BMW case study solution

SUPPLY CHAIN MANAGEMENT

12/22/2015

NATIONAL COLLEGE OF BUSINESS ADMINISTRATION & ECONOMICS| WCC

BMW: THE 7-SERIES PROJECT (A)

CASE STUDY

QUESTION & ANSWERS

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

case.

Supply Chain Management SUPPLY CHAIN MANAGEMENT


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

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

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STRATEGIC ISSUES

THE LAUNCH OF REDESIGNED MODEL

Took almost six years

Put more effort in styling and design

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Competent Features

Tangible Features

Intangible Features

3 Steps Involved

Increased Product Variety

More Frequent ProductIntroduction

Improved Quality Of NewlyLaunched Models


Typically BMW product passed through 3-5 design process

LAUNCH CYCLE

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”?

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Pilot Production

& Manufactur

ingStart-up

Pilot Production In The Pilot

Plant

Full Production

Ramp-up

Factory Pilot

Production Run

Prototyping At Bmw


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.

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

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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.

ISSUE 4:

The suppliers weren’t involved in the final engineering drawings and commercial

production process later after.

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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.

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.

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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?

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.

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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?

ANSWER:

1: COMPETITIVE AND OPERATION STRATEGY: BMW: Competitive benchmarking with 1.5 customer complaints per car Differentiation strategy 1. Breakthrough2. Continuous improvement

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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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BMW case study solution