For this year’s ISM World Annual Conference, Frank Carbone, Holman Enterprises senior vice president of corporate assets and chief procurement officer, hosted Ted Davis, vice president of North American supply chain at ARI, for a Q&A on the challenges of today’s fleet and vehicle supply chains.
Here’s a recap of their discussion.
Frank: What are the elements of the fleet supply chain, and how does ARI help fleets manage it?
The ARI supply chain starts with an interactive conversation with our customers so we can understand their vehicle usage and overall needs and wants. It transverses a very large supply chain, touching on many points such as acquisition, design, engineering, delivery and upfit. It then sees its way through compliance and all the way to the disposal of that vehicle.
Watch Ted explain what he thinks is unique about the Holman supply chain:
Frank: 2020 was a pretty challenging year relative to vehicle deliveries due to plant closures and even DMVs closing down. We were hoping 2021 would be a little bit better. What is your team seeing now?
Unfortunately we’re seeing a whole lot of the same thing. DMVs continue to be inconsistent; we’re seeing COVID impact both state and local regulations as well as the employees working at the DMVs who are processing the work.
From an OEM perspective, we’re seeing them continue to struggle to produce vehicles with microchips and foam- and rubber-based product allocation. These production delays are creating pent-up demand from the OEMs and across our supply chain.
Frank: What do these challenges mean for fleet customers?
In 2021, it’s critically important that they plan and take action quickly. I tell my team that time is our friend – the sooner you can order, the sooner you can plan, the better off you’re going to be, and the better opportunity you’ll have to plan for contingencies.
As we look toward the back half of the year, we’re going to see continued strain on rail transportation and truck deliveries. The sooner you can get in line to get those things through for your fleet, the sooner you’ll be able to use those desperately needed assets.
Frank: How does ARI manage risk, resiliency, and redundancy in the auto and fleet supply chain?
We’ve been managing all three for many years, but I think over the last 12 months we’ve certainly seen our focus on those three amplify because of the pandemic. It’s really a two-fold approach, from my point of view.
Watch Ted explain:
Frank: Are you seeing the market challenges push buyers into the used vehicle market?
If we look back 12 months, what we saw was a significant decrease in values, but it was very short lived. And then we saw a bounce back that has gone over and above pre-pandemic values. That pricing is really jumping high because of demand.
A lack of new vehicle inventory is really creating pressure on the used vehicle space. At the end of last month, we saw the highest used vehicle values year to date. In the first two weeks of April, we saw over a six percent increase compared to the close of March. As we look forward, we’ll continue to see a rise in values.
The biggest challenge going forward will be if the inventory holds up. Will there be enough vehicles to actually get out and purchase.
Avoid future pitfalls
Engaging with strategic business partners like ARI helps you understand what’s possible and lets you know about potential pitfalls to avoid in advance. Planning early gives you more time to execute, and the better off you will be from a contingency perspective.