The after-effects of the Covid crisis have shown that supply chains are fragile and can break down. This was the case when demand skyrocketed after the first “Coronavirus shock”, and the global supply chain was stretched to breaking point. Since that time, supply reliability has been a critical factor which can determine the success or failure of a market player. Depending on how quickly supply disruptions occur, they generate additional costs for the maintenance of continuous supply chains both on the customer and on the supplier side. Quality impairments can also occur due to hasty further production or the use of alternatives which potentially generate far-reaching follow-up costs. This blog will therefore examine the question as to whether MD ELEKTRONIK can prevent disruptions in the supply chain by taking systematic approaches to planning, or whether this idea is just pure fiction.
How do gaps in the supply chain come about?
Supply shortages can be caused by influences external to the company such as a surge in customer demand, logistics problems, raw material shortages, supplier production downtimes or even by unforeseeable “acts of God” (force majeure) or strikes. Most of the time, it is difficult to anticipate these risks of loss early enough, and consequently, their impacts on the globalized and widely-spread supply chain are often unavoidable. In Europe, the demographic change and resulting shortage of skilled workers, along with changes in the legal regulations governing environmental protection, safety and emissions as well as technological trends in the industry are also having an impact. The market behavior of customers, competitors and suppliers also continuously influences the microeconomic environment. Factors within the company can also result in supply shortages. Causes for this can include insufficient short-term, medium term and long-term planning, the inability of the company’s own supply chain to adapt, as well as an inappropriate selection of suppliers, which can lead to quality problems, insolvency or monopoly situations. These influencing factors can result in gaps in supply which is why a systematic safeguarding strategy is so crucial to success in the volatile automotive sector.
How MD ELEKTRONIK is securing the supply chain with forward-thinking, systematic planning
MD undertakes forward-thinking and systematic corporate planning to minimize risks in the supply chain both for the company and for its customers. This includes the development of strategic approaches to avoid supply shortages, as well as a safeguarding strategy which is based on two pillars: transparency through detailed market analysis and planning, and the flexibility of its own levels of service in the short term. This approach makes it possible to make transparent, reliable, low-risk, mid- and long-term corporate decisions based on solid planning data. The competitive advantages generated also make it possible to respond at short notice to events in the supply chain.
To generate this data, MD continuously analyzes market and customer information from numerous primary and secondary sources. These analyses primarily focus on the onboard network of the future. To be able to properly assess the challenges of tomorrow, a profound understanding of current and future demands is necessary so that strategic decisions for product development can be made, and the continued development of technologies can be driven forward. In doing so, current megatrends such as self-driving vehicles, zone architecture and the software-defined-car are also constantly monitored.
For MD ELEKTRONIK, knowledge management is the key to securing future competitiveness. Information about market and onboard network developments is gathered in a systematic and interdisciplinary manner. This includes continuous market and sector analyses, the evaluation of studies, and participation in congresses, trade fairs and forums. Continuous technical discussions with customers, cooperation partners and suppliers is another key success factor. Analysis of the onboard network, conducted by the Application Engineering and the Technical Product Management departments, plays a central role. The current and future onboard architectures of existing and target customers are assessed with regard to technological developments and product placement opportunities. This information is incorporated into the mid- and long-term planning, enabling MD to make well-founded corporate decisions through globally established, centrally managed control circuits. Potential for product development can be identified at an early stage, and future product development projects can be efficiently prioritized. From the transparency gained, MD can derive strategic plans for innovation management, product development, and machine and system development in its own Mechanical Engineering and Marketing departments. Thanks to this strategic approach, securing the supply chain in the long term is not only realistic but also achievable.
Subsequently, within the context of short- and medium-term planning cycles (detailed planning and 24-month projections), provisions for resources, such as raw materials, capacities, equipment or personnel, can be made at an early stage and provided on time. Safeguarding these planning cycles in the short-term determines the capacity to supply the customer in a stable manner. As part of a well-coordinated sales and operations planning process, it is possible for MD ELEKTRONIK to identify 24-month bottlenecks at an early stage and to take the necessary steps to safeguard supply. The currently well-established global control circuit is a complex structure made up of interlocked processes, systems based on specifically developed software, and the Sales and Operations Manager who steers, coordinates, monitors and constantly further develops the interdisciplinary planning process.
The following illustration shows the established control circuits, planning levels and planning horizons of established planning cycles:
| Planning levels/control circuits | Planning level | Planning horizon |
|---|---|---|
| Step 0 – 1 x / year | Strategic planning | ≤ 10-year |
| Step 1 – 2 x / year | Strategic planning | ≤ 5-year |
| Step 2 – monthly | Medium term planning | ≤ 24 months |
| Step 3 – 1 x / day | Detailed planning | ≤ 10-year |
How MD ELEKTRONIK avoids gaps in supply before they occur
Nobody at MD has the prophetic ability to predict the future. On the contrary, in addition to taking a systematic planning approach, the company’s success is based on its consistent focus on flexibility in order to achieve a high level of service. In the complex and fast moving automotive industry where global demands for an efficient supply chain are constantly increasing, companies find themselves in a labyrinth of complexity and unpredictability. As mentioned at the start of this post, unforeseeable events – such as short-term disruptions in the supply chain, events of force majeure, raw material shortages, technical problems or changes in the onboard network – cannot be fully covered by stable planning. The increasing globalization of the automotive industry and its supply chains has also significantly increased the risk of short-term events in recent years. Supply chains are extremely sensitive and liable to break down. Therefore, in addition to established planning cycles, MD ELEKTRONIK relies on flexibility as a key strategy.
The following aspects form the central pillars to securing the supply chain:
MD ELEKTRONIK has successfully developed a strategy which makes it possible to react flexibly to dynamic, unforeseeable changes in the market. This ability makes a decisive contribution to stabilizing the supply chain up to the end customer, and to increasing the resilience of the entire supply chain. The effective combination of transparent planning and targeted flexibility is positioning MD as a stable, crisis-proof partner in a constantly changing and challenging industry.
Summary and conclusions
In the increasingly volatile and fast moving automotive industry, the securing of supply chains is a crucial success factor for everyone involved. Without an effective safeguarding strategy, follow-up costs and quality risks in the supply chain increase uncontrollably. MD ELEKTRONIK has implemented forward-looking and systematic planning in the short, medium and long term, enabling it to identify market trends and changes in the area of onboard network technology at an early stage, and to safeguard the supply chain accordingly.
By setting up process and system-supported control circuits to determine global and regional target figures, the company is well-positioned to invest in capacities and skills at an early stage, in order to minimize risk and make strategic decisions. MD’s primary objective as a reliable partner is to secure customer supply in the long term. In the complex world of onboard networks where global demands for a well-functioning supply chain are constantly increasing, MD’s focus is on flexibility and planning. In this way it can utilize the strengths described and rapidly take safeguarding measures to prevent any gaps in supply from occurring before they impact the customer. To come back to our initial question as to whether disruption-free supply chains are purely fictional, we have been able to show that MD ELEKTRONIK turns fiction into reality.
About Christoph Zauner
Christoph Zauner is a Technical Product Manager at MD. His focus is on automotive PCB connectors and electronic components. His many years of professional experience in electronic engineering make him highly capable in this field. What excites him most about his job: "Being able to help shape new products from the very beginning is a special privilege. The close customer contact, the collaboration in an international team and the resulting intercultural experiences make the tasks particularly interesting.”