Importance of logistics in the automotive sector
Logistics is a vital element for the automotive sector. A light vehicle can have between 15 and 20 thousand components; an average of 60 and 70 thousand pieces. The production and assembly of each of these elements requires, in turn, the assistance of a long network of suppliers. And it also requires a distribution circuit.
Considering the dimensions of the Mexican automotive industry, the logistical challenge is highly complex. The sector represents 3.8% of the national GDP and 20.5% of the manufacturing area. In 2020, despite the drop in production caused by the pandemic, 3,040,178 light vehicles were produced in Mexico.
A company in itself: the importance of logistics
Due to the importance of logistics for industrial management, companies that offer design, management and process control are very used. These, also called logistics operators , can cover all stages of the supply, distribution and marketing chain, totally or partially.
Most often, logistics operators manage activities related to the supply chain . In this sense, it must attend to the timely and safe transfer of materials to and from the company, which includes their adequate storage.
In industries such as high-production, high-flow-product automotive, each function can be ‘outsourced’. It is possible to find a logistics operator for each of the processes. Nevertheless, a good operator can also coordinate or subcontract the different service providers.
Aspects of automotive logistics
Logistics in the automotive industry can cover the following features:
- Supply chain / Acquisition of inputs.
- Interaction between suppliers and customers.
- Storage and inventory control.
- Transportation.
- Security both in warehouse and in transport.
- Distribution and commercialization.
Because of its importance and complexity, the automotive industry requires the support of logistics operators to manage some of the aforementioned processes. The most common is outsourcing supply chain logistics.
For every need, a type of logistics service
The selection of the appropriate logistics provider depends on the size and business of the producing company . Naturally, a small business will endeavor to carry out all its processes itself. As the company is larger, outsourcing the management of a part of its processes will be the most efficient solution.
In the universe of industrial processes, we talk about 1PL, 2PL, 3PL and 4PL and 5PL operators in order from lowest to highest level of outsourcing. The acronyms correspond to English Party Logistics (logistics providers, in Spanish). What is the scope of each of them? The following table explains it.
| 1PL | Small industries usually carry out all the processes of the production and storage chain by themselves. But they can hire an operator to transport and distribute the merchandise. |
| 2PL | Operators at this level manage: The transportation and storage of goods, including proper packaging and security logistics.Orders, intermediation between suppliers and customers.Inventory control. |
| 3PL | Transportation and storage, inside and outside the company (land, sea and air, as the case may be). Cargo insurance.Order preparation, inventory control, inbound and outbound logisticsIn the case of export and import, seek advice on customs requirements (licenses, permits, regulations). |
| 4PL | Manages, designs and optimizes all processes related to the supply chain. It does not deal with transportation; it outsources the service. Strategic planning of supply chain processes.Administrative and commercial management, expansion to international markets.Technological advice for the optimization of processes. |
| 5PL | It works more as a strategic partner of the company than as a service provider. |
Delegation of the logistics of industrial management to one or more operators reduces transport , storage and distribution costs. Similarly, by hiring this type of service, time is saved in learning and integrating new technologies.
Logistics services for the automotive sector
The automotive industry handles large volumes of inputs and finished products. As a result of the magnitude of its processes, automotive production involves various companies, both manufacturing and services. In the coordination of all processes and agents lies the importance of logistics for this sector.
Bringing a vehicle into the hands of the customer involves coordinating activities and timelines of various manufacturers and suppliers of all levels. From assemblers, through suppliers of materials and accessories and distribution services, everything requires highly organized logistics.
What a logistics operator in the automotive sector offers
A logistics operator for the automotive sector should offer the following services:
- Own storage infrastructure, modern, with optimal maintenance.
- Fleet of vehicles for transportation, in optimal condition and fully insured. Management of routes and rates, according to dispatch / reception chronology and type of materials.
- Reliable own suppliers, first, second and third level.
- Permanently updated technological systems for inventory control.
- Up-to-date systems for the safety of materials and finished products, in the warehouse and during their transportation.
- Efficient time control. This point is especially necessary in the JIT (Just in Time) processes typical of the automotive sector.
At Looper we have more than 10 years of experience serving the automotive industry, we adapt to the demands and needs of each client. We know that the industry does not take breaks so, within our staff, we have a third shift to cover 24 hours a day and ensure world-class service. Do not hesitate to contact us. We are at your disposal.
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