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Security of supply: definition and important aspects for buyers
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Security of supply in a nutshell:
Security of supply describes the reliable and uninterrupted availability of goods, raw materials or services at the required times. It is a strategic success factor for purchasing, as it ensures continuous production and business processes and prevents potential supply bottlenecks.
Example: An automotive manufacturer secures its supply of critical semiconductor components through dual sourcing, holds a 4-week safety stock and concludes binding supply contracts with both suppliers for 24 months with guaranteed minimum purchase quantities of 50,000 units per quarter.
Contents
What is security of supply?
Security of supply in purchasing refers to ensuring a continuous and reliable supply of required goods, materials or services to a company. It ensures that all necessary resources are available in the right quality, quantity and at the right time in order to maintain production processes and business operations without interruptions.
Core elements of security of supply
Significance for purchasing
In procurement, security of supply plays a decisive role in a company's competitiveness and stability. It enables production interruptions to be avoided, delivery times to be met and customers to be served reliably. Effective management of supply security therefore makes a significant contribution to customer and stakeholder satisfaction.
Security of supply: from traditional strategies to modern approaches
Building on the importance of supply security as an essential factor for smooth operations, companies today are facing increasingly complex challenges. Global supply chains, volatile markets and unpredictable events such as pandemics require a rethink of how to secure the supply of materials. The need to switch from traditional methods to innovative approaches is becoming increasingly urgent in order to ensure competitiveness and stability.
Old: Traditional security of supply strategies
Traditional approach: Historically, companies relied on high stock levels and long-term contracts with a small number of suppliers to secure supplies. This"just-in-time" model meant that large quantities of materials were held in stock to mitigate any shortages. Relationships with suppliers were often rigid and there was a lack of flexibility to react to market changes. This strategy led to high warehousing costs, tied-up capital and an increased risk of stock obsolescence. In addition, external disruptions such as natural disasters or political unrest could still severely affect supply chains.
New: Supply Chain Resilience
Supply chain resilience: Modern companies rely on a resilient supply chain that prioritizes agility and adaptability. By using digital technologies such as IoT, big data and AI, supply chains become transparent and can be monitored in real time. This enables proactive risk analysesand rapid responses to disruptions. Strategies such as nearshoring and flexible contract models increase flexibility. In addition, collaboration across the entire value chain promotes innovation and strengthens relationships. The implementation of supply chain resilience leads to reduced inventories, lower costs and higher customer satisfaction through reliable deliveries.
Practical example: Automotive industry
A leading automotive manufacturer was facing challenges due to supply bottlenecks for electronic components. By converting to a resilient supply chain strategy, the company was able to expand its supplier base within six months. supplier base by 30% within six months. The use of AI-supported forecasting tools improved demand planning by 20%, which led to a 15% reduction in inventory levels. The response time to supplier disruptions was reduced from an average of ten to two days. Overall, the company increased its production efficiency and achieved annual cost savings of 50 million euros.
Conclusion on security of supply
Security of supply is a key success factor for modern companies. The combination of strategic supplier management, optimized inventory management and digital risk management enables robust and future-proof procurement. Despite higher costs and coordination efforts, the advantages of a diversified procurement strategy clearly outweigh the disadvantages - especially in times of global uncertainty and rapidly changing markets.
