Moving Beyond Finance-Centric Risk: A Recent Fire At A Recticel Plant Shows You Why
by Rolf Zimmer
Monitoring financial risk is important, but a recent fire at an automotive supplier shows why financial risk is only a fraction of all the risks facing your supply chain. As more and more spend gets directed to a smaller number of suppliers, it becomes more important than ever to know as much as possible about those suppliers. Why? Because a seemingly insignificant incident at an n-tier supplier’s site can jeopardize your bottom-line, delivery and reputation.
Can a fire at a 2nd tier-supplier really disrupt at least 5 industry leading automotive OEMs? It did, and here is how it happened.
What happened …
On January 22nd a fire broke out in one of the production halls at Recticel’s plant in Most, Czech Republic. The plant specialized in producing surfaces of interior car components, and the production hall affected by the fire produced the door (or latch) for glove compartments.
So just how important is the glove compartment door anyway? You might think it’s not as important as the engine or the breaks, but it’s important enough to stop OEMs’ sales in their tracks.
The consequences are in the news – here is a quick summary …
- Volkswagen can’t finish roughly 20,000 VW Passats until replacement parts for the glove compartment door can be found. In the meantime, Volkswagen must find a large empty space to move the unfinished vehicles while it waits for the missing glove compartment doors to be delivered.
- Peugeot delayed launch of a brand new medium sized SUV series from early spring to late spring or early summer to protect production of a top-performing smaller SUV series. There are over 60,000 pre-orders , exceeding OEM´s target by roughly 70%.
- Peugeot temporarily also stopped production of the 3008 at its factory in Sochaux, eastern France as a result of the fire.
- Volkswagen and Peugeot are in good company as Renault, Daimler and BMW were also affected by the Recticel fire.
What Should You Do …
It is increasingly critical to comprehensively look at supplier risk and not just at a supplier’s financial risk. riskmethods alerted our customers of the Recticel fire, giving them ample time to come up with appropriate action plans. If you would like to learn how to move beyond finance-centric risk, please check out our recent webinar on five ways on how to do just that.