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Presented By :

Arjun Gaur
Maqbool Ahsan 14810031

BMW: 7-Series Project:

Redesigned 7-Series luxury Sedan were to be
launched in 1994
Flagship product of BMW
Whether to try a new process for building the
A single Suppliers would fabricate major
subassemblies of cockpit and ship these to BMW


Formed in 1916 by Gustav Otto

In 1920 began producing cars
From 1930-1950 gained reputation for high-performance
1n 1966 introduced 02 series and created new automobile market
segment (high performance engineering, styling &comfort)
This combination set BMW apart from its competitors and responsible for move
into world league of car companies in the 1970s.

From 1970-1990 car production is increased from 160,000

Units/Year to 500,000 Units/Year
Since 1959, BMW earned a profit every year
In Germany: BMW held 7% share of Total Market & Ranked 5 th
behind Mercedes, Volkswagen-Audi, Ford and Opel
70% sales were from Europe & remaining 30% from US and Japan

Luxury Car Market

World 16th largest car maker & held 1.5% share of the
world market.
Leading player in Luxury Car Segment (1 out of every 10
of the 5 million car sold annually was a BMW)
Companies in this market competed on the Tangible
product characteristic (Acceleration, handling, comfort)
and Intangible(Perceived quality and image)
Highly competitive market
Prices : Cars at highest end - $1,00,000 and growing
segment is in range of $20,000 to $40,000
By the Late 1980s: New Competitor had begun to
challenge the European high-end Producers
Japan was giving
as compared to
Toyota,Honda, Nissan
Japanese Luxury cars Priced below competitive European

1986-1989: Japanese Car maker captured the 11.8% of the

U.S luxury car market in 1989 which was initially zero in
At the same time European car maker share for same
market fell from 29% to 22%.
5-10 Year ago in Luxury car segment 10-15 customer
complaints per car at model launch would have been
considered acceptable. 1-1.5 year after launch it would be 35 complaints per car . BMW always met or exceeded these
However, Lexus(Japanese) seems to be launching model
with an average of 3-5 complaints per car at launch after
one year they are down to 1.5 complaints per car.

BMW 7-Series

Toyota (Lexus)

Honda (Acura)

Nissan (Infiniti)

Case Problems

Low quality launch as compared to

competitors => customer complaints
Decisions over the Cockpit Design (i.e.:
Hand Crafted vs. Automated Production)
Ways to improve operation objectives
(quality, flexibility)

Product development cycle - BMW

BMW Spends more time in Concept
Development. -> 2 years ( Japanese
manufacturers take only 6 months )
Dont compromise on the time they spend on
styling as it is very integral.
Clay models and Drawings.
Product divided into 30 major subsystems or
Modules. ( Braking systems, Cockpit, slide
doors , trunk etc.)
An inter-functional team was responsible for
each Module.
Design, Product engineering, Production
Engineering, Procurement, Prototyping, Vehicle
testing , Manufacturing and other functions.

Product development cycle - BMW

3 to 5 batches of full Prototypes where
made during the whole production cycle.
Prototypes hand built by highly skilled
craftsmen at BMWs Design and Engineering
The parts or the materials used may not be
the same as the used in the final production.
( But it will be resembling parts or
Each prototype car costs around DM 1.5
Later generation of prototypes may be build
using Pre- production tools
Prototypes made from Actual production grade

BMW approach provided maximum flexibility within design
cycle. Because no specialized tools were used (Changes can be
made very quickly).
BMW management even allows changes to be made at the late
Final design frozen before 16-180 months before actual market
introduction. (Its called Cubing)

During Prototyping, Production tools are procured and

Outside Suppliers would be selected and the final
volume and pricing agreements would be made.

Pilot Assembly (Engineering

6 months of pilot Assembly.
By This time 1/3 of High volume production tools where
procured. Rest of the tools used will be the pre-production
Troubles might occur
Internal Compatibility issues as prototypes where made
from Pre-Production tools
From the side of the suppliers
All sort of Debugging is done in the pilot Assembly

Pilot Production (Factory)

Pilot production shifted to the factory
Plant would stop the production of commercial vehicles to pilot
production to avoid confusion.
Starts at least 3 months prior to market introduction
Initial run of 25 and final pilot run of 60 cars ( of none are sold)
Here final opportunity to fine tune the process, change tooling
and also trouble shoot.

Full Production Ramp-Up

Production slightly ahead of the introduction to fill the distribution

Only 4 new model car per day .
To utilize the higher fixed cost there is a transition period of old to new
mixed- model ramp up production
In this the production ratio between old and new will start to sink. And

Mixed Production Ramp-Up

Better Utilization of fixed Assets.
Logistics problems due to 2 models
Problems creeping up during full production .

The Case
Whether to go for a pre production
tools in prototyping.
In-house prototyping vs outsourced.
Decision over handcrafted and
automated methods.
Level of prototyping. (More parts to
be included)

The new approach..

Why ?
To reduce errors during pilot running/
Complexity led to many hit and trials/
Gap before actual production.
Develop long term relation with
suppliers and Vendors

Against the approach

Huge investment needed.
Longer lead times/ Delays.
Not flexible as earlier.
Needless investment. Current
prototypes serve their purpose fully.
Technological capability of the supplier.