BMW Seems to Have Its Supply Chain Issues Licked

Shortly before Russia invaded Ukraine, Michael Nikolaides took over the BMW logistics division. He faced down supply chain problems in a unique way.

The invasion only exacerbated an already problematic part of the automotive world. The supply chain has been in various states of flux for many companies. As Nikolaides took over the BMW logistics division, he quickly learned that the supply chain could be much more challenging to manage than engines, which was his previous position at the company. His guidance led to many improvements in the supply chain.

Acceleration through partnerships

Although the Russian invasion of Ukraine caused many automakers to panic, the BMW logistics team and its partners found ways to be flexible and deliver required supplies throughout 2022. These relationships and partnerships led to improvements in the supply chain for BMW, resulting in delivery volume increases of 10 percent compared to the previous years. The quick shift from one process to another and flexibility throughout this process allows BMW to enjoy a much lower disruption rate than other automakers with regards to the supply chain.

Logistics helps determine where BMW vehicles are made

The supply chain is volatile and disruption is a serious problem for most companies. BMW took a stand and pushed hard to ensure the supply chain would be an asset to the company and not a liability. Some of this meant improving flexibility in digitalization, logistical sustainability, and using emission-reducing technology inducing electric and hydrogen trucks. Another way to improve the fragile supply chain is to produce vehicles at the right BMW plants for the supplies. This means the logistics team has a say in where some vehicles are built. This influence aids in ensuring the right supplies can be delivered to the BMW factory that needs them to build the right vehicles.

Could the global supply chain improve in 2023?

BMW is a bit of an outlier in seeing increased deliveries compared to 2021. Of course, even this luxury automaker isn’t back at its pre-pandemic levels of supplies, especially semiconductor chips. Thankfully, there are some signs of recover in this supply area, which more plants opening and increased availability of these chips. Also, freight and container shipping rates have been decreasing, which could help save BMW and other automakers some money when shipping supplies to their factories around the world.

Unfortunately, with the positive news there’s also some negative. Anyone looking for automakers to return to pre-pandemic supply levels are likely fooling themselves. Although BMW was able to steady the supply chain enough to increase year-over-year supplies, they are not back at the pre-pandemic levels. Europe continues to experience shortages in vehicle logistics trucking and port capacity, which a problem felt around the world. Rail shipping of vehicles has been seriously delayed, causing problems in shipments getting to the proper destinations. This has put a strain on the entire global economy, which also means most don’t expect to every see things return to normal.

BMW had systems that unknowingly aided the supply crisis

Like many automakers, BMW has used a strategy to build vehicles specifically when necessary. Some call this a Just-in-Time process where the supplies arrive as needed, but BMW calls it their order-to-delivery process. This company has been using this process for the past two decades, but now it has helped BMW be flexible in its supply chain.
The OTD Process uses at BMW is called KOPV which allows changes to an ordered vehicle up to six days before it goes into production. This is the perfect system for luxury customers to buy the BMW they want with the specific features desired. Its also an excellent process to ensure these vehicles can be made with the supplies available. This flexibility has been a key component in righting the supply chain ship at BMW.

Transparency matters and it trickles down at BMW

The internet of things has become a huge part of the BMW logistics solution for the past several years. Using the Connected Supply Chain strategy, the BMW team can track materials in ocean containers, see truck satellite locations, and use in-vehicle telematics to ensure finished models arrive a dealers in peak condition and on time.
The use of technology in tracking supplies and vehicles isn’t anything new, but it certainly helps to use them to improve the tracking of many vehicles. If a ship carrying BMW vehicles has problems or delays, these can be communicated to the dealership and then to the customer to ensure transparency of information right down to the end user.

Better visibility allows BMW partners to better anticipate goals

BMW uses an integrated control tower and online portal to track supplies and deliveries with logistics partners. This allows the production control teams to see and predict necessary supply quantities and timeframes more accurately than ever before. The central control tower is in Munich, but it has extended visibility in many of the key areas of the world.

Another area where BMW has made upgrades to its supply chain communication is through the inventory data. This allows BMW to enjoy visibility of supply levels and automatically order more as needed. This system also ensures the factory can see when shipping delays occur that might impact the production of some of the BMW vehicles being made at that plant.

The next step in the BMW supply chain

Sustainability is becoming more than just a corporate buzz word in the automotive industry. Most automakers, including BMW, are exploring various ways to bring products to their factories using sustainable methods, recycling leftover materials, reusing anything possible, and reducing their carbon footprints during the entire manufacturing process. This process involves the logistics division as much as the rest of the manufacturing process and it’s the next major challenge for BMW.

The BMW logistics team can give themselves a proverbial pat on the back for altering the course of their supply issues. Through flexibility, visibility, and connected systems, BMW is in a much better place today than it was at the end of 2021.