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Preventive Supply Chain Management
Munich– The unpredictable shift in market share between diesel and gasoline engines, monopolistic supplier markets in key technologies, uncertain political conditions in times of, for example, “Brexit” and the “trade dispute” with the U.S., as well as other exogenous demand shocks—when looking at the news today, one thing becomes very clear: The time remaining for (post-)industrialization is growing ever shorter for manufacturers and their suppliers.
The Shopping Situation
Due to fixed schedules for the launch of new or revised products and late product concepts or changes from the development departments, the procurement departments of industrial companies find themselves in an increasingly tight “sandwich” position between production and development.
Electric vehicle use is on the rise
Disruptive events across the entire automotive industry—in particular, the diesel scandal and the resulting decline in demand for diesel engines among all manufacturers—are gradually forcing OEMs to shift their focus toward electric mobility. The Volkswagen Group has already announced plans to launch a total of 70 new electric models by 2028. Key factors in achieving this goal include the industrialization of new technologies (electric motors, battery storage, etc.), ensuring a robust supply chain, and complying with new regulations and laws.
The supplier itself is only one of the risk factors
Given the ever-increasing complexity of supply chains, preventive management and integration of these chains are essential—from ensuring transparency regarding component changes, to continuous demand forecasting and the associated capacity planning, all the way to series production process and product approvals at suppliers’ sites.
The foundation of preventive management is ensuring transparency regarding component changes originating from the development department. By providing complete information on the components, the purchasing department is able to assess the impact on the supply chains (availability, costs, lead time) and, if necessary, implement targeted measures.
Continuous demand forecasting throughout the supply chain enables suppliers to prepare early for changes in demand and technology. Only by communicating demand as early as possible (part quantity, demand period, and demand location) can procurement departments effectively manage supply chain risks (e.g., supplier dependencies, etc.). Robust and sustainable data management throughout the entire supply chain is essential for this.
The Role of Manufacturers
In addition, directly securing capacity with suppliers is another key component in proactively mitigating risk factors. Furthermore, new technologies and high investment costs are increasingly leading to monopolistic or duopolistic supplier markets (battery cells, catalytic converter manufacturers). It is therefore essential for manufacturers to identify critical component volumes as early as possible in order to ensure a connected supply chain that includes secured capacity. In supplier markets, the principle “first come, first served” applies more than ever.
By adopting the KBC approach to preventive supply chain management at an early stage, a premium OEM was able to significantly reduce the impact and consequences of the new WLTP test cycle and RDE procedures compared to its competitors, secure supply and capacity, and thus prevent a drop in sales. The manufacturer was able to produce all planned vehicles with the new technology.