Suppliersâ€™ risks in the automotive industry
During conversations with our Clients we have time and again heard them mention the problem that the turnover speed of their business far exceeds the reaction time of production, resulting in serious economic risk and exposure for them.
In recent years the markets of the automotive and domestic appliance industries have shifted in just moments, with complete disregard for long-term supply agreements. We are all familiar with the story: a ship full of parts leaves the Far East bound for Europe, but by the time it has covered barely a fifth of the journey, drastically changed consumer demand is already of a completely different magnitude â€¦
The new technologies that keep cropping up and the need of every manufacturer to quickly adapt to them in order to remain competitive makes the situation more difficult. If we think about it, the structure of a supply chain is critical in this regard, as well, as the adaptive capacity of manufacturers also depends on the ability of their suppliers to keep up with technological development. Adaptive capacity has become a basic requirement for survival.
What can be done in such a rapidly changing environment in order keep production stable, profitable, and competitive? Stable, profitable, and competitive simultaneously, not separately! The stability of production can be easily ensured by amassing huge stocks, but that would require infinite resources, which would end up as â€śidle moneyâ€ť in parts warehouses, waiting for production. This solution, therefore, is neither profitable (definitely not on the short and medium run), nor competitive, since the competitive edge would be lost immediately due to the jump in storage costs. The big question is whether it is possible to reduce the costs related to the supply chain and maintain production risks at a low level at the same time. There are a few aspects that must be taken into consideration in order to resolve this contradiction:
- Parts suppliers must be maximally reliable! Every manufacturer must assess the risks of its suppliers: their financial situation, compliance with laws and regulations, risk management practices, the geographical positions of their sites, and even the political stability of their countries.
- If the supply chain is broken, the role of an individual supplier in resolving the situation can become critical; which means that suppliers must be capable of adapting to unexpected events and possess the appropriate tools and skills to react efficiently even to extraordinary situations. This is why it is important to establish a platform and framework for communication between members of the supply chain. IT solutions that create links between these members are particularly important in this regard.
- If the two conditions indicated above are met and our suppliers are also geographically close to us, it becomes possible to develop flexible supply solutions, minimise stocks, and set up even daily deliveries without a significant increase in production risks.
Unique supply solutions
These are the aspects that we strive to apply maximally within our own field, the production of cable assemblies and cable fittings regarding the management of our supply chain. Accordingly, we feel bound to provide at least the same level of reliability, flexibility, and precision to our Clients:
- Central European site, nearly two decades of production experience, stable financial background;
- adaptation to new technologies and solutions to unexpected situations are guaranteed by our in-house team of engineers and our tool plant
- unique delivery structure, including even daily deliveries
If you are looking for a secure solution for the supply of cable fittings, do not hesitate to contactÂ us: our colleagues will assist you with all your needs!