"The tensions in logistics flows continue to be one of the biggest challenges"

Inflation, instability in economic growth, energy prices, the management of raw materials, tensions in logistics flows, the effects of the war in Ukraine... continue to affect the value chain. We raise the following questions:

1.- How do the events of the last three years continue to affect the Purchasing departments, from the Covid pandemic to the war in Ukraine, including energy prices, the lack of products from Asia and the tensions in logistics flows?

2.- How do these factors, as well as others such as inflation or the rise in interest rates, influence the so-called Purchasing managers index?

3.- Has this combination of circumstances, unexpected in many cases, led to a reconsideration of the Purchasing function in terms of sources of supply and visibility of the supply chain? Is there a trend to increase supply points in Europe or in areas such as North Africa?

4.- What impact can trends that are transforming the sector such as electrification, connectivity, digitization or sustainability have on Purchasing?

5.- How is the Purchasing function changing concepts such as interaction in the cloud, the blockchain or even the metaverse?

Ivana Rubasova, Exterior Parts Head of Purchasing at SEAT and CUPRA

1.- Since the pandemic began, we have been immersed in a series of events that have forced us to focus our attention on ensuring supply. Despite the fact that, from an operational point of view, the impact of Covid and the war in Ukraine have decreased considerably, they are still relevant in purchasing activities due to the collateral effect generated by the increase in the price of gas or by the transfer temporary removal of the production of certain components from Ukraine to other countries in order not to interrupt the flow of manufacturing.

This situation has led to a greater search for alternatives and has forced us to be more agile and flexible. At the same time, we have faced different challenges, such as the increase in the prices of raw materials and energy, and inflation itself. The tensions in logistics flows continue to be one of the biggest challenges due to the lack of carriers, and it has forced us to look for alternative logistics routes that are less crowded.

However, some of these elements, mainly energy costs and the price of some raw materials, are normalising. We trust that this positive trend will be reinforced throughout the year.

2.- Any change in prices and market conditions has an impact on Purchases. Our mission is to minimise this impact on the end customer.

3.- These circumstances have led to a rethinking of the supply strategy. In the case of Ukraine, for example, we have been forced to transfer the manufacture of some components to other factories located in other countries, both European and North African, so as not to interrupt the manufacturing chain. Additionally, the location of components has also been promoted to bring the supply chain closer to the production plants and minimise the risks of possible unexpected events that may affect the supply chain.

The Future: Fast Forward project, led by SEAT SA together with the Volkswagen Group to electrify the Spanish automobile industry, is providing a unique opportunity for suppliers to establish themselves closer to production centres.

4.- Each of them has an impact on the sector and the Purchasing area. In the case of electrification, it implies the nomination and search for new suppliers specialised in the technology necessary for electric vehicles, as well as the transformation of suppliers that already supplied combustion vehicles.

For its part, connectivity adds greater added value to the customer, and the great challenge is to strengthen the functionality of all connected car technology, both software and hardware. As for digitisation, it is essential for our processes to be more lean and to optimise the supply chain, while increasing control over it. The client wants to follow the entire manufacturing process of a car and the manufacturer, to know at all times where each component is located. It is a very relevant, necessary and complex process due to the number of actors involved.

Finally, sustainability and the use of recycled material in our products is vital. We are developing circular economy and supply chain decarbonisation projects within our models and we need to look for experts in this type of purchase.

5.- From Purchasing we have used new tools such as the metaverse to strengthen our relationship with suppliers through, for example, project presentation events. We are still very early in the process and, in the future, metaverse platforms or the cloud could serve to keep us connected with our stakeholders at all times and optimise work and communication processes with them. Due to the confidentiality of the projects, we must be able to use these platforms meeting all the requirements to guarantee the security of the information and of our suppliers.

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Opinion published in AutoRevista 2.377