The Locomotive Auto Industry (Essay Sample)

The Locomotive Auto Industry
Executive Summary
This paper examines and analyses in details the logistics automotive industry based on various aspects. To ensure that this objective is met, a detailed research is done on the nature of the logistics automotive industry, the problems and challenges facing it and the various mechanisms that are employed in dealing with these challenges and problems. The main purpose of this paper is to determine the current systems in logistic automotive industry, the weakness of the current systems in the entire industry and avail solutions and recommendations for the automotive industry to be more efficient as far as logistics is concerned. This is done in the light of various best ways of logistic management employed in the automotive industry all over the world. The primary research methods employed include observation of the logistics activities in the automotive industry and administration of questionnaires to various players in the automotive industry. The secondary research methods used include study and analysis of scholarly and industry articles on logistic automotive industry. In this paper, we argue that logistic automotive industry offers opportunities, is faced by several challenges and there are mechanisms of mitigating these challenges.
Keywords: logistics, automotive industry, Supply chain management.
Introduction
Generally, Logistics is a collection of activities and processes that are associated with the acquisition, movement, storage and delivery of supply chain commodities. It encompasses various functions of a business including: distribution, transportation, warehousing, and handling of materials and management of inventory (Martin, 2011). In the automotive industry context, logistics is the flow and movement of raw materials, component parts, spare parts and the vehicles as part of automotive purchase. Automotive logistics is a very important part of automotive business and helps in reduction of automotive cost. This part of automotive industry is capital, technology and knowledge intensive.
The automotive industry is currently largest single manufacturing operation in the entire world. The industry utilizes approximately: 40% of rubber, 25% of glass, 40% of annual oil output of the entire world. The industry experienced a growth rate of about 5.9 percent annually from 1951 to 1972.However after 1973 the growth rate declined to about 1 percent annually until 2002 due to the oil shock. This low growth rate came to a stop in 2003(Maxton & Wormald, 2004).Currently, more than 70% of all vehicles are sold in the developed world. Though developing countries have a high market potential, they are still being constrained by low levels of income.