This epidemic has destroyed the growth of the auto industry. According to the latest estimates, global auto sales will drop between 20 and 30 percent in 2020. Moreover, depending on the region, it may take up to four years to restore pre-COVID 19 levels.

While plants are still shutting down, many people are in short-term jobs or work from home due to epidemiological measures. With so many people working remotely, a window of opportunity has emerged to introduce a new way to manage a company with a profit and loss (P&L) statement, for example through including business flexibility sites and, as a result, labor savings in expenses. Through physical cuts in the workplace. Today is a high degree of uncertainty calls for a shift away from the annual budget towards allocating vital resources. Instead of fixed budgets that limit their degrees of freedom, auto players must adopt a zero-based budgeting approach and rebuild their income data from scratch.

Under this plan, every businessman knows about a generally “survival minimum\” in terms of service performance and necessary budgets, rather than basing needs on investments in the past year, or so they particularly thought. 

A zero-based approach could essentially spur long-awaited changes in the auto industry, including boosting production facilities, eliminating activities that mostly add particularly little value, and drastically reducing investments in non-critical new assets in a big way. Given the challenges posed by the pandemic, the aviation industry mostly is currently leading the way in applying an agile and zero-based budget approach and reconstructing income data. Automobile original equipment manufacturers and suppliers should particularly do the same.

Build resilience into the supply chain, contrary to popular belief

The first weeks of the COVID-19 pandemic generally revealed the complexity of global supply chains becoming fragile in a kind of big way. If you basically are in February, before the disease kind of arrived in Europe and the United States, the supply shock caused production interruptions in kind of many suppliers particularly single layers, also important parts of China went missing.

The increasing reliance on one country’s sources of supply, especially China, essentially has grown kind of more evident due to the crisis. If the links generally are broken, the disturbances increase, which for the most part is quite significant. From 2000 to 2020, Mainland China basically went from producing 5-30% of the world\ ‘s manufacturing value-added in a subtle way. 

We’ve for the most part noticed that industry leaders now for all intents and purposes have a growing sense of urgency about supply chain flexibility; generally Many manufacturers in Europe and the United States are considering suitable backups, really such as particularly local sourcing or internal sourcing in a particular major way. Companies will need to focus on basically specific areas to particularly make their supply chains more resilient after the pandemic in a big way.

Article By : Muneer Mujahed Lyati