Executive Briefings

Risk Management and Quality Assurance in Automotive Supply Chains
Risk Management and Quality Assurance in Automotive Supply Chains

Global automotive supply chains are at greater risk of disruption today than ever before. The typical modern vehicle is far more sophisticated than its predecessors, loaded with electronic components and systems that are sourced from all over the world. Supplier networks are more complex as well, presenting original equipment manufacturers (OEMs) with the challenge of managing multiple tiers of production. With so many additional links in the chain, the impact of a natural disaster, supplier failure, port congestion or other crisis can be severe, if not crippling. 

The solution to coping with this newfound complexity is, ironically, a simple one – at least in concept. It comes down to two necessities: having the right data, as well as visibility into each link in the chain. Companies should employ continuous sampling and auditing procedures to ensure that all channels are following the correct procedures, says Bernie Hart, vice president of global trade management sales with Livingston International. That means having in place clear and consistent key performance indicator (KPI) metrics. In addition, companies need to engage in benchmarking, to understand how they’re performing against others within their industry.

Richard Barnett, vice president of industry solutions with GT Nexus, recommends  the adoption of systems for proactively identifying risk events before they occur, and gauging how they will impact at least three levels of the supply chain: OEMs, and Tier 1 and Tier 2 suppliers. Companies, he says, need to enforce “a single source of truth” across all supply-chain partners.

One key move that OEMs and suppliers can take to alleviate the risk of shipment delays is to join the voluntary Customs-Trade Partnership Against Terrorism (C-TPAT) program, which certifies that a given company is a trusted importer whose shipments are less likely to be halted for inspection by U.S. Customs and Border Protection, says Barry Brandman, president of Danbee Investigations.

Global automotive supply chains are at greater risk of disruption today than ever before. The typical modern vehicle is far more sophisticated than its predecessors, loaded with electronic components and systems that are sourced from all over the world. Supplier networks are more complex as well, presenting original equipment manufacturers (OEMs) with the challenge of managing multiple tiers of production. With so many additional links in the chain, the impact of a natural disaster, supplier failure, port congestion or other crisis can be severe, if not crippling. 

The solution to coping with this newfound complexity is, ironically, a simple one – at least in concept. It comes down to two necessities: having the right data, as well as visibility into each link in the chain. Companies should employ continuous sampling and auditing procedures to ensure that all channels are following the correct procedures, says Bernie Hart, vice president of global trade management sales with Livingston International. That means having in place clear and consistent key performance indicator (KPI) metrics. In addition, companies need to engage in benchmarking, to understand how they’re performing against others within their industry.

Richard Barnett, vice president of industry solutions with GT Nexus, recommends  the adoption of systems for proactively identifying risk events before they occur, and gauging how they will impact at least three levels of the supply chain: OEMs, and Tier 1 and Tier 2 suppliers. Companies, he says, need to enforce “a single source of truth” across all supply-chain partners.

One key move that OEMs and suppliers can take to alleviate the risk of shipment delays is to join the voluntary Customs-Trade Partnership Against Terrorism (C-TPAT) program, which certifies that a given company is a trusted importer whose shipments are less likely to be halted for inspection by U.S. Customs and Border Protection, says Barry Brandman, president of Danbee Investigations.

Risk Management and Quality Assurance in Automotive Supply Chains

Learn more about the essentials of risk management in automotive supply-chains by watching this video , which also addresses the critical issues of managing SKU variety and warehouse flow-through, and the impact of 3D printing.