Technical article
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 the wake of events such as “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 clear very quickly: The time remaining for (post-)industrialization is growing ever shorter for manufacturers and their suppliers.
The shopping situation
Due to fixed launch schedules for new or redesigned products and last-minute product concepts or changes from the development departments, the procurement departments of industrial companies find themselves in an increasingly difficult “sandwich” position between production and development.
Electric vehicle use is on the rise
Disruptive events across the automotive industry—particularly 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 compliance with new regulations and laws.
The supplier itself is only one of the risk factors
Given the ever-increasing complexity of supply chains, proactive management and integration are essential—from ensuring transparency regarding component changes, through continuous demand forecasting and the associated capacity planning, to series production and product approvals at suppliers’ sites.
The foundation of preventive management is ensuring transparency regarding component changes originating from the development phase. By providing comprehensive information on the components, the procurement department is able to assess the impact on the supply chain (availability, costs, lead times) and take targeted action as needed.
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 (quantity of parts, 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, securing capacity directly from 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). Therefore, it is essential for manufacturers to identify critical component volumes as early as possible to ensure a connected supply chain, including 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.