The transformation of the automotive industry toward zero-emission mobility means much more than simply fitting a fuel cell, electric motor, or battery instead of a combustion engine and fuel tank. “Transformation” here means real change, not just further down the line when the vehicles are on the road but upstream too – all the way along supply chains. The crises of recent years have made it clear that companies with global operations need to be proactive in shifting their supply chains toward more sustainability and resilience. Among other things, this calls for greater supply chain transparency in order to meet the challenges posed by the new (drive) technologies.
Rather than simply changing the technology used inside the products, electromobility is radically transforming the entire industry. This is making the supply chain a key part of the automotive industry because it too is undergoing change – in terms of both the manufacture of components, modules, and systems for electric vehicles and the continued refinement of a sustainable, resilient, and transparent supply chain.
Supply chains are complex by their very nature, with many goods and components being obtained from one country and then used in the manufacturing process in another. Some machinery and systems as well as production tools are purchased and made at sites all over the world before finding their way into ElringKlinger’s global manufacturing network. With sustainability along the entire value chain being a high priority for ElringKlinger, the company has set itself the ambitious target of making its in-house global production carbon-neutral by 2030 as a first step.
Over the past few years, unforeseeable incidents such as the container ship stuck in the Suez Canal, container backlogs at ports caused by the COVID-19 pandemic, and various armed conflicts have demonstrated just how fragile supply chains can be. Yet they also find themselves buffeted by other external factors such as extreme weather events, volatile energy prices, and import restrictions – all challenges that call for maximum flexibility to keep supply chains stable and prevent assembly lines from grinding to a halt.
Via its innovative cell cover, ElringKlinger is part of a large-scale international project (IPCEI “EuBatIn”) to build a value chain for the European battery industry.
At the same time, supply structures – and thus also their complexity – are evolving, driven by the ongoing transformation toward electromobility. This is because new products, such as battery systems and electric drive unit components, are bringing a new wave of suppliers onto the scene, and these new components and their suppliers have to be integrated seamlessly into existing supply chains.
The high degree of complexity in supply chains thus requires greater transparency because not all goods are available locally. Thus it is all the more important that raw materials are mined and processed in an environmentally sustainable way and that they can be traced right back to their origin. And the same applies to upholding compliance standards. By way of a “chain reaction,” therefore, ElringKlinger expects high standards of its suppliers, who in turn enforce them on their own suppliers. This is ensured with the help of ElringKlinger’s supplier code of conduct, which covers areas including environmental responsibility and compliance with social standards, the law, and the principles of business ethics. With it, the ElringKlinger Group commits its suppliers to taking corrective action in the event of a suspected or actual breach of human rights or environmental law because fulfilling one’s due diligence obligations throughout the supply chain is extremely important to ElringKlinger on account of its strong corporate culture.
To identify suppliers that may potentially harbor risks, ElringKlinger uses the results of a risk analysis that gives it the underlying data it needs for preventive countermeasures. In addition, an innovative software tool will help in future to reach out to suppliers directly and obtain data on additional issues raised by the risk analysis, thus contributing to greater transparency along the supply chain.
In a world in flux, supplier relationships built on partnership can lay the foundations for resilient supply chains. However, this requires both trust and transparency along the entire chain.
ElringKlinger has also set up anonymous whistleblower systems that anyone can use to report misconduct; the company requires its suppliers, staff, and subcontractors to raise awareness of these systems. Taken together, these measures are fostering a culture of integrity and transparency throughout the supply chain that is underpinning long-term partnerships and sustainable growth.
The automotive industry’s transformation toward electromobility has a societal and environmental dimension as well as a technological one, and ElringKlinger is playing an active role in helping to shape a responsible future for the industry through critical reflection and continuous improvement. Besides being something to aim for, a sustainable, resilient, and transparent supply chain is also ElringKlinger’s top priority for its strategic sustainability management.
