Business Communication Flexibility Importance (Continental ERP-System)
Business Communication at Continental aims to communicate to Supplier a stable demand with reasonable fluctuations in volume production during series production); this process is based on both customer orders as well as the mid and long-term Continental rolling customer demand forecast (CDP). However, the proportion of concrete OEM’s orders and demand forecast can vary. This depends on the OEM, their business model (commercial vehicle, aftermarket etc.) the region, and the associated complexity of predicting demand. Product variety within the automotive industry makes the planning process complex. OEM’s demand is rarely perfectly stable. Frequently, OEM’s know specific and fixed requirements by customers only a few days before the assembly of a vehicle starts. Changes – short or mid-term – in OEM demand are likely and influence the whole supply chain.
All this information is processed within Continental ERP-Systems taking into account capacity restrictions and certain planning logics to offset high fluctuations. However, fluctuations are reflected in the Delivery Schedule, which Suppliers receive from the any Continental location in regular intervals.
Fluctuations must be compensated by means of stock in the logistics chain as well as by flexibility of all partners within the complete supply chain. However, flexibility within the supply chain is limited due to capacity constraints, availability of raw material, cycle time, supplier lead-time and transportation time. All partners in the supply chain have to balance properly their capacities, inventories and other resources in order to correspond to market volatility. There might be periods of stable, increasing of falling demands. This volatility can hardly be predetermined as a lot of complexity is associated with this (e.g. material shortages, increased customer demand, economic slowdown etc.).
A delayed response affects supply, inventories and causes costs. Therefore, it is of the essence that Continental and Supplier ensures the necessary Business Communication flexibility in the event of changes in demand.
The only option to manage flexibility is to balance risks throughout the whole supply chain and share risks between business partners. This approach requires trustful collaboration and information sharing between the Parties and is preferably combined with VMI consignment process.