According to a new report, the global automotive sector is forced to reconsider its dependence on “just in time” components (JIT) as a result of the most fragile supply chains since the turn of the century.
The Achilles Chain of Supply Resilience Index (ASCRI) report for the first quarter of 2022 shows that the resilience of global supply chains has fallen to 39.8 – the first time this figure has fallen below the 40-point high-risk threshold with further declines in resilience expected.
As the performance of the automotive sector has already been severely affected by persistent semiconductor shortages, further disruptions caused by the conflict in Ukraine and restrictions on movement in China caused by COVID make automotive manufacturing one of the most risk-prone industries in the supply chain.
Restrictions on the movement of workers in China have led many leading car brands, including VW, to shut down production at several of their plants in China, shortly after a shortage of semiconductors forced it to suspend production at other plants in China and Germany last year. .
Also contributing to the particularly low resilience of the sector is the persistent shortage of lithium, which has already begun to stifle the production of electric vehicles (EV).
It seems that the industry’s dependence on searching “just in time” seems to be challenged by the perfect storm that has dealt a severe blow to the sustainability of the automotive supply chain.
Katie Tamblin, Achilles Product Director, said: “We are seeing an unprecedented level of risk in global supply chains, given developments in Ukraine and China in particular, and for the automotive sector these risks seem to have a lasting impact.
“Given that the sustainability of the sector’s supply chains has been particularly hard hit, particularly over the last 12 months, it seems that standard methods such as timely sourcing will have to give way to a more pragmatic approach in the foreseeable future. ».
The Achilles Supply Chain Resilience Index (ASCRI) is a time series index that measures changes in supply chain risk. The index measures the main risks of the supply chain in six categories: economic, environmental, labor practices, legal and governance, sustainability, and security and safety. Each country’s score is obtained by combining the Achilles ’scores of suppliers in a country with that country’s overall performance in these six categories. This structure is then complemented by a range of global measures, including delivery data and sentiment. The report for the second quarter uses data from January to March 2022.