ZF Friedrichshafen AG implements the new Xcitec® Risk Management software. ZF and Xcitec® jointly developed a software solution that identifies supplier risks early on and enables the execution of measures to avoid and reduce risk. With the implementation of this new software, ZF has supplemented its existing supplier management with active risk management.
Suppliers have more than 50 percent of the materials contingent at ZF, meaning they have substantial influence on the company’s performance. For this reason, it is important to identify risks in the supplier portfolio early on, to assess these risks and to prevent negative effects on ZF, such as delivery bottlenecks or delivery failure, with appropriate measures. The purchasing department at ZF uses Xcitec® Risk Management to accomplish this. In the first step, the focus is on financial risks and supplier bankruptcies.
ZF has defined a risk model, in which indicators consisting of both hard facts (e.g. credit rating) and soft facts (e.g. relocation period) as well as additional company information enable prognoses regarding the probability of occurrence and the expected degree of damage arising from a supplier bankruptcy. This risk model is the foundation for all risk analyses.
Risk assessment for all active suppliers is carried out in an automated and secure process. Any existing indicators in the Xcitec® Supplier Management system or other systems are automatically integrated into the risk assessment, and when changes occur, all values are updated in real time. Purchasing department members can manually enter any additional indicators, such as company news items.
The risk priority index is calculated from the probability of occurrence and the degree of damage. This index indicates the degree of risk and enables corresponding measures for risk avoidance or reduction. Warning functions notify the purchasing department about changes in risks and indicators. The measures are documented and monitored in the software to secure the implementation of the risk prevention measures.
“We have implemented the Xcitec® Risk Management Software to identify risks early on, recognize their impact and actively implement measures to avoid negative consequences for ZF,” says Johannes Kamzelak, Head of Central Purchasing for Production Materials at ZF Friedrichshafen AG. “The integrated approach of the Xcitec® software solution enables us to benefit from existing data in the Supplier Management and Risk Management solutions.”
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