Securing the supply chain for an electronics manufacturer
The company suffered due to sudden price spikes of components from Asia. We developed a geopolitical risk map and changed the structure of contracts with suppliers. Thanks to this, the company avoided a downtime in June when competition was waiting for parts. Raw material costs fell by 11%.
ElectroTech Kraków struggled with unstable supplies of components from Asia. Lack of predictability hit the production schedule and the company's margin. Within 5 months, we rebuilt the purchasing system, which saved liquidity during the peak season.
The challenge
In December 2023, the company recorded 4 serious delays that stopped the assembly line for 86 hours. Contractual penalty costs towards end recipients then amounted to 14,300 PLN. Main components were getting 7-9% more expensive month by month without any warning from intermediaries. The owner wasn't sure if he would have anything to assemble control modules from in two months. There was a lack of clear rules for verifying suppliers and a contingency plan in case of logistics channel blockades.
Our approach
Our team of 3 people entered the company in January. We started with an audit of 12 key commercial contracts. We analyzed real transport routes and introduced a simple warning system for customs changes. We didn't promise miracles, just hard data. We changed the operating model from ad-hoc purchases to cluster purchases with a hard price guarantee for 4 months in advance. We build the foundations of your peace of mind, so we focused on eliminating intermediaries who generated the greatest margin risk.
The solution
We created a risk map for 3 main regions of Asia. We implemented new contract templates with clauses that protect the buyer against a sudden transport price change above 15%. We launched a buffer warehouse for 14 hardest-to-reach components, which froze capital but gave a guarantee of work continuity. We also developed relations with an alternative supplier from the Czech Republic to shorten the transport route for critical orders. It was a hard structure that gave a certain profit.
Results
The company stopped reacting nervously to every news about container prices. The supply structure became predictable, and production started at full steam without downtime during the busiest period of the year.
Timeline
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January 2024Contract audit and identification of 8 logistics bottlenecks.
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February 2024Negotiation of new terms with suppliers from China and Taiwan.
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March 2024Launch of buffer inventory control procedures in Krakow.
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June 2024System test during a logistics crisis — no delays.
"We were looking for someone who wouldn't teach us theory but would specifically organize papers and deliveries. Korona Corporate Governance did it without fluff. I finally know how much I'll pay for components next quarter."