of manufacturing and energy for supply-chain management company Exiger. “We’ve gone to the opposite end of that spectrum…and now we’re feeling the pain of that as geopolitical tensions as well as some of these supply-chain shocks highlight the fragility of the network.”

But thanks to emerging technological capabilities and a heightened focus on supply-chain management in the wake of the pandemic, businesses may be better positioned to weather these types of crises.

As director of intelligence solutions for global supply-chain insights and risk analytics firm Everstream Analytics, Mirko Woitzik has had a front-row seat to this evolution. What once was a niche function is now a subject of boardroom discussions and earnings reports, he told Tech Brew.

Everstream provides real-time supply-chain monitoring and risk assessments, mostly for multinational companies with tens of thousands of suppliers, helping guide logistics and procurement decisions.

Customers “not only see exactly where the ships are, but they also see whether there might be a port closure or whether there’s a strike at a different port or whether there’s a hurricane likely causing some delays at an airport,” Woitzik said. “We have that additional risk layer, so you can take the time to reroute ahead of time.”

Logistics lessons

Companies are reckoning with the fact that the days of unimpeded global trade are in the rearview mirror, Clark said, with realities such as heightened geopolitical tensions and sourcing and human-rights regulations that have led them to scrutinize every aspect of their supply chains.

Experts told us they don’t expect any significant changes to the “just-in-time” supply-chain model that’s employed widely across the industry (where parts are delivered to assembly plants as they’re needed for production rather than maintaining stockpiles), but there are other ways manufacturers can protect themselves from disruptions.

Companies may look to bring a larger portion of product engineering in-house, Clark said, or to localize production. They may renegotiate capacity commitments with logistics providers. And they could re-evaluate their existing inventory policies, as they did during the pandemic.

They might conduct sourcing analyses to help ensure they know exactly where components and raw materials that are needed for production come from, set up early warning systems to flag potential disruptions, and increase the level of dual sourcing (having two suppliers for a component).

“Each of those have different time horizons for when they can be affected, but some of the things that I’ve been hearing is that [companies are] pursuing them all in parallel,” Clark said, “realizing that some of them will take some more time to pull through.”

AI assistance

In a surprise to no one, AI has entered the supply-chain logistics chat, with companies using the tech to look deeper into their supply chains.

A recent report by ecosystem integration software company Cleo found that 33% of businesses “are turning to generative AI specifically to combat supply chain disruptions in 2024,” Frank Kenney, director of industry solutions, said in a statement provided by spokesperson Sarah Medina.

Everstream uses AI models trained on historical and customer data to identify events that could disrupt supply chains and track down hard-to-find information about sub-tier suppliers.

Analysts “can’t possibly figure out 10 to 15 events that are potentially impacting their supply chain,” Woitzik said. “We use AI to make those severity assessments, looking at huge troves of data. [It gives] our analysts the best possible information so that we can filter that down and only focus on the ones that have the big impact—like an earthquake, like the Baltimore bridge.”

Supply-chain visibility company project44 used predictive analytics after the bridge collapse in Baltimore to estimate what percentage of goods were rerouted to alternate ports.

“Through advanced analytics, automotive companies can forecast the impact of disruptions on their inventory in real-time—assessing the amount of inventory that’s at risk, where the company has safety stock padded, and where inventory will need to be redistributed to prevent delays,” Eric Fullerton, project44’s senior director of product marketing, said in a statement provided by spokesperson Hanna Bautz.

Still, there could be opportunities for companies to more effectively leverage technologies like AI.

Software company Coupa found in a recent report that despite the potential benefits, less than a third of CFOs are looking to leverage AI for procurement.

“It’s no longer an option for companies (whether a startup or a mature company) to use obsolete technology,” Nari Viswanathan, Coupa’s senior director of supply strategy, said in a statement provided by spokesperson Katie Murphy.

Woitzik would like to see better integration of the various supply-chain management systems businesses use.

“I think most of the efforts right now and in the next five years will go into making these systems talk to each other,” he said. “That’s definitely something that still needs to be figured out.”