LONDON (ICIS)--Disruptions to the automotive supply chain caused by the coronavirus have highlighted the importance of managing risk, an executive at major lubricants manufacturer Fuch Petrolub said on Thursday.
The more global the supply chain becomes, the more disruption a global disease can cause, said Holger Karnetzky, vice president, supply chain at the Germany-based manufacturer.
“China is one of the largest suppliers of automotive parts in the world. The answer for the global automotive industry lies in actively managing risk with contingency planning,” said Karnetzky.
“We track very narrowly what is going on … Whenever we see a risk, we jump on it locally to manage it … A lot of work has gone in recent decades into managing risk.”
The other key area which demands industry attention is the work to be done in explaining what lubricants are doing for sustainability.
“We need to have a fact-based discussion. It is our duty to find ways to explain in an easy and understandable way, with examples, and demonstrate the real value [that lubricants bring],” the executive said.
“We need to show young people the contribution from our side. [It is about] simplification.”
The feedback from lubricant customers is that there is a strong demand to move to electric vehicles (EVs).
Karnetzky said that “everyone is trying” to speed up the transformation, adding that this is likely to cause a decrease in overall consumption of lubricants.
“But, on the other side, products are getting much more complex. We are being a solution partner, looking at the complete supply chain, and we all have to work together. We are ready because we have wide experience,” he said.
“The lubes industry is part of the solution. We are at a critical point in time today, and we must demonstrate we take sustainability seriously. To get acceptance from society and commit on common standards, we must be very transparent.”
That would imply, for instance, talking about the whole life of the product.
Other challenges facing the lubricant industry are the volatility of demand down the supply chain and variations in specifications.
“We must manage the volatility down the chain. There are months with big increases in demand, months with big drops,” he said.
Equally, there is a wide variety in which products are allowed to be sold in different countries.
“[Standards are] not aligned around the world. So, we will see a trend towards the regionalisation of products,” concluded Karnetzky.
The 24th ICIS World Base Oils and Lubricants Conference runs on 19-21 February in London.