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Industry Trends

INDUSTRY FOCUS: AUTOMOTIVE

A Closer Relationship is Developing Between Auto Manufacturers and Suppliers—with Material Handling Playing a Key Role

By Sandy Smith

The U.S. automotive industry has been written off before. But today, technology, consumer demands and outdated business models are driving significant shifts—to the point where tomorrow’s car manufacturers might not look anything like they do today.

As the automotive industry goes through this disruption—and attempts to withstand strong financial headwinds—suppliers have a larger role to play. And this is driving a closer relationship between manufacturers and suppliers—with material handling playing a key role.

Many of these changes have occurred in 2017 after gathering on the horizon for a few years. IndustryWeek anticipated that 2017 would force the automotive production line to “streamline, automate and diversify at even greater speed as manufacturers and suppliers race to produce lighter more powerful vehicles faster. The effects will spread throughout the supply chain. Suppliers, too, will need to be more innovative, faster and more agile—often transforming their logistics and production processes as smaller, more technologically advanced suppliers start challenging older ones. Speed of development, production and supply will be of the essence.”

Changes in the plants continue to reflect the automotive industry’s full embrace of sophisticated automation, something that Gene Buer, vice president, Solutions Group, at Columbus McKinnon, has watched for more than two decades. “There are so many more robots doing so much of the work. AGVs (automated guided vehicles) are also a major growth area inside the plants. The number of material handling equipment operators within plants has dropped significantly over the last 10 years as smart automation equipment has gotten much more capable.”

In its 2017 automotive sector trends and analysis, Strategy& pointed to lessons learned in aeronautics. “If auto makers expanded their cooperative efforts, the industry would essentially be smart-sizing, the way the airplane manufacturing sector has over its long history,” said in its report earlier this year. “In the very beginning of aeronautics, the Wright Brothers and companies that grew in their wake made their own engines. Before long, a group of separate businesses emerged to produce engines, each of them competing to improve and advance the equipment. As aircraft engine technology advanced rapidly, jet engines became the dominant design—and having a spate of companies making the same part proved costly. The industry responded by consolidating, resulting in just a few independent aircraft engine manufacturers and a more efficient supply market.”

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According to the recently released 2018 MHI Annual Industry Report, “Overcoming Barriers to NextGen Supply Chain Adoption,” eight out of ten survey respondents believe these supply chains will be the predominant model within just five years. However, the report found that the adoption of some of these technologies was slower than originally reported when MHI started the annual report in 2014. The report cites three top barriers to adoption of these technologies: 1. Making the business case for NextGen supply chain investments. 2. Tackling the supply chain skills gap and workforce shortage. 3. Building trust and security in digital, always-on supply chains. This issue of MHI Solutions focuses on the adoption of these digital solutions, from best practices in robotics and artificial intelligence to blockchain and innovations in last mile delivery.

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