Broadly speaking, supply chain design often combines activities and resources. But regardless of how these activities and resources are broken down, their design breaks down into two steps.
First, a decision must be made as to what warehousing, distribution, and manufacturing operations are needed at a particular location or node. And second, certain activities within these operations need to be integrated into the global supply chain network.
In the case of an automobile manufacturer’s global supply chain, where seaports are standard nodes, this means deciding which production and distribution processes are entrusted to a specific port.
With regard to the distribution process, some activities are inherent in the nature of a node and can only be performed there. Inbound and outbound transshipment activities are examples of what typically happens at seaport nodes.
As a way of adding value, ports are likely to be entrusted with distribution activities such as warehousing, location and/or pre-inspection (PDI).
When providing (at least short-term) vehicle storage, the port acts as a vehicle distribution center for the local/regional markets and/or as a buffer point for cars en route to domestic or export markets.
The localization carried out by the port includes some or all of the measures that must be taken into account for the specifics of the vehicle import or export market. This may include adapting the vehicle configuration to legal requirements (fitting correct colored headlights and taillights) and language restrictions (infotainment programming) and/or processing the information flow related to the import or export process (customs document handling). .
Consecutive product quality checks are performed on vehicles from factory exit to final delivery. Seaports are usually key locations for these controls, especially after cars arrive from a multimodal journey. These port nodes are not only tasked with performing the quality controls of PDIs, but also with doing anything that needs to be done afterwards, such as: B. Cleaning, painting and/or repair services. As EVs account for a larger proportion of import and export flows, battery testing and charging are often added to these pre-delivery activities performed at port nodes.
In addition to such activities in the sales process, OEMs can also allocate some production activities to seaports. This typically occurs, for example, when cars leave the factory uncompleted as part of a postponement strategy. The aim is to deal better with uncertainties and volatility in demand and to minimize inventory costs.
Additional or full compliance of the configuration of a car with a specific order is then carried out at the seaport, making it an extension of the manufacturing facility. Some harborside activity centers may even look like assembly lines.
All of this raises the question of whether all OEMs make the same decisions regarding the allocation of activities to their seaport nodes.
As a first step in answering this question, a survey was conducted of the top eight vehicle handling ports in North America in 2021. These ports are: Baltimore, MD, Brunswick, GA, Jacksonville, FL, New York-New Jersey, Vancouver, BC, San Diego, California, Hueneme, California and Portland, OR. They were asked what activities are carried out there for the various OEMs. Additional data was collected from major websites and web-based sources. A total of 28 OEMs and 11 auto fabricators were identified using at least one of the eight ports for warehousing, assembly, localization and pre-delivery.
Main results of the survey
At least in part because OEMs are believed to want to capitalize on the port crossing to perform a number of sub-processes that would otherwise require another stop elsewhere, the sampled ports are entrusted with the full range of activities identified in the survey.
However, not all OEMs allocate the same activities to their seaport nodes. For example, in-port assembly is typically done for global OEMs, but premium OEMs tend to use ports for localization. It is worth noting that warehousing and pre-delivery activities were typically found in all ports.
There also seems to be another difference in approach between global OEMs and premium OEMs. For example, vehicle processing / refurbishment / distribution centers are predominantly operated by premium OEMs themselves. Global OEMs are now outsourcing the operation of these centers to auto fabricators rather systematically. A possible reluctance of premium OEMs to share resources with other manufacturers, as well as higher import/export volumes to be managed by global OEMs, may contribute to these differences.
As the automotive industry moves to mass market new products, namely hybrid and full electric vehicles, OEMs need to significantly improve the agility and resilience of their supply chains. As a result, the contribution of seaports to the production and distribution processes is likely to evolve significantly in the coming years. Such a development presents a great mix of opportunities and challenges for OEM supply chain designers.