Sales and Operations Planning (S&OP) and procurement teams understand that a parts shortage originating in the lower-tiers of the product value-chain can provide a noteworthy overall supply chain disruption. Last week, luxury car producer BMW AG experienced such a situation, a component shortage that impacted the production schedule of multiple models.
According to published reports, the German luxury car maker is slowing or halting production of certain models in response to a shortage of parts caused by delivery problems from supplier Bosch GmbH. The hiccups in the reportedly normally smooth operation show how dependent manufacturers are on a global, smoothly running supply chain.
In last week’s BMW’s case, the culprit is noted as a “Lenkergetriebe,” or steering gears used in BMW’s 1-Series, 2-Series, 3-Series, and 4-Series compact cars. Reports point to the supply disruption caused by a bottleneck at an Italian company that supplies the casings for Bosch’s electronic-steering systems. Bosch has since dispatched employees to Italy to help resolve the problem.
A report published in both the Financial Times and the Irish Times, quotes a BMW spokesman indicating that the 1- and 2-Series cars had come to a standstill on Friday and Saturday, whereas production of the i3 and i8 electric cars was running as normal. The plan, reportedly was to resume production by today, but BMW conceded yesterday that the “situation is unlikely to change this week”.
Bloomberg reports that BMW will seek financial compensation from Bosch. BMW purchasing chief Markus Duesmann indicated on Monday in an emailed statement to Bloomberg that there is only limited vehicle production at various German plants, while factories in Tiexi, China, and Rosslyn, South Africa, have moved up or extended planned interruptions.
No doubt, the current component supply shortage will be rectified. As is the case for many of such incidents, the question is how soon.
Once again, another current day reminder that in today’s globally extended manufacturing and supply chain networks, a snafu or glitch at any tier of the value-chain can have widescale impacts without adequate supply chain risk mitigation planning.