Tech-based planning can mitigate auto industry’s supply chain challenges: EY India


Against the backdrop of semiconductor shortages hitting vehicle sales in the country, EY India on Wednesday said technology-based planning can mitigate such supply chain challenges faced by the automobile OEMs.

EY India, in a report, said automobile manufacturers should make use of rapid ‘what-if scenario modelling capabilities’ that are available in modern day intelligent digital planning solutions to assess such risks in advance.

Currently, automobile OEMs have started to witness a steady increase in vehicle demand due to the revival of car sales. However, the semiconductor industry is finding it difficult to address the increasing demand as it also caters to other industries like IT, consumer electronics, mobile and medical equipment.

According to EY India, automobile OEMs were faced with the threat of decreased consumer mobility due to work from home and lockdowns during the onset of the pandemic.

Nonetheless, vehicle manufacturers’ projections were initially correct – during April ’20 to June ’20, which witnessed nearly near zero offtake in automobile sales.

Ironically, the pandemic also witnessed an increase in demand of high-end TVs, mobile phones, entertainment systems and laptops to serve the “forced to stay at home consumers”.

At present, semiconductor manufacturing is a complex global intertwined ecosystem, which has led to a supply chain that is vulnerable to macroeconomics, natural disasters and other factors.

Besides, semiconductor companies operate in several different countries and jurisdictions with country specific and international laws relating to health and environment regulations.

“The current semiconductor shortage will certainly revive with time, however other similar disruptions may occur again. Automobile manufacturers should make use of rapid what-if scenario modelling capabilities that are available in modern day Intelligent digital planning solutions to assess such risks in advance,” said Yugesh Aglawe, Partner and Supply Chain Leader, EY India.

“The ones who do this will mitigate their risks better and win more often in the market.”