Automotive Supply Chain Article Critical Review Report Analysis

This report provides a critical review of an article discussing the transformation of the automotive supply chain, driven by the increasing adoption of electric vehicles (EVs). The review highlights the article's key arguments, including the impact of battery technology on the supply chain, the importance of battery quality and volume, and the shifting geographical landscape of manufacturing. The report analyzes the author's points, emphasizing the logical connection between battery technology and supply chain dynamics, and the effects of increased EV manufacturing on assembly facilities and logistics. The review also acknowledges potential weaknesses, such as the limited discussion of cost considerations. Overall, the report concludes that the article offers valuable insights into the future of the automotive industry and the evolving nature of supply chain management in the face of technological advancements and changing consumer demands.

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A. Supply Chain Article Critical Review
The article has focused on an area that has been seen to have significant effects on the
modern automotive industry. The manufacturing of electric cars has for a long time been
advocated for and this is due to the fact that it is safe for the environment and it makes it easier to
reuse the energy. Some of the manufacturing giants in the car industry have been seen taking a
different direction when it comes to the manufacturing of cars and this is because they have
deviated from manufacturing fuel cars and they have started manufacturing electric cars.1 In the
next few decades, it is more likely that the automotive supply chain might be dealing with more
electric cars as compared to fuel cars. The reason behind it is associated with the fact that the
current trend shows that more organizations are working on ways of manufacturing electric cars.
The author of the article has presented some facts that are associated with the transformation
of the automotive industry. The first fact is that the technology of manufacturing batteries is
likely to transform the car industry by a significant percentage.2 The argument that has been
made by the author, in this case, passes the test of logic and this can be associated with the fact
that one of the factors that are pulling behind the supply of electric cars is lack of enough and
adequate batteries.3 In this respect, it becomes essential to understand some of the factors that
affect the supply of electric cars. An electric car is different while compared with a fuel car and
this is due to the fact that not all nations have batteries for the cars.4 Therefore, it means that
1 Christopher, Martin, Logistics & supply chain management (Pearson UK, 2016)
2 Brindley, Clare, Supply chain risk (Routledge, 2017)
3 Pauka, Charles ‘The automotive supply chain is about to go electric’, Transport and Logistics News (Online, 3rd
April 2019) < https://www.tandlnews.com.au/2019/04/02/article/the-automotive-supply-chain-is-about-to-go-
electric/>
4 Stevens, Graham C., and Mark Johnson "Integrating the supply chain… 25 years on"46.1 (2016), International
Journal of Physical Distribution & Logistics Management 19-42
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there is a cumbersome process of getting the batteries. When there is a cumbersome process of
getting the batteries, the potential buyers might be frustrated and that affects the supply chain.
Therefore, when the author states that the technology of batteries will affect the supply chain, his
remarks are logical and they apply in the real-life situation.
The second finding that the author has provided is associated with the quality and volumes of
the batteries. It is essential to note that there are organizations that are good when it comes to
manufacturing spare parts and sometimes they even outshine the car manufacturing companies.
A good example can be seen in organizations that manufacture tires or brake pads. Some of the
organizations are good in what they do and sometimes customers choose to buy from them than
to buy from the car manufacturing companies. In this case, it is evident that the argument of the
author is strong and this is because if organizations come up with quality and high volume
batteries, the customers of electric cars will be motivated to buy the electric cars because they
know that there are manufacturers of better batteries. When the demand for a product increases,
it affects the supply chain directly.
The author makes a strong point about the shifting of the supply chain. The reason why the
point is strong is associated with the fact that it considers the law of supply chain. The supply
chain is affected by the availability of the products. For example, when China started becoming a
world leading manufacturing country, the shift of the supply chain took place. Before China
became the manufacturing giant, the United States was the country that was leading.5 Therefore,
it meant that logistics and supply chain were more concentrated on the United States because it
was the source of most of the products. However, the shift made China one of the greatest
sources and that meant that logistics and supply chain had to shift to a different location.
5 Monczka, Robert M., et al, Purchasing and supply chain management (Cengage Learning, 2015)
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Therefore, the companies that will concentrate more on the manufacturing of the batteries will
have a significant effect on the supply chain.
The embracement and increased manufacturing of electric vehicles will have adverse effects
on logistics when it comes to other products that are associated with assembly facilities. The
point that the author has made has connected supply chain with the demand for products. It is
essential to note that the supply chain is affected by the demand for products. When the demand
for a certain product is high, the supply of the same product must be increased with the aim of
meeting the demand. The use of electric vehicles only needs one to purchase a battery and
connect it to the vehicle.6 Therefore, there will be no expertise needed. As a result, the assembly
facilities will reduce and this will affect the supply of the products that are associated with
assembly facilities.7 The reason behind it is associated with the fact that the supply chain is the
same that has is used to deliver the same products to the targeted customers.
Despite the fact that the author has made strong arguments which are genuine, there are some
weaknesses that are evident in the arguments. The first weakness is associated with the shifting
of logistics. It is paramount to note that the cost of electric cars is also a factor to consider when
looking at the supply chain. Considering that the prices of cars will not change, it is evident that
the only thing that will happen is a substitution. For example, the same people who have been
using fuel cars will be still the same people who will be using electric cars. In this respect, it
means the demand for fuel cars will reduce as the demand for electric cars increases.8 When one
demand increases and the other decreases, it is evident that balance is promoted. Therefore, the
only change that is likely to take place is the change in the goods that the supply chain will be
6 Mangan, John, Chandra Lalwani, and Chandra L. Lalwani, Global logistics and supply chain management (John
Wiley & Sons, 2016)
7 Fredendall, Lawrence D, and Ed Hill, Basics of supply chain management (CRC Press, 2016)
8 Hugos, Michael H, Essentials of supply chain management (John Wiley & Sons, 2018)
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handling. Instead of supplying the fuel cars, the supply chain will be dealing with electric cars
but relatively equal units. However, the arguments of the author are logical and informative.
Bibliography
Articles/Books
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Student’s Number SUPPLY CHAIN
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Brindley, Clare, Supply chain risk (Routledge, 2017)
Christopher, Martin, Logistics & supply chain management (Pearson UK, 2016)
Fredendall, Lawrence D, and Ed Hill, Basics of supply chain management (CRC Press, 2016)
Hugos, Michael H, Essentials of supply chain management (John Wiley & Sons, 2018)
Mangan, John, Chandra Lalwani, and Chandra L. Lalwani, Global logistics and supply chain
management (John Wiley & Sons, 2016)
Monczka, Robert M., et al, Purchasing and supply chain management (Cengage Learning, 2015)
Pauka, Charles ‘The automotive supply chain is about to go electric’, Transport and Logistics
News (Online, 3rd April 2019) < https://www.tandlnews.com.au/2019/04/02/article/the-
automotive-supply-chain-is-about-to-go-electric/>
Stevens, Graham C., and Mark Johnson "Integrating the supply chain… 25 years on"46.1
(2016), International Journal of Physical Distribution & Logistics Management 19-42
Appendix
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The automotive supply chain is about to go electric
by Charles Pauka on April 2, 2019 in Breaking News, SC Management, Technology, Transport Equipment
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BMW’s Mini production line in Oxfordshire, UK. Photo courtesy of the BBC.
Jess Dando
New research from Transport Intelligence (Ti) has found that automotive supply chains will undergo a
radical transformation over the next decade as the internal combustion engine is phased out in favour of
alternative propulsion systems.
It is clear that electric vehicles will play an important, even defining, role in the industry’s future. This will
mean that the supply chain for the entire powertrain will be transformed and the types of components, the
logistics processes employed to move them, the markets of origin and destination as well as the tiered
character of automotive supply chains will fundamentally change.
Key findings in the new report – Ti Future Mobility: Electric Vehicle Supply Chain
Architecture – include:
 As the dominant technology in electric vehicles, battery manufacturing processes will transform
the automotive supply chain.
 Battery or battery pack producers with high volumes will drive out lower volume manufacturers,
including many vehicle manufacturers’ own in-house operations.
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 Supply chain and logistics provision will adapt to the geography of battery and electric component
production locations.
 The integration of the battery-pack and associated drive-train elements will create a distinctive
‘propulsion platform’.
 The complex and deeply integrated tier-system of suppliers feeding in the components will
change fundamentally.
While batteries are complex pieces of engineering, they are much more straightforward to insert into a
vehicle than an internal combustion engine. Plugging in the electric motors to the battery is a
comparatively simple process. With no welding shop, no engine plant and a higher level of outsourcing to
new component suppliers, the automotive assembly facility will shrink in scale along with its logistics
requirements.
“Conventional vehicle manufacturers define assembly as a core-competence but with the changing nature
of operations, this may no longer be the case. It may be that, in time, automotive manufacturers’ come to
focus on the design and marketing of their product, in the way that Apple does,” said Nick Bailey, Ti’s
Head of Research and the report’s co-author.
The impact of the reduction in parts and the elimination of tiers of suppliers in the powertrain supply chain
might be considered to be traumatic enough for the automotive supply chain. However, in addition to this,
the process of the manufacturing of batteries in terms of materials, skills and existing production
structures has developed outside of the main automotive powerhouse economies. Japan, South Korea
and China are dominant in the sector, sourcing their raw materials from Asia, Africa and Latin America.
Europe and North America have, with a few exceptions, been side-lined in the development of new
technologies of batteries as well as in the manufacturing know-how.
One important discrete aspect of any EV supply chain that will make it distinct from IC supply chains is
the differing nature of the interconnection of components. Whereas the relationship between components
in IC vehicles is predominantly kinetic, the relationship between electric and electronic components is
reliant on the movement of electrons. This means that the nature of different component’s interfaces are
very different. This obviously has major supply chain implications.
“Fundamentally there is a shift in the nature of the components used, from mechanical engineering to
electrical and electronic engineering,” said report co-author Thomas Cullen, senior analyst at Ti. “The
economics of both designing and producing these components is very different. This has enormous
implications for how the automotive supply chain is ordered.”
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