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AXA XL & Swiss Re collaborate on auto sector supply chain resilience

18th July 2019 - Author: Luke Gallin

Insurance and reinsurance giants, AXA XL and Swiss Re have collaborated to improve the understanding of supply chain risks and develop greater supply chain resilience within the automotive industry.

value chainA recent post by Rachel Alt-Simmons, Head of Strategic Design, Insurance Pricing and Anne Sheehy, Head of Property Pricing, Insurance Pricing at AXA XL, announces the new partnership with global reinsurer Swiss Re.

The pair underline the importance of being able to both identify and proactively address supplier risks within the automotive sector and the insurance industry, noting that this is critical to the sustainability of both.

“Disruption at a small but deeply-networked supplier shines a light on supply chain interdependencies. A single breakdown can quickly ripple across the globe with devastating financial consequences. Perhaps surprisingly, many companies have limited visibility into their supply chains, making it difficult to mitigate connected risk,” explains the pair.

Most industries across the world are being disrupted and advanced by the ongoing rise of technology, and when considering the automotive sector, Alt-Simmons and Sheehy highlight that this has substantially increased the complexity of manufacturing cars – ultimately resulting in the need for tier 1, tier 2 and tier 3 suppliers for a single vehicle.

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“The deeper the supply chain network, the harder it is for risk and procurement managers to identify and understand potential risks embedded in the network,” add Alt-Simmons and Sheehy.

In response, AXA XL and Swiss Re have put their risk knowledge and modelling capabilities together, in order to develop supply chain resilience scores that “reflect the vulnerability of a company’s entire supply chain network to disruption.”

According to the announcement, by leveraging external market data, AXA XL and Swiss Re are able to identify exposures in the supply chain network beyond the primary suppliers (tier 1). The pair explain that risk managers are able to test the impact of changing supplier on the overall resilience of the network, while at the same time identify potential problematic supplier relationships.

“Optimising this score in parallel with optimising supplier costs will enable deeper collaboration between procurement and risk management functions, leading to supply chains that are both more cost-effective and resilient to disruption,” explains Alt-Simmons and Sheehy.

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