Separate suppliers can be in the same region and even in the same country, if the country is as large as China, Keller says. "We tend to look for suppliers that have locations throughout Asia, perhaps some combination of Thailand, Vietnam, China, Korea and Japan."
A dual-sourcing strategy has meant that Active Tools has had to add to its supplier base. To ensure that all suppliers are able to meet Active Tool's quality standards and volume requirements, the company has added quality engineers to support an expanded audit and validation program. "Our quality engineers work with our suppliers to ensure that they have the processes in place necessary for them to continually supply the quality of product we need for the automotive industry," Keller says. Active Tools' provides the industry with tire repair kits that are a preferred alternative to spare tires in many new vehicles.
Another risk mitigation strategy that Active Tools has pursued is development of internal manufacturing capabilities for a few critical components. "We decided to develop that capability so that if we experience a supply disruption based on a vendor's inability to deliver product, we can internally manufacture that product," Keller says.
The issues that most concern Keller in terms of risk are not natural disasters, since major disasters on the scale of Japan's earthquake and tsunami are rare, he says. "I worry more about regulatory issues with all the different countries we have to deal with," he says. "Most of the low-cost countries that we currently source from have fairly unstable political environments and you never know when something may come up that will cause disruptions."
"At Active Tools, we continually reassess our supply chain risk management strategy and make sure we have the processes and partners in place to successfully implement that strategy," he says.
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