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Supplier Audits & Assessments

“Bosch’s delivery problems cause a drop in sales at BMW”. Headlines about production downtimes as a result of supply shortages increasingly dominate the business press. In the case of BMW, Bosch was no longer able to supply steering gears as it had difficulties with one of their casting suppliers.

Single Sourcing: Strategy and risk at the same time

The business relationship between automotive manufacturers and their suppliers is not an easy one. Characterised by complex supply chains (increase in the depth of supply chains and geographical distances of the supply relationship) and growing dependencies, the significance of suppliers and their delivery performance is steadily increasing. Due to the equally increasing cost pressure, OEMs are deliberately becoming dependent on suppliers, e.g. through single sourcing. The objective of this procurement strategy is to lower these costs through synergies such as bundling purchasing volumes and joint research and development. The disadvantage posed by a single procurement source is, however, evident due to the high dependence on the supplier. Furthermore, the suppliers are closely synchronised into the OEM’s production process. Virtually no inventory supply chains and the switch to JIT (Just in Time) and JIS (Just in Sequence) deliveries reduce storage costs while increasing requirements to delivery performance. More than ever before, a single missing link in the supply chain causes supply shortages to lead to impaired production at the OEM and therefore increases the extent of the damage caused by the supply interruption.

Supplier audit as prevention

These framework conditions require on-site prevention, as the OEM can only reduce the probability of a supply shortage with preventive measures. One of these preventive measures is the supplier audit. Supplier audits serve to identify and make transparent any potential risks at an early stage. The earlier the OEM discovers potential risks with the supplier, the greater the probability of preventing possible supply shortages. In contrast to reactive supply assurance, the sustainable empowerment of critical suppliers has a long-term positive effect on delivery performance and therefore on costs.

Objectives of the audit

Although an on-site supplier visit is very time-consuming, it poses the greatest benefit in terms of risk reduction and early elimination of supply problems. Apart from delivery quality, it is crucial to focus on the prevention of possible field risks within the framework of the supplier audit. Furthermore, the objective should always be the improvement of the direct and indirect production segments, such as optimised space utilisation, employee utilisation and the synchronisation of production differences between suppliers and OEMs (pull-principle production).

Which suppliers should be focused?

The identification of critical suppliers is decisive for the feasibility of supplier audits. The field quality performance and the actual delivery performance, such as adherence to delivery volumes and the delivery quality of a supplier, only form part of the identification criteria.  Instead, an understanding of the supply chain, including all n-tier suppliers, is sufficient to determine the critical supplier sites with regard to production technology and structural dependencies.

KBC is your professional partner for supplier audits

KBC is committed to the quality standards of its clients and those of the automotive industry. However, the actual performance is provided by our own employees – consisting of more than 100 experts from quality, logistics and production. As an officially nominated supplier auditor of a well-known automotive OEM, KBC follows the motto: “Together with the supplier and our client, we ensure production improvements, optimise interfaces between supplier and customer and promote constructive cooperation.”