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Digital Chances: Supply Chain Risk Management (SCRM) in the Automotive Industry

How to identify risks before they arise?

Globalization, natural disasters and political unrest: Supply chains in the automotive industry become increasingly vulnerable and insecure. Therefore, the importance of identifying risks in the supply chain and reacting before they cause serious economic damages is rising.

A proactive SCRM becomes a top priority! But how to enable the practical implementation? What to take into consideration when developing a proactive risk management strategy? And how to identify risks using innovative technologies?

Volker Roelofsen, Partner and Automotive and Supply Chain Management Expert, has addressed these questions in a webinar.

Types of risks and priorities in projects

Risks may be of completely different relevance for companies – even within the same industry – according to the set-up and configuration of their supply chain. Relevant risks may be identified, evaluated and displayed in the SCRM-Cockpit integrating Big Data (from external sources) with Small Data (from internal sources). Current projects have shown that focus topics may vary from identifying global infrastructure through transport risks to geological and political risks.

Supplier vs. Supply Chain Risk Management

Experience gained on projects indicates that the main focus of SCRM projects lies at the supplier side and on identifying a manageable number of risks, although the internal supply chain is also associated with risks.

Digital technologies increase customer requirements which is accompanied by evolving from an organizational- to an individual-centric economy. With greater market power of the customer comes a high level of market dynamics and volatility. A customer-oriented supply chain becomes critical to success in the automotive industry. Supply chain design that absorbs and makes market dynamics controllable is necessary. Only then can risks for the customer be reduced.

Best Practices

The following Top 4 supply chain risks were identified:

  • delayed customer deliveries
  • low quality supply chain planning
  • supply bottlenecks at supplier side
  • quality issues at supplier side

A best-practice SCRM concept consists of four core elements: innovative technologies, innovative SCM and planning approach, customer and market trends, basics (master data management, supply chain organization, KPIs). These elements have to be integrated in an SCRM approach covering every step from risk identification to controlling.

Lessons learned

At the same time, supply chains are currently threatened by a steadily increasing number of risks. Most companies respond with strategies focusing on only a few aspects of supply chains and available technologies. Internal and customer risks have to be looked at in an integrated way.

Best-practice approaches combine innovations with state-of-the-art LEAN SCM concepts and basics. Companies with an integrated approach have shown significantly higher supply chain performance.

For questions and inquiries, please feel free to contact us.

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