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BMW Owners Wait For Repairs On Supply Chain Breakdown In Germany : News

BMW is struggling to deliver spare parts on time because of a new supply-management system, forcing customers to wait for repairs.

About 10 percent of the parts are not immediately available in the central warehouse in Dingolfing, Germany, due to the changeover, Manfred Grunert, a spokesman for the automaker, said.

BMW has workers on extra shifts to help shorten the wait, and aims to have the new system working properly by early September.

The delays, which started more than two months ago with the switch to the new logistics system, have caused ripple effects globally because orders for BMW's 40 parts-distribution centers originate at the Dingolfing facility. The warehouse also directly supplies about 300 repair shops in Germany.

"We have to disappoint about 180 customers per month; that means 20 percent of our customers with major repair work," said Burkhard Weller, owner of Weller Gruppe, one of the two biggest BMW dealers in Germany. "The problem is present at all 16 of our locations. It is impossible to appease a customer who can't use his car."

The issue is especially sensitive for BMW because of its premium reputation. "The ongoing problems on the spare parts supply might tarnish BMW's image," Stefan Bratzel, director of the Center of Automotive Management at the University of Applied Sciences in Bergisch Gladbach, Germany, said. "I don't remember any comparable case that a problem like that is dragging on over months."

Profit boost
The after-sales business is important for carmakers because it contributes substantially to their profitability, ties customers to their brand and has a high influence on customer satisfaction, according to the Nuertingen, Germany-based Institute for Automobile Industry, a state-funded think tank.

"BMW has always been among the best companies regarding the supply of spare parts," said BMW distributor Weller, who is also a dealer for other brands, including Lexus, Toyota and Audi. "At the moment, they're bringing up the rear."

The logistics project -- named ATLAS -- was started in Dingolfing in 2009, with a target to complete the new system within three years, according to a joint press release at the time from International Business Machines Corp. and SAP AG.

Dropping out
IBM, which was the main contractor and is still advertising the project on its Web site, is no longer involved in setting up the program, said Dagmar Domke, an IBM spokeswoman. She declined to say when or why IBM pulled out. SAP is supplying the software for the warehouse management system, said Marcus Winkler, a spokesman for the company.

"The originally envisioned time frame for completion of the project had been somewhat postponed a while back as some parameters had changed," Winkler said, without providing additional details.

BMW declined to comment on its suppliers.

BMW delays in the United States are mostly with special order parts, said Kenn Sparks, a spokesman for the carmaker in the country.

In China, some dealers are facing the same issue as well, among them China Zhengtong Auto Services Holdings Ltd. Zhengtong, which has 20 BMW dealerships in the country, is supplied by warehouses in Shanghai, Beijing and Foshan, which in turn mainly get their parts from Dingolfing, the company said. Zhengtong, in some cases, has needed to negotiate directly with component makers for special orders, the company said.

Left waiting
Markus Zollner, owner of the car repair shop Zollner Karosserie in Regensburg, Germany, said that one missing part can mean that the entire repair is delayed. "The worst is that when a delay happens, BMW is not able to tell us a delivery date," Zollner said. "Sometimes cars are standing there for weeks."

BMW's distribution centers all increased their inventory before the system changeover, allowing for normal delivery of most orders, Grunert said. "A very high percentage of our dealers worldwide don't have any spare parts problem."

Employees in Dingolfing have been working extra shifts since the beginning of June to get the spare parts to the distribution centers as quickly as possible and are already clearing the backlogs there, according to Grunert. Workers will likely be putting in extra hours until the end of the year to alleviate the delays, Erwin Gegenfurter, head of the works council in Dingolfing, said in an interview.

For cases where parts supplies are not arriving on time, BMW is providing replacement vehicles for customers. For dealers like Weller, that's not enough. "I can't tell the customer that he will get his car back within one week; I have to say, 'I don't know,'" Weller said. "This is very unsatisfactory because, normally, we have a client satisfaction rate of 92 percent."


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Sources : BMW Owners Wait For Repairs On Supply Chain Breakdown In Germany Photo | BMW Owners Wait For Repairs On Supply Chain Breakdown In Germany Article

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