Bmw Supply Chain Management in Car Manufacture

RESEARCH AREA:

Business

RESEARCH BRIEF:

Supply Chain Management in car manufacture (BMW)

i. Prepare an assessment of the BMW current supply chain position. Then contrast the nature of its supply chain with one of its suppliers

ii. Outline operational and supply chain strategies that could be used to enhance the organisation's future performance enabling it to take advantage of future opportunities, particularly the complementary capabilities of other firms within its own supply chain

iii. Describe the technical and human resource changes that need to be made to the supply chain to allow a successful implementation of these strategies

TABLE OF CONTENTS

1.0 Introduction Pg 3

2.0 BMW's current supply chain position Pg 4 - 5

2.1 BMW's suppliers TNT (a contrast) Pg 6 - 8

3.0 Operational and Supply Chain Strategies that could Pg 9 - 11

enhance BMW's future performance

4.0 Technical and Human Resources needed for supply Pg 12 - 13

chain to allow successful implementation of strategies

5.0 Summary Pg 14

6.0 References Pg 15-16

7.0 Bibliography Pg 17-18

1.0 INTRODUCTION

"Supply Chain Management is about getting the product to the right place, at the right time, in the right volume, and at the right price." (Atos Origin, White Paper, 2003)

"Supply Chain Management refers to a wide variety of activities that firms and industries use to coordinate the key players in their procurement process." (Laudon & Traver, 2001, Pg664)

The rate of change in supply chain management is evidenced by the fact that the automotive industry is ever increasingly moving towards. The make and sell philosophy is nowhere better typified than by the phrase "any colour you like, as long as it's black". Now car makers get detailed information from their dealers on the actual models that customers have orders - and tailor their manufacturing schedules accordingly; a push based supply chain.

2.0 BMW'S CURRENT SUPPLY CHAIN POSITION

BMW found a partner, Magna Steyr, to take over a function that was considered the very core of what BMW is as a company. This was possible through the integration of its so-called "customer-oriented sales and production system" into the production process of an outside company. Thus all customer-relevant aspects of a BMW can be delivered to the customer.

BMW would turn over such a vital link in its supply chain to another company is dramatic evidence that supply chain management, long regarded as necessary work, has become a strategic opportunity. www.softwarestrategies.com

There are four levels of automation for BMW. Level 1 deals with material handling, automated conveyors, and robotic operations. Adding these types of operations generally reduces the labour force needed, increases quality, decreases cost of operation per unit time, but has a higher initial cost at set-up. The body shop of the BMW plant in Spartanburg, SC has a relatively low automation rate of 25%. www.bmwusa.com

Level 2 deals with equipment and plant layout. The Spartanburg plant utilises a U-shaped assembly line to allow for good access and fast communication. BMW views this as a cellular layout. However other people may disagree with this view. In order to have true cellular manufacturing, a continuous flow is needed. The question is, does BMW have a true, even flow? (Professor Onsi, BMW Manufacturing Technology, 2002)

The third level of automation Involves manufacturing software systems. These can aid in the planning of operations, and increase efficiency. In 1999, BMW South Africa commissioned its new logistics system using SAP R3 to improve management of their supply chain. BMW North America (NA), on the other hand, outsourcer's logistics 100%. (Professor Onsi, BMW Manufacturing Technology, 2002)

Level 3 also deals with flexible manufacturing systems. In June of 2000, BMW Board of Management Member responsible for worldwide production, Dr. Norbert Reithofer, stated that modifications to the factory's manufacturing areas would provide "the flexibility and capability needed for the preparation and production of exciting new models in development." In addition, BMW has been setting benchmarks for flexibility, which will allow for comparison in the future, and perhaps reduction of risk. (Professor Onsi, BMW Manufacturing Technology, 2002)

The fourth level of automation involves computer integration. Here benefits of cost reduction, efficiency, and flexibility can be realised.

BMW NA in Spartanburg uses BMC software solutions to support the company's continuous manufacturing operations. The process should "move from a reactive toward a preventative mode with applications; this saves a lot of money if your business emphasizes JIT and supply chain management" says Bennie Voster. www.bmc.com/investors/ar/1999/bmc-99ar12.html

Other software systems have been implemented. Digital Manufacturing (DMF) allows for the simulation and optimisation of processes, production lines, and individual assembly operations. Results have been the reduction in development time from 60 months to around 30 months. It has also led to the ability to create flexible machine for flexible manufacturing, more easily. Another software tool BMW use involves computer simulated crashes. Smashing the car just once takes two to four days of computer processing time, but costs a mere 500 dollars, as compared to nearly a million for a true crash test. (Professor Onsi, BMW Manufacturing Technology, 2002)

2.1 CONTRAST OF BMW'S SUPPLY CHAIN WITH TNT (ITS SUPPLIERS)

TNT Logistics North America, one of USA's leading providers of value-added logistics, announced that it