When to buy what at the best price on the world market? This is a question that every manufacturing company asks itself. The pandemic and the war in Ukraine have exacerbated this and caused significant difficulties in international supply chains. Product availability and supply capability have thus increasingly become an existential aspect for companies. Therefore, we have re-defined the topic of supply security (which EVVA has intensively dealt with in the stakeholder dialogue 2020, but which was not yet defined as "material" at the time) as such.
EVVA quickly responded at the beginning of the Ukraine war and was able to increase the purchase quantities for brass and nickel, the main materials for our production, as a precautionary measure to ensure supply security for our customers and partners.
Fixed price variants have also been agreed with the energy supplier for electricity and gas prices and have been purchased on the spot market in order to diversify the risk and protect against future sharp price surges. Energy is a much higher cost factor than in previous years, and prices will at least double in 2023.
The trend towards independence
In the past, higher inventory levels were perceived as too expensive a solution, but this view has been relativized by the Corona and Ukraine situation. Today, more flexible stockholding serves as a precautionary measure to better prepare for supply fluctuations and to keep one's own production running longer in the event of a crisis. It is not solely about cost efficiency - the potential for a new crisis wave is being factored in as a risk factor. For companies, higher supply security means greater economic sustainability. "EVVA has a high vertical range of manufacture, which means that we can produce many small parts ourselves. Our competitors often have to buy them from other suppliers. This has helped us in the pandemic. Whether with materials or energy, we very closely observe price developments and try to take advantage of favorable purchasing opportunities. Another advantage is that we have stocked our warehouse as a precautionary measure", said EVVA CEO Stefan Ehrlich-Adám.
The corresponding inventory management has benefited EVVA in the crisis. Herbert Reininger, who leads the logistics and procurement department at EVVA, explains how necessary preventive inventory stocking is: "Whereas it used to take 2 months to get a brass delivery, it now takes around a year. And delivery times for electronic components can be up to 2 years. This means that you have to order very early, even though you do not yet know exactly which products will be in higher demand in 2 years or which components will be particularly needed for new developments. On the other hand, it is not economically viable to fill the entire warehouse for the next few years at once. Finding the right balance is important. That is why supply security has become a major issue for EVVA".
Single source analyses
Where previously there were isolated supplier dependencies, EVVA has been able to select from at least two suppliers through single-source analyses in order to increase supply security and independence. At the same time, EVVA maintains its high inventory levels for critical product parts by purchasing early.
EVVA has also professionalised the analysis of missing material: Where and why do material shortages occur (e.g., due to spontaneous urgent large orders or unreliable supply sources) and how can they be avoided? These learning processes help EVVA, among other things, to optimise the Kanban system, adapt work time models to large orders, and maintain high delivery performance.
The big EVVA advantage:
In-house machine and tool construction
EVVA has been able to repair and often design the necessary production machines and tools themselves. A large portion of EVVA's machinery was planned and implemented by their in-house mechanical engineering department - which has a positive impact on independent maintenance and delivery capability.
This competence and the traditionally high vertical range of manufacture bring advantages that many competitors do not have. EVVA can manufacture countless access system variants and order sizes themselves - down to a batch size of 1, meaning only one individually manufactured security product.
We have been training our apprentices in mechanical engineering and toolmaking ourselves for decades, so the know-how for our own machine innovations remains in-house. This independence strengthens our economic sustainability.
Fulfilment date: 2024
How: Thanks to its large vertical range of manufacture, EVVA is able to produce many small parts for production in-house and does not need to have them delivered. A comprehensive analysis will determine which previously purchased parts can also now be produced in-house.
Positive impacts: If even more purchased parts can be quickly produced in-house, this will have a positive impact on delivery reliability and independence from fluctuations in supply.
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