Global Supply Chain Disruption

We are in the midst of what is being dubbed the ‘Great Supply Chain Disruption,’ a period that began with the Covid-19 pandemic in early 2020 and the infamous shortage of semiconductors around the same time, and has continued as the world has grappled with the resultant labor shortages and massive inflation, and the current-day conflict between Russia and Ukraine, which continues to strain supply chains and have a heavy impact on the automotive and energy industries; compounding our difficulties in returning the supply chain to normal.

2022 doesn’t look to be a year in which manufacturers will find much relief, as central banks the world over, citing ongoing supply chain disruption and downgrading any prospects of near-term economic growth, are eyeing steep contractionary monetary policies to curb inflation, making it more difficult for manufacturers to invest in building up suppliers, to bank inventories to meet customer demand, or to solve systemic supply chain problems that have existed for years and have only come to be highlighted by the pandemic.  Many auto manufacturers have been left scrambling trying to shore up gaps and bring on new suppliers in less affected regions in a desperate effort to increase vehicle inventories and meet customer demand, without having time or ease of building capital on their side to do so.

What IATF Says About Maintaining Supply to Customers

The emphasis on maintaining supply to ensure customer satisfaction is clear throughout all of IATF 16949.  Clause 6, for instance, includes the additional requirement for contingency plans in 6.1.2.3, which includes the requirement that automotive manufacturers identify both internal and external risks to manufacturing processes that are essential for maintaining production output and to ensure that customer requirements are met.  The clause goes on to require plans for continuity of supply in the event of things such as interruption from externally provided products, processes, and services; natural disasters; and, of note, labor shortages.

The supply chain disruption has become so pervasive that many organizations were suffering severe blows to their supplier scorecards, which prompted the IATF to amend FAQ 8 in early April of this year to address concerns that additional audit time would become necessary for many organizations as a result of the poor scorecard performance which has resulted from supply chain disruption that is largely outside of their control.  While IATF has answered in the negative, that these circumstances are global in nature and do not warrant special audit conditions, it highlights the global scale of the issue and the struggles that are becoming common to all auto manufacturers who are trying to guarantee supply throughout the supply chain to meet customer demand and meet customer requirements.

What IATF Says About Vetting and Approving Suppliers

The automotive quality management system standard is strewn with exhortations of controlling the quality of supplied components throughout, starting in clause 4, with 4.4.1.1 requiring manufacturers to ensure the conformance of all products and processes to all customer and statutory and regulatory requirements, including those that have been outsourced.  There are a litany of additional requirements for supplier selection in 8.4.1.2 including risk assessment to ensure that suppliers are able to achieve consistent product conformity and supply of product and that quality and delivery performance are considered in the selection process.  Also, of note, the standard requires in 8.4.2.3 that sub-tier suppliers hold at least an ISO 9001 certification and that they are on the path to having a quality system that is certified against the automotive standard.

These are just a high-level view of some of the requirements that IATF 16949 places on automotive manufacturers in the selection, vetting, and approval of suppliers.  Auto manufacturers are tasked with finding and developing suppliers with appropriate quality system certifications and approving products through a PPAP process to ensure that they are able to meet quality and delivery requirements, all happening rapidly through the ever-changing world that we live in today, marked by constant instability and disruption.  Managing suppliers in such a dynamic environment is becoming more difficult than ever for most auto manufacturers.

How IntellaQuest Can Help You Manage Suppliers and Supplier PPAPs Amidst Global Supply Chain Disruption

IntellaQuest is perfectly suited to help you to manage the chaos.  We’ve honed our automated workflow solutions software for more than 25 years to help auto manufacturers to manage suppliers through a combination of applications.  For instance, relevant documentation, certifications, and scorecards can be managed through our SupplierQuest application.  Through PRRQuest, organizations are able to take a collaborative approach to problem resolution and supplier development.  PPAPQuest makes the part approval process from new suppliers simple, ensuring that of the necessary elements are completed and evidence of conformity collected and properly documented.  And our Collaboration Portal, integrating to each of these applications, brings our approach to supplier management together, by creating a space where your suppliers can enter to view scorecards, upload documentation such as their QMS certifications, and work in collaboration with your team to resolve corrective actions or complete PPAPs.  As our business environment becomes more complex, so increases our need for tools to help us manage our business processes – that’s what we do best.