Auto OEM Keeps Supply Chains Running Amid COVID-19 CrisisEverstream Team
SOLUTIONS: Heat Mapping, Incident Monitoring, Transportation Planning
“In the early weeks of the Coronavirus crisis Everstream Analytics helped us avoid lost production worth high double-digit millions of euros, maybe even triple-digit, in a single major engine program.”
– Senior Manager, Risk Management
Serving a vital link in the automotive industry’s global supply chains, a global tier one automotive component manufacturer has recorded sales of more than $10 billion with 29,000 employees in 19 countries. The company makes components that car owners rely upon but rarely see, from clutches and axle components to turbochargers and cabin heating systems. It is also a major player in the e-mobility revolution, producing electric motors, transmissions, and complete EV-drive modules together with a wide range of electric accessories for hybrid vehicles.
The automotive component manufacturer runs a complex and truly global supply chain, with a network of 67 production facilities and hundreds of second – and third – tier specialist suppliers around the world. The scale and reach of that supplier network put the company at the epicenter of the COVID-19 outbreak when the virus struck the city of Wuhan in China at the end of 2019. As efforts to battle the disease led to shutdowns and travel restrictions across the region, the company needed to take decisive action to secure critical components produced by local suppliers.
For the past three years, this global product leader has operated a dedicated supply chain risk management function, using the Everstream Analytics platform to track incidents and monitor supplier stability. “As soon as we saw alerts of a new virus in Wuhan, we evaluated the potential impact of disruption in the region, looking at the suppliers that could be affected, identifying the part numbers they produced, and evaluating inventories of those parts that were at sea on their way to us or already in our network,” said the senior manager, risk management, at the company. “And of course, we were in close contact with our suppliers to understand the situation on the ground and how it was affecting their ability to produce.” As the rest of the world now understands only too well, the virus epidemic escalated rapidly, and it quickly became clear that a shutdown was likely. “At that point, we needed to act rapidly to secure the additional components we needed to maintain production at our own plants,” he also remarked.
Working with its suppliers, the company placed a “one-time buy” order covering the maximum feasible quantity of components. Now it just had to ship the material to its plants in Europe. That wasn’t easy. Wuhan is a major manufacturing center and, said the senior manager, “everybody else had the same idea.” With the collapse in passenger travel to and from China leading to a significant drop in airfreight capacity – and with ports congested, closing down, or short of personnel – logistics options between Wuhan and Europe were disappearing fast. “We worked with Everstream Analytics to review every possible option for transport,” he noted. “And we able to find a rail route through Russia that wasn’t disrupted and still had available capacity.” With that option secured, the suppliers loaded several million components into trucks and shipped them out of Wuhan to the railhead in the hours before the lockdown sealed the city off from the rest of the world.
– Maintain supply of critical components for
major automotive programs world-wide
– Track the impact of the coronavirus pandemic on hundreds of suppliers and transport routes
– Plan and execute an effective response to
severe operational and logistics disruptions
– Mapped complete supply network using
Everstream Analytics, with 24/7 monitoring of virus impact on production facilities and transport networks
– Customized heat-map reports tracking the impact of the pandemic across the world
– Identification of alternative routes and modes to overcome severe logistics disruption on global and regional transport lanes
– Rapid action at the beginning of the crisis
enabled millions of critical parts to be shipped from Wuhan to Europe by rail before the shut-down, safeguarding a multi-million euro engine program
– Pro-active response ahead of the pandemic allowed production to continue at multiple sites world-wide despite local lockdowns and transport restrictions
– Ongoing monitoring of supplier operational and financial stability as the automotive industry enters the recovery phase
The supplier risk management team’s swift action ensured that supply to a major engine program in Europe could continue uninterrupted through the lockdown in China. According to the senior manager, avoiding lost production was worth “high double- digit millions of euros at least, maybe even triple-digit.” Securing a critical train load of components from China, however, was only the first step in a much larger series of crisis response actions. By late January, the first cases of COVID-19 were identified in Europe, and the company’s supplier risk-management team knew that they were facing a global challenge. “In a situation like this, the actions available to us are always the same … But the more warning you have, the more effective you can be,” says the senior manager. The company used the Everstream Analytics platform to create a “heat map” of the impact of the virus, as its spread triggered lockdowns, transport restrictions and other public health responses across the world. “As soon as the first cases appeared in Italy, we began to increase our call-off of parts from suppliers in the region,” he affirmed. “We focused on the most critical ‘system-relevant’ parts, where we use the same component in multiple-end products, for example, or where there are only a few suppliers in the world able to produce the component.” As in China, suppliers across the world responded by adding extra shifts and ramping up their production. The company’s team monitored the crisis hour by hour, making daily changes to its plans as the situation evolved. It kept a close eye on logistics links, too. “In Europe, we didn’t have such an extreme logistics situation as in China,” states the senior manager. “But everyone will have seen the TV images of border delays and 120-kilometer tailbacks on motorways. We used the Everstream system to identify problems and re-route our transport as necessary to keep supply moving to our plants.”