Auto-Sector Interview Preparation

Supply chain management is the end-to-end coordination of sourcing, procurement, production, inventory, and distribution — moving materials from suppliers through manufacturing to the end customer efficiently. The goal is the right product, quantity, place, time, and cost.

Logistics focuses on the movement and storage of goods (transport, warehousing, distribution). Supply chain management is broader — it encompasses logistics plus sourcing, procurement, production planning, supplier relationships, and demand management across the whole network.

JIT means receiving materials only as needed for production, minimising inventory holding cost and waste. In automotive it relies on reliable suppliers, frequent small deliveries, and tight coordination; it reduces working capital but increases vulnerability to disruption.

Safety stock is extra inventory held to buffer against demand variability and supply uncertainty (delays, defects). It prevents stockouts and line stoppages. The level balances stockout risk against holding cost, set using demand variability, lead time, and desired service level.

Lead time is the total time from placing an order to receiving the goods (or order to delivery). Shorter, reliable lead times reduce required inventory and improve responsiveness. Variability in lead time is often more damaging than its length, as it forces higher safety stock.

The bullwhip effect is the amplification of demand variability as you move upstream in the supply chain — small fluctuations in customer demand cause progressively larger swings in orders to suppliers. Caused by forecast errors, batch ordering, and lack of information sharing; it inflates inventory and cost.

EOQ is the order quantity that minimises total inventory cost by balancing ordering cost (favouring large orders) against holding cost (favouring small orders). It's a classic model assuming steady demand, helping decide how much to order at once.

It's managing supplier relationships to ensure quality, on-time delivery, cost, and reliability. Automotive depends heavily on tiered suppliers; a single supplier's failure can halt a line. It includes selection, evaluation/rating, development, and risk mitigation (e.g. dual sourcing).

Tier 1 supplies finished components/systems directly to the OEM (e.g. complete seats). Tier 2 supplies parts/sub-components to Tier 1 (e.g. seat frames). Tier 3 supplies raw materials or basic components (e.g. steel, fasteners) to Tier 2. It's a layered supplier hierarchy.

Inventory turnover = cost of goods sold ÷ average inventory. It measures how many times inventory is sold and replaced in a period. Higher turnover indicates efficient inventory use and less capital tied up; too low suggests overstocking or slow movement.

Kanban uses visual signals (cards/bins) to trigger replenishment only when stock is consumed — a pull system. When a bin empties, it signals to refill that exact quantity, controlling inventory, preventing overstock, and synchronising material flow with actual usage.

Demand forecasting predicts future customer demand using historical data, trends, and market intelligence. Accurate forecasts drive production planning, procurement, and inventory decisions; poor forecasts cause stockouts or excess inventory and ripple through the supply chain.

A WMS controls and optimises warehouse operations — receiving, put-away, storage location management, picking, packing, and dispatch. It improves accuracy, space utilisation, labour productivity, and inventory visibility, and integrates with ERP and logistics.

A milk run is a route where one vehicle collects parts from multiple suppliers (or delivers to multiple points) in a single planned trip, instead of separate full-truck trips. It improves transport efficiency, supports JIT with frequent small deliveries, and reduces cost and emissions.

Purchasing is the transactional act of buying goods (raising POs, receiving). Procurement is the broader strategic process — identifying needs, sourcing and evaluating suppliers, negotiating contracts, managing relationships and risk, and ensuring value over the whole sourcing lifecycle.

Immediately assess stock and consumption rate, contact the supplier to expedite, explore alternate/dual sources or substitute parts (with quality approval), reprioritise production to models not needing the part, use any safety stock, and escalate. Then root-cause and strengthen the supply to prevent recurrence.

Incoterms are standardised international trade terms (e.g. FOB, CIF, EXW, DDP) defining who is responsible for shipping, insurance, duties, and risk at each point of the journey between buyer and seller. They prevent disputes by clarifying obligations and cost/risk transfer.

It's identifying, assessing, and mitigating risks that could disrupt the supply chain — supplier failure, natural disasters, geopolitical issues, demand shocks, quality problems. Strategies include dual sourcing, safety stock, supplier audits, contingency plans, and visibility tools.

ERP (Enterprise Resource Planning) integrates business processes — procurement, inventory, production, sales, finance — in one system with shared data. In supply chain it enables material requirements planning, real-time inventory visibility, coordinated planning, and informed decisions across functions.

On-time delivery (OTD), inventory turnover, order accuracy/fill rate, lead time and its variability, transportation cost per unit, freight utilisation, stockout frequency, and supplier performance ratings (quality, delivery). These reveal efficiency, reliability, and cost performance.