Automakers seek more ethical, resilient supply chains

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Some automakers have spoken about the need to increase dual sourcing — relying on two suppliers to make the same part — to avoid breaking the chain in the event of disasters such as the pandemic.

“This is definitely something we are looking at,” Kia Europe COO Emilio Herrera told Automotive News Europe. “We wouldn’t want to be in the same situation again, where we depend on a sole supplier.”

The value of dual sourcing became clear during this year’s pandemic. An exclusive reliance on parts suppliers in China’s Hubei province, the site of the first outbreak of COVID- 19, cost some automakers dearly, according to a report by the analysis arm of ING bank.

But dual sourcing is not an option for smaller-volume producers such as JLR.

“Making double sets of tools just in case there’s an earthquake or some other crisis is simply unaffordable,” Harnett said.

The massive cost of supply chain holdups means extra scrutiny of this part of auto manufacturing is going to be inevitable.

“The issue keeps coming up,” said Matteo Fini, executive director for automotive supply chain and technology at IHS Markit. “Since the tsunami and Thai floods, around 2011 and 2012, awareness has increased among automakers, starting with the Japanese, and Toyota in particular. They have begun a very thorough exercise to map as much supply chain tiers as possible and have asked their major Tier 1 suppliers to do the same.”

Suppliers are generally supportive of the process.

“If you are using new tools — cloud service or digital monitoring — to manage complexity to get a better understanding, it helps all of us,” said Thorsten Muschal, executive vice president of sales and program management for Faurecia, as well as president of the European supplier organization CLEPA. “We all have to reduce costs and risk management, and anticipation can do that.”

He named other benefits as well, such as tracking parts and calculating CO2 footprint, especially when looking ahead to the possibility of CO2 taxes in Europe in the near future. “I would say it was as essential for suppliers as automakers.”

But some suppliers remain a bit leery about providing automakers with too much insight into a Tier 1 supplier’s own supply chain arrangements.

“There are concerns around what sort of ammunition this transparency could give to an automaker’s purchasing department,” Fini pointed out. “They could request their Tier 2 or Tier X suppliers to move up the chain, for example.”

And establishing a blockchain solution is also no simple matter.

Two years ago, BMW co-founded the Mobility Open Blockchain Initiative, and last year it completed a pilot solely involving the purchase of front lights.

BMW acknowledges the difficulty of tracking a part’s origin and supply route when so many players are involved. The goal of the pilot, it said, was to “ensure seamless traceability of components more or less at the push of a button.”

Andreas Wendt, BMW’s head of purchasing and supplier network, said this year that the company’s vision is to “create an open platform that will allow data within supply chains to be exchanged and shared safely and anonymized across the industry.”

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Saurabh Shukla

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