Supply Chain Management Challenges and Solutions

The assignment discusses the supply chain management system of BMW, identifying key challenges such as globalization, fast-changing market, and quality compliance. It then proposes solutions using data management and integration to overcome these challenges, providing visibility and trust among manufacturers, suppliers, and partners.

Global Logistics and Supply
Chain Management

Table of Contents
INTRODUCTION...........................................................................................................................1
BMW and Supply Chain Management.......................................................................................1
Theoretical concept ....................................................................................................................2
Key issues and challenges faced by BMW in supply chain management..................................2
Solutions to overcome challenges...............................................................................................3
CONCLUSION................................................................................................................................3
REFERENCES................................................................................................................................4

INTRODUCTION
The flow of products and services which includes the movement and storage of raw
materials, work in progress and finished goods from production to consumption is known as
supply chain management system. BMW is well known automobiles company originated in
Germany which specialises in producing cars, bikes and aircraft engines. Supply chain
management and logistics system is essential part of organisation. In this context, the following
case study will focus on supply chain management and logistics systems of BMW and analyse
the key challenges and issues faced by the organisation. Eventually, recommendations will be
provided, in order to avoid or eliminate the challenges efficiently.
BMW and Supply Chain Management
Bayerische Motoren Werke or BMW is renowned luxury car and motor cycles
manufacturing company incorporating its business activities nearly all over the world. Its
headquarter is located in Munich, Germany and the organisation was founded in 1916. Supply
chain management or SCM is referred as the process of designing and managing seamless and
value added process across the boundaries of organisation to meet the needs and increases the
revenue of company and customers. According to Stadtler, 2015 supply chain management
system is maintaining the relationship and inflow and outflow of goods and services within
producers and consumers. BMW global supplier network creates a major contribution in creation
of value, improving the quality and innovation and thus, led the company towards success and
development. Suppliers plays, a prominent role and impact on sustainable performance and
development of organisation. BMW works with around 13000 suppliers in 70 countries (Supplier
Management, 2018). The responsibility of the suppliers and organisation is to compliance with
rules, regulations and legislation in order to increase the sustainability and productivity of the
company. The belief of the company regarding supply chain management is directly related with
customers. They connote that our supply chain management system starts and ends with
customers. In order to fulfil the customer requirement, the organisation uses a application where
customers can request for the type of customisation they need. Once the customer make request,
the central database record their request and deliver it to the manufacturing unit.
Theoretical concept
Authors have made in-depth research in the field of supply chain management and logistics
systems used by the organisation. They have proposed and developed few theories that justifies
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the process of supply chain management system. These theories are universally acceptable and
nearly all the organisation have implemented in their supply chain management system including
BMW. According to Brandon‐Jones and et.al., 2014 Resource Based View theory of supply
chain management states that the management of organisation needs to use those resources that
helps in increasing the sustainability in the supply chain management system and aid in
generating competitive advantage to the organisation. These resources can be physical capital
resources, human resources and organisational resources. The emergence of this theory
represents the disagreement with the Porter Five Force analysis. In supply chain management, it
is important for the organisation to increase the sustainability and management of BMW always
make efforts in this aspect. Vettorato and Hsuan, 2015 said that Transactional Cost Economics
theory of supply chain management proposed that the management after performing
transactional cost analysis, selects the most economic supply and logistics structure. The decision
whether to perform a transaction internally or externally depends on the difficulties and costs
associated with the transaction (Olbert, Protopappa‐Sieke and Thonemann, 2016). Transaction
difficulties involves factors such as hazards under uncertainty, rationality, small numbers of
bargaining and information impactedness. The supply and logistics management system of
BMW implements the concept of Transactional Cost Economics theory in order to selects the
best and efficient method of transportation of goods and services globally.
Key issues and challenges faced by BMW in supply chain management
Supply chain management helps the organisation in gaining competitive advantages by
maximising customer satisfaction and brand reputation. Though after implementation of
globalisation and trade liberalisation policies in different countries, the management of BMW
faced issues and challenges in supply chain management. In 2017, BMW suffered from
production stoppage of 3-Series Sedan in Germany, China and South Africa due to Bosch failure
in supply the necessary steering gears (Uhlenberg, 2017). In this context, the key issues faced by
the organisation is described below:
1. Globalisation: The organisation seeks for different countries which offers lower labour
costs, low or flexible tax policies, low cost of transport. In order to do that, the company
complicates the supply chain and logistics process. They have difficulties in making
communication, interaction and collaboration problem (Uhlenberg, 2017). Furthermore,
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the organisation has to follow the cultural code which impacts on management, losing
control and visibility.
2. Fast Changing Market: Customers taste and preferences are changing rapidly. Due to
short life cycle of product, BMW is under pressure to innovate the new products and keep
the manufacturing costs low. This also demands agile supply chain that can be used for
manufacturing products for future use.
3. Quality and Compliance: BMW faced the challenge of maintaining its quality in order to
ensure to meet national and international regulatory standards (Uhlenberg, 2017).
Increase in technologies and methods of supply chain increases difficulties for the
management to choose the most appropriate one.
Solutions to overcome challenges
From the above analysis, it was identified that BMW faced various challenges in supply
chain management system. By using appropriate data management and integration system, the
management of BMW will be able to overcome the key issues effectively and efficiently. Data
management and integration is the system that address supply chain management challenges at
the most basic level of the value chain and in every activity (Uhlenberg, 2017). Furthermore,
providing visibility not only to manufacturers, but also to suppliers and partners can potentially
improve trust and long-term relationships.
CONCLUSION
From the study, it can be understood that supply chain management plays crucial and
important role in growth and development of organisation. In this context, the following study
discuss the supply chain and logistics management of BMW. The theoretical concepts and
theories to supply chain management has been assessed in this study. The key challenges faced
by BMW and possible solution has been identified in the study.
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REFERENCES
Books and Journals
Brandon‐Jones, E., and et.al., 2014. A contingent resource‐based perspective of supply chain
resilience and robustness. Journal of Supply Chain Management, 50(3), pp.55-73.
Olbert, H., Protopappa‐Sieke, M. and Thonemann, U.W., 2016. Analyzing the Effect of Express
Orders on Supply Chain Costs and Delivery Times. Production and Operations
Management, 25(12), pp.2035-2050.
Stadtler, H., 2015. Supply chain management: An overview. In Supply chain management and
advanced planning (pp. 3-28). Springer, Berlin, Heidelberg.
Vettorato, G. and Hsuan, J., 2015. Balancing Technologies for Reverse Supply Chain with
Modularity as Strategy for Competitiveness. In 1st International Competitiveness
Management Conference.
Online
Supplier Management. 2018. [Online]. Available
through:<https://www.bmwgroup.com/en/responsibility/supply-chain-management.html>
Uhlenberg, A., 2017. How to use the 7Ps Marketing Mix?. [Online]. Available
through:<https://www.liaison.com/blog/2017/09/18/key-issues-supply-chain-management-
overcome/>
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