Practical example
Supplier Stabilization During Supply Chain Bottlenecks
Background
Against the backdrop of rising product quality standards, increasingly integrated supply chains, and a highly dynamic economic environment, the active management of large supplier networks is becoming ever more important and complex. This is particularly true for the automotive industry. A supplier’s reliability is by no means a given in the first few years following its selection. Comprehensive qualification prior to awarding a contract and continuous audits after awarding help counteract potential negative changes at the supplier and enable risks to one’s own supply chain to be identified at an early stage. According to KBC’s experience, effective supplier management is characterized not only by the rapid identification of weaknesses but also by the active management of crisis situations that have already arisen.
Consequently, many OEMs are increasingly focusing on short-term measures to stabilize their supply chains. The targeted deployment of interdisciplinary task forces can mitigate the impact of supply chain bottlenecks in the short term and address vulnerabilities in the long term. Comprehensive transparency regarding supplier performance and rigorous management of corrective actions are essential in this regard.
Specific task
Restoring delivery capacity and reducing the backlog of a Tier 1 supplier in the United Kingdom.
KBC's Approach
- Conducting a root cause analysis to identify and prioritize actions
- Introduction of key performance indicators for daily tracking of the delivery performance of the Tier 1 supplier
- Conducting data-driven sub-process analyses to ensure quality and reduce scrap rates
- Establishing communication channels between OEMs and suppliers and standardizing reporting procedures all the way up to the executive board
- Day-to-day management of the task force team, prioritizing and scheduling parts deliveries, and resolving quality issues in the production chain
Impact achieved
The OEM’s short- and medium-term supply needs were successfully secured. Thanks to rigorous reporting, performance metrics for the OEM were made transparent all the way up to the executive board level. Thanks to regular communication between the OEM, the supplier, and the task force team, risks were identified as early as possible and the need for escalation was flagged in a timely manner. Through targeted tracking of corrective actions, a reduction in the scrap rate of over 20% was achieved for key sub-processes. Supplier reliability, as measured by OTIF (on-time in-full), was raised from under 10% to over 90%. A delivery backlog of approximately 3,000 parts was sustainably reduced through close collaboration between suppliers and the task force team. Additionally, a multi-day inventory buffer was built up in anticipation of Brexit, which was imminent at the time.
