How ArchLynk and SAP IBP Power Resilient Automotive Supply Chains

Key Takeaway:

The automotive industry’s supply chain faces unprecedented complexity, volatility, and visibility gaps. Leveraging SAP Integrated Business Planning (IBP) transforms planning processes with real-time data, advanced analytics, and end-to-end collaboration—driving agility and resilience.

1. Key Challenges Facing the Automotive Supply Chain

1.1 Persistent Disruptions and Complexity

• 30,000+ Parts Per Vehicle: The average car contains over 30,000 distinct components sourced globally, making it one of the world’s most complex manufactured products.
• Supply Chain Disruptions: 2025 is characterized by ongoing interruptions—driven by unstable trade policies, geopolitical tensions, and lingering aftershocks from the pandemic. 57% of supply chain professionals cite insufficient visibility as their top challenge.
• Labor Pressure: Nearly half (48%) of automotive companies report skilled labor shortages as a major concern; labor costs and talent gaps remain strategic risks.
• Profitability Squeeze: Automotive supplier EBIT margins are two percentage points below pre-pandemic levels in 2025, pressured by sluggish sales and transformation costs.

1.2 Semiconductor Shortages and Electronics Complexity

• Severe Chip Shortage Impact: Over 9.5 million vehicles were cut from production in 2021 due to chip shortages, followed by another 3 million in 2022. Recovery remains slow, with production caps and delayed launches continuing. The average chip cost per car is expected to nearly triple—from $500 during the pandemic to $1,400 by 2028.
• Analog Chip Constraints: Supply for mature chip process nodes (90–180nm) is projected to tighten again in 2025, driven by surging EV launches and global competition.

1.3 Demand, Regulation, and Market Headwinds

• Modest Growth Amid Uncertainty: The global light vehicle market is forecast to reach 91.4 million units in 2025, a modest 3.1% increase over 2024, with recovery expected to be slow.
• Cost and Bureaucratic Pressures: 77% of firms cite rising costs, 58% cite regulatory burdens, and 49% identify geopolitical instability as key disruptors.
• Sustainability Pressures: Stricter emissions rules, particularly in Europe, are driving investments in cleaner vehicles and transparent reporting—further complicating already intricate supply networks.

2. Introducing SAP Integrated Business Planning (IBP)

SAP IBP is a cloud-based suite that unifies demand, supply, inventory, and S&OP planning on a single HANA-powered platform. Leveraging machine learning, real-time analytics, and collaborative workflows, IBP enables proactive, data-driven decisions across all planning horizons.

3. How SAP IBP Resolves Key Automotive Challenges

4. Automotive-Specific SAP IBP Offerings

4.1 SAP IBP for Automotive

Preconfigured capabilities tailored to the automotive sector include:

• Vehicle-Based Forecasting: Forecast demand at the vehicle model and variant level, factoring in trims, options, and market-specific needs.
• Component & Module Planning: Translate vehicle forecasts into requirements for engines, EV batteries, transmissions, and infotainment systems.
• Supplier Critical-Equipment Monitoring: Monitor lead times and risks for high-dependency suppliers (e.g., semiconductors, rare materials).
• S&OP Blueprint Templates: Ready-to-use templates with automotive KPIs such as capacity utilization, supplier readiness, and inventory turns.

4.2 Integrated S&OP & S&OE Framework

Structured across three horizons:

• Strategic (2–5 Years): Volume planning, capacity expansion, and ICE-to-EV transitions.
• Tactical (6–24 Months): Master scheduling, supplier allocation, and inventory buffering for model ramps and regulatory changes.
• Operational (0–3 Months): Daily/weekly execution aligning customer orders with supplier shipments and simulating urgent disruptions.

5. Best Practices for Implementation

5.1 Master Data Harmonization

• Standardize BOMs across plants and models.
• Define clear hierarchies and planning attributes.
• Cleanse and validate data for consistency.

5.2 Phased Rollout

• Start Small: Begin with demand planning or S&OP in one division.
• Scale Gradually: Add supply planning, inventory optimization, and control tower in later phases.
• Iterate & Improve: Refine models and training at each step.

5.3 Cross-Functional Governance

• Establish steering committees for executive and operational alignment.
• Schedule regular review cycles to monitor adoption and impact.
• Appoint “super-users” to champion change and support teams.

5.4 Continuous Learning and Optimization

• Use analytics for root cause identification.
• Run scenarios to anticipate supply and demand shocks.
• Provide ongoing training to ensure adoption of new features.

Conclusion

By adopting SAP IBP, automotive manufacturers can overcome the limitations of fragmented planning systems. With AI-driven forecasts, scenario-based decision support, and a unified control tower, SAP IBP enables planners to turn volatility into agility—driving resilient, transparent, and sustainable supply chain operations.

At ArchLynk, we bring these capabilities to life by combining a value-first strategy, expert-driven SAP execution, and a one-stop approach to supply chain transformation. From data harmonization to phased rollouts and continuous optimization, our experts ensure SAP IBP delivers measurable results—faster, smarter, and at scale.

Ready to future-proof your automotive supply chain?
Connect with ArchLynk’s experts today.