July 2024 – In 2024 so far, the strategic importance of resilient supply chains was underscored by ongoing global disruptions. Geopolitical tensions, pandemic aftershocks, and environmental challenges highlighted the need for businesses to enhance their adaptability and robustness.
Perspectives on 2024 So Far paper download here.
Key events and trends in 2024
Chinese EVs entering Europe
The UK automotive market is poised for a significant shift with the introduction of five new Chinese electric vehicles (EVs) between 2023 and 2024. Notable entrants include the BYD Seal, BYD Dolphin, Nio ET5, Omoda 5, and GWM Ora 031. Chinese EV manufacturers benefit from vertically integrated supply chains, encompassing everything from raw materials to production, along with cutting-edge design capabilities and lower production costs, positioning them as formidable competitors in the UK market.
Despite their strengths, Chinese Original Equipment Manufacturers (OEMs) face significant challenges in adapting to the aftermarket landscape outside of China. Unlike in China, where independent dealers dominate, UK consumers prefer OEM-led franchised dealers for servicing and repairs of newer vehicles. This difference imposes high expectations on parts availability and shorter backorder lead times in the UK. Chinese OEMs must revamp their parts supply chains to align with these new market demands. The inability to meet these expectations can impact their market penetration, as evidenced by some Chinese vehicles being uninsurable in the UK due to inadequate repair facilities, insufficient spare parts, and poorly translated parts descriptions2. It is important for Chinese OEMs to understand the customer proposition and adapting aftermarket supply chains remain critical for successful global expansion.
Red Sea Crisis and Global Trade Disruption
The disruption of trade through the Red Sea, particularly the Suez Canal, which handles up to 15% of global trade3, has had a profound impact on the global shipping industry. BP’s halt on oil and gas shipments through this route has led to increased prices4, while the rerouting of shipping away from the Suez Canal has caused significant delays for retailers and manufacturers. European retailers like Asos and Marks & Spencer have faced delays in apparel and footwear shipments from the Far East. Similarly, technology retailers and furniture giant Ikea have warned of potential delays. The automotive sector has not been spared, with manufacturers like Tesla, Volvo, and Suzuki experiencing production slowdowns due to material shortages.
The crisis has revealed supply chain vulnerabilities, leading many organisations, particularly in the automotive sector, to strengthen their risk management strategies. Companies are diversifying their supply bases, increasing inventory, and exploring new transportation methods for resilience. There is a growing interest in modelling, simulation, and analytics tools for scenario planning and real-time data capture. Concepts like the ‘Condition Based Supply Chain’ use IoT technologies to improve planning, anticipate failures, and minimise disruptions, such as those from the Red Sea Crisis.
Net Zero Carbon Buildings
Achieving net zero targets necessitates a comprehensive approach to building regulations that includes both operational and embodied carbon assessments5. The built environment contributes significantly to greenhouse gas emissions, with emissions occurring throughout a building’s lifecycle, from material manufacturing to demolition. Current policies primarily focus on operational emissions, neglecting the substantial impact of embodied carbon, which can contribute up to 50 million tonnes of CO2 annually. Addressing whole-life carbon (WLC) is crucial for truly sustainable buildings, countries like the Netherlands have mandated WLC considerations since 2012. The increasing demand for Life Cycle Assessment (LCA) in construction, driven by the rising requirements from Original Equipment Manufacturers (OEMs) and public purchasing bodies to include embedded carbon data in their submissions, highlights a significant shift in industry standards. This shift is further emphasised by the implementation of the Carbon Border Adjustment Mechanism (CBAM) scheduled for December 2025.
Integrating LCA into buildings allows companies to comprehensively evaluate the environmental impact of our buildings from cradle to grave. This includes assessing the carbon footprint associated with materials, transportation, construction processes, and eventual demolition or recycling. By adopting LCA, we can identify high-impact areas and implement strategies to reduce carbon emissions, aligning with the sustainability goals of OEMs and public bodies.
Embedded carbon is critical for achieving net zero targets. In commercial construction, industrialisation offers decarbonisation opportunities by standardising components, enhancing efficiency, and reducing embedded carbon. Cost should not be the sole factor; contribution to net zero emissions should guide material choices. Organisations must accurately assess the embodied carbon of their products and the carbon emitted by buildings and processes to gain a true basis from which to make effective decisions and reduce the planetary impact. Importantly, they must not make such decisions in isolation of service, quality and cost considerations.
Developments within Unipart
Sustainability
Unipart Consultancy reintroduced its sustainability proposition with a self-funding model designed to tackle Scope 1, 2, and 3 emissions, reflecting our commitment to embedding sustainability at every level of our operations. Our approach leverages Unipart Rail’s research, Unipart Technology Group’s innovation, and Unipart Logistics’ logistics expertise; the solutions are augmented with innovative approaches and best practices. Aligned with the Unipart Way’s continuous improvement ethos, our commitment to sustainability goes beyond rhetoric; it’s embedded in our actions, initiatives, and ongoing projects. This leads to a highly performing carbon-balanced supply chain and the ability to meet the CBAM regulation.
Partnerships
Unipart Consultancy’s strategic partnership with Riskoa in Q2 highlights our proactive approach to embedding sustainability in supply chain management. Riskoa’s expertise in carbon management digital solutions and sustainability advice complements our own, allowing us to deliver high-impact, scalable solutions. Chris Dixon, Managing Director of Unipart Consultancy, expressed enthusiasm about this collaboration, “Our collaboration with Riskoa represents a significant milestone in our commitment to advancing sustainability practices. Together, we have the opportunity to drive meaningful change and create lasting value for our clients and the environment”.
Roger Singleton, CEO of Riskoa, commented, “We are excited to join forces with Unipart Consultancy to deliver impactful solutions that address the complex challenges of sustainable supply chain management. By combining our strengths, we can empower businesses to make informed decisions and achieve their sustainability goals”.
Through this partnership, we leverage artificial intelligence and simulation to assess the carbon impact of products throughout their lifecycle, providing our customers with actionable insights to improve sustainability in a timely and automated manner. This collaboration embodies our mission to create high-performing, carbon-balanced supply chains.
Global expansion
As part of our geographical expansion, Unipart has established a robust presence in the Kingdom of Saudi Arabia (KSA), the largest economy in the Middle East, driven by its Vision 2030 initiative6. This strategic vision aims to diversify the economy and boost competitiveness beyond oil reliance. Chris Dixon, Managing Director of Unipart Consultancy, discussed the opportunities and challenges in this dynamic market and how Unipart Consultancy can support the market. Unipart’s entry into Saudi Arabia presents a unique opportunity to design and implement optimal supply chain solutions from the ground up, leveraging advanced technologies and best practices tailored to local contexts. Navigating regulatory complexities and cultural nuances is crucial, but our extensive experience and local partnerships position us to significantly enhance supply chain efficiency and resilience in this rapidly growing market.
Summary
Businesses must focus on resilience due to geopolitical tensions, pandemic effects, and environmental challenges. Your business should aim to optimise costs and ensure cultural alignment to enhance competitiveness, boost engagement, and support resilient operations. Advanced risk management and visibility are key to your supply chain strategies, however, they require effective technology and innovation. Purpose-driven strategies in cost management are crucial for engagement and sustainable success; companies in 2024 must stay adaptable and proactive to maintain supply chain continuity and stability.
Our white paper provides a comprehensive analysis of current market conditions, emphasising the importance of resilience in business and supply chain management. It explores critical aspects such as risk management, inventory control, visibility, traceability, logistics networks, and the role of simulation and decision support in fostering a culture of continuous improvement. The paper also offers insights into major events in 2024, including the entry of Chinese EVs into the UK market, the Red Sea Crisis, and advancements in net zero carbon building. Additionally, it highlights Unipart’s growth, sustainability initiatives, and key partnerships, with a notable expansion into Saudi Arabia.
To access the full white paper, click here.
References
- Luke Chillingsworth – Five Chinese EVs expected to head to UK – from BYD’s £8,000 car to Nio’s Tesla rival – February 2024
- Sam Smith – Chinese EVs Become Virtually Uninsurable In UK Even Though There’s Nothing Wrong With Them – March 2024
- Conor Pope – How conflict in the Middle East is squeezing global supply chains and affecting consumers – February 2024
- Lora Jones – BP pauses all Red Sea shipments after rebel attacks – December 2023
- Anastasia Mylona – Why embodied carbon is the key to truly net zero buildings – June 2024
- Kingdom of Saudi Arabia – Vision 2030