Operations, Logistics, and Supply Chain Management in BMW

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Understanding Operations, Logistics, and
Supply Chain Management
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Table of Contents
Essay................................................................................................................................................3
References........................................................................................................................................8
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Essay
This report demonstrates the understanding about operations, logistics and supply chain
management. Operation management helps in creating a high level of efficiency in the company.
It helps in converting the material and labor into the product and services of the organization in
an competent manner which help in achieving the organizational objective. Logistics involves
the management of the acquired resources, storing and transporting them. It is a process of
identifying the suppliers and the distributors to determine the accessibility and effectiveness
(Christopher, 2016). People manage the logistics department are referred to as logisticians.
Supply chain work as a network between the firm and its suppliers which helps in producing the
goods to the final buyers. This system involves many people, entities, resources, information,
and peoples. This system involves the processes which help in getting the products and the
services into the original form for the customers. This report helps in analyzing how these
operations, how these logistics and the supply chain management are used in the BMW which is
a UK based automotive company and explained the use of this system in the organization by
making comparisons with the other organizations (Christopher, 2016).
BMW is a German multinational company which operates in various countries such as the UK,
America, Europe, etc. The company produces automobiles and motorcycles. It was founded in
the year 1916 which deals with the engines of the aircraft which is produced and operated from
the year 1917 to 1918 and again from 1933 to 1945. The full form of the BMW is “Baterish
Motoren Werke AG’, this involves operating in the mini cars, Rolls-Royce and the motorcycles
(BMW group, 2019).
There are two areas through which BMW performs its logistics and the supply chain operations
which are location & layout as well as management of people in the operation and the supply
chain.
One of the most important decisions of a company is regarding the targeted location and the
layout, For BMW it has expanded its business worldwide but for achieving its objective it has to
decide about the location which is suitable enough for operating and selling, which can be cost-
friendly and the work environment because once an organization is committed to a location it
becomes difficult to make changes in the resources and the cost issues.
In the area of managing the people in operations and the supply chain management, an
organization has to make various decisions regarding the asses about the design process and the
labour planning, identifying the major issues in the job designs, finding the incentive scheme
importance and different types of ways through which labor standards can be established. These
activities help in managing the people in the organization.
The main objective of making the strategy about the location is to increase the benefits of the
location to the firm, so BMW has used specific locations particularly the rich countries through
which they can sell their expensive products which further helps in maximizing the profits of the
company. In the location area, various strategies are involved such as expanding the present
facilities, maintaining the present facilities and adding the sites and closing as well as relocating.
For considering the low cost of the products location decision performs an important role as once
the location is fixed it becomes difficult to change or reduce the cost (Domschke, 2013). There
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are also the various factors that affect the decision regarding choosing the location such as the
growth in the economical market, good international communication, different expenses on
labor, Easier flow of capital between the countries and finding the success factors which help in
achieving the competitive advantages. There are various key factors which help to make location
decision and by using these factors BMW has taken the location decision which are the
government rules and the political risks, economic and the cultural issues, productivity and the
labor talent, exchange rates and currency risks, etc. For launching the products it is important to
consider the community decision as each country is different in their ways such as government
incentives and the fiscal policies, land, and construction costs, etc. Deciding about the sites are
an important part of the decision making which involves site size, costs, air, rail and waterway
systems (Domschke, 2013).
An organization needs to deal with the area of layout which helps to make important decisions.
There are variety of layout which are fixed position, functional, cell and the product layout. A
fixed layout involves the processing of the resources and the people who come to the service
such as the motorway building. There are various advantages of the fixed layout such as a large
amount of tasks to the staff, a very high product, and mix facilities. There also involves various
disadvantages to such as increased unit costs, scheduling space and difficult tasks. Functional
layout processes the products which are similar and group them for example – specialist machine
or processing. The advantages of the functional layout are it is not difficult to supervise, high
product and the mix flexibility, demerits involve lower use, increased work in progress and the
complex flow. The cell layout involves a self-contained area which helps in completing the
processes of particular operations such as the service stores of the BMW. The advantages
involve group work whose outcome can be motivation, can provide better compromise and
speedy throughput. Disadvantages can be costly in rearranging the present layout and require for
more plant. The product layout involves the pre-determined route which involves all the
operations that follow a similar process sequence such as the automobile assembly in the BMW.
The advantages are it involves a low unit cost for the high volume of products, involves various
chances for the specialization of the equipment. Some of the demerits of product layout are lower
mix flexibility and work can be repetitive. Some operations have got the combination of the
different layouts for which the mixed layout. Servicecape layout, it is the process of using the
different operations with the different combination of the elements which influences the forms of
behaviour. For example – BMW showrooms can create different kinds of displays and interiors.
BMW uses some of the location strategy and the layout strategy and some areas are different
from the operations of the Mercedes Benz. Benz involves various factors that help in
determining the location decision such as the proximity to the markets in which the
transportation costs may make it important for the producers of the company, proximity to the
suppliers and proximity to the competitors which involves both the part of service and the
manufacturing industries. Whereas BMW uses some different areas of the decision making
processes such as the country decisions, region, and community decisions. Mercedes Benz uses
the different variety of layouts such as fixed position layout which involves assigning the high
variety of the objectives to the staff and increased productivity and the mix flexibility. Whereas
BMW uses the cell layout which involves the making separate units of the service and the
product selling in the market as well as it uses the process layout in which similar kinds of
products are processed and grouped such as similar cars and similar bikes.
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Managing people during the operations and the supply chain is another important area that comes
under the operations, logistics and supply chain management. It involves the operations
management in which operations are performed such as the direct, develop, deliver and design.
Designing involves the use of various other functions in which employees are managed to
perform the designing function with the help of the process technology and the supply network
designs. People in organizations are managed in different ways such as allocating the different
works, designed the different jobs for the different individuals, designing the work environment,
etc. Various factors influence this job design, work time allocation and the working environment
which are the division of labor, behavioural approaches, flexible working, and the team efforts.
There are various stages through which the works are measured in the organization such as the
standard time is calculated by adding the basic time and the allowance (Engel, 2017). There is a
requirement of the job design through which the people in the organization can be managed.
There are various components of the job design that can b used in the organization such as job
expansion, job specialization, psychological components, self-directed teams, and the incentive
schemes & motivation. There are various physiological components such as job identity,
autonomy, feedback, skill variety, and job significance. Incentive schemes are important for a
company for motivating the employees of the organization which helps the business to perform
well in terms of productivity, sales, and profits. These schemes encourage the employees to
improve their efforts for achieving the objectives such as customer services, quality, and timely
delivery, it helps in encouraging the changes in the organization and creating a desired
workplace culture. There are some types of the scheme which can be applied in an organization
such as the multi-factor, multi-level schemes, and the team-based bonus schemes (Larkin, 2012).
Various studies can be conducted in the organization to analyze the work performed in the
organization such as work-study which involves the method study and the work measurement.
Work-study is used for the examining of the human functions of work in the ways which further
helps in the identifying of all factors which affect the efficiency and the economy. Method study
includes the collection and the difficult examination of the proposed and the existing methods of
completing the work, it is a means of developing easier and effective methods and reducing the
costs. Work measurement involves the use of strategies to carry out the specified jobs at the level
of performance which is defined. For managing people in the operations and the supply chain
management short term scheduling can be used as its focus is to allocate and prioritize the
demands which are generated by the customer orders to the available facilities (Roncaglia,
2014). It helps in the faster movement of the goods through the facility means which use the
lower cost and the assets better as well as results in more dependable deliveries. BMW
scheduling follows the maintenance of the vehicles, production of the goods, purchase of
materials and the workers. Another important function performed for work management is the
finite and infinite loading. These perform the function of assigning the jobs to the work stations.
Finite loading helps in assigning the work up to the capacity or the work stations and the infinite
loading does not consider the capacity.
There is a difference in the use of strategies of the BMW and the Mercedes Benz in terms of
managing the people. Benz uses the team-based bonus schemes for encouraging the employees
as different teams are assigned to the different departments of the organization. Whereas BMW
uses the multi-level scheme as incentives here are given based on the level of the work done in
the company. BMW uses the short term scheduling process which the organization in getting the
competitive advantages and improves the customer services through faster delivery. It helps the
manager to schedule the maintenance of the cars and bikes, producing the products, purchase of
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the raw material and the workers. Benz uses the finite loading process as in this organization due
dates are pushed out and all the work gets done so, finite loading helps the organization to assign
the works according to the capacity of the work stations. So, managing the people in the
operations and supply chain management is an important function of an organization.
The economic approach of the BMW involves practices that improve the long term development
of the business and also look to meet ethical, philanthropic and environmental standards. BMW
can improve their operations with sustainable practice by keeping balance of economic decisions
with effect on community. When an company modifies the manufacturing function which
include the recycled products that can give advantage to the company by lowering the material
costs which also benefits the society by decreasing the consumption of the resources. So, BMW
always keeps in mind performing all the necessary economic responsibilities (McDaniel, 2016).
(Entrepreneur India, 2019).
The environmental approach involves the responsibility of the business that should operate its
activities in a manner that protects the environment. By taking care of the environment and going
forward in the operations a firm can have the advantages. There are various points which an
organization should follow for fulfilling the environmental approach such as a firm should store
the waste safely and securely, and ensure that these are collected by the local authorities and the
licensed waste contractor. BMW manages the wastes for recycling by separating the plastic,
metal and the glass (Entreprenure India, 2019).
The social approach involves the work of an organization in such a way that it benefits society.
An organization’s ability to make the balance between achieving economic performances and
adhering to societal & environmental issues is a critical factor for doing the operations
effectively and efficiently. BMW includes in the list of the social approach as it is using its
profits for donating for the welfare of the society. The social approach involves the duty of an
organization to act in the favour of their environment and community. These social
responsibilities applied in the business are referred to as corporate social responsibility (BBA
mantra, 2019).
BMW is doing very well in the worldwide market as it is earning a net income of 7.2 £ billion
with 134,682 employees. The company uses the various theories and concepts to keep running
on the success track such as making the location & layouts and managing the people in the
operations and the supply chain management. It made the location plans based on the community
or the region and the efficient market which helps in increased profits. They have made the
layout process with the help of the functional layout and the cell layout. BMW can use various
other strategies for improving more in the market democratizing the market, exploring the digital
integration, Building an end to end solution, building communities and resources and exploring
the unexpected opportunities. All these methods can help BMW to develop more in the market
and also can improve the profits.
This report demonstrated the understanding of the operations, chains and logistics management
and how these systems are used in a manufacturing organization. This report explained about the
two areas of chain and logistics management which are used in the BMW which is a German
based automotive company operating in the UK. These areas were the location & layout and
managing people in operations and supply chain management. This report reflects the social,
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economic and environmental approach used in BMW’s business and gave a recommendation
about BMW’s business and suggested different methods of improving the business.
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References
• BBA mantra, 2019. Social responsibility of business. [Online] BBA mantra. Available at:
https://bbamantra.com/social-responsibility-business/ [Accessed: 31 July 2019]
• BMW Group, 2019. Introduction to the BMW. [Online] BMW group. Available at:
https://www.bmwgroup.com/en/brands-and-services.html [Accessed: 31 July 2019]
• Christopher, M., 2016. Logistics & supply chain management. Pearson UK.
• Domschke, W. and Drexl, A., 2013. Location and layout planning: An international
bibliography (Vol. 238). Springer Science & Business Media.
• Engel, A., Browning, T.R. and Reich, Y., 2017. Designing products for adaptability: insights
from four industrial cases. Decision Sciences, 48(5), pp.875-917.
• Entrepreneur India, 2019. Ways of making business more efficient. [Online] Entrepreneur
India. Available at: https://www.entrepreneur.com/article/292833 [Accessed: 31 July 2019]
• Larkin, I. and Leider, S., 2012. Incentive schemes, sorting, and behavioral biases of
employees: Experimental evidence. American Economic Journal: Microeconomics, 4(2), pp.184-
214.
• McDaniel, B.A., 2014. Entrepreneurship and Innovation: An Economic Approach: An
Economic Approach. Routledge.
• Reid, R.D. and Sanders, N.R., 2015. Operations Management, Binder Ready Version: An
Integrated Approach. John Wiley & Sons.
• Roncaglia, A.J., Cerisola, F. and Paz, J.P., 2014. Work measurement as a generalized
quantum measurement. Physical review letters, 113(25), p.250601.
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