Challenges and Recommendations for Sustainable Supply Chain in Automobile Industry

SUPPLY CHAIN OF MINERALS
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Table of Contents
Introduction:................................................................................................................................2
Challenges to achieve sustainable and stable supply chain:........................................................3
Excessive inventory:....................................................................................................................3
Risk of loss of materials:.............................................................................................................4
Sales returns and consequent losses:...........................................................................................5
Volatility of demands for electrical automobiles:.......................................................................6
Government policies:...................................................................................................................6
Logistics challenges:....................................................................................................................7
Ethical issues:..............................................................................................................................8
Recommendations to companies to develop a stable and sustainable supply chain:.......................8
Promotion of electrical vehicles:.................................................................................................9
Strict procurement policies:.......................................................................................................10
Conclusion:....................................................................................................................................11
References:....................................................................................................................................13

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Introduction:
‘Going green’ or embracing sustainability is one the major challenges which the global
automobile companies are facing today. The governments of various countries like Australia and
France have laid down stringent environmental laws to control the pollution caused by the
automobile industry both at the manufacturing and consumption stages. The customers today are
also preferring automobiles which cause less pollution. The increasing awareness in the society
about the large scale pollution which the effluents automobiles give out cause and the damaging
effects which the pollutants have on the human health have led to the society in general
increasing support shift towards The automobile companies in order to adapt to this political,
societal and customer pressures are shifting towards sustainability (Zailani et al. 2015). These
companies are channelizing their technological capital, human capital and knowledge capital
towards manufacturing vehicles using sustainable fuel like electricity which causes less pollution
compared to coal and petrol. The electrical vehicles or EVs today use batteries which contain the
electrical fuel which is harnessed when the car is driven. However, this embracing sustainability
has its own challenges. The article titled ‘Going Green is not that easy for electric vehicles’
which was published in the Financial Times on December 7, 2018 shows that ‘going green’
poses several challenges to the supply chains of the automobile companies (Dizard 2018). These
challenges stem due to external factors like political decisions and shortage of raw materials.
They have emerged as strong impediments to the sustainability in the supply chains in the
automobile industry often challenging the very stability of the chains. The aim of the report is to
explore the challenges which supply chains of the automobile companies encounter in order to
embrace sustainability (Hsu, Tan and Mohamad Zailani 2016). The analysis of the challenges
would pave to the recommending measures which the automobile companies can take to mitigate

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or at least reduce the challenges they face while embracing sustainability and make their supply
chains more stable.
Challenges to achieve sustainable and stable supply chain:
The following are the challenges which automobile companies around the globe have to
encounter to embrace sustainability:
1. Excessive inventory:
The automobile companies have to face the issue or challenge of excessive inventory
while operating in the market. The automobile companies today in order to embrace
sustainability have to manufacture or acquire batteries which can hold electrical which in turn
can be harnessed by the cars while plying on the roads. However, it can be pointed out that the
major automobile companies are based in Europe, Asia and North America (Chinadaily.com.cn.
2018). The main sources of minerals like cobalt are located in African countries like Congo. This
means that there are huge time gaps between placement of orders for raw materials of batteries in
the automobile companies and the actual delivery of automobiles. The automobile companies in
order to continue their production during this time lag and ensure steady mobilisation of raw
materials towards the production of electrical vehicles have to stock huge inventory of batteries.
Similarly, the companies manufacturing the batteries have to stock immense quantities of raw
materials which go into manufacturing of the batteries like cobalt and nickel, of of which are
very expensive. Moreover, these firms manufacturing batteries which are moistly located in
developed markets like Europe and emerging markets like Asia. The main countries producing
these metals are situated in Africa which means that battery manufacturing firms located in Asia
and Europe have to bear immense cost to import these materials from Africa (Kay 2018). This
analysis shows that the firms manufacturing batteries as well as the firms using these batteries in