Supply Chain Risk Management for Automotive Industry

Many automotive and supplier manufacturers are experts in maintaining their inventory of materials suppliers, but their corresponding resilience can be difficult to analyse and quantify.

There have been incidents where a single supplier represents the majority or whole of the industry and consequently, there are limited alternatives available. These types of incidents expose the vulnerabilities in the global automotive supply chain, whereby thousands of parts go into each vehicle made.

Increased technological disruption, in combination with greater regulatory scrutiny, is driving the creation of new business models and new competitive forces that are impacting the supply chain. In some cases, original equipment manufacturers (OEMs) are seeking new suppliers outside of the traditional model.

In turn, each component can contain hundreds of other pieces supplied by multiple other companies. An example is the rubberised portion of a windshield wiper, the hard metal parts of that wiper or the electronics used for a wiper’s motion. The absence of any one of those parts can shut down an entire production line. Consequently, insurers have struggled to meet coverage expectations due to a lack of visibility.


Supply chain risk insurance

As both the number and diversity of disruption events increases, and with many emerging and growing threats to watch out for across every continent – from the prevalence of factory fires and extreme weather events to the rise of cyber-attacks, the risk picture is extremely fragmented. A joined-up, forward-thinking approach is vital.

We have developed a revolutionary approach which links supply chain analytics to an insurance solution. From this approach clients would benefit from:

Supply chain risk insurance
  • Improved terms from the insurance market based on greater visibility and management of risk
  • Contingent business interruption (CBI) cover available across the entire supply chain, going beyond the traditional tier 1 named suppliers
  • End to end supply chain network mapping
  • Prediction of the biggest failure points anywhere in the supply chain
  • Support to mitigate the right risks with the right strategy.

Completed visibility of Suppy chain


Supply chain risk insurance

Effective risk mapping and targeted business continuity planning can minimise risk and increase auto manufacturers’ resilience, giving assurance to shareholders.

It can also help represent how threats can be turned into opportunities: leveraging supply chain insight to create a competitive edge.

Automotive businesses will be in a position to take decisions they might not otherwise have been able to make, such as knowing where they can reduce inventory buffers without sacrificing resilience. Or they might be able to gain first mover advantage by pre-planning for a specific event, potentially putting them several days or even weeks ahead of rivals.

Supply chain risk insurance

Covering every risk, everywhere, is unlikely to be practical and prioritising what to cover can be immensely challenging. However, the very scale of exposure that the automotive industry is facing demonstrates the critical importance of having policies that cover the most business-critical areas, and avoids duplications and gaps.

That’s why JLT’s partnership with Resilinc is so powerful – by linking cutting edge supply chain analytics into our insurance solution, we can provide real breadth of business interruption coverage.

After all, supply chain insight and visibility is key to a resilient business, in the auto sector more than perhaps any other. And a resilient business is a better managed risk.

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