What is Auto Ancillary Logistics?

January 27 , 2023 | CATEGORY : SERVICES
Auto ancillary logistics refers to the coordination of transportation and distribution of automobile parts and materials. This can take place within a single location or across long distances. Automotive parts are highly specialised in making logistics a challenging process. Also, when we talk about one of the most complex logistics industries, it is none other than automotive.
 
As a result, auto ancillary logistics often involves transporting high volumes of materials over long periods. It may also require strict security and adherence to guidelines set by manufacturers. Because of these challenges, auto ancillary logistics can be a highly complex operation. Several components make up auto ancillary logistics. 
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  • What steps are involved in auto ancillary logistics?
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Several components make up auto ancillary logistics. These include procurement, production, distribution, and returns management.
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  • Procurement talks about how automobile manufacturers procure the materials they need to make their products. This can include everything from purchasing raw materials to leasing vehicles
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  • Production involves assembling parts to build automobiles, like cars, vans, and trucks
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  • Distribution is the process of getting finished products to their intended location
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  • Return management is the reverse of distribution and involves accepting returned or faulty products
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It is a complex process that involves several steps. Hence it becomes important to understand the challenges that logistics companies experience while sending automotive parts from one location to another. 
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  • Understanding auto ancillary logistics challenges
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There are several challenges associated with auto ancillary logistics. Firstly, the products to be delivered may be costly or contain sensitive information. Another challenge is the time between ordering materials and receiving a finished product is relatively less. Hence timely delivery of goods at times gets challenged. 
 
It means logistics professionals must search for the best shipment available with the closest deadline. The massive number of products also makes it difficult to find and keep qualified drivers. Over a dozen different types of vans are used for delivery, all with unique features such as sliding doors and roof-mounted racks.
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  • What are the benefits of auto ancillary logistics?
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 Thanks to technological advances, it’s now possible to have accurate and real-time manufacturing, in which products are made only when needed. This allows auto parts manufacturers to have different factories and warehouses available to cater to the increasing demands.
 
If a factory is not able to meet demands during the peak time of the year, idle facilities elsewhere can be put to use. 
 
And logistics providers can offer manufacturers discounted rates since they do not need to pay for an idle facility for just a few hours.
 
Just-in-time manufacturing also reduces waste and cuts down the cost of materials. The faster manufacturing process and delivery times also increase customer satisfaction, making automakers more competitive.
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  • What does the future of auto ancillary, logistics look like?
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According to the Times of India, more than 37 lakh units of cars were sold in India in 2022. Moreover, according to Statista, approximately 14 lakh units of cars were sold in 2021. If we compare the sales number, it's clearly visible that more cars were sold in 2022 than in 2021. Surprisingly, the number of car sales is continually increasing. 
 
According to Mordor Intelligence, the automotive market is expected to expand up to $160 billion by 2024, which was valued at $100 billion by 2021. We are clear about the fact that the automotive industry is going to experience extensive growth. But the automotive industry and auto ancillary, logistics sector is directly proportional to each other, therefore it will also grow in the near future. 
 
As the demand for cars will increase, so will the demand of manufacturers for services that transport the stock related to car manufacturing. In other words, the demand for auto ancillary, logistics will also increase, with the demand for cars. So there's nothing wrong in saying that the future of the auto ancillary, logistics industry is bright.
 
In the future, you might also receive delivery of autonomous vehicles through air transport, such as drones. Even robotics will also play a crucial role. Just-in-time manufacturing would also be in huge demand, and people will consider it. Also, at a CAGR of 7.6%, the automotive logistics market is projected to reach $330.86 billion in 2026.
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  • How does auto ancillary logistics allow companies to beat their competition? 
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When logistics professionals incorporate ancillary services, they are not only cutting shipping time but also automobile costs. And time is money. In most cases, delivering automobiles directly to a customer reduces the length of a delivery route by tens or hundreds of miles.
 
Rather than carrying products from a warehouse to a retail store or customer, auto ancillary logistics providers make it a point to deliver those products directly to the customer’s door. This eliminates the need for storage in a warehouse and cuts the time and money that would have been spent on shipping. It also increases customer satisfaction and gives businesses a competitive advantage. 
 
Also, India's automotive logistics sector has been expanding due to improved connectivity, distribution networks and uniform regulations. The automotive logistics sector is essential to India's GDP growth. It contributed to the total of  13% of the country's GDP. 
 
This is the reason, automotive parts manufacturing companies rely on logistics services providers to ship the products from one location to another.
 
 Allcargo Logistics delivers end-to-end solutions for the automobile industry, managing thousands of components and shipments on time. We are one of the best auto-components supply chain management company with a track record of managing complex supply chains for domestic and international businesses.