Analysis of BMW's Operations, Logistics, and Supply Chain Management

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Running Head: UNDERSTANDING OPERATIONS, LOGISTICS AND SUPPLY CHAIN
MANAGEMENT
UNDERSTANDING OPERATIONS, LOGISTICS AND SUPPLY CHAIN
MANAGEMENT

UNDERSTANDING OPERATIONS, LOGISTICS AND SUPPLY CHAIN MANAGEMENT
Table of Contents
Introduction to operations management..........................................................................................3
Overview of the organisation...........................................................................................................3
New product and service development and process........................................................................4
New Product Development Process Model (NPD Process Model).................................................4
Step 1: Generating........................................................................................................................4
Step 2: Screening of the idea........................................................................................................4
Step 3: Concept testing................................................................................................................5
Step 4: Performing business analytics.........................................................................................5
Step 5: Performing marketability tests.........................................................................................5
Step 6: Identifying product development possibilities as per technicalities................................5
Step 7: Commercializing..............................................................................................................6
Step 8: Feedback and review collection post launching..............................................................6
Quality management........................................................................................................................6
Check sheet..................................................................................................................................6
Cause and effect diagram.............................................................................................................7
Triple bottom line............................................................................................................................8
Recommendations............................................................................................................................9
Conclusion.......................................................................................................................................9
Reference List................................................................................................................................10
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UNDERSTANDING OPERATIONS, LOGISTICS AND SUPPLY CHAIN MANAGEMENT
Introduction to operations management
Operations management stands for the management of all the resources available within an
organisation in order to carry out the business practices in the most appropriate way. The primary
objective of operations management is to ensure high quality of delivery of production services
to the customers. In addition to this, it also aims to deliver the work and practices in the most
efficient way for the company in terms of productivity, profit, and reputation among the
customers. The primary activities involved in the entire field of operations management include
handling logistics services. The movement of goods and materials from one place to another take
place in a very calculated way where the operation managers have to decide about the quantity of
goods to be moved. Moreover, the shortest possible route is also selected by the managers
depending on several environmental and artificial factors.
Mathematical calculations are very important in order to identify the total investment of time,
money and other resources that have to be done in order to achieve maximum efficiency for the
business. Therefore, the investments that are to be done in vehicles during purchase and
maintenance along with fuel consumption are many factors that are considered before making a
final decision about logistics operations.
Overview of the organisation
The BMW group is one of the most popular automobile manufacturing companies all over the
world that manufactures more than 2.5 million units of vehicles every year. The organisation has
been operating since over the last hundred years and it has quarters are located in Munich,
Germany. Organisation is currently headed by Mr Norbert Reithofer who is the chairman of the
organisation and the operations are supervised by the chief executive officer Mr Harald Krüger.
The company has its office located in almost every country all over the world and approximately
130,000 employees work for the organisation. The annual revenue generated by BMW
Corporation is almost €100 billion as per the data published by the company in the 2017 annual
report. The organisation is known for its luxury and sports class vehicles especially cars and
motorcycles that are preferred by rich people all around the world.
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UNDERSTANDING OPERATIONS, LOGISTICS AND SUPPLY CHAIN MANAGEMENT
The following report is about the different aspects that BMW group needs to be careful about
before initiating the development and processing of any new product or service. In addition to
this, the details about quality management in the organisation along with its significance and
positive outcomes have also been discussed. In order to design and develop a new product and
take it forward towards further processing and final production, it is important to have adequate
knowledge about the market potential. Similarly, quality management is also very important
because it ensures that majority of the people have a positive image about BMW.
New product and service development and process
In order to design and develop a new product or service, it is important that the organisation
carefully carries out and analysis throughout the market to identify the requirements based on
which the product is to be developed. It is essential that the company is able to provide the right
product according to the demands and necessity of the customers (Sroufe and Joseph, 2017). The
newly designed product is expected to be superior compared to the already existing products in
the market in the same category. Hence, following are the major steps that can be followed
according to the new product development process model of the NPD process model considering
the scenario of BMW group.
New Product Development Process Model (NPD Process Model)
There are eight major steps the company needs to be careful about while developing a new
product according to the NPD Process model.
Step 1: Generating
The first step is to study the market by conducting SWOT analysis regarding the possibilities of
success and the factors that can act as barriers for the company. The overall affordability and
return of investments are roughly estimated regarding any new product that is to be launched
(Hyun Park et al. 2017). The company managers also conduct analysis to identify the increasing
needs and demands of customers that are related used to formulate the ideas.
Step 2: Screening of the idea
On the basis of primary research of the market and define the customer demands, the
organisation creates a primary pool of ideas in the screening stage. These ideas can be the rough
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UNDERSTANDING OPERATIONS, LOGISTICS AND SUPPLY CHAIN MANAGEMENT
designs of new products where the newly emerged demand are added as new features in the
products. The BMW Corporation can introduce some extraordinary features to make that drive
even more comfortable and safe.
Step 3: Concept testing
After collecting the idea during the screening phase and formulating an organized system of
ideas, the company developed a concept of the product. This particular concept product is not for
commercialization and only for initial testing of the success of that product (Sharma et al. 2016).
The company managers internally conduct test drives for the new vehicle that has been
developed considering the new requirements of the customers and make a note of improvements
required.
Step 4: Performing business analytics
The fourth step is about performing the business analytics regarding the product after testing and
verifies the concept product. The business analytics generally includes the overall investment in
developing the product and the estimated return on investment that it is likely to deliver. The
total materials used along with the involvement of time and workforce for mass production in the
future are carefully analyzed to identify the business analytics results.
Step 5: Performing marketability tests
The marketability tests are performed in the fifth stage of the NPD Process where the chances of
marketing taxes are collected. The primary aim of this step is to ensure that the features that have
been added in the new product are according to the demands and requirements of the customers
(Ali, 2016). In case of BMW, the new features are to be advertised and marketed for the people
to make them understand about the correlation between their necessities and the product.
Step 6: Identifying product development possibilities as per technicalities
The final touch in the development possibilities according to the technical specifications of the
product are conducted in this step. This includes looking at the features carefully again and doing
some minor adjustments to bridge the gap between customer expectations and the company’s
product. The sitting arrangements, positioning of windows and other handling systems are finally
adjusted in this stage.
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UNDERSTANDING OPERATIONS, LOGISTICS AND SUPPLY CHAIN MANAGEMENT
Step 7: Commercializing
The final stage is of commercialization where the final product is launched in the market. This is
usually done on a specific date of advertising about the product through different mediums. This
is important because the maximum level of awareness will ensure maximum participation of
customers in the opening ceremony of the new product (Balon et al. 2016). This will finally
result into better reputation, higher sales figures and increased profit margin for the organisation.
Step 8: Feedback and review collection post launching
The company needs to collect feedback and reviews from the customers on its products after
making it commercialized. The review and feedback collections are very beneficial for the
company because it helps them identify the areas of improvement that they need to include in an
advanced model. The BMW Company therefore keeps improving its new vehicles on the basis of
reviews received on its vehicles belonging to previous models.
Quality management
Quality management factor is among the most crucial factors in any organisation that ultimately
decide the fate of an organisation. The success or failure of a company significantly depends on
the quality is of products and services that is delivered to the customers. The BMW group is
known for its quality products all over the world and therefore it is growing ever since. The
massive expansion in different countries all over the world has taken place because the company
has provided high quality products to its customers. The organisation has used many total quality
management tools or TQM tools in order to ensure that the products are of optimum level of
quality before reaching to the customers (Izogo and Ogba, 2015). Following are some of the
most effective tools that BMW group has used in order to ensure your best quality in terms of
production at commercial levels.
Check sheet
The check sheet is a highly preferred and reliable technique for total quality management tool
that is used by many organisations in order to ensure your best quality services and products. The
quality of products can be enhanced only if the services and operations related to the production
are conducted in an appropriate way (Leal-Millán et al. 2016). Therefore, the BMW group
ensures that a check sheet is maintained properly on a regular basis based on which the overall
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work done on a particular product can be identified. This technique is also helpful to know the
quality of work done by the employees at the service plants and premises. There is a set of
parameters that are considered in order to identify the overall quality of any service delivered by
an individual that will reflect upon the final product quality.
A check sheet for or BMW car consists of different parameters on which the overall quality of
the car can be identified. These parameters are speed, durability, impact withstanding capability,
personal safety, price, noise cancellation, comfort level, engine performance, and pollution or
carbon emission parameters. The overall rating is given to the car by an independent
organisation. However, the internal quality testing processes are performed by the company itself
to identify and evaluate the performances delivered by its employees.
Cause and effect diagram
The Quality management can also be done for an entire service operation with the help of the
cause and effect diagram. This is also known as the fishbone diagram where the effects of any
mishap are described along with the causes of the happening hours of those mishaps. The most
prominent advantage of using this diagram is that the company managers are usually able to
identify the reasons behind any unusual activity or result. In addition to this, all the possible
reasons that can lead to the happening of that unusual activity can be documented down easily.
As a result of this, the company managers can find out the solutions for these problems. There
are often multiple solutions available in order to resolve any particular issue with the business
operations. Hence, the managers can easily identify the most appropriate solution in terms of
effectiveness and cost consumption and choose the same at the right time. This usually saves a
huge amount of time and other resources like money for the company because it allows the
management people identify the problems at the earliest and take necessary actions (Gencer and
Akkucuk, 2017).
The BMW group has used fishbone diagram to identify some normal issues that are likely to
occur in the production line of the company. There have been moments when some individual
employee did not turn for work. Hence, the analysis was done using the fishbone diagram to
identify the exact reason that could have been either not sending notice on a specific day or any
other personal reason. The necessary works done by the operations teams of the organisation are
very important to be quality managed because any lack in quality of service reflects in the final
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UNDERSTANDING OPERATIONS, LOGISTICS AND SUPPLY CHAIN MANAGEMENT
product. Similarly, in case of any hardware related issues where any particular car does not have
enough paint it on a specific area of its surface is tested for the reason. There can be multiple
reasons including malfunctioning of the paint sprayer for which handling of the robotic
automated arm. All the possible causes are noted down and analysis is done to identify the exact
reason behind the same. The appropriate actions are taken by the right individual so that the
same issues do not show up repeatedly. The fishbone diagram also allows brainstorming inside
an organisation where people can come up with creative Solutions to the problem (Surange,
2015).
Triple bottom line
The triple bottom line or TBL theory is used widely in many organisations in order to carry out
its operations. The triple bottom line concept is about analyzing the impact of any company
operations on three major aspects that are social aspect, economic aspect, and environmental
aspect. The social aspect is about the people who are getting affected by the company operation.
This also includes the corporate social responsibility is carried out by the company. The
economic aspect is regarding the profit that is earned by the organisation. The third major aspect
is the environmental aspect which is affected by the production of different items by an
organisation (Mahajan et al. 2017). The operations conducted by the company can be termed as
equitable if the social and economic aspects are properly taken care of. Similarly, the company
operations are viable in case of proper conduct of activities benefiting the economic and
environmental aspects. Finally, the company is said to be performing variable operations if the
social and environmental aspects are adequately taken care of by the company management.
However, any organisation that is performing well on all the three aspects can be termed as a
sustainably operating company.
The BMW group has effectively implemented it strategy to have a positive impact on all the
three aspects. Considering the social aspect, BMW carries out corporate social responsibility
related works by sponsoring charitable trusts and supporting the NGOs in different countries. In
addition to this, the people working as employees of BMW group is also properly taken care of
by the management. The BMW group is also performing well in economic aspect because of the
huge number of sales of its vehicles in many countries which allows the company to earn huge
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UNDERSTANDING OPERATIONS, LOGISTICS AND SUPPLY CHAIN MANAGEMENT
profits. The organisation is also very careful about the environmental aspect and therefore is very
strict about carbon emission and pollution testing of its vehicles.
Recommendations
After going through all the aspects it can be said that the organisation is doing well in its field of
automobile manufacturing. However, it can consider the following recommendations in order to
perform even better.
 Introducing electric vehicles and promoting the same will be beneficial for the
environmental aspect considering the triple bottom line concept.
 Marketing about those new technological advanced electric vehicles that can deliver
optimum level of performance will also fetch monetary benefits for the company.
 The overall company expansion needs to be done from car manufacturing two other
heavy duty vehicles like trucks and buses.
 The BMW group management it also needs to implement several other theories so that it
can sustain the market competition and also perform well in every sector associated with
automobile engineering.
 The BMW group should primary focuses on enhancing the safety features of a car
without increasing the caused by a huge extent.
Conclusion
An organisation can perform significantly well if all the aspects including quality and customer
services can be delivered in the best possible way. The above report has explicitly described the
importance of proper market research in order to develop and commercialize any new product or
service. The BMW group is performing significantly well compared to its competitors in the
automobile sector because the luxury cars made by this company are highly preferred by many
people belonging to upper financial classes. The quality management aspect has also been
discussed in the report where the different types of quality management tools that are used in
companies have been discussed.
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Reference List
Ali, S.A., 2016. Directions to explore the principles of service innovation: With various
companies’ case study. Journal of Research in Business, Economics and Management, 6(3),
pp.971-978.
Balon, V., Sharma, A.K. and Barua, M.K., 2016. Assessment of barriers in green supply chain
management using ISM: A case study of the automobile industry in India. Global Business
Review, 17(1), pp.116-135.
Gencer, Y.G. and Akkucuk, U., 2017. Measuring quality in automobile aftersales:
AutoSERVQUAL Scale. Amfiteatru Economic, 19(44), p.110.
Hyun Park, S., Seon Shin, W., Hyun Park, Y. and Lee, Y., 2017. Building a new culture for
quality management in the era of the Fourth Industrial Revolution. Total Quality Management &
Business Excellence, 28(9-10), pp.934-945.
Izogo, E.E. and Ogba, I.E., 2015. Service quality, customer satisfaction and loyalty in
automobile repair services sector. International Journal of Quality & Reliability
Management, 32(3), pp.250-269.
Leal-Millán, A., Roldán, J.L., Leal-Rodríguez, A.L. and Ortega-Gutiérrez, J., 2016. IT and
relationship learning in networks as drivers of green innovation and customer capital: Evidence
from the automobile sector. Journal of Knowledge Management, 20(3), pp.444-464.
Mahajan, V., Misra, R. and Mahajan, R., 2017. Review on factors affecting customer churn in
telecom sector. International Journal of Data Analysis Techniques and Strategies, 9(2), pp.122-
144.
Sharma, R.R., Chadee, D. and Roxas, B., 2016. Effects of knowledge management on client-
vendor relationship quality: the mediating role of global mindset. Journal of Knowledge
Management, 20(6), pp.1268-1281.
Sroufe, R. and Joseph, S., 2017. Designing a Sustainability Management System at BMW
Group: the Designworks/USA case study. In Strategic Sustainability (pp. 76-90). Routledge.
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Surange, V.G., 2015. Implementation of Six Sigma to reduce cost of quality: a case study of
automobile sector. Journal of Failure Analysis and Prevention, 15(2), pp.282-294.
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