Supply Chain Disruption: Electrical Vehicles Driving Change with Sustainable Procurement

The future of the automotive industry is electric. The traditional fossil fuel-based vehicle market has been declining for decades and will continue to do so as more people turn to sustainable transportation methods. What does this mean for supply chains? This blog post explores how electrical vehicles are driving change, and how to mitigate the disruption to your supply chain whilst maintaining sustainable processes.

The Electrical Vehicle (EV) industry is growing as a result of consumer demand, government incentives and environmental benefits. According to PWC, Europe and China will lead this change. By 2040 England and France plan to ban the sale of fossil fuelled vehicles and Germany will be offering consumers financial incentives to choose EVs. The movement to EV is inevitable as will the disruption. The speed at which this change is happening will only place further pressure on this industry to grow without compromising the integrity of their supply chain. Connecting business partners, suppliers and experts across business units and national borders – this is the main task of a modern centralised procurement function.

Further, KPMG has pointed out that digital technologies will also have disruptive effects on existing procurement systems and processes. How can procurement then use digitalisation to pursue corporate strategy as effectively as possible and at the same time strengthen its own position? What will likely be most important in the future of procurement is creating transparency over a complex market in a short period of time through streamlined, automated procurement processes and higher data quality. This makes it ever more necessary for companies making the move to EV to ensure that they’re using the right digital technologies. The criteria by which this is decided varies and is at the discretion of each company. However, there are some that are (or should be) persistent across companies. Those are; user-friendliness, ability to tangibly make processes more efficient, support sustainability, be easily accessible to suppliers and not break the bank in the process. Ultimately, a tool that supports you and your team to do your job quicker, better and that can absorb and deflect disruption to your supply chain. 

Suppliers in the automotive industry are also at risk. There are a couple of reasons for this, which similarly make it important for suppliers to make themselves accessible and keep up with their Buyer’s digitalisation. PWC has identified a key factor putting suppliers at risk is that EV vehicles are “radically simpler in mechanical terms” and therefore require less components than traditional ICE (internal combustion engine). For Suppliers, this means more competition for less providable products and services. Furthermore, the attributable value in EV’s weighs heavily on lithium-ion battery packs, the packs alone can currently account for up to 50% of EVs value. As these packs are usually made outside of the traditional supply chain, this reduces the space which traditional Suppliers can maintain their foothold in the automotive supply chain.

An obvious but tangible step for Buyers and Suppliers to mitigate the disruption to their businesses is ensuring that they have clear lines of communication that are streamlined. This is where DeepStream comes in. For Buyer’s, DeepStream reduces manual workloads previously dedicated to emails, spreadsheets and reporting. Its flexibility and ability to adapt to different workflows means minimum disruption to the supply chain as it evolves. Xos Trucks has been a perfect example of this, and you can read how DeepStream onboarded them and streamlined their processes here. 

For Suppliers, joining DeepStream is free, and by being on our Network you can be approached and added to requests from any of our Buyers. As currently our Buyers include some of the leading lithium battery gigafactories and EV makers, being on the Network from which they source makes Suppliers more easily accessible to our Buyers. Furthermore, our streamlined communication makes it easier for Suppliers to respond to requests quickly and efficiently. This saves Suppliers time, uses up less resources and frees both up to respond to new incoming requests.

Deploying resources effectively to meet the needs of the team and goals of the company is something that companies are focusing both because of its financial sense, but also to expectations for sustainability. EV as champions of sustainability in the automotive industry are under pressure to excel without offsetting their growth with unsustainable practices. According to Accenture building into the fabric of the company's operations, making social responsibility sustainable is one of the key signals they see as influencing the success of businesses in the future. However, despite all the rhetoric around sustainability, companies have been finding it difficult to match “rhetoric with results’, described at the “intention-delivery gap”. 

DeepStream helps companies to close this gap. The platform empowers companies to build sustainable decision making into their operations through our Evaluation module, and our Audit trail makes this reportable at no extra cost (financial or otherwise). The Evaluation module in DeepStream can be added to a request at any time and the criteria with which Buyers can evaluate suppliers is completely customisable. This means that key sustainability indicators can be included in the evaluation criteria. The Audit trail logs all events, updates and communications that take place in a request from the moment it is sent to suppliers. This includes changes and updates to the Evaluation module, in which a report detailing everything from the criteria and weighting can be downloaded from the platform with a click of a button. 

If you’re a Buyer in the EV or Automotive industry and you want to stay ahead of the curb, talk to us to find out more.

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