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Weekly News Review | 13 February 2017 | Automotive Purchasing and Supply Chain Automotive Purchasing and Supply Chain

Talking Point

The butterfly effect

A large fire at Recticel International’s factory in the Czech Republic on January 22 reminded the automotive industry how reliant it is on each player, small or large, within the entire supply chain. Recticel’s Most facility, which produces urethane automotive interior skin for the global market, has impacted a number of global suppliers and automakers such as BMW, Magna, the PSA Group and Faurecia, who now have to find a solution to overcoming this specialised component shortage. Following the disaster, authorities have forced the supplier to halt production as they assess the damage, which is estimated to total at least €3.7 million, however it will be extremely difficult to present a total figure that the industry will lose over the shutdown period.

For example, Peugeot has announced that it would delay the launch of its 5008 SUV by two months to protect its 3008 compact crossover which halted production last month due to the fire. The 3008 is Peugeot’s fourth-best-selling model in Europe, illustrating the severe consequences of relying entirely on a single supplier, albeit a specialist. Recticel is the sole worldwide provider of patented polyurethane sprayed skins for vehicle interiors, which makes it much more difficult for manufacturers to locate a backup supplier in the event of an unsuspected disaster like this. The damage has travelled all the way down the supply chain, affecting vehicle production for OEMs who need just-in-time deliveries and even impacting transport providers who will not move as many units due to the interrupted flow.

Renault has also taken a blow from a three-day hiatus caused by the fire, forcing the automaker to send home its workers at the Douai facility in Northern France. The factory that produces the Espace, Scenic, Grand Scenic, Megane and Talisman models will restart production with three shifts and will hope to continue to produce the five models through one shift over the next two weeks. So, in addition to car manufacturers and suppliers, workers are now missing out on their full-wages; state governments will most likely have to pay out.

Planning for supply chain problems is essential in any industry, whether it be a natural disaster, accident or failed delivery. Through collaboration, OEMs, tier suppliers and transport providers can prepare for any issues, even those that are unexpected, sourcing alternative routes and facilities. Having a strong relationship with only the first tier is no longer enough, as risks are happening further down the supply chain. The correct preparation can yield great benefits for a business and, in some cases for smaller suppliers, ensure its survival. Having a clear, effective method of dealing with these supply chain problems is the only way players can progress in the modern market.

Alex Kreetzer

Alex Kreetzer - Digital Editor

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