Automotive companies must turn to specialists for greater supply chain visibility

Following the news that Volkswagen has partnered with RCS Global, an agency specialising in supply chain analysis, to audit its suppliers for sustainability and ethics compliance;

David Leggett, Automotive Analyst at GlobalData, a leading data and analytics company, offers his view:

“The COVID-19 crisis has demonstrated once again that automotive companies have long and complex supply chains and also that they often lack transparency, which hampers planning and creates risk. Supply chains can break lower down the chain and if a critical part or sub-component is missing, problems are created further up the chain.

“However, many vehicle makers are now finally addressing the problem and securing the help of supply chain specialists – as VW is doing. Others – including Daimler and Volvo Cars – are investigating new technological solutions such as crypto-tech blockchain to gain transparency on supply chain issues such as CO2 and the source of cobalt for lithium-ion batteries. Again, it means working with outside specialists and considering radical changes to procurement processes and systems.

“Not only will the business case build for better understanding and transparency of automotive industry supply chains, but pressures to audit and measure suppliers’ compliance with sustainability and ethical standards will inevitably grow.

“In the cooperation with RCS Global, it has already been possible to identify 134 sub-suppliers and 18 mines in the Volkswagen Group’s battery supply chains and the majority have already been audited. VW is making good progress, but there is a long way to go.”

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