Supply Chain Management for BMW Motors

This assessment analyzes the overall logistics supply chain and management of BMW motors. It includes supply, operations, integration, information, and sustainability analyses. Learn about BMW's vision, mission, and strategic goals, as well as its supply analysis, operation analysis, information analysis, integration analysis, and sustainability analysis.

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Supply chain management
BMW motors

BMW-SCM 1
Executive summary
International business becomes easier and has a rapid transformation in the recent short period of
time. Globalization, SCM and the AI, all are reshaping the pattern of international trade flows.
These restructuring is contribute to business growth and the country’s economic growth as well.
Better supply and allocation of resources and more freedom of choice for consumer lead to
expanding the business internationally and it is becoming more essential to manage to supply
chain across internationally.
BMW is a German based multinational organization which is founded in 1916. The organization
becomes the world’s 12th largest motor vehicle producer with more than 227903 produced
vehicles. The company operates in Germany China Brazil, South Africa, India, and several other
countries and has the largest supply chain across the world. This assessment will analyze the
Overall Logistics supply chain and management of the BMW motors. This report will also
include supply, operations, integration, information and sustainability analyses and discussion of
the improvement program.

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Vision, mission and strategic goals
BMW is the leading brand the company has its vision mission and strategic goals:
Vision
• BMW’s vision is to be the number one
• Inspiring stakeholders and customers on the move
• Shaping tomorrow’s individual premium mobility (BMW group, 2019)
Mission
• Providing the most unique services and other safety features
• Offering customer satisfaction and best experience to them
• Being the most aspirational brand
• Focus on future high technologies (BMW group, 2019)
Strategic approach
Utilization of unique technologies and digitalization
The company’s strategy is to expanding technologies in the coming years to lead the success and
set new standards in the competitive market. Company’s strategic approach contains:
• Better brand and design
• Technologies and digitalization
• Customer satisfaction
• Profitability (BMW , 2019)

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Supply analysis
There is a lot unique product category of BMW cars and its procurement department has to
manage such as BMW, Mini, BMW I, BMW M, Rolls-Royce Motor Cars and BMW Motors
(BMW group, 2019). The procurement department of BMW manages procurement process to
consistency in the procurement operations; they maintain a centralized and integrated
department. They focus on the relationship with supplier as the organization has around 12000 in
70 countries (BMW , 2019) which include suppliers including Brembo, BorgWarner,
Elringkiinger, ThyssenKrupp, Bridgestone, and Mahle (Auto news, 2018). To manufacture The
Company depends on more than 100 auto part suppliers across the world and its more than 40%
suppliers based on Germany or subsidiaries of German located companies and 35% are from
Eastern and Western Europium countries (Karkaria, 2018). The company has huge supply
market including US, South Africa, Pakistan, India, China, Brazil, France Iraq, and many others.
BMW’s supply market mostly is the luxury cars, however, supply market mostly mini and Rolls
Royce. In the 2018 company’s sales around 2490644 which include Rolls Royce and MINI
delivered most around the world (Bekkar, 2018). There are many supply-related challenges for
the company such as production delays and supply delays as there is a case in 2017, where Bosch
provide steering gears to BMW when Bosch unable to meet the demand of BMW for the
steering gears it wreaked havoc on both the organization (Scheer, 2017). Also, there are many
opportunities for BMW as there are increasing the number of automotive tools suppliers in
Germany such as Denso Corp and Magna international INC and many others.
Operation analysis
Company sales market mostly luxury cars; however, the company also focuses on fewer budget
cars. The company sales from MINI and Rolls Royce is around 2490664 (+1.1%) which is from

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all over the world. There are MINI sales grew by 38.4% to 142617 cars. Hence the company
target sales market contains both luxury cars and mini as well. USA and Germany and China are
the largest markets of the company however China is the largest BMW sales market as compared
to the USA and Germany in 2018. The company provides many features such as adaptive
headlights which ensure better visibility and safety during night drives and provides dynamic
stability controls. The company utilizes much demand forecasting techniques such as customer
survey and collective opinion sales force competitive method. These techniques utilized in the
sales market for demand forecast such as China. China is the largest economy with the largest
population. A customer survey is an easiest and direct way to forecast demand and in China, it
would be most easy to carry a survey to forecast the demand between consumers. BMW uses JIT
inventory management techniques which reveal risks of disruption manufacture due to input
shortages. However, the company utilizes different techniques for different products such as the
company also utilizes ABC methods of putting products into categories as the most valuable
brand and least valuable brands. There is a challenge while using JIT methods. IF there is a delay
while ordering new products and tools can lead to stock out condition. BMW plan properly while
using JIT techniques so that new orders can timely be placed (Badenhorst-Weiss, 2010).
Information analysis
Bullwhip effects cause many difficulties for the company’s supply chain. Bullwhip depends on
the forecast demand, not on the actual customer demand (Jiang, 2019). Therefore due to
increased sales, the retailer forecast the increase in demand. It influences all the level of the
supply chain such as suppliers’ order forecast and as a result, BMW manufactures more vehicles
to meet the demand. Due to insufficient information, the company ends up by carrying the
additional stock of cars which is lead to lost business. However, there are some solutions for this

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such as better collaboration and better communication amongst suppliers and partners. Supplier
and project portals, Electronic Data Interchange transactions and other capabilities of supply
chain management software can help. The company also utilizes the tool to manage if supply
chain management system such as shipping status tool provides all where are all cars are they
timely shipped to retailers. Overall it provides all updates related to shipping activities so that
immediate action can be taken when required. The company also uses order purchasing tool.
SCM tools make Supply chain process easier and more efficient. This tool supports many
functions of the SC such as sales order processing order management and fulfillment. Companies
carry global supplier network and contribute to value creation, innovation, and quality which
lead to success. BMW has lots of suppliers and sub-supplier across the world. The company
motivates its dealers to assess their sustainability management. The company also awarded its
suppliers in every 2 years. BMW’s priority is customer satisfaction; the company motivates its
customer to share feedback on any products. Customer can share and give feedbacks by its and
websites and can get information as well. The company received many customer satisfaction
awards (BMW , 2019).
Integration analysis
Supplier network Auto manufacturer marketing channel Consumer
Steel
Aluminum
Rubber
Transmission
Brakes
Engine
ElringKlinger
Brembo
BorgWarner
Franchiser, show
rooms
Raw material Components Assembly

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(Source by author)
Here is 9 steps framework to design the lean supply chain:
Eliminate waste so that value remains: To do this BMW has to collaborate at all levels and
increase waste for inventory and unnecessary steps.
Research advanced technology to make to improve efficiency: The Company can utilize
many source and tools such as Omni channel, EDI, Trading partners interface, cloud solutions,
and many other tools company can use to create efficiency.
Customer usage visible to all associates of SC: This would set supply chain pace.
Lead time decrement: Decreasing outbound and inbound transportation logistics gets to near
actual customer demand which increases flexibility and reduced waste.
Create a level load / level load: By creating collaboration helps to make continuously flow at
every level.
Use Pull Systems, Like Kanban: This can be helpful for BMW to reduce complexity in the
planning, also overproduction.
Increase Velocity, Throughput and Reduce Variation: Through the delivery of smaller
shipments, BMW can fulfill the customer demand which will increase the velocity to its
customer. As a result, it will help the company to reduce lead time and inventory also allows
meeting customer requirement.

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Collaboration and discipline: By establish collaboration and discipline the company can
identify issue and route causes. BMW can use six sigma and VSM to better collaboration and
discipline.
Focus on Total Cost of Fulfillment: This has to be accomplished when all accomplices of the
lean SC share in operational and budgetary profits when squander is wiped out.
Triple-A model
Agility: There are many challenges while BMW move and supply its products such as delay in
supply and loss time wastage. Bing agile help to operate fast to every level if supply chain
(Feizabadi, 2019). It enables the company to quickly forecast scenario and views them at the
various level also set them at hierarchy level.
Adaptability: Adaptability is how the company’s supply chain and its process adapt itself
according to market changes.
Alignment: It states that how BMW’s collaboration with Brembo, BorgWarner and with many
other partners. How they communicate and share market information with each other.
Collaboration is an important aspect as sharing information is helpful to analyses various
fluctuation and calculation (Feizabadi, 2019).
Sustainability analysis
The company’s priority is their customers BMW’s SC process begins from the clients and ends
with the clients. The company uses built to order system to meet the customer’s expectations. Its
customers give feedbacks and share demand information through the dealers. All kind of
information of supply chain captured via a central database. Bill allocation is done to define the

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cost of production and selecting where the car will be produced. All parts are provided on
worked to-stock premise on the model existence of the vehicle imported. Parts are gotten at the
Cape Town worldwide air terminal by shipment. It is passed on to the one of BMW's plant in
Pretoria. Once cumulative, it is taken to the distribution center wherever it is transported to the
vendors prepared for gathering by the client. A portion of the assembling forms at Rosslyn plant
incorporates creation of vehicles, painting, providers of parts, circulation of autos, exportation,
quality gauges at BMW and the utilization of mySAP innovation for y principles at BMW and
the utilization of mySAP innovation for improving communication system. These procedures can
be clarified as pursues (Pagell, 2009).
Triggers model identify the internal and external pressure into the overall supply chain process.
As a customer of the BMW has great importance. BMW has many stakeholders such as
customers, employees and government. These stakeholders put pressure on BMW’ supply chain
process. The pressure can be Legal demand and regulations, customer demand, competitive
advantage, Stakeholders expectations environmental and social pressure groups, and reputation
loss. And when BMW is pressured it passes the pressure of its supplier (Seuring, 2008).
(Source by authors)
Suppliers
(Multi-tier)
BMW
Government
Customer
Internal
stakeholders
Pressure and incentives
Supplier evaluations for
risk and performance
for risk
SCM for
sustainable
products

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BMW supply chain analysis
BMW uses a fully integrated supply chain network across the world; it utilized the service
management system to have a broader plan to create efficiency supply chain analysis. The stage
is initiated by densities in the invention installed in its cars and resulting interest for frameworks
to help to overhaul. It utilizes a gateway to combine data and frameworks with its providers. This
prompts the speedier data stage for correspondence. It similarly utilizes advance innovation
applications, for instance, mySAP, without a moment to spare assembling, worked to arrange
which attributes of lean assembling and developments are for the most part. To dynamic supply
chain alignment, there are some steps as lean, agile and flexible supply chain.
Lean SC: It emphases on reduce waste of non-value steps along the chain. BMW can eliminate
waste and additional inventory of cars. The company can achieve production effectiveness, and
setup time decreasing, that enables the economic production of small quantities and enhances
cost decrease, manufacturing flexibility and profitability to some degree. Short set up time lead
to internal operations flexibility, however, leans supply chain of BMW might less external
responsiveness to consumer demands, which can need flexibility in cars designing scheduling,
and supply. BMW has to find that along with the added variety and responsiveness squeeze, they
should continue flexible to changes in future (Dubey, 2018).
Agile SC: This is all about to carry inventory as general as possible. It’s a concept of post
phenomenon. This increases the effectiveness and productivity of BMW’s supply chain process
by moving products diversity closer to the end customer. Postponing the decoupling point
decreases the danger of being out of stock and holding an excess of supply of items that are not
necessary. Besides, items can be offered at the lower absolute expense with a more elevated
amount of assortment, empowering techniques of "mass-customization" to be sought after. For

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instance, Rather than having different colors of cars retailer began to paint cars in the neutral
colors and customize the final color as per the customer requirement (Dubey, 2018).
Flexible SC: The flexible supply chain has a great extent of flexibility and adapts changes.
Customer is the first priority of BMW motors. Customer demand has many variables with times;
therefore flexible supply chain is creating efficiency in the business operations. BMW has
different cars and each of them shares some different characteristics hence it is useful for the
company to apply this method. By using the company would be capable to provide a wide range
of products efficiently. The company would be able to forecast and respond to the customer
demand pattern more accurately. However, this requires larger products holding cost due to
additional cars and this has to be controlled carefully. It is difficult to identify business risk just
because of third party involvement. In the peak demand, the company would require to
outsourcing some activities (Dubey, 2018).
Improvements program
The company has many things which can help to create efficiency in its supply chain process.
The main point of the SC is to make sure that BMW is able to drive the extreme profits that it
can. There is one point to progress the supply chain process, by changing the strategy for end
users of the car. BMW’s target mostly those people who can buy luxury cars and who earn high
income as it manufactures luxury cars mostly. The company should try some feature of market
segmentation. That will help the company to offer its products to both kinds of high and end
users. The company should try to manufacture cheap products so that they can develop another
market segmentation of those consumers who are not capable to buy costly cars. Marketing on
this segmentation will not be a problem as the company as BMW’s brand name is already
recognized. This will help to increase market share hence boosting sales.

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The company also can provide multi-tier visibility, planning, and execution. Some research
states that multi-tier visibility is required by approximately 68 percent of brand owners to
improve performance. A better forecast is the top benefit to many tier suppliers which
replenishment on OEM’s and tier one. There are more steps to make efficient supply chain such
as Demand-driven S&OP, Demand sensing and shaping with dealer point of sale data,
postponement, visibility, multi-tier inventory management and supply chain risk mitigation.
Improvement program and vision mission and strategy
Multi-tier network visibility and help to exchanging accomplice to assess the hazard at whatever
point they occur. The potential outcomes identified with sourcing elective supply and
coordination can be investigated and assessed to lessen the danger of supply disturbance and
guarantee supply coherence. This would help to reduce inventory delay possibilities that would
make a better relationship with the suppliers.
Supply continuity enables business continuity services. BMW can instantly re-route shipment
destined for the adversity areas, activate the different source of change delivery plans to end
users immediately. By providing cheap vehicles the company can expand its target market,
currently; the company is focusing on those who earn a high income. Hence currently it has a
limited market. By providing cheap products it would help to influence all kind of customer with
low and high income. Expansion of the target market would be helpful to its vision of becoming
a number one brand. Cheap products make better customer satisfaction. For instance, currently
only high profile group is satisfied as they can easily buy its cars, but all those who want to buy
the products but cannot buy due to luxury productivity. By manufacturing cheap products the
company satisfies those customers who want to associate them with the company have
experience of their products.

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Conclusion
The company seems to be on the list of the top 3 brands of Luxury cars in Europe. The success
has emanated from the decision that has been made all through. SCM has contributed hugely to
this acknowledgment. Great tasks and choice have been on how the providers are chosen and the
part of overseeing them. They are key supporters of the beginning's prosperity thus they ought to
be dissected in the most ideal manner conceivable. The procedure of creation from the
organization is very clear and is institutionalized in all the assembling plants. Less complexity
has contributes the luxury vehicles being produced having enhanced dissemination direct has
additionally helped in taking out wholesaler's bargaining power. This expands the productivity
prospects of the company. Nevertheless, the organization has to concentrate on low-end
consumers too. The low salary customers would likewise help in improving the SC if a viable
advertising division is executed.

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