BMW halts production of cars due to supply chain snag
BMW has been forced to halt production of its Series 1, 2, 3,and 4 cars due to a lack of parts available from the company's steering gear supplier, Bosch.
According to the Wall Street Journal, the various models for which the gear parts are missing are built internationally at factories in Germany, China, and South Africa and 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.
An automotive supply chain like BMWs relies on a just-in-time approach, with thousands of parts from steering wheels to tires to gears typically arriving at the factories as and when they’re needed. With the factories shutdown, there may now be a supply glut if BMW’s other suppliers don’t halt production.
If the other suppliers do halt production, there will be financial penalties for BMW, while most direct costs as a result of the shutdown at the BMW plants are likely to be shifted to Bosch, the ultimate loser in this situation.
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 they’re likely to run into the tens of millions of dollars in the short-term.
It will be interesting to watch how Bosch and BMW work together to mitigate the issue and build better resilience into their supply chain.