Presented By:Abhishek Mandvakar

Ankur KejriwalHari Mohan

Nikhil AbrahamPrabhat Singh

Vinay Singh

BMW’S New PlantIn May 2005 at Leipzig area ,GermanyGerhard Schroder, Germany Chancellor

opened Plant with Helmut Panke,the Chairman of Company.

BMW invested € 1.3 billion.Manufacture BMW 3-Series car’s.Max annual capacity: 650 cars/dayExpected to create 5500 jobs in that area.

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The ceremonial process of signing the Plant Establishment Contract.

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BMW HistoryIn 1913 in Munich,Germany,Karl Friedrich Rapp

established the Rapp-motorenwerke to manufacture Aircraft Engines.

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In 1916During First World War Company secured

contract to manufacture aircraft for Austria-Hungarian army.

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In 1917 In 1917 Rapp needed additional financing to

complete this contract .The partnership with “Camillo Castiglioni.The new partnership company named as

Bayerische Motoren Werke GmbhThe company soon get into difficulty due to over

expansion.Sell it to Australian industrialist,Franz joseph

Popp,in 1917

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In 1918Bayersche Motoren Werke manufactured its

first aircraft engine.It reached upto an altitude of 5000 metres in

29 minutes, creating a world record.

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In 1919Treaty of versailles banned Germany from

producing Aircraft.The company shift to manufacture Railway

brakes.

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In 19221922, Bayerische flugzeugwerke AG.Manufacturer of small aircraft merged with

BMW to form BMW AG.

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In 1923BMW started manufacturing Motorcycle R32-

500 cc Bike designed by Max Friz.Company started producing car in late

1920’s.

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From late 1920’s to 1950’sIn 1928-BMW setup a car manufacturing unit

in Eisenach region of Germany.There they manufacture DIXI cars and sold

under their name.By early 1930 they started designing their

own cars.And introduced many successful carr’s like

327 saloon and 328 roadster

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Saloon 327 & Roadster 328The roadster especially was the most successful sports

car of its time & was nominated as the Car of the Century in 1999 by a panel of Auto experts.

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BackgroundDuring second world war BMW again

concentrated on manufacturing of aircraft engines and motorcycles for German army

At the end of war they were heavily bombed .During 1950’s BMW tried to enter in

premium segment market but failed.

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Late 1950’s to 1990’sIn1959 launched BMW 700 of “sporty

exterior” which was the main selling point.They launched other models based on BMW

700 and won many competitions.

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BMW 1500In1961 BMW launched another successful

model BMW 1500With powerful sporty sedan with its front disk

brake and four wheel independent.

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Headquarter in MunichIn 1970 BMW moved its headquarter to

Munich.The building looks like the four cylinder of

cars.

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Overseas MarketFrom 1970’s to 1990 they focused on exports

market’s.Like US ,south Africa, Australia, Asia, Japan,

Austria and Bavaria.In 1992 BMW outsold the Mercedes for the first

time in Europe.Company became the first European car market to

operate in US market.In 1994 BMW attempt to enter in mass market by

bringing British Car m/c MG Rover.The purchase gave the company ownership of

many successful brands like Mini, Land Rover, and Triumph etc.

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From 2000 to 2005In 2000 BMW sold the MG Rover to Phoneix

consortium for a nominal £10.Mini and Triumph Hold by the BMW and Land

Rover and Range Rover sold to Ford.In Early 2000 BMW launched its 1-series and 6-

series.For launching this car model company faced

many criticism.

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Mini & Rolls RoyaceIn 2004 company added three 3 car brands-BMW, Mini, and

Rolls Royce.

In 24 cities,12 Countries on 4 different continents.Company employed 70,000 peopleCustomer deliveries increases from 1.2 millions unit. Revenue in 2004=US $ 60.47 billions Profit=US $ 3.03 billions.

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Operation Strategy Model

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The Mass Customization

What is Mass Customization ??

Meeting particular customer’s need on a large scale.

Basically combining the concepts of mass production with customization.

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Why Mass-CustomizationDrivers of the Idea :

One of the criticisms against B.M.W. Was that most of its cars looked alike.

As a maker of luxury cars it had to deliver value to its customers.

In older system customer had to do away with whatever limited options they had.

Total customer satisfaction became the new buzzword.

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Impact on Operations strategyCOSP – Customer oriented sales and

production. Production process was defined by the car

ordered by the customer.This was supplemented by the online

ordering system launched by the company.

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Customer –Oriented Sales and Production Process

The BMW Group introduced an online ordering system in 1998, which gives dealers the option on showing customers their desired car on the screen and confirming the delivery date on the spot.

The time frame in which the vehicle can be built is fixed within a few seconds, a place in the production process is immediately reserved and the manufacturing logistics department is informed.

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COSP

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Some interesting factsThere were 1032 options available within the

B.M.W. product range.The B.M.W. & series alone offered 1017

variations.The B.M.W. X-5 sports utility vehicle had

1000 bumper variations, 4000 instrument panel choices.

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The InsidersAdvance planning was the key reason for the

excellent management for BMW’s supply chain management.

B.M.W. had a very efficient ERP solutions provided by SAP.

It connected the supply chain management very well.

Once the data entered it reached automatically to the production areas.

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Supply ChainInvolves purchasing, quality and

logistics personnel because they are not just developing parts for a vehicle; they are developing a supply chain right up to the supplier.

The planning process involves management of information flow as well and requires sophisticated information technology.

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Focusing on SuppliersThe integration of suppliers into vehicle development and

production is a decisive factor in competition. All of BMW’s suppliers use either EDI (Electronic Data

Interchange), or Web EDI.Web EDI attaches ERP (for BMW, their SAP software) to

the internet and allows partners in communities like South Africa who cannot afford “full-blown” EDI to communicate with BMW.

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When they ship parts, suppliers send BMW advance shipping notifications (ASNs) to provide the car manufacturer with exact information on parts counts and delivery dates. Parts arriving at the BMW dock are then received “just-in-time” and transferred directly to the line.

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Supplier NetworkBMW has invested heavily in sequencing

technology to support its production process. BMW also has developed sophisticated

transatlantic communications. It spent more than $35m for the sequencing

system at the Spartanburg plant.

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Reason for outsourcing facility management: The Sequence Center

assures that the right parts get to the right places at the right times.

Was created to feed sequenced and build parts from distant suppliers just in time to the assembly line.

Sequence Center

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Sequence Center It's not often that a warehouse has only one customer, but that is precisely the case with BMW's Sequence Center. The building is located adjacent to the company's Spartanburg, S.C. manufacturing facility and was created to feed sequenced and bulk parts from distant suppliers just-in-time to the assembly line. Since the automaker builds the vast majority of its cars to meet customer-selected options, accurate sequencing of individual parts is crucial to manufacturing efficiencies. The process is designed so that a needed part for a particular order is sequenced exactly to match a car body just as it reaches a specific assembly station. In a typical day, 12,000 picks are made and put on 2,200 pallets for delivery to manufacturing.

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Unique Automobiles

Up to 20,000 parts travel the pressings plant through Body-in-White, and are then painted and assembled to become a perfect whole – a unique BMW or MINI.

Every vehicle which rolls off the line is tailor-made according to the customer's wishes in terms of model, color, interior furnishing and accessories, and engine type.

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LogisticsBMW has earned a reputation for producing the highest

quality car with the highest level of customer service.

BMW’s logistics challenge is to let customers change their choices right up until the production process starts.

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On-Time Delivery Reliability100%

Order Change Flexibility –Up to 6 days prior to end of production

Reduction of Lead Time –10 Days (process time)

Time and Flexibility Targets

None of this would happen with any coordination without BMW's advanced information systems

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Comparative analysis

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Profit Margin

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The operating leverage conceptStatement Dec 04 Dec 03 Dec 02

revenue 60472.9 52122.2 44315.8

Quantity sold 1.5 1.30 1.07

E.B.I.T. 4847.7 4022.9 3455.6

Operating leverage =(%change in E.B.I.T.)/(%change in quantity of goods sold)

So we get degree of operating leverage as 0.7639

SynopsisMass customization- endless possibilities.Customer satisfaction and loyalty.Innovation generation.Idea feasibility and implementation through

operational strategy.

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Thank you!!

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