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SCM in Motor Vehicle Industry

The document discusses BMW's supply chain management strategies for their Mini brand. It describes how BMW uses a flexible production network across multiple plants in the UK and flexible just-in-time procurement policies to efficiently produce customized Mini vehicles according to customer orders. Close collaboration with local suppliers allows BMW to gain speed, quality, and flexibility benefits. Through integrated supply chain management, BMW achieves a competitive advantage of offering premium customized cars with quick delivery.

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Bharat Kumar
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122 views44 pages

SCM in Motor Vehicle Industry

The document discusses BMW's supply chain management strategies for their Mini brand. It describes how BMW uses a flexible production network across multiple plants in the UK and flexible just-in-time procurement policies to efficiently produce customized Mini vehicles according to customer orders. Close collaboration with local suppliers allows BMW to gain speed, quality, and flexibility benefits. Through integrated supply chain management, BMW achieves a competitive advantage of offering premium customized cars with quick delivery.

Uploaded by

Bharat Kumar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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Supply Chain in

the Motor
Vehicle
Industry.
Presented by
Ananthu bharat

Introduction

The motor vehicle industry is


very competitive.
A competitive advantage is
necessary to remain in
activity.

There are two main strategies to


get a competitive advantage:

BMW has a differentiation strategy.

How can supply chain


management help attain a
sustainable competitive
advantage?
The Mini assembly plant is
located in Oxford.

Outline
Part I: An Overview of the BMW Group
A) BMW AG
B) BMW in the United Kingdom
C) Mini

Part III: Mini, the Production Triangle


A) A philosophy of production
B) Production

Part II: The Contribution of Supply


Chain Management to the Competitive
Advantage of the Motor Vehicle
Industry
A) What is a supply chain?
B) Evolutions
C) Current issues

Part IV: Mini, the Extended Production


Network
A) Logistics
B) Purchasing policies
C) The role of suppliers

Part I:
An Overview of the BMW
Group

A) BMW AG
Three brands of cars.
1, 286,310 cars
delivered in 2009

50,681 million euros


of revenue in 2009

Net revenue decreased by 36.4%

14th largest car


manufacturer in
terms of production

96,230 employees

The main markets are


Germany, the United States,
the United Kingdom and Asia.

24 production and assembly


plants in 13 countries

with most of production


located in Europe.

BMW groups strategy:


increase sales by more than 2
million cars a year, through
materials cost reductions and
better utilisation of the capital
employed.
Two pillars:
- Focus on premium segment.
- Networking and flexibility in
production.

B) BMW in the United


Kingdom
3rd largest market of the group
2nd biggest production
country
Only country where the
three brands are
manufactured

3rd largest car


manufacturer in the UK

1.7 billion worth of exports in


2004, representing almost 1%
of British exports.
8,000 employees

Four production plants in the UK:


Goodwood:
1,000 employees
1,212 cars in 2008
Hams Hall:
1,000 employees
Four-cylinder petrol engines
372,000 engines in 2008
Swindon:
1,000 employees
Pressings and sub-assemblies
for the Mini
Oxford:
3,700 employees
Production and assembly
of the Mini
216,000 cars sold in 2009

C) Mini
1913

First car produced in Oxford, the Bullnose Morris.

1930s

Morris factory is established in its current location, in Cowley.

1954

The Pressed Steel Company ( later Pressed Steel Fisher)


needs extra capacity outside its Oxford factory and
establishes a car panel production facility in Swindon.

1959

Creation of Mini as a concept for British Motor Corporation:


Morris Mini Minor and Austin Seven.

1965

Pressed Steel Fisher bought by Rover.

1968

Merger between BMC and Leyland, to create British Leyland.

1969

Separation between Austin and Morris models is lifted: all


Mini cars are branded MINI.

1986

British Leyland renamed Rover Group.

1994

The BMW Group acquires the Rover Group.

2000

BMW sells Rover to the Phoenix Consortium, Land Rover to


Ford and keeps the Mini brand.

2001

Opening of the Hams Hall Plant


Launch of the Mini One and Mini Cooper.

2004

Launch of the Mini Convertible.

2006

Second generation of Mini.

2007

Launch of the Mini Clubman.

2008

The Mini E is unveiled.

2009

Launch of the new Convertible.

2010

Launch of the Mini Countryman.

Three body styles.

Six engine variants:


4 petrol variants:
One: basic
Cooper: intermediary
Cooper S: turbocharged
John Cooper Works: the most
powerful
2 diesel variants:
- One D: basic
- Cooper D: intermediary

Part II:
The contribution of Supply
Chain Management to the
Competitiveness of the
Motor Vehicle Industry

A) What is a supply chain?


End
customer
Second tier
supplier

First tier
supplier

First tier
customer

Supply side
Information
flow
Physical
flow

Second tier
customer

Demand side

Purchasing and
supply management

Physical distribution
management
Logistics

Materials
management
Supply chain management

B) Evolution of supply chain


management in the motor
vehicle industry.
The environment has dramatically
changed from the 1970s.
SCM has been an area of growing
interest since that time.
Competitiveness = internal
efficiency + good management of
external relationships.

The main changes which occured:


The traditional way

The new way

Low prices privileged


Large supply base
Adversarial relationships
with suppliers
Limited communications
Large stocks

Involvement of suppliers
from development
Smaller supply base
Longer contracts
awarded
Interdependency
Smaller and more
frequent deliveries.

Strong integration of organisation


Influence of Just-In-Time and Agilit

C) Current issues.
Crucial decisions:

Capacity utilisation: effect on


revenues, speed of response,
dependability, quality, flexibility.
Planning, forecasts: mismatches
between demand and production are
expensive.
Lead time: improvements in time
and consistency will benefit the
supply chain at different levels,
giving more flexibility.
Logistics and inventory
management: creates the
synchronisation of material and
information flows between the
organisations.

Part III:
Mini, the Production Triangle

A) A philosophy of
production
KOVP: Customer-Oriented Sales and Production
Process:
- Simple and rapid ordering process at the
dealers.
- Immediate receipt of binding confirmation order.
- Flexibility when altering customers order (up to
7 days before production).
- Information on the order status.
- Quick and punctual delivery .
Aim: offer a customised car at a desired date.

Provides additional revenues


and builds the brand image.
Attained through a flexible
production system and a
performant IT environment
which enables visibility and
coordination along the supply
chain.

How can BMW gain more


flexibility in the production
processes ?
- Postponement:

- Build-To-Order:
Low finished goods inventory,
customisable product, quick
delivery. "Pull" triggers.

B) Production
Body shell and assembly:
370 different interior trims and 320
exterior variants
Flexibility of the facility
Modules

Engines:
Delivered just-insequence.
Traced through
production.
BMW knowledge.
Body pressings and and sub-assemblies:
Delivered just-in-sequence.
Increased capacity and productivity.
80% of parts of the body shell.

Part IV:
Mini, the Extended
Production Network

A) Logistics
Logistics has a direct impact on the
speed and efficiency of operations.
Increased structural complexity of
production and sales network, together
with increased product complexity and
changing customer requirements:
challenge to design and manage.
Optimisation: standardisation and
integration.

Different levels of logistics networks:

Transport of components and


parts.
Material handling.
Logistics facilities.
Enterprise Resources Planning:
- Control of material flows
- Use of internet communications,
electronic data interchange,
barcodes, radio-frequency
identification

B) Purchasing policies
Suppliers have to be carefully selected.
Cost reductions

Globalisation.

C) The role of suppliers


Numerous and important parts of the
Mini are sourced locally: speed and
flexibility.
Suppliers choose to relocate near the
plants: significant integration.
Suppliers are requested to deliver high
quality products and services. Examples
of Kautex-Unipart and HBPO.
Suppliers development can help attain
cooperation and performance.

Conclusion

Mini and BMWs competitive


advantage lies in their brand
image.
The brand image is built on
premium, customised products.
The KOVP is supported by supply
chain operations.
Supply chain management
provides quality, efficiency and
flexibility.

Operations are managed to fulfil


these aims within the group, but
also all along the supply chain.
Cooperation with suppliers is
vital.
Focus on core competencies.
Drawbacks: change in the
structure of the supply market.
Good supply chain management
practices are an opportunity to
reduce costs and increase
profits.

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