Technical article
Supplier Auditing
Munich – “Bosch’s supply problems cause drop in BMW sales,” read the headline in the Handelsblatt. Headlines like this—or similar ones—about production stoppages resulting from supplier bottlenecks are appearing with increasing frequency in the business press. In BMW’s case, Bosch was unable to supply steering gears due to its own problems with a casting supplier.
Single Sourcing: Both a Strategy and a Risk
Automakers and their suppliers share a challenging business relationship. Characterized by complex supply chains (increasing supply chain depth and geographical span of the supply relationship) and growing interdependencies, the importance of suppliers and their delivery performance is steadily increasing. Due to rising cost pressures, OEMs are consciously placing themselves in a position of dependence on a single supplier, for example through single sourcing. The goal of this procurement strategy is to reduce costs through synergies such as the bundling of purchasing volumes and joint research and development. However, the disadvantage of a single sourcing source becomes apparent due to the high level of dependence on the supplier. Furthermore, suppliers are closely integrated into the OEM’s production process. Virtually zero-inventory supply chains, as well as the shift to production-synchronized delivery (JIT – Just in Time and JIS – Just in Sequence), reduce inventory costs on the one hand but increase the demands on delivery performance on the other. If a link in the supply chain fails here, delivery bottlenecks lead to greater disruptions in the OEM’s production than before and thus increase the extent of damage caused by the supply interruption.
Supplier audits as a preventive measure
These conditions necessitate on-site preventive measures, as the OEM can only reduce the likelihood of a supply bottleneck through such measures. One such preventive measure is the supplier audit. Supplier audits serve to identify potential risks at an early stage and present them transparently. The sooner the OEM identifies potential risks at the supplier, the greater the likelihood of proactively preventing potential supply bottlenecks. Unlike reactive supply assurance, the sustainable empowerment of critical suppliers has a positive long-term impact on delivery performance and, consequently, on costs.
Objectives of the Supplier Audit
On-site supplier visits are very time-consuming, but they offer the greatest benefits in terms of risk reduction and the early resolution of supply issues. In addition to delivery quality, it is crucial to focus on the prevention of potential field risks as part of the supplier audit. Furthermore, efforts should always be made to improve both direct and indirect production areas, such as optimizing floor space and labor utilization, as well as synchronizing production differences between suppliers and OEMs (production based on the pull principle).
Selection of suppliers to be audited
Identifying critical suppliers is key to the feasibility of supplier audits. Field quality performance as well as current delivery performance—such as a supplier’s adherence to delivery schedules and the quality of incoming shipments—are only part of the identification criteria. Rather, a comprehensive understanding of the supply chain, including all n-tier suppliers, is sufficient for determining critical supplier locations in terms of production technology and structural dependencies.
KBC is your point of contact for supplier audits
KBC is committed to meeting both its customers’ quality standards and those of the automotive industry. However, it is the company’s own employees—comprising over 100 experts in quality, logistics, and production—who make the difference. As an officially designated supplier auditor for a well-known automotive OEM, KBC operates under the motto: “Work together with suppliers and customers to ensure production improvements, optimize interfaces between suppliers and customers, and promote constructive collaboration.”