As a global player in the automotive electronics industry, ACTIA has gained considerable experience in managing its supply chain. In a global situation that is severely disrupted, the relationships that the group has established with its suppliers helps strengthen its ability to serve its customers.
Vincent TURMEL, ACTIA purchasing director, explains the group’s purchasing strategy using the image of the “extended enterprise”.
What is the global situation as regards the procurement of electronic components?
The electronics industry is facing many disruptions such as the geopolitical situation, climate issues and the pandemic, in addition to risks related to globalisation. Although purchasing from suppliers based all over the world allows us to reduce purchasing costs, and hence production costs, it also increases the risks: production delays, quality issues, problems during transport, or more significant issues such as natural disasters or the overthrow of a government.
Unfortunately, we can expect these phenomena to multiply in the years to come. As a result, ACTIA is developing resiliency in its supply chain to face up to these disruptions.
What is a resilient supply chain?
A supply chain is resilient when it is able to effectively weather multiple disruptions that may occur, so that the ACTIA production sites can continue producing, despite any incidents.
To achieve this, resilient logistics chains have to incorporate certain prerequisites, so as to avoid repeating certain mistakes from the past.
For instance, it has become vital to understand all of the links in the logistics chain for families of strategic purchases, such as semiconductors, in order to control risks.
The supply chain must therefore be based on an appropriate purchasing and procurement strategy, in which it is vital for all of the data to be shared between their different stakeholders in the chain.
What is ACTIA’s Purchasing strategy?
ACTIA’s purchasing strategy is based on its market intelligence and the creation of a supplier panel with which ACTIA develops close and long-term partnerships. Risk management and supplier relationship management are therefore at the heart of the process for securing ACTIA’s supply chain.
What has the crisis changed in the relationship with suppliers?
We involve our suppliers very early on in the projects: starting from the innovation and consultation phase for an invitation to tender. This allows our suppliers to understand what our emerging needs will be. For their part, they provide us with their innovation roadmap for their components. This enables early incorporation of innovations into our designs. In this respect, the supplier ecosystem is an extended enterprise. Suppliers are strategic partners for our innovation, the quality of our products, and our competitiveness. The components crisis has obviously furthered this trend.
What is ACTIA’s market intelligence based on?
For more than 15 years, ACTIA has had a dedicated group of at least 20 people in place to continuously monitor the electronics market: the Components observatory. It provides precise information about the electronic components market in order to make the best sourcing decisions, and also to monitor and manage product obsolescence. It should be emphasized that ACTIA is one of the few EMS to have this experience and offer this service to its customers.
The observatory uses the component information databases that it populates and consolidates so that, in the development phase, engineers have an accurate picture of the status of all the parts in their parts list, in order to identify and eliminate the risks.
In serial production, our experts monitor the status of each component to detect and manage the appearance of new risks – such as obsolescence.
Lastly, it participates in the process of creating new parts, in particular for multisourcing, which is essential for our supply chain resilience strategy.
What tools are used by the ACTIA Components observatory?
We subscribe to various databases, such as IHS, which populate our digital solution: iPersyst, which was specifically developed for managing component obsolescence, and now enables us to manage more than 150,000 components and more than 12,000 parts lists. To react quickly, it is essential to have the greatest amount of reliable information in real time, over a huge number of references. This is why digitalisation is essential for ensuring supply chain resilience.
How does ACTIA identify procurement risks?
The key phase in establishing a resilient supply chain is during product development. It is during this stage that the risk mitigation actions are most effective. This is why ACTIA has a dedicated purchasing team that is an integral part of the product development team.
This team is tasked with analysing risks throughout the product development period, based on data collected by the Components observatory. The risk analysis is exhaustive and relates to all of the references in the parts list.
Our supplier partners help to provide us with the information needed for this analysis. This is why we are very much in favour of the concept of transparency in choosing our partners.
What has the crisis brought to this risk analysis?
- ACTIA is carrying out an in-depth analysis of its supply chain and suppliers, to secure procurement in the future. In particular, we ask suppliers of semiconductors for additional information.
- We assess:
- – their production capacities in relation to overall demand;
- – the front-end and back-end manufacturing sites;
- – their dependence on subcontracting;
- – their multi-FAB strategy, etc.
ACTIA has expanded its database to include a new criterion, procurability, and according to these criteria, a component will be rated as more or less “procurable”.
What are the advantages of multisourcing?
Working with multiple supply sources is key for mitigating risks and securing the supply chain. Multisourcing is therefore the rule at ACTIA. Sole sourcing is a risk and only applies to very specific components (CPU, PCB, power ICs, etc.). Carried out when a new reference is issued, it allows components’ end-of-life to be managed, redesign risks to be reduced, and also supplier quality issues to be alleviated. Multisourcing is of course also an ally when it comes to competitiveness, the crisis has not changed anything there.
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The supply crisis has shaken up the purchasing function’s doctrine of the iron triangle – Quality, Cost, Delivery – which remained on a fragile balance. In this new equation, Delivery has become the master, often to the detriment of cost. Relationships with our customers, partners and suppliers have also evolved. Power relations are being rebalanced, and the supplier is becoming a partner on which our ability to produce and deliver to our customers depends. The supplier relationship is entering into a new era, and it is an essential link for the company’s competitiveness and long-lasting success.Vincent TURMEL.