Mike Thoeny, President of Flex’s Automotive Business Group, Shares Strategies for Strengthening Automotive Supply Chains

The automotive supply chain stands out as a significant risk factor compared to other industries. In 2021, nearly 45% of global automotive manufacturers reported supply chain disruptions as the primary reason for production halts. At Flex, data from thousands of companies and over 20,000 products reveals that automotive product parts face a 55% availability risk—more than double the industry average. Stockout risk, at 93%, further exacerbates the problem, threatening production continuity, customer relationships, and cost management.

As next-generation mobility, driven by software-defined vehicles, transforms the automotive industry, the sector must address its readiness to meet new supply chain demands. The rising reliance on semiconductors adds complexity, with chip content per vehicle expected to double by 2030, according to Boston Consulting Group. KPMG’s survey shows that 45% of OEM executives outside China are deeply concerned about semiconductor availability, a concern mirrored in other critical areas like battery components and rare earth elements.

Flex’s data analysis highlights that the automotive industry faces double the risk score of other sectors. Drawing parallels with the cloud industry, which is also undergoing technological transformation, the automotive sector can improve supply chain resilience by adopting practices such as regionalization, multi-sourcing, and collaboration. Manufacturing in-region can mitigate risks and enhance responsiveness, while collaborating with suppliers early in the product lifecycle can secure supply continuity and drive innovation.

Flex has developed a joint risk management tool to identify supply chain risks early, using AI and machine learning to provide insights on supplier quality, demand, and end-of-life risks. Cross-industry collaboration is essential for building a more resilient automotive supply chain, especially as the industry transitions to next-generation mobility.

By adopting best practices from other industries and leveraging digital supply chain tools, the automotive sector can navigate its challenges and seize new market opportunities.