You are on page 1of 6

MASS CUSTOMIZATION: THE BMW WAY

INTRODUCTION:Founded in 1917, the BMW is one of the largest car manufacturers in the world and, with its BMW, Mini , Rolls ± Royce, Land rover and Triumph possess three of the strongest premium brand in the car industry. The group also has a strong market position in the motorcycle sector. The aims to generate profitable growth and average return by focusing on the premium segments of the international automobile sector. The major car manufacturing unit are in 1928 Eisenach region of Germany, in 1970s it set up its first overseas plant in South Africa, In may 2005 its new plant was set up in the Leipzig area of Germany etc . The company¶s brand is extremely strong and associated with high performance, engineering excellence and innovation. The company continues to launch a stream of innovative products as a part of its battle with its German peer Mercedes to be the world¶s largest luxury car maker. The company employed 70,000 people in its plants and, in 2004; its customer deliveries exceeded 1.2 million units. Revenue in 2004 was US$ 60.47 billion and profit exceeded US$ 3.03 billion.

PURPOSE OF CASE
- To understand the concept of mass customization. What are its advantages and major challenges in implementing mass customization? - What is the importance of differentiation and exclusivity for makers of luxury cars? What did BMW do to promote differentiation and how was it advantageous to the company? - To understand the role of suppliers in improving manufacturing efficiency and also to understand the role of IT in streamlining manufacturing.

µProducing goods and services to meet individual customer¶s needs with near mass production efficiency¶.Mass customization allows the ordinary man or women in the street to acquire a product that has been produced to meet their own particular needs yet at a competitive price . . As a result.WHAT IS MASS CUSTOMIZATION? At first we understand the meaning of customization it means µTo make or alter to individual or personal specifications¶.Lead customers will provide a rich source of new ideas that can also be exploited with other customers or with new prospects. In simple words we can say that: . y Market Exploitation Personalized and customized products and services will differentiate against commodity type products. The process of delivering goods and services that are customized to satisfy the customer needs it is known as mass customization. you make comparative shopping difficult and you shift the focus from price to benefits. y Lower Costs . With their similar cost they will be double attractive. .Whilst it is possible to manufacture at a mass produced price. ADVANTAGES OF MASS CUSTOMIZATION y Higher Profits . you have the option to charge a premium whilst still retailing below the price of a custom product. NPD has lower risk of failure and a higher chance of beating the competition.thus providing exceptional value for money.By providing tailored products to meet particular needs. Mass customization is the strategy which help to capture the market share and also helpful to maintain the good customer relationship. This in turn will open your product to a wider market. .

. distributors and customers as they return time and time again for further unique products. y Customers are patient enough to order a custom car and wait to have it delivered y Mass customizations also face a challenge to deliver a custom made product almost instantaneously..Satisfied and loyal customers provide excellent references and referrals.Companies will forge a close relationship with their suppliers. y Internal complexity is experienced inside operations and manufacturing-related tasks. CHALLENGES OF MASS CUSTOMIZATION Mass customization still has to face many challenges. . y External complexity can be referred to as the difficulties encountered by customers when they have to select adequate variants out of a large set of product alternatives. related to the time taken for an order to proceed. .On-going service can be adapted throughout the customer's life because it can be linked to the unique product. y One of the biggest challenges of mass customization in the auto industry. Other Challenges related to auto industry. We identify the external complexity and internal complexity as the main problems that may jeopardize the implementation of the strategy.

(C) Detrimental Implications Reliance on suppliers. relatively lower productivity of production assets. Low inventory because of high volumes carrying costs ± even zero inventories. Product and Production Orientation (A) Focus Consistent Quality standardized products and services via production/operational efficiency High Quality Customized products and services via integrated process efficiency (B) Beneficial Implications Low Variable costs. continual process improvement. possible demanding and stressful environments 2. short cycle times . Reliance on interaction with all stakeholders. Research And Technological Developments (A) Focus Breakthrough Innovations Continual incremental Innovations (B) Beneficial Implications Greta technological Advances Continual Improvements.MASS CUSTOMIZATION VS MASS PRODUCTION MASS PRODUCTION MASS CUSTOMIZATION 1. eventual technological superiority. Affordable price High Production Flexibility . optimum utilization of production assets. Production inflexibility. High cost of variety.

standardized products to large homogeneous markets Gaining market share by fulfilling customer needs in fragmented niche markets (B) Beneficial Implications Stable. competitive . organic. segment retreat and avoidance Too much reliance on technological advances 4. positive feedback loops (C) Detrimental Implications Managerial Attention often diverted Possible loss of focus. Structural and managerial orientation (A) Focus Efficiency and economies of scale through stability and control Variety customization and economies of scope through flexibility and quick response (B) Beneficial Implications Lower costs through efficiency based Management attentions focused on core on specialization competencies. cross functional teams.(C) Detrimental Implications Longer cycle times. meeting exact needs (C) Detrimental Implications Disregard of some consumer needs. predictable demand Quick response to changing customer needs. flexible and relatively hierarchical structures. Less of customer Lack of breakthrough innovations focus 3. Marketing Orientation (A) Focus Selling Low cost.

division of labour. bureaucratic and hierarchical structures.towards diversification and conglomeration. negative feedback loops mediocrity . mechanistic.