BSH UK & Ireland CEO Andreas Meier answers Kitchens & Bathrooms News readers’ questions
Kitchen retailers have blasted BSH for a shortage of stock across its new collection of built-in Bosch, Siemens and Neff appliances and complained about lack of communication with the manufacturer. So we put your questions to BSH UK & Ireland CEO Andreas Meier
Q: Which product categories have been affected by the stock shortage?
A: The stock challenges relate to the new range of Bosch, Neff and Siemens ovens launched in April 2015 due to the phenomenal response to the new built-in oven platform and the increased demand for the new cooking technologies across Europe. There is also a delay on double ovens, which stems from an unexpected and prolonged spike in demand over the last 6 months and which has been addressed and we are recovering from. All Spring 2015 ovens and compacts are affected although supply of those models without steam functionality is expected to improve throughout the summer, ahead of a return to normality in the supply of single and compact ovens with steam functionality.
To break this down further:
• We have increased the production of double ovens and expect to eliminate all current back orders by the middle of the year.
• We anticipate the delivery lead-times will improve over the summer across all single ovens.
• The availability of compact combination appliances, with pyrolytic cleaning, has always been communicated as available from October 2015.
Q: If it has been reported by BSH sales of built-in ovens were increasing 30% year-on-year monthly growth, and asked retailers for pre-orders, why has there been a stock shortage for appliances from your new built-in collection launch?
A: The built-in oven market experienced steady growth throughout 2014, however towards the end of 2014 there was a sharp upturn in the market and, by December, the UK experienced in excess of 30% year-on-year monthly growth. BSH did not showcase our spring 2015 built-in range until the very end of November. At the showcase we encouraged our trade customers to place orders with us early January 2015. All trade customers were encouraged to place orders early to enable us to assess the interest in the range of new appliances. With so many new technologies and more than 100 new models being launched, we were not sure which features would excite consumers more than others. The early ordering option was important to allow us to assess the situation and many trade customers who took advantage of these offers have been able to display items ahead of the launch date and gain feedback from consumers directly. We have used this information to understand where the future demand lies and to shape our production capacity accordingly. Without the early indications about what specific products would be in the highest demand our supply challenges would have been even greater.
Q: What are the order wait times for each of these product categories now?
A: We are working to rectify the situation as quickly as possible. Stock levels are expected to improve throughout the summer and autumn.
To break this down further:
• The products which were not superseded by the spring 2015 ranges are not affected by the stock issues despite the increased demand, with the exception of double ovens
• We continue to supply our current oven ranges, hobs, hoods, dishwashers, cooling and entry level single ovens from the new ranges
• We have increased the production of double ovens and are producing an additional supply of to eliminate the back log to ensure we have fulfilled all requests by the middle of the year.
• All Spring 2015 ovens and compacts are affected, although supply of those models without steam functionality is expected to improve throughout the summer, ahead of a return to normality in the supply of single and compact ovens with steam functionality. The delivery for compact pyrolytic microwave combination ovens has always been communicated as available from October 2015.
Q: What exactly has been done at the point of manufacture to increase the level of production?
A: In the UK, BSH has already shipped 20,000 more ovens in 2015 compared to the same period in 2014. Production of all ovens has increased; we have employed hundreds of additional staff and implemented additional shifts, among other measures, in order to significantly increase capacity in all production facilities manufacturing the new oven ranges.
Q: If the shortage of appliances is European-wide, what priority has been given to the UK market?
A: The spike in consumer demand for built-in cooking appliances has indeed been experienced across Europe. Our production capabilities have been increased to deal with the European wide popularity of the new range of ovens. The factories are committed to producing to forecast to each individual country and we are tracking orders as they are produced and delivered. The UK has the same priority as the rest of Europe.
Q: How will you prioritise orders from UK customers? Will it be by volume?
A: We are working to fulfill all existing orders. These will not be prioritised by volume or size of customer but in chronological order.
Q: How many appliances are now on order from the UK, i.e. what is the size and scale of this backlog?
A: It is BSH policy not to share confidential numbers even directly with individual customers
Q: When will this backlog of orders be cleared?
A: Stock levels for the newly launched single and compact ovens without steam functionality are expected to improve throughout the summer, ahead of a return to normalised supply of single and compact ovens with steam functionality.
Q: When was there understood to be an issue with stock shortage?
A: The spike in demand was noticed towards the end of 2014, and we continued to monitor the market growth into 2015. In addition, at the start of this year when demand for the new range started to become apparent, following the showcase in November, we began to take immediate action within the supply chain. We also started communicating with our trade customers at the beginning of the year to alert them to additional lead times for double ovens. We hired hundreds more people for our factories to add an additional shift and increase production but the transition period with recruitment presents an unavoidable time lag before the full benefit takes effect. The trade partners of BSH have for many years benefitted from a very high level of ex-stock availability. The spike in consumer demand for built-in cooking appliances at the end of 2014, as well as the extreme demand for the new BSH oven technologies, has created the currently challenging conditions for our new built-in oven ranges resulting in unavoidable delays in our ability to fulfil orders on the date requested.
Q: When did you communicate that stock shortage issue to your customers and how did you do that? Are you surprised that many have vented frustration with the lack of information from BSH?
A: We are being as transparent as possible and have been communicating with all our trade customers via letters, individual visits, phone calls, emails and for Kitchen specialists via The Hub throughout this year. Understandably our customers are disappointed as this is a very unusual situation for BSH and we have set very high service standards previously. We are working hard to fulfill all orders and many customers had acknowledged this. We would like to thank all our customers for their patience and support.
Q: Are you aware of the issues that have been created particularly for the independent retail sector and how do you propose to make amends?
A: I would like to reiterate the point I made earlier, we are working closely together with all our trade partners to manage the situation in the most professional way, regardless of channel or market size. We continue to supply our current oven ranges; hobs, hoods, dishwashers, cooling and entry level single ovens from the new ranges. The main drivers for the increased demand are the newly launched ranges that were showcased in November and launched last month in April. Stock levels for single ovens and compact ovens without steam functionality are expected to improve throughout the summer, ahead of ovens with steam functionality in the autumn. We have reacted to the increased demand by employing hundreds of new people in our factories which has enabled us to add additional shifts and increase capacity across the production facilities responsible for the manufacture of the new oven ranges. Whilst there will be an initial transition period for the full effect of measures to be felt, it will be beneficial in the coming months allowing us to ship many more appliances. We would like to thank all of our customers for their continued support during this unusual time. We value all of our trade partners whatever their size, channel or volume of order and we will continue to develop these relationships in the months ahead.
Q: Will you be offering any form of compensation for companies who may have lost sales through this stock shortage?
A: It is BSH policy not to share confidential information about our trade terms with our customers in public.
Q: How will BSH UK finances be affected by this shortage of appliances not selling through the channels?
A: It is BSH policy not to share confidential financial information.
Q: Do you believe the company reputation has been damaged?
A: Understandably our customers are disappointed. However, they understand BSH is demonstrating its intention to manage the situation in a professional manner. As mentioned, the supply for the majority of products will improve throughout the summer.
Q: Is there any truth to the suggestion that manufacturing issues, particularly the Hide & Slide Pyrolytic oven, has played its part in the stock shortage?
A: BSH is fully committed to its development and quality standards. Of course our new oven range adheres to our highest standards.