Automotive supply chain no longer ‘fit for purpose’

Automotive supply chain no longer ‘fit for purpose’

Automotive supply chain no longer ‘fit for purpose’

In an interview with CNBC a senior Bosch executive, Harald Kroeger, has warned that the automotive supply chain is no longer ‘fit for purpose’.

German technology and engineering group Bosch is the world’s largest car-parts supplier and has been struggling in the face of the global chip shortage.

According to Kroeger, a member of the Bosch management board, supply chains have buckled in the past year as demand for chips has surged worldwide.

Coinciding with that surge, several key Semiconductor manufacturing sites were forced to halt production.

Kroeger warned that the situation is acute, and said that many carmakers have seen production hit by a lack of chips – both VW and Toyota have recently said significant cuts in production have been planned for September.

In the interview Kroeger pointed out that manufacturing semiconductors is a complex, time-consuming process.

“As a team, we need to sit together and ask, for the future operating system is there a better way to have longer lead times. I think what we need is more stock on some parts [of the supply chain] because some of those semiconductors need six months to be produced. You cannot run on a system [where] every two weeks you get an order. That doesn’t work.”

Kroeger said that he expected the chip shortage to extend “way into 2022” and added that he hoped demand would remain stable. “We need to ramp up supplies so we can fulfil that demand,” he said.

Bosch opened a new €1bn chip factory in Dresden, Germany, back in June which it is hoped could help address the semiconductor shortages which are hitting industry.

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