SUPPLY CHAIN MANAGEMENT

SUPPLY
CHAIN
MANAGEMEN
T

SUPPLY
MANAGEMENT

CHAIN

NATIONAL COLLEGE OF
BUSINESS ADMINISTRATION &
ECONOMICS| WCC

SUPPLY CHAIN MANAGEMENT

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
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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C o m p etent
Featu res

Tan g ible
Features

In tang ib le
Featu res

STRATEGIC ISSUES
3 Steps
Involve
d

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
Producti
on &
Manufact
uring
Start-up
Pilot
Producti
on In The
Pilot
Plant

Prototypi
ng At
Bmw

Factory
Pilot
Producti
on Run

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Full
Producti
on Rampup

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QUESTION NO. 2.
What are the causes and consequences of BMWs 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 models 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 werent involved in the final engineering drawings and commercial
production process later after.

CONSEQUENCES:
If the commercial suppliers does not came

across

problems during the commercial production,

the

later on they

will take time for sorting out the things and

then

time will be again needed for the adjustment in

the

designs.

The suppliers wouldnt 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.
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)

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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 BMWs
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. 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.

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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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