Five things companies must employ to preserve corporate stability within automotive supply chains

Five things companies must employ to preserve corporate stability within automotive supply chains

Situation:

  • COVID-19 is causing unprecedented risks and challenges to global automotive supply network

  • OEMs are monitoring inbound material with task team to find parts and prevent shortages in their supply chains as the spread of the coronavirus rattles markets and threatens to roil manufacturing processes globally

  • It is difficult to predict where this crisis is going or how it will impact operations

  • Consumer behavior and demand will also be affected by the crisis and the global financial consequences

  • Shortages of critical components may slow down production or prevent restart

  • Some regions may be affected more than others at different times opening up windows to mitigate risk

Advice:

  • Identify key stakeholders and form an empowered crisis response team responsible for communicating updates internally, consolidating requirements and setting priorities for the suppliers

  • Develop and use scenarios to understand financial and operational impacts of a broad range of possible outcomes to improve strategic robustness

  • Focus on balancing supply and demand to minimize the risk on revenue; the crisis will affect the availability of material, but it will also affect consumer demand.  Prioritize production of hot products

  • Understand material criticality across the supply chain and deep into the tiers to anticipate risks on revenue due to part shortages

  • Establish a contingency plan to including alternative sources in non-affected regions and the associated new logistics and freight required

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