Anyone familiar with the automotive industry certainly understands the logistical burden related to maintaining, tracking, and shipping inventory to consumers. Fortunately, some developments offer much promise in for the future of automotive fulfillment. We exist in a day and time where the changes in the way we live life and conduct business seem to come into view every day.
The advancements in technology and the expansive levels of connectivity that the internet provides, give us speed and efficiency in areas that were traditionally much slower and less efficient. Automotive supply chains are among the most complex systems in any sector. There are approximately 20,000 parts on each vehicle, meaning that the demand for the product and sufficient space is without question.
When you mix ever-advancing technology with a process as complex as automotive inventory processing and shipment, you get some extraordinary results. Here we will explore what the future of automotive fulfillment holds.
The Traditional Fulfillment Process
Traditionally, the automotive industry depended solely on large warehouses that companies used as distribution centers for their smaller facilities and retail locations. Additional warehouses are often opened throughout the country to increase the delivery time for consumers further away from the original shipping locations. The demand for space as business scaled forced many companies to expand to even larger facilities undergoing greater overhead expenses as a result.
Inventory has traditionally been transported to and fro to these warehouses via semi-truck—resulting in increased carbon emissions and exorbitant fuel costs. Once items are ordered by customers, the products are shipped to the customer by way of the post office or other parcel delivery service.
Subsequently, the growth of an automotive company means the increase in the logistical demands for the company. These demands often come with a few so-called “invisible” costs that many businesses don’t initially consider when scaling their operations.
Automotive inventory management depends heavily on efficient logistic practices and protocols. Logistics is a term that relates to the detailed coordination of and execution of a complex operation—usually involving many individuals and various facilities. Maintenance, tracking, and transport processes are the heart and soul of logistics.
Logistics is often the most daunting aspect of conducting business, due to its complexity and demand for constant maintenance and resupply. This is what prompted the addition to logistical options, and the automotive industry is one of the greatest beneficiaries.
Fulfillment centers are facilities that provide inventory maintenance and delivery services for companies that wish to outsource these processes to outside companies. This is what is called third-party logistics (3PL), and this industry is currently growing at an astounding rate due to the demand by consumers and companies alike.
Amazon made this business model famous by offering 3PL services to online sellers that had no room for inventory and wished to take advantage of the ability to sell products without worrying about maintaining or shipping out stock.
What this Means for the Automotive Industry
The automotive industry is responsible for supplying millions of parts to consumers based on the numerous makes and models—past and present. The approximate 20,000 parts for each vehicle come from thousands of different companies, and this adds to the complexity of the task of inventory management.
The shipping costs a company accrues can be significantly reduced by using a fulfillment center. Aside from the saving on transport from facility to facility, fulfillment centers are able to negotiate with shipping companies to get cost reductions based on the increased volume of shipments processed by these companies. This means that the automotive industry will be able to become even more efficient and enjoy this increased efficiency without having to manage inventory.
A Glimpse into the Future
The future of automotive fulfillment looks very bright. The 3PL business model has added a new dimension to the process of automotive inventory management and logistics surrounding the maintenance and delivery of automotive products. Companies will be able to expand at accelerated rates because they have removed a massive cloud of overhead.
The seasonal fluctuation in demands will no longer have to affect automotive parts suppliers. The future of the automotive fulfillment centers means a clearer pathway for expansion for companies in this industry.
Companies wishing to have a bold startup or simply scale without being concerned about being overwhelmed by the astronomical logistics that can accompany doing business in the automotive industry. Taking advance of third-party logistics services may offer your company just the advantage it needs.