How Lamborghini is protecting its supply chain amid the pandemic, conflict in Ukraine

MANILA: Since 2020, global auto supply chains have faced political, social, and economic challenges brought by the COVID-19 pandemic, the semiconductor shortage, and the Russia-Ukraine war.

Lamborghini said it despite these challenges, it has remained resilient while also achieving record-breaking results on the sales and financial fronts. 

"What strategy did Lamborghini adopt to ensure that production could continue uninterrupted? What approach is it taking as it prepares for the future?" These were the topics discussed with Chief Procurement Officer at Automobili Lamborghini Silvano Michieli, along with the exemplary cooperation with the Ukrainian supplier Leoni, the auto marque said in a release. 

When asked how Lamborghini is reacting to supply chain issues caused by the geopolitical situation, Michieli said: "Lamborghini has been taking risk-limitation measures and securing its supply chain.

One of the main initiatives that we’ve taken here has been to forge even closer ties with some of our strategic suppliers, going from a more traditional 'supplier–client' relationship to one that’s more of a partnership. At the same time, we revise our processes to a more proactive, analytical approach. This will enable us to anticipate any new problems in the industry."

Referring specifically to the war in Ukraine, Lamborghini is in close contact with its suppliers in the country with an emergency task force established by the Volkswagen Group that is responsible for ensuring that a steady flow of supplies. The company has cooperated with Leoni, which produces wiring for the Huracán in the West of the country.

“Leoni’s staff are having to make huge sacrifices to keep their manufacturing processes moving and thus keep driving the production capacity of their country. The time they spend working is interspersed with curfew periods when they have to take shelter in the underground areas of the production plant.

They show heroic amounts of courage, devotion to their work and love for their country, and Lamborghini is enormously grateful to them," Michieli expressed. 

If Leoni’s production activities are brought to a halt, how would Lamborghini handle it?

“Our approach is based on the idea of duplicating rather than reallocating, with a 'dual production' strategy. Thanks to our help, our Ukraine-based suppliers are working to ensure that some of their plants in Europe can count on the same production capabilities," he said. 

"It means that our relationship with our established suppliers will remain unchanged. They’ll continue their production work in the factory in Ukraine while we support the process of duplicating the plant outside the theater of war. Although we hope it doesn’t happen, we’ll be ready if the war brings production in Ukraine to a halt again." 

Lamborghini added that roles are sometimes even reversed. "The company from Sant’Agata Bolognese often acts as a “consultant” in the procurement of raw materials such as carbon and microchips," the company explained.

However, in order to be selected as approved suppliers in the first place, companies have to go through a rather strict rating process.

Michieli explained how Lamborghini chooses its suppliers: “We place great importance on checking the financial reliability and sustainability of our suppliers and their supply chains... we now also look very closely into the solidity of our suppliers. In addition to financial stability, we also pay close attention to development performance and innovations, quality and logistics in terms of delivery security." 

Being part of the Volkswagen Group also benefits Lamborghini in its synergy and supply chain, Michieli illustrated. 

“There are considerable advantages to being part of a group like Volkswagen... Lamborghini has one of the highest contribution margins in the group, so it is prioritized when it comes to supplies.

In addition, the group gives us access to a number of forms of technology that play a crucial role in our evolution. We’re talking about technology that would not normally be within reach of a small company like ours. It gives us exclusive access to innovative solutions and a clear competitive edge over our rivals."

Lastly, Michieli debunked the theory of deglobalization caused by the aforementioned crises. 

"In my opinion, an extreme form of deglobalization is a utopian, short-sighted idea. I’m more of a believer in rethinking the current supply processes and outlooks, which are in any case undergoing a natural evolution in the industry due to the new circumstances," he concluded. 

Photos from Lamborghini

Also read: Lamborghini Huracán Tecnica previewed at Milano Monza Motor Show