ElringKlinger AG's Supply Chain Risk Management

SITUATION

In 2021, ElringKlinger AG, a German automotive supplier, found itself in a precarious position. The global semiconductor shortage and geopolitical tensions were causing significant supply chain disruptions. As a key player in the automotive industry, ElringKlinger needed to ensure a stable supply of components to meet customer demands while managing the financial risks associated with fluctuating raw material prices.
The company’s existing supply chain management system was not equipped to handle these unprecedented challenges. ElringKlinger needed a robust solution to enhance its supply chain resilience and maintain its market position in a volatile global market.

SOLUTION

ElringKlinger implemented a comprehensive supply chain risk management strategy:

1. Conducted a detailed supply chain risk assessment, identifying critical vulnerabilities.
2. Implemented advanced forecasting models for raw material prices using machine learning algorithms.
3. Diversified the supplier base across different geographical regions, reducing reliance on any single market.
4. Established strategic stockpiling for critical components, particularly semiconductors.
5. Developed alternative sourcing strategies for key materials, including exploring synthetic alternatives.
6. Implemented a real-time supply chain monitoring system to quickly identify and respond to disruptions.
7. Formed strategic partnerships with key suppliers to secure priority access to critical components.
8. Invested in vertical integration for certain components to reduce external dependencies.

RESULTS

By Q2 2022, ElringKlinger’s supply chain risk management initiative showed significant improvements:
– 18% reduction in supply chain disruptions
– Stabilised production costs despite market volatility
– 15% improvement in on-time delivery performance
– 20% reduction in inventory holding costs due to improved forecasting
– 10% increase in overall supply chain efficiency
– Successful navigation of the semiconductor shortage with minimal production delays

ElringKlinger AG’s ability to manage supply chain risks effectively highlights the critical role of a robust risk management framework. At Aysen Consulting, we provide comprehensive risk management services that help companies identify, evaluate and mitigate risks. Our expertise in supply chain risk assessment and advanced forecasting models ensures that our clients can maintain operational stability and resilience in the face of global uncertainties.