Dive Brief:
- BMW is stopping production of Series 1, 2, 3,and 4 cars due to a lack of parts available from the company's steering gear supplier, Bosch, The Wall Street Journal reported Wednesday.
- As the various models for which the gear parts are missing are built internationally, factories in Germany, China, and South Africa are either temporarily shuttering or bringing forward planned production breaks.
- Assembly may resume as soon as next week, as Bosch and BMW are working to fix the problem quickly. Costs due to the production break are unknown.
Dive Insight:
Like a puzzle, a supply chain needs all its pieces in place. When even one part, piece, or portion is missing, the overall product fails. It's the supply chain manager's job to keep the process functional, although the reasons for failure can vary from human error to capricious weather.
In the automotive supply chain, where thousands of parts from steering wheels to tires to gears must typically all arrive at the factory just-in-time for production, a factory shutdown is the manager's worst nightmare.
A single day of lost production, in any plant, is a commitment unmet and can cost millions of dollars in breakdowns. BMW, the ultimate buyer, is typically insured against such losses by charging damages from their suppliers. The ultimate loser, then, is Bosch although other supply chain effects may follow: Will BMW's other suppliers pause shipments as well? If they do, that's lost sales. If they do not, BMW will experience an inventory glut in the short-term.
As unfortunate as production stops are, supply managers know they are to be expected from time to time, even among the largest of companies. Time will tell what the costs of the event are, but the better factor to watch is how Bosch and BMW work together to ameliorate the issue. Lessons may be learned the hard way some times, but at least they can help build supply chain resilience.
