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The importance of crisis management for resilience in the automotive industry
Natural disasters, political instability, supply chain disruptions, product recalls and cyber-attacks: such crises can have serious consequences for companies, from production stoppages and loss of sales to reputational damage.
Effective crisis management is therefore crucial for a company's resilience. It helps to recover from crises and resume normal operations as quickly as possible. It also helps to minimise the negative impact of crises and strengthen competitiveness.
The automotive industry is inherently complex and globalised, which makes it particularly vulnerable to a variety of crises. In recent years alone, it has faced these challenges, some of which are still ongoing:
Global supply chain issues: The Covid-19 pandemic and the war in Ukraine have severely impacted global supply chains. Bottlenecks in key components and raw materials are leading to production stops and delivery delays.
Semiconductor shortage: Demand for semiconductors has risen sharply in recent years, while production capacities have not kept pace. This is leading to bottlenecks and price increases that are hitting the automotive industry hard.
Stricter environmental regulations: Environmental regulations for automobiles are becoming increasingly strict. This requires the development of new technologies and the adaptation of production processes.
Shift towards e-mobility: As a result of stricter regulations and changing customer expectations, the automotive industry is shifting towards e-mobility. This requires massive investment in new technologies and production processes.
Shortage of raw materials: One consequence of the shift towards e-mobility is the rise in prices for important raw materials for the production of batteries such as cobalt, lithium and nickel. This puts pressure on car manufacturers' margins and can lead to supply bottlenecks.
Practical tips for effective crisis management in the automotive industry in turbulent times
In order to be successful in these turbulent times, effective crisis management is essential. Below you will find some practical tips on how to prepare for and manage crises.
1. Prepare for crises:
- Identify potential crisis scenarios: Carry out a risk analysis to identify potential crises that could affect your company. Evaluate the likelihood and potential impact of each crisis scenario.
- Create a crisis plan: Develop a comprehensive crisis plan that defines how your company will respond to various crisis scenarios. The plan should include roles and responsibilities, communication channels, decision-making processes and actions to manage the crisis.
- Train your employees: Train your employees in crisis management procedures. Make sure they know what is expected of them in a crisis situation and how to communicate effectively.
- Create a culture of risk management: Promote a culture of risk management throughout the organisation. Encourage your employees to recognise and report potential risks.
2. Manage crises:
- Act quickly: as soon as a crisis occurs, it is important to act quickly and decisively. If you are well prepared, you don't have to waste time analysing the situation. You can take immediate action to contain the crisis and minimise its impact.
- Effective communication: Communicate clearly and transparently with all internal and external stakeholders. Ensure that everyone is informed about the situation and knows what is expected of them.
- Decision-making: Make quick and informed decisions to manage the crisis. Make sure you consider all relevant information and weigh up the potential impact of your decisions.
Additional tips for effective crisis management
- Learn from crises: After a crisis, it is important to analyse the events and learn what went well and what went badly. Use these insights to improve your crisis plan and reduce the likelihood and impact of future crises.
- Build strong relationships: Build strong relationships with your key stakeholders, such as customers, suppliers and authorities. These relationships can help you in times of crisis.
- Utilise technology: Use technology to improve your crisis management. There are a number of software solutions that can help you plan, manage and analyse crises.
- Hire an interim manager: Interim managers can provide valuable support to companies in the automotive industry during difficult times. They have extensive experience in managing crises and can act quickly and effectively to restore the necessary stability.
Below we take a closer look at how interim managers can provide valuable support for the automotive industry in times of crisis.
The role of interim managers in crisis management
Interim managers can provide valuable support to companies in the automotive industry in crisis situations. The following advantages make them valuable resources when needed to manage crises quickly and effectively and get companies back on the road to success:
- Rapid availability: interim managers are generally available at short notice and can be quickly involved in crisis management.
- Independence: Interim managers are independent of the company and can therefore make objective decisions.
- Expertise: Interim managers have extensive experience in crisis management and the automotive industry.
- Flexibility: Interim managers can react flexibly to new challenges and adapt their tasks to changing requirements.
The typical tasks of an interim manager in crisis management in the automotive industry include
- Analysing the crisis situation: the interim manager must first analyse the crisis situation in detail in order to understand the causes and potential effects.
- Developing a crisis plan: Based on the analysis, a crisis plan must be developed that contains measures to deal with the crisis.
Implementing the crisis plan: The interim manager is responsible for implementing the crisis plan and managing the crisis management process. - Communication with stakeholders: The interim manager must inform all relevant stakeholders about the crisis situation and the measures taken.
Negotiations with suppliers and customers: The interim manager can conduct negotiations with suppliers and customers to minimise the impact of the crisis. - Reorganisation of the company: In some cases, the interim manager can also be tasked with reorganising the company.
Case study: Successful crisis management by an interim manager
This case study illustrates the crucial role that interim managers can play in crisis management in the automotive industry:
An internationally active German Tier 1 automotive supplier with a global market presence, which develops and manufactures rubber hoses and engine cooling circuits for the automotive industry, found itself in a critical situation: the purchasing team was unstable and most of the long-term employees had left the company. At the same time, the start of a new project for key customers was imminent, which involved new purchased parts and investments in the pre-series phase. The many unresolved problems, the overload of employees and the demotivation of the newcomers threatened to jeopardise the progress of the project. In addition, there was a lack of discipline in the processes between IE and PUR as well as missing or incorrect data in SAP and other information systems.
To overcome the crisis, an experienced interim manager with 17 years of experience in the automotive industry was brought in. The expert had
- extensive expertise in the area of pre-series purchasing,
- negotiating skills,
- knowledge of purchasing processes,
- resilience
- and the ability to work in a multitasking environment.
He took on the tasks of the missing employees, consolidated the data, implemented structured processes and set to work to fulfil the following project objectives:
- Securing delivery dates and eliminating delays
- Stabilisation of the purchasing team
- Savings within the project purchasing contracts
- Promoting teamwork in the pre-production workshop
- Improving the performance of the supplier panel
- Identification of new potential improvements and savings opportunities
The crisis was successfully overcome thanks to the deployment of the interim manager. The delivery deadlines were met, delays eliminated and the project successfully completed. Specifically, the following goals were achieved:
- Release of the escalation status by the OEM
- Savings of approx. 80,000 € within the supervised project
- Successful recruitment and integration of new permanent employees
- Integration of new suppliers and on-time delivery of over 97%
The use of an interim manager with industry expertise proved to be extremely effective in this crisis situation. Thanks to his quick grasp of the situation, his experience and his assertiveness, he was able to stabilise the situation, achieve the project goals and at the same time create the basis for a sustainable positive development of the company.
Conclusion
Crisis management is a critical aspect of business continuity and success, especially in the dynamic and often volatile automotive industry. Effective crisis management requires a combination of strategic planning, proactive preparation and decisive action during a crisis event.
Interim managers can provide valuable support to companies in the automotive industry during these difficult times. They have extensive experience in managing crises and can act quickly and effectively to take control and create stability.
The use of interim managers in crisis management can help companies to strengthen their resilience, secure their long-term competitiveness and emerge stronger from crises.
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