Mapping the what, when, where and why of disruption risk today.
How much do auto manufacturers and Tier 1/Tier 2 suppliers really know about the risk vulnerabilities of their supply chain networks? Since disruption to the delivery of just one of the thousands of parts each car today contains has the potential to halt entire production lines, this is a critical question. The scale of the challenge is immense.
Measures to create transparency often focus predominantly on Tier 1 suppliers and even then many unknowns can remain. Indeed research from our data partner Resilinc, indicates that [75%] of companies have no visibility into Tier 2 and beyond. It’s cause for concern, given that sub-tier suppliers are at just as much risk, if not perhaps even more so.
This matters because disruption risks must not only be identified but evaluated in terms of importance before they can be effectively mitigated.
The purpose of this report is to shine a spotlight onto what risks suppliers are particularly exposed to, in order to help auto manufacturers pinpoint weak links in their supply chains so they can take appropriate action.
We will look at issues such as:
- what are the most frequent events versus which types of events have the biggest impact
- the prevalence of man-made and natural events
- what are the main emerging risks and growing threats
- geographical spread and sub-tier penetration.
We will also assess the extent to which auto manufacturers and their suppliers are focussing on building up resilience, so that they can minimise the possibility and extent of downtime, and we consider what solutions and protections are available to mitigate the impact of disruption events.
In doing so, it is hoped that businesses in the auto sector can get ahead of the game, and turn risk into opportunity.
"It's all about quality data: greater transparency along the supply chain can help set auto businesses apart from their rivals. The broader and deeper that knowledge, the better auto manufacturers can mitigate risk and be agile in their response to events - and the more favourably they will be viewed by insurers" Matt Grimwade, Head of Automotive, JLT Specialty.
What are the most common risk events?
Top 5 supply chain event types (2016-2017)
The automotive industry was the most disrupted sector in 2017, with the number of disruption events jumping by 30% in a year to nearly 1,700 events, just over 1,300 in 2016. The most common types of events the automotive sector faced last year were:
The graph shows a mixture of man-made and natural events – all of which have increased since the previous year. Some are sudden, acute impact events, while others are more likely to have a gradual onset and may have a longer impact timeframe highlighting the challenges businesses in the automotive sector face when it comes to mapping and contingency planning.
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