Analysis of BMW's Supply Chain Management

This assignment is about analyzing BMW's supply chain management strategies. The analysis focuses on how BMW is able to deliver products in a given time frame while maintaining high quality. The assignment also touches upon the importance of logistics and supply chain management in achieving operational performance, citing various references from books, journals, and online resources.

Understanding Operations,
Logistics and Supply Chain
Management

INTRODUCTION...........................................................................................................................3
New product/service development and corresponding theories..................................................4
Managing quality........................................................................................................................6
Triple bottom line; Economic, environmental and social approach/ considerations for BMW..8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Logistics management is a part of supplying chain management which engages in
planning, implementing and controlling the effective forward and flow of storage products and
services to meet the requirements of customers. Basically, main objective of this process is to
transfer the goods from one place to another in order to meet the requirements of desired
consumers (Christopher, 2016). BMW AG is a German multinational organization which is
engaged in manufacturing auto-mobiles and motorcycles at global marketplace. Therefore, main
objective of this project is to highlight the process of operation management and logistics process
of BMW. Along with this, method of New Product Development and procedure of managing
quality is also discussed in the project. Apart from this, various other factor such as; triple
bottom line, environmental and other social approach is also outlined in the assignment for
understanding the factors which is consider by BMW while running their business entities.
Operation management is an appropriate area which is concerned with the process of
designing and controlling the whole procedure of manufacturing department. Basically, its main
objective is to make sure that business operations can efficiently uses necessary resources which
is requisite for meeting the customer need. However, foremost responsibility of operation
management is to manage the whole procedure of production system which is involved in
converting input into output such as; raw materials, labour and energy into form of certain goods
or services. Mainly, operation is one of main function in an enterprise including supply chains,
marketing, finance and human resources. Operational function requires both management of
strategic as well as day-to-day production of goods and services (Rushton, Croucher and Baker,
2014).
BMW AG is a German multinational organization which presently engaged in offering
luxurious automobiles and motorcycles at global platform. Basically, this organization was
founded in around 1916 by having its headquarters in Munich, Bavaria. Moreover, this
organization manufactures vehicles in various countries such as; Germany, India, China, Brazil,
United Kingdom and United states.
Two major topics which is selected for this assignment are; new product development
and managing quality. Main reason behind selecting these subjects is to understand the process
of enhancing new product at marketplace with the help of certain theory because it will help an
organization while launching their new vehicle at distinct market (Flynn, Huo and Zhao, 2010).
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Secondly, major reason for selecting managing quality is that now-a-days customers are
becoming more quality conscious and prefer qualitative product while buying goods for their
personal use. Therefore, management of quality is really indispensable for the organization in
various manners such as; aids in creating long term relationship with customers, support in
establishing goodwill of an association at marketplace, maximize the sales revenue and many
more.
New Product Development- This factor is all about enhancing newly launched product
for gaining more or more profit by satisfying needs of desired consumers. According to this
element, it has been analysed that an organization is going for enhancing their goods by taking
number of initiatives as well as having an option of certain procedures. In fact, this terminology
shows that various types of goods or vehicles are produced by BMW but still company wanted to
develop more to their newly launched product in order to gain competitive advantage.
Managing quality- According to this factor, quality management is a term which
enforces an organization to focus on their product quality by conducting some changes in their
process. For example; implementation of lean production and TQM for managing quality during
production process.
New product/service development and corresponding theories
BMW is taking various measures for developing their new product in proper manner in
order to gain certain competitive advantage by satisfying customer requirements. Basically new
product development is gone through an appropriate process for minimizing the possibilities of
mistake and errors (Gligor and Holcomb, 2012). Mainly, automobiles are marketed under major
brands such as; BMW is one of best amongst them with sub brands BMW M, Mini and Rolls-
Royce. Apart from this, motor cycles of company are marked under BMW Motorrad. On the
other hand, BMW is now committed to delivered mobility for upcoming generations by taking
up the major challenges by performing in three distinct fields of sustainability such as; economic
success, social responsibility and environmental protection.
Product design- This process gone through a suitable process of product life cycle for
proper launch of BMW vehicle at marketplace. Basically, manufacturing department of an
organization needs to various steps of product designing which is described as follows-
Introduction- First or foremost step is to design an effective product and make plan for
launching it at marketplace with the help of suitable strategy such as; advertisement through
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social media, distribution of pamphlets about products and brochure is also best one for BMW to
inform consumers about the features of their new launch.
Growth- Secondly, consumers attracted at large number and very much interested to use it for
experiencing new product.
Maturity- Thirdly, sales of new product is of peak and almost every individual have used it by
understanding their features.
Decline- Now, at last demand of product get diminished because everyone is having that vehicle
but product of BMW never lose their demand or people never get bored with the services of
BMW vehicles.
Process designing of New product development process is discussed as follows-
Objectives- First or foremost motive is to develop the new product of BMW that is i8 for
enhancing business performance in coming 12 months.
i8 - It’s a brand new revolutionary vehicle of BMW as it consumes only electricity
without losing or missing any of the quality or features of standard quality cars of BMW.
Generating ideas- Company is going to generate internal and outsources extrinsic
thoughts which choose the best amongst them as per organizational mission, vision,
objectives and entire strategy (Carter and Liane Easton, 2011).
Research and technology development- BMW is having their own research centres or
outsources as well as advanced technology innovations from associations for BMW i8.
PST Prototyping, screening and testing- This part of product development serves for
prototyping i8, designing full screen tests and testing in various terms such as; consumption
of car, safety and behaviour.
Refinement and development- Furthermore, fixing gaps comes out during testing in
order to make final improvements, alpha and beta testing through employees as well as
customers.
Introduction into new market- In this step, an organization is going to launch their
product at marketplace for further sale and to present it in front of the customers with the
help of various sources such as; through exhibition, showrooms etc. (Van Wassenhove and
Martinez, 2012).
Throughout the process, it has been analysed that suitable stages is followed while
developing new product for attaining their set targets in a defined time frame. In fact, it’s an
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appropriate theory which is used by company for developing their new product for attaining their
professional objectives. Hence, this process supports company in establishing their positive
image at marketplace which helps in gaining competitive advantage by satisfying user’s
requirement as per their choice or need.
On contrary to this, Robert’s rules of innovation states that there are almost 10 step
program for surviving at corporate world. Along with this, he also believes that ten imperative
step help in sustaining at market while launching new innovative product. Basically, NEW
PRODUCT DEVELOPMENT process is a third imperative step from these ten and very much
critical part of innovation in whole procedure. Another name of NPD is Stage-Gate. Thus, by
seeing this, developer’s pays full attention in entire process and conduct full research for
understanding the reason behind success and failure of goods. Moreover, in this modern
innovation world, Stage-Gate procedure is fully used for developing new product and really very
much effective.
Unfortunately, in few cases these things are not possible where new product is totally
exception innovation and it became mandatory for resolving challenging inventive problems.
But, in these type of situation, an organization can also improve their innovation process and
automatically attain set objectives by the use of TRIZ method into NPD stages. TRIZ is a
Russian acronym which is used for “theory of inventive problem solving” that was coined by
G.S Altshuller as well as with all colleagues in between almost 1946 and 1985. It’s a problem
solving tool which is totally based on logic, necessary data instead of intuition which accelerates
the capability of creator in order to resolve emerging problems. Along with this, TRIZ also help
in providing repeatability, predictability and reliability because of its structure and algorithmic
framework.
Managing quality
Managing production department number of activities is covered such as; decisions are
made that includes operational strategy, product designing, process, managing quality, capacity,
facilities planning, and production as well as inventory control. These entire things are very
much indispensable in the operational department for proper management of an association.
Therefore, BMW always focussed on their operational management for managing their
qualitative raw materials in suitable manner in order to attain set targets in given duration by
satisfying the needs of customers. In fact, success of an association is somehow depends upon
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proper functioning of operational function because products which are used by final users are
designed by manufacturing. Hence, this shows that an association needs to manage all the
activities which are going too incurred while converting raw materials into finished products.
Therefore, it has been understood that company is focussing in managing their quality by taking
number of initiatives such as; reduce usage of those materials which is going to harm the
surroundings and preferring only recycling resources. But still, company is not compromising
with their quality as they are taking measures steps for maintaining their product quality at
marketplace in order to gain competitive advantage or believe in establishing monopoly in little
foreign market. Moreover, in little society having BMW is a sign of high status, luxurious image
and shows that a person belongs from very repudiate company (Wong, Boon-Itt and Wong,
2011).
Logistics- It’s an appropriate process of managing things which occurred while
transferring certain goods and materials from one place to another. However, resources which
are managed in logistics consist of physical items like; food, materials, animals, equipment’s and
liquid. Apart from this, there are some intangible items too like time and information. Basically,
it’s a part of supply chain management which involves in planning process, implementing and
controlling the efficient and effective flow of goods. Moreover, complexity which incurred in
logistics can be modelled, assessed, visualized and optimized by simulation software (Jacobs,
Chase and Lummus, 2014).
Quality management is an appropriate act of overseeing all the business activities and
operations for maintaining the best or desired level of excellence. It includes number of things
such as; policy of quality, creating and implementing planning for quality and assurance as well
as quality control or improvement too. Basically, quality managing makes sure that an
association, product or services being a consistent. Main objective of this department is to focus
on product and service quality and to achieve it. Managing quality is a current approach but still
very significant for BMW because it supports the arts and crafts as well as allowed users for
selecting best suitable products for meeting higher qualitative standards instead of normal goods
(Mangan, Lalwani and Lalwani, 2016). Additionally, some of the major actions which is taken
by BMW for on-going sustainability through-
Reduce the usage and diversity of raw materials into production process.
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Prefer compatible materials like recyclables or natural resources for protecting environment from
getting harmed.
It is essential to decrease the usage of those materials which will harm the environment.
On the other hand, Walter A. Shewhart PCDA Model have conducted major step in
evolution in almost 1924 towards managing quality by creating various methods for controlling
quality production with the use of statistical methods. Along with this, major objective is to
promote continuous improvement plan at workplace by fulfilling the needs of desired users.
Basically, owner of BMW is of creative minds and always wanted to come up unique ideas due
to which this organization believes on continuous improvement plan and following various
operations to gain competitive advantage. Additionally, International Standard for quality
management adopted various number of management principles which is used by top
management for assisting their organization towards enhanced performance.
Launching a new or unique car consumes massive amount of data in entire value chain.
Thus, BMW is using Smart Data Analytics digitalization cluster for assessing the data selectively
and improves its production system. However, outcomes which comes out from intelligent data
analysis create an effective contribution towards enhancing quality in various regions of
production and logistics. For example; improvements in data driven process and systems aids in
reducing lead times as well as lowering the costs. In fact, new development has not only be done
in headquarters but at various other points in international production network too. Hence, this is
the way through BMW group is acquiring advantage of broad innovations which opening up
additional alternative options for making more flexible production (Wu and Pagell, 2011).
Moreover, company is also going for using access-protected intranet-of-things for connecting the
large quantity of sensor and process information from production and logistics quickly and
easily.
Furthermore, total quality management is most appropriate theory which is used by an
organization for managing quality at workplace. Basically, this method make wide efforts for
installing and conducting permanent efforts in order to change the climate where employees are
working for enhancing their ability. Mainly, first or foremost focus of quality management is to
meet the need of users as well as strive for exceeding expectation of customers. BMW uses
continuous improvement plan by modifying their existing vehicles in order to generate revenue
by satisfying customers.
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Lean production is simply defined as a systematic method for reducing the possibilities
of defective times. It means, by using this strategy an organization wanted to minimize waste
material while producing their finished goods. It helps an enterprise in improving their
employee’s knowledge and talent by guiding them towards modern method. However, this
technique is derived majorly from Toyota Production system. BMW uses this for reducing their
wastage while producing new products and manufacturing department are very satisfied with this
tool also because this helps in controlling extra cost.
Employee empowerment helps in offering specific degree of autonomy to the employees
for making final decision associated with specific organizational task. Basically, this approach
means managers of BMW have decided to give authority to their subordinates to make self-
decision in certain task. For example; HR team have go engaged in hiring skilled employees and
taking interview then at that time they don’t have to go and consult with higher authority before
selecting any desired employees. This means that, HR team or selection group have an
opportunity to instant select eligible candidate because they have the right to act as per their own
decision. This will be really beneficial for BMW is various manner such as; reduce maximum
time which might consumed by production team of BMW while designing their creative items.
Along with this, empowering of various employees helps an enterprise in maintaining positive
environment at workplace because this process aids in providing opportunity to all the members
of an association in order to show their talent and skills. As a result, employees get succeeded in
attaining their set targets and feel motivated also.
Benchmarking- It’s a strategy that is also applied by BMW while running their business
operation in order to create a competitive environment at workplace. As a result, this helps
company in encouraging their employees towards their set targets and objectives which leads to
attainment of organizational goals as well as productivity maximization. However, this approach
is all about comparing process of an organization and its performance metrics with best one of
other competitors. This surrounding is also sometime creating amongst staff members for
motivating them to reach at set target. BMW always set their target by designing its long term
vision and number of short term missions for gaining competitive advantage at marketplace. For
example; adding modification in existing product such as; launch of various upcoming
generations of previous vehicle or car that might like by most of the consumers. All these act as a
benchmarked for an organization which encourages their staff members towards set targets. In
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fact, BMW use benchmarking system by setting the target of an organization as well as
employees too so that they can perform their job role in much better manner. For example;
company have to set a target of selling more or more of their top model in coming 6-8 months.
This shows the benchmark of BMW and marketing team of employees are also liable for this.
Along with this, production team get responsible for designing creative cars with unique features
for seeking the attention of distinct users.
Triple bottom line; Economic, environmental and social approach/ considerations for BMW
Triple Bottom line is seen as TBL which is an accounting approach by having three parts
such as; social, environmental and financial. However, some organization adopted this theory for
evaluating its performance in broader perspective in order to create high range of business value.
BMW have gained few sustainability bragging rights for a broad range of measures from energy,
water and waste reduction to innovation and diversity. It has propelled that German based
automobile company have on top spot on corporate knights. BMW, officially known as
Bayerische Motoren Werke moved into first place, up from sixth place after acquiring above
almost 80% in eight of 12 KPI. Basically, company get succeeded in gaining high scores in few
areas such as; energy, waste and water reduction . Sustainability and environmental protection
Vice President of BMW Ursula Mathar states that company have not changed its focus across
past few years but still she believes the outcomes reflect continuous involvement and work
across the organization (Tummala and Schoenherr, 2011).
Instead of this, BMW group have succeeded in building their positive image and
reputation for their work by always reducing environmental footprint. Some of the major
examples of consumer problems are; its battery powered BMW i3 vehicle, plug-in-hybrid BMW
i8 models or current BMW X5 plug-in-hybrid. Basically, these models get improves in the
weight in order to make them more energy efficient. As a result, almost 4.4-per-cent dropped
average fleet carbon dioxide emissions per kilometre in around 2014. Hence, Mathar says that
efficiency of energy is highly advantages from ecological and economic point of view. For
instance; BMW states that reduction in volume of resources which are used while manufacturing
vehicle like waste, water and energy as well as its emissions per car emerges (BRENDA BOUW,
2016).
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CONCLUSION
From the above report, it has been summarized that operational management and logistic
process is really playing major role in success of automobile sector because these two terms
supporting enterprise in vibrant manner. For example; delivered the same product as it is
demanded by users in a given time frame as well as properly designing the products by
maintaining the high quality. Throughout the analysis, it has been understood that BMW have
focussed on their several departments for attaining set targets. Along with this, by using various
approaches such as stages of new product development and managing quality easily get
succeeded in establishing their brand image at marketplace.
REFERENCES
Books and Journals
Christopher, M., 2016. Logistics & supply chain management. Pearson UK.
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Rushton, A., Croucher, P. and Baker, P., 2014. The handbook of logistics and distribution
management: Understanding the supply chain. Kogan Page Publishers.
Jacobs, F.R., Chase, R.B. and Lummus, R.R., 2014. Operations and supply chain
management (pp. 533-535). New York, NY: McGraw-Hill/Irwin.
Gligor, D.M. and Holcomb, M.C., 2012. Understanding the role of logistics capabilities in
achieving supply chain agility: a systematic literature review. Supply Chain
Management: An International Journal, 17(4), pp.438-453.
Flynn, B.B., Huo, B. and Zhao, X., 2010. The impact of supply chain integration on
performance: A contingency and configuration approach. Journal of operations
management, 28(1), pp.58-71.
Wong, C.Y., Boon-Itt, S. and Wong, C.W., 2011. The contingency effects of environmental
uncertainty on the relationship between supply chain integration and operational
performance. Journal of Operations management, 29(6), pp.604-615.
Carter, C.R. and Liane Easton, P., 2011. Sustainable supply chain management: evolution and
future directions. International journal of physical distribution & logistics
management, 41(1), pp.46-62.
Van Wassenhove, L.N. and Martinez, A.J.P., 2012. Using OR to adapt supply chain management
best practices to humanitarian logistics. International Transactions in Operational
Research, 19(1-2), pp.307-322.
Mangan, J., Lalwani, C. and Lalwani, C.L., 2016. Global logistics and supply chain
management. John Wiley & Sons.
Wu, Z. and Pagell, M., 2011. Balancing priorities: Decision-making in sustainable supply chain
management. Journal of operations management, 29(6), pp.577-590.
Tummala, R. and Schoenherr, T., 2011. Assessing and managing risks using the supply chain
risk management process (SCRMP). Supply Chain Management: An International
Journal, 16(6), pp.474-483.
Online
BRENDA BOUW, 2016. [Online]. available through<
https://www.corporateknights.com/magazines/2016-global-100-issue/top-company-
profile-bmw-14533332/>.
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