Financial analysis turned into a financial advisory service
The Goal
SNECI’s goal was to assist the players of the automotive industry in better understanding the risks and financial health of their suppliers. This activity was put into place following the automotive crisis in late 2008-early 2009 to help them protect themselves from industrial risks. We now regularly present and explain to suppliers what they should focus on improving to meet financial criteria required by their clients, and we support them in implementing the proposed action plans.
SNECI’s Role
“As a result of the crisis, automakers became very attentive to the financial health of their suppliers,” says Stanislas Bailly, who created and implemented this methodology at SNECI.
To avoid suppliers not being on recommended supplier lists, SNECI analysed financial results for strengths and weaknesses and proposed an action plan. If it was a question of cash, the recommended solution may have been that of a loan; if the margins were too low, an action on purchasing, inventories or the payroll was recommended to reduce costs; and if the problem lay in production, aids to improving productivity were proposed.
With this tool, suppliers can propose action plans associated with a recovery timetable to present to the "risk committees" of their customers, demonstrating the relevance of their actions. "We were able to reinstate a supplier on a manufacturer’s supplier panel," recalls Stanislas Bailly. Since July 2010, nearly 20 worldwide suppliers from the automotive industry have analysed their financial situation with this methodology. Additionally, it has a non-crisis use as an indicator of where preventive work can be done. SNECI proposes that its clients use it every six months.
SNECI’s Added Value
The competencies of SNECI's specialists in financial evaluation, who know the constraints of the automotive industry and the specificities linked to the products and also the region in the world where the supplier is located, allowed for the creation and deployment of this powerful new tool that is adapted to the sector.
