COVID-19 exposes the fallacies in risk management with mould purchasing strategies

In a recent DNV-GL ISO9001 management systems audit SabriScan’s customer centred risk analysis practises were deemed to be excellent. The focus in the audit this ​time were operational excellence (OPEX) and efficient usage of resources. In its management system SabriScan combines the best practises of IATF-, ISO- and EFQM –standards and references.

In our risk analysis at SabriScan we have invested heavily into the end user perspective (OEM Clients). Distributed supply chains in Europe, Asia and Morocco reduces vulnerability in crisis situations as is now, COVID- 19 outbreak.​ Our risk management practises, and our business model have been proven to function well and our clients are testifying this by trusting us with new orders - extending our order bookings to a record during the last few weeks. Our clients are supported by almost 10 service centres providing projecting and technical support, new mould supplies and maintenance services. Projects can be delivered from a distributed supply chain with ”one stop shop” interface.

From the risk management perspective, we have seen our model perform outstandingly. During good (read normal) times the focus is mainly in (cheap) prices. A recent boom time and good order volumes were hiding obvious large problems in the OEM and Tier 1 supply chains. New orders and large growth covered the ”sins” of earlier orders.

The pressures to outsource production were hiding the importance of moulds in the car parts supply chain. Moulds were seen only as costs, a necessary evil to support parts production. Instead of concentrating on their core, Tier1 and Tier2 operators (component and parts assembly companies) have been forced to manage mould operations they have quite often not very deep understanding of. The skill investments into this area have been minimal and the holy grail of managing the Chinese supply ”easily” did take over. Some of the visible results have been supply difficulties, quality variations, extra costs, production stops, even drops in market shares and all this BEFORE the COVID-19 crises.

There is a new trend and practise spreading among the Original Equipment Manufacturers (OEMs, in car industry, read car brands). To lower risk and manage cost the brand owners are discussing the mould purchases directly with SabriScan. In Finland we have done this successfully for years with our non-automobile business clients. The larger brand owners have benefitted by having fast delivery cycles, gaining competitive prices, and receiving high quality. In large moulds where the machining volumes are sizable, we can compete head on with the Chinese suppliers. We are confident to produce these moulds cost competitively in Finland. The production in China has a cost advantage when there is plenty of small details, plenty of fitting work and moving slides.

The best practise in the future will be approaching the OEM client together. SabriScan and component/assembly supplier will work jointly side by side from the beginning of mould purchase cycle. SabriScan’s responsibility will be to support the OEM from product design to mould delivery and eventually maintenance support at the mass production factory locations. Component/ assembly supplier can concentrate fully to it’s own core business.  The brand holder will see transparently the whole supply chain with all of it’s cost drivers and risk profile.

The OEM client will benefit already in the parts design phase. Sabriscan will participate into manufacturability analysis and thus we have been able to cut the manufacturing process times with several months. The actual mould manufacturing will be handled with efficient process like project management methods and using SabriScanMethod in production. The production times and often also cost can be cut markedly.  These methods are also put into use with our help with our sub suppliers.
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All in all: Managing risk in supply chains gives the industrial OEM an advantage: it gets the product, autos, welding equipment, batteries or light switch to the market faster and more efficiently.  Real competitive advantage and money in the bank!