SUPPLY CHAIN MANAGEMENT

12/22/2015

SUPPLY CHAIN
MANAGEMENT
SUPPLY CHAIN MANAGEMENT

NATIONAL COLLEGE OF BUSINESS

ADMINISTRATION & ECONOMICS| WCC
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BMW: THE 7-SERIES PROJECT (A)

CASE STUDY

QUESTION & ANSWERS

QUESTION NO. 1.
Give an overview/ synopsis of the
case.

ANSWER:

SYNOPSIS OF CASE PROBLEMS

 The customer complaints about low quality launch as compared to competitors.
 The decisions to be taken over the Cockpit Design. Either they will be Hand Crafted or will
be automated production.
 The ways to improve quality, flexibility and creativity in new models.
 Were to be launched in 1994
 Introducing new methods of fabrication of interiors
 Suppliers would now fabricate the cockpit designs
 Would increase product quality.

BACKGROUND
 Formed in 1916 by Gustav Otto and started producing aircraft engines.
 In 1920 began producing cars.
 From 1930-1950 gained reputation for high-performance engineering.
 1n 1966 introduced 2nd series (high performance engineering, styling & comfort).
 70% sales were from Europe & 30% from US.

LUXURY CAR MARKET

 Had 1.5% share of the world market
 Highly competitive market

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 Prices were as high as $1,00,000

 Japan was giving fierce competition as compared to Nissan, Toyota, Honda.
 Was targeting $20,000- $40,000

Competent
Features

Tangible Intangible
Features Features

STRATEGIC ISSUES

Increased Product Variety

More Frequent Product

Introduction

Improved Quality Of Newly

Launched Models

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THE LAUNCH OF REDESIGNED MODEL

 Took almost six years

 Put more effort in styling and design

 Typically BMW product passed

through 3-5 design process

LAUNCH CYCLE

Pilot
Production
&
Manufactur
ing
Start-up

Pilot
Prototypin Production
g At Bmw In The Pilot
Plant

Factory
Full
Pilot
Production
Production
Ramp-up
Run

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QUESTION NO. 2.
What are the causes and consequences of BMW’s quality problems with newly
launched product? What should be done to improve “launch quality”?

ANSWER:

ISSUE 1:
They use fake tools and materials in the prototype, but in real production models
they use real materials.

CONSEQUENCES:
The outcomes of analysis gained from
materials and tools used in prototype testing
do not fit in with desired results in final
production models.

RECOMMENDATIONS:
Pre-fabrication tools should be used in prototype model so that accurate results could be gained
in order to launch quality BMW Model. They should also reduce the space between prototype
and production process in means of tools and materials.

ISSUE 2:
They use drawings and clay models in prototype rather than pre-fabrication tools in
the first prototype stage.

CONSEQUENCES:
The use of fake materials had covered many
designs and manufacturing problems. It reduced
their opportunity to realize and fix quality
problems. It took highly skilled craftsmen and
labor to take care of the handmade clayed
prototype. The labor costs were increased and it
took more time than normal.

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RECOMMENDATIONS:
They should automate the prototype model. They should use real material instead of clay or 3D
drawings to judge the weakness of prototype models. It will also help them to reduce their labor
cost and it will save time too. By using pre-production tools to build most of prototype parts in
early prototyping will increase their quality production.

ISSUE 3:
The Mixed-model ramp up strategy. They produces the new series of BMW on the
same production line where the old models are produced.

CONSEQUENCES:
Due to same production line where old
and new series are produced, countless
confusion was being noticed among
workers due to minor problems. The same
production line made the logistics more
complex. Probably not all problems were
being discovered or solved in the pilot
production phase only major problems
were been taken into consideration. The
workers spent a lot of their time identifying and solving the big problems. So that less time for
minor problems 1and fine tuning were left. The customer complaints remained on their place
although of severe or extra resources for quality assurance, inspection and rework was done for
improvements. Due to same production line new model’s quality were being affected.

RECOMMENDATIONS:
Separate ramps should be built for New Series Models. They should use sudden changeover
approach. Separate minor problems identifying racks should be built. For this purpose they will
give cross-training to labors to improve the ability and flexibility in switching the design and
production of different models. Customer relation departments should be improved to higher
extent.

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ISSUE 4:
The suppliers weren’t involved in the final engineering drawings and commercial
production process later after.

CONSEQUENCES:
If the commercial suppliers does not
came across the problems during the
commercial production, later on they
will take time for sorting out the
things and then the time will be again
needed for the adjustment in designs.
The suppliers wouldn’t be able to
know exactly what kind of materials
or tools that BMW wants to procure,
and what they should supply.

RECOMMENDATIONS:
The commercial suppliers should be in the factory at earlier in the development process, when
commercial production takes place. If the commercial suppliers came across the problems during
the commercial production, it will help them to sort the problem on time. It will also save time
for adjustment in design later. The paying advantage will be they would get it straight what
BMW wants them to procure.

QUESTION NO. 3.
What are your recommendations to Carl-Peter Forster concerning the 7-series
prototypes? What should he do regarding future development projects?

ANSWER:
RECOMMENDATIONS CONCERNING THE 7-SERIES PROTOTYPES
 New pre-fabrication tools should be used at the early prototype stage. So that one can learn
more from the prototypes.
 Workforces in the factory should be well-trained and up to date.

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 Reduce the time spent in development process and try to prepare for regular prototypes.
 Make best use of the present tools.
 Focus on core competencies and try to outsource if it is needed.
 The suppliers should get involved earlier in the design of prototype parts.
 Invite other outside salespersons to support as well as add-on the company.
 Separate minor problems identifying racks should be built.
 Customer Relation departments should be improved to higher extent.

RECOMMENDATIONS CONCERNING FUTURE DEVELOPMENT PROJECTS

STRATEGIC OBJECTIVE ENHANCEMENT

 Consider and apply lean
production/manufacturing.
 Reduce the development lead
time.
 Competitive benchmarking/lower
customers complaints per car)

ADOPT PARALLEL ENGINEERING

 Expand the relationship with the
third party logistic.
 Promote the interaction and communication among departments, suppliers and sellers.
 Hire specialists and experts to participate in the production process.
 Increase the manufacturing capacity.
 Corporate with potential sellers, suppliers and innovative people.

QUESTION NO. 4.
What changes would you recommend in the BMW develops new models? What attributes
of newly launched products would you expect to improve as a result of these
recommendations? Which attributes might deteriorate?

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ANSWER:
RECOMMENDATIONS FOR CHANGES IN DEVELOPING OF NEW MODELS
In creation of prototypes for new model:

 Using the actual parts instead of substitute parts.

 It will help to avoid problems and complications.
 The investment will pay off in the long run.
 Simplify the production process & minimizing the number of parts in a product:
 Design for Manufacturing (DFM)
 Design for Assembly (DFA)
 Reduce product assembly cost,
number of assembly operations and
design complexity for new models.
 Testing all things from the design stage.
 Beside investment in R&D and styling,
need to conduct marketing studies.
 Employ Lean Product Design elements.
 Applying synchronized engineering.

EXPECTED IMPROVEMENTS:
With new construction of prototypes:

 ensembles techniques used to build in high-volume production vehicles

 Reducing problems associated with bringing new models into production.
 Maintaining high-quality image
 Increasing market share
 Reduce customer complaints
 be more customer-friendly

QUESTION NO. 5.
What recommendations would you make to Chairman Von Kuenheim regarding BMW’s
strategy to compete against new Japanese entrants into the luxury car market?

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ANSWER:
1: COMPETITIVE AND OPERATION STRATEGY:
BMW: Competitive benchmarking with 1.5 customer complaints per car
Differentiation strategy
1. Breakthrough
2. Continuous improvement
 Focus on moderately big changes
 Sig Sigma for operation management

2: MARKET EXTENSION
BMW: Expanding target market to the upper-middle class clients.
 Increasing customer base, bigger market share and sale volumes.
 Using lean production to promote customization for variously different ordered products.
 Focusing Sig Sigma to help improve product quality and operation efficiency
 Reusing some standard machines and pre-production tools.

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