Strategic supply chain management implications of an unregulated BREXIT

Abstract

Due to the integrated, complex and long supply chain structure of the automotive industry and the large size of cross-border trade of components and cars between UK´s and EU´s automotive supply chain actors, the implementation of a tariff scheme and custom handling procedures in the event of an unregulated (hard) BREXIT by March 2019 negatively affects the industry. The fundamental Four Freedoms are hindered resulting in an increase of sourcing costs. Assembly parts and distribution of final cars becomes costlier. The crucial JIT (just-in-time) philosophy is jeopardized due to the requirement of safety stock and custom checks. The purpose of this thesis is to develop a case study providing students with an effective way to apply Strategic- and Supply Chain Management (SCM) concepts based on a real case scenario of automobile industry (BMW). Professors are provided with resolution documents to effectively assess students’ solutions. A deductive approach was adopted in which the causal relationship between a hard BREXIT and strategic SCM implications is elaborated. A qualitative exploratory method was adopted, and the nature of the collected data is primarily qualitative, but also entails quantitative elements. Data was retrieved from scientific articles, industry specific reports, company reports, interviews and documentation from BMW. A hard BREXIT presents great challenges for BMW and their suppliers. BMW should foster cooperation with suppliers and engage in more backward integration policies to secure supply of strategic components and avoid supply stops. Supply network flexibility is crucial to maintain a sustained competitive SC. To offset trade barrier costs, BMW should partially shift MINI and eMINI production from the UK to other suitable European countries such as Hungary or the Netherlands and the company should aim towards more local sourcing in the UK for more standardized components.