Navigating Supply Chain Disruptions
May 4, 2022—There are many factors putting pressure on the repair business encouraging shop owners to ultimately adapt or risk falling behind. But how can the industry be expected to truly react when some of the most aggressive elements involved are out of shop owners’ immediate control?
An example of this can be seen in the case of industry supply chain disruptions, something that is not breaking news to anyone or any business in the automotive aftermarket.
The unity among shops regarding this topic resonates well with the work done by Susanna Gotsch, senior director and industry analyst for CCC Intelligent Solutions. Gotsch is the author of the annual Crash Course Report, which provides data, analysis and insight pertaining to advancements and shifts within the aftermarket.
Because of this role, Gostch understands the direct and devastating impact that these disruptions can have on business.
“Our objective with the Crash Course has been to provide our customers with perspective on what the main trends are that are impacting both the frequency of auto accidents and auto repairs, and also the trends that may be driving changes in the cost structures,” Gotsch says.
Information accessed from this report allows automotive professionals to plan accordingly regarding the ups and downs of industry shifts.
Some contributing factors of note that currently propel significant change in the aftermarket include inflation, labor shortages and, yes, the state of the supply chain.
“A lot of the supply chain issues were a byproduct of surging consumer demand that was really not anticipated coming out of COVID,” Gotsch says.
As many people can remember from the not-so-distant past, the automotive aftermarket started to really feel this impact towards the end of 2020. There had been a pause in ordering components such as semiconductor chips because the demand from customers wasn’t there production-wise.
What came next was where some of the real problems started to settle in. Once demand picked back up, Gotsch says that the automotive industry just wasn’t ready.
“Unfortunately, they were sort of behind the curve,” she says.
She also explains something that those in the industry are already well aware of: Automotive manufacturers were not even the largest customers of semiconductor chips.
For example, the industry had to compete with consumer electronics, which drove up demand and caused even more issues. The shortages, and all that they have entailed, have only snowballed from that point on.
Not all hope is lost, though. According to Gotsch, there is potential for relief from these shortages in 2023 and supply chain issues have the possibility to be resolved by 2024.
However, much of that prediction cannot be assured because the ongoing conflict in Ukraine is a contributing factor in all of this as well.
Additionally, the pandemic is still playing an active role in the way business is conducted.
“Of course, you have now surging cases of COVID in China, and many of the large markets being shut down,” Gotsch says. “That will add an additional wrench.”
Ultimately, no matter what the circumstances, some things just cannot be predicted to a tee. But regardless of the outcome, Gotsch believes an effective response strategy is possible. In fact, she believes that this is already happening.
“I think repairers have been doing a good job of adapting wherever they can,” Gotsch says.
She notes that responsibly delaying bringing in work until all the relevant parts become available onsite (in the case of drivable vehicles), and clearly communicating with customers are crucial strategies to engage during this time.
There is no denying the headache and harm that supply chain disruptions can cause, but practicing a forward-thinking approach is something that Gotsch foresees shops needing to implement for the foreseeable future.
“That will likely have to be something repairers will continue to have to do through this year and into early next year,” she says.
There is not much that an individual can do about the state of the supply chain, as unfortunate as that may be. Some of the impact that these disruptions have on the industry may echo for some time, but there is reason to be hopeful when looking toward the near future.
“I think hopefully most people anticipate [the Shanghai] shutdowns may be shorter-lived, and hopefully we’ll start to see some improvement, barring any major change that comes out of the Russia-Ukraine conflict starting in 2023.” Gotsch says.