Last updated on Sep 4, 2024

Your production line is at a standstill. How do you navigate negotiations with a supplier in crisis?

When your automotive production line grinds to a halt due to a supplier crisis, the situation demands a swift and strategic approach. Your supply chain is the lifeblood of production, and any disruption can lead to significant losses. In the automotive engineering field, where just-in-time manufacturing is common, the margin for error is slim. Navigating this tricky terrain requires a blend of technical know-how and negotiation acumen. Understanding the complexities of automotive supply chains and the importance of each component is crucial for effective communication with your suppliers. You must balance the urgency of resuming production with the realities facing your supplier, aiming for a solution that minimizes downtime and fosters a resilient partnership.

1 Assess Impact

Firstly, evaluate the extent of the impact on your production line. Determine which parts are affected and the potential downtime you're facing. This information is vital as it sets the stage for your negotiations. By understanding the specific challenges, you can communicate effectively with your supplier about the urgency of the situation. It's also important to consider any contractual obligations and the possibility of sourcing alternative parts in the interim. This assessment will guide your negotiation strategy, ensuring you approach discussions with a clear understanding of your needs and limitations.

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Alipio Chaves

Quality Manager | Projects | Business Management | Automotive | Quality System | Continuous Improvement | Operational Excellence | Quality Assurance
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O primeiro passo para administrar uma crise de parada de linha é realizar um inventário geral de informações para entender qual a dimensão da crise que você terá de administrar. Utilizo essas etapas para melhor visualizar o cenário e iniciar a estratégia de contornar a crise: 1-) Realização de um inventário geral, com a quantidade de peças em produto acabado no cliente, em processo e no fornecedor; 2-) Ter claro qual foi o motivo da interrupção do fornecimento, por exemplo, quebra de um equipamento, perda no transporte, quebra de qualidade, ...; 3-) Verificar quais recursos serão necessários (mão de obra, matéria prima, serviço terceirizado) 4-) Estabelecer um processo de comunicação com todas as partes interessadas;

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2 Open Dialogue

Initiate a dialogue with your supplier by expressing understanding of their crisis while emphasizing the critical nature of the situation for your production line. It's essential to maintain a professional and empathetic tone. Openly discuss the challenges faced by both parties and seek to understand the root causes of the supplier's difficulties. This will not only help in finding immediate solutions but also in building a foundation for a more resilient supply chain in the future. Remember, communication is a two-way street, and active listening can be just as important as clearly stating your own position.

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Alipio Chaves

Quality Manager | Projects | Business Management | Automotive | Quality System | Continuous Improvement | Operational Excellence | Quality Assurance
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Como boa prática, estabelecer um processo de comunicação com o fornecedor, colocando de forma a participar da solução do problema e não de forma agressiva, onde só é realizado cobrança sem aplicar empatia e verificar quais as dificuldades que ele está enfrentando. Estar presente nas dependências do fornecedor gera um formato mais rápido de comunicação, gerando o entendimento e suporte necessário nesse processo. Importante enfatizar que somos dependentes um do outro e que quanto mais rápido sairmos desse processo de crise, melhor será.

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Steven Wood

Managing Director, Chief Operating Officer, Operations Director of over 30 years experience in the Food Manufacturing Industry
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The best way to approach such an issue issue is one of collaboration and support understand from the supplier. What can you do to help them?. That may be less or find an alternative route of supply in the short term. In reality, you have few levers so it’s far better to work with the supplier to improve the situation and try to become confrontational

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3 Explore Solutions

With a clear understanding of the impact and an open line of communication established, it's time to explore potential solutions. Be creative and collaborative in this process. Consider short-term fixes that can get your production line moving again, even if they're not perfect. This might involve temporary measures such as expedited shipping, alternative parts, or even adjusting production schedules to accommodate delays. The goal is to find a viable solution that offers relief to both your company and the supplier, ensuring that the partnership can endure beyond the current crisis.

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4 Mitigate Risks

In parallel with finding an immediate solution, work on mitigating future risks. This could involve diversifying your supplier base to reduce dependency on any single source or negotiating more flexible contract terms that account for unexpected disruptions. It's also wise to develop contingency plans for various crisis scenarios. By proactively addressing potential risks, you'll be better equipped to handle similar situations in the future, minimizing the impact on your production line and maintaining a steady flow in your supply chain.

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Steven Wood

Managing Director, Chief Operating Officer, Operations Director of over 30 years experience in the Food Manufacturing Industry
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In the modern area where supply chains are extremely fragile a multisourcing strategy of raw materials packaging and equipment is an intelligent approach to adopt. Do not put all your eggs in one basket with a single supplier but look for others who can offer you a service In that contingency against a supply disruption which in the current error is almost inevitable

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Danielle K.

Procurement Manager at CSID
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Your local supplier maybe a better alternative to address immediate and/or long term needs. Daily check-ins maybe needed to build a rapport with your local sales rep.

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5 Build Partnerships

Beyond the immediate crisis, focus on strengthening relationships with your suppliers. Solid partnerships are invaluable, particularly in times of difficulty. Work towards mutually beneficial arrangements that incentivize quality and reliability. Consider long-term collaborations that could involve joint investments in technology or processes that enhance supply chain resilience. By fostering a sense of partnership, you encourage suppliers to invest in meeting your needs, which can lead to improved performance and reduced risk of future crises.

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6 Plan Forward

Finally, use this experience as an opportunity to refine your approach to supply chain management. Analyze what worked and what didn't during the negotiation process and apply these learnings to improve your strategies. Regularly review and update your supply chain risk assessments to reflect the changing landscape of the automotive industry. By planning forward and adapting to new challenges, you ensure that your production line remains as robust and responsive as possible, ready to meet the demands of an ever-evolving market.

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Steven Wood

Managing Director, Chief Operating Officer, Operations Director of over 30 years experience in the Food Manufacturing Industry
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Stockholding levels are a critical factor to bear in mind when it comes to supply of either materials or equipment. Ensure you have done your homework in this area If we are talking about equipment then ensure you have critical parts and critical that spares well stocked up. If we are talking about materials or packaging and stocks allow for a reasonable amount of time for an outage in that way you have some level of buffer against disruption.

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Your production line is at a standstill. How do you navigate negotiations with a supplier in crisis?

1

2

3

4

5

6

1 Assess Impact

2 Open Dialogue

3 Explore Solutions

4 Mitigate Risks

5 Build Partnerships

6 Plan Forward

Automotive Engineering

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Your production line is at a standstill. How do you navigate negotiations with a supplier in crisis?

1

2

3

4

5

6

1 Assess Impact

2 Open Dialogue

3 Explore Solutions

4 Mitigate Risks

5 Build Partnerships

6 Plan Forward

Automotive Engineering

Rate this article

Thanks for your feedback

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