Aston Martin, Jaguar Land Rover and Toyota Motor Europe have formed an automotive community, aimed at creating “collective protection” from supply chain risks.
They have worked with the owner of Goodwood, Lord March, and supply chain management company Achilles, to develop a three-step solution for identifying and managing potential risks in their supply chains, which they hope will be adopted across the industry.
Central to the plan is an online portal accessible to buyers and suppliers offering comprehensive, accurate and up-to-date information about the supply chain.
The automotive community has consolidated multiple risk management processes into one standardised set of questions for all suppliers. The aims it to enable them to identify and manage consistently potential risks in terms of health and safety, compliance, financial stability, ethics and corporate social responsibility.
As a result, potential suppliers only need to complete one questionnaire to be considered to work for all three car manufacturers; and buyers can see ‘at a glance’ all potential issues affecting their supply chain. The system complies with Competition Law and all companies will be able to maintain commercial confidentiality.
The second element is supply chain mapping – a tool, led by Toyota Motor Europe, which allows car manufacturers to see information about the sub supply chains involved with critical aspects of car production. One of the features allows automotive companies to map out which supplier manufacturing sites are potentially exposed to risks including natural disasters, financial and CSR. This enables them to mitigate any potential impact on global production. Supply chain mapping will also address potential bottlenecks, reliance on single suppliers, and companies with long lead-in times which could impact on production.
The automotive community is now inviting Tier 1 suppliers, deemed as being critical to production, to provide information. These suppliers will cascade the request for information right down through the supply chain – creating a complete picture of supplier location, function and compliance across countries in a single database
The final element is a financial analysis model designed to provide “financial health check” on suppliers. By identifying potential problems early, buyers and suppliers can work together to address the root cause.
The supplier information management system is hosted by Achilles.
Gary Archer, purchasing director at Aston Martin and chairman of the Achilles Automotive Steering Group, said: “Aston Martin have proactively managed risk within our supply base for a number of years, however Achilles Automotive provides an exciting new initiative which uniquely draws together three key supplier management tools; Supplier Information Management, Financial Risk Analysis and Supply Chain Mapping.
“Aston Martin realise the burden placed on our suppliers to comply with multiple requests from the automotive industry, we therefore clearly see that a single system interface reduces the burden while also providing the added value of a unique tool to enable Suppliers to promote their business, ability and products.
”Achilles Automotive will be jointly funded by both OEM and supplier, which we believe fairly recognises the benefits to all parties.”
Ian Harnett, purchasing director, Jaguar Land Rover, said: “Achilles Automotive will deliver greater efficiency not only to JLR but to the whole automotive industry through the creation of a standard process of managing supplier information and keeping information current and up-to-date.”
Guillaume Jacques, Purchasing general manager, projects & strategy planning, Toyota Motor Europe, added: “Recent events, such as the Japan earthquake, Thailand flood, and smaller scale issues such as fires at supplier premises showed us that we needed to address potential supply risks deep in our supply chain and had to extend risk management from tier 1 level to lower tiers.
“The objective of Supply Chain Mapping is to enable us to study together with our suppliers how to mitigate our exposure before any problem occurs (e.g. by doing validation of alternative material) and react quicker when a problem occurs.
“Toyota Motor Europe took a leading role in this project because we made the strategic decision to develop a Supply Chain Mapping solution before anyone else. We first tried by ourselves but faced difficulties due to the complexity of the project and workload both on supplier and TME side. Achilles approached us with the concept of an automotive community at the beginning of 2012. We quickly realised the potential benefits of a community approach and proposed to Achilles to extend the scope of their project to include Supply Chain Mapping.
“One could wonder why TME want to share their initiative with other car makers. The answer is simple. OEMs’ supply chains are so inter-dependant that there is no point in TME trying to secure its supply chain on its own, as any OEM stopping production on a big scale would impact others within a very short time.”
Luis Olivié, global business development director at Achilles, said: “The automotive sector is truly globalised and by working collaboratively, these industry leaders are setting standards in gaining visibility of issues which could affect people, planet and profit.
“This technology will enable OEMs to map and understand their own supply chains right through the many tiers. It will allow them to see the interaction and dynamics of them and risk assess in a way that has never been done before. It works not only up and down in their own supply chains, but across different companies to maximise benefits.
“With the benefit of an integrated supply chain, OEMs can put in place additional contingency measures to aid continuous production.”
Lord March, the founder of the Goodwood Festival of Speed and Goodwood Revival events, said: “As Goodwood is at the heart of the automotive industry with relationships across a wide-span of vehicle manufacturers, I am delighted to be directly involved in helping to ensure the OEM supply chain of vital components to assist the smooth and uninterrupted flow of new vehicle production.”