BMW

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Company Background

BMW = Bavarian Motor Works Founded in 1916Originally an aircraft engine manufacturerProduced first automobile in 1929By the 1980s, established itself in the luxury/ performance segment of the global automotive market

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Product Line

3 Series Entry Level Sedan $25K to $40K

5 Series Mid-range Sedan $37K to $44K

7 Series Flagship Sedan $54K to $70K

Headquarters:BMW Group activities worldwide are co-coordinated from the corporation's head office in Munich. A city landmark, the "four-cylinder" tower at the Olympic park is the nerve center for an organization which covers over 150 countries.

70,000 employees in the 70,000 employees in the BMW Group production BMW Group production ensure that every customer ensure that every customer receives his tailor-made receives his tailor-made vehicle on time and with the vehicle on time and with the high quality expected. high quality expected.

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The BMW Customer

Average BMW Customer Profile: Approx. 46 years old Median income = $150K Well-educated Married and no children 2/3 were male Technology is important Very loyal to the BMW brand Driving is a form of personal expression Work hard and play hard!

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In 2000, BMW had a unique window of opportunity

Sales were highest ever in the U.S. Brand has never been stronger No new products being launched over

next 6 months

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Non traditional approach Previous success with product in films Unique opportunity to sell brand and not cars

Over 9 million hitsComprised of 5 filmsOver 2 Million visitors registered

1994 - Majority of BMW manufacturing in Germany• Some “kit factories” in Far East• Exports to US BMW Dealers – Disappointing Market Share

US BMW Sales Problems• 1986-1989 Sales in US fell 65%• Gas guzzler tax• Luxury tax• Japanese Competition (Dramatically Cheaper)

Good News• Tax breaks in South Carolina

New labor practices

Building a Global Supplier Network• Local supplier base key to success (NAFTA,

transportation)

The BMW Group introduced an online ordering system in 1998, which gives dealers the option on showing customers their desired car on the screen and confirming the delivery date on the spot.

The time frame in which the vehicle can be built is fixed within a few seconds, a place in the production process is immediately reserved and the manufacturing logistics department is informed.

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Production

The worldwide production network of the BMW Group is the backbone for growth in all of its global markets.

Due to the close cooperation between all of the plants, manufacturing takes place quickly and flexibly. This creates significant advantages in the international market.

The BMW Group currently has 22 production and assembly plants, in twelve countries on four continents.

Where it makes sense, the BMW Group also ties external partners into series manufacturing.

Worldwide assembly plants

The BMW Group strategy of ensuring that production is tuned to market demands around the world also applies to smaller markets with worthwhile potential, in which customs regulations may, for example, complicate the import of complete automobiles.

In such areas, the BMW Group manufactures automobiles from parts kits in assembly plants. This is the so-called “Completely Knocked Down” (CKD) production process. (Mass Customization)

In the CKD process, certain parts and components are packaged as kits in precisely defined assembly steps and exported for assembly in the respective countries.

These kits are then supplemented with locally manufactured parts in the partner countries.

Currently, the BMW Group uses CKD assembly to manufacture automobiles with partners in eight locations (Malaysia, the Philippines, Russia, Vietnam, Egypt, Thailand, Indonesia, and Mexico).

The BMW “Team of Plants”

The integration of production and logistics systems within the individual BMW Group locations (to form an international production network) offers advantages for the customer.

First and foremost, greater efficiency in the supply of production materials helps to speed up the delivery of cars and motorcycles to customers, each plant making its own contribution to the smooth operation of the production network.

Despite the growing variety of models, the BMW Group’s production network is so flexible that in several plants, different models can be manufactured as and when needed.

One example: If the market demand for the BMW 3 Series models increases, then the plant in Dingolfing can include this vehicle in their production program.

If the demand drops, then it is taken off the production program.

The integration of suppliers into vehicle development and production is a decisive factor in competition.

All of BMW’s suppliers use either EDI (Electronic Data Interchange), or Web EDI.

Web EDI attaches ERP (for BMW, their SAP software) to the internet and allows partners in communities like South Africa who cannot afford “full-blown” EDI to communicate with BMW.

BMW introduced this solution to fellow German automakers Daimler Chrysler, Toyota, and Volkswagon.

When they ship parts, suppliers send BMW advance shipping notifications (ASNs) to provide the car manufacturer with exact information on parts counts and delivery dates. Parts arriving at the BMW dock are then received “just-in-time” and transferred directly to the line.

Unique automobiles

Up to 20,000 parts travel the pressings plant through Body-in-White, and are then painted and assembled to become a perfect whole – a unique BMW or MINI.

Every vehicle which rolls off the line is tailor-made according to the customer's wishes in terms of model, color, interior furnishing and accessories, and engine type.

An almost unimaginable number of 1017 variants are possible for the BMW 7 Series alone.

BMW has earned a reputation for producing the highest quality car with the highest level of customer service.

BMW’s logistics challenge is to let customers change their choices right up until the

production process starts.

Meeting deadlines - in all details Making sure that the right numbers of the right parts are in the right place at the right

time - and that these parts meet the required standards.

Logistics is of essential importance not only for stable production, but also for efficient transportation throughout the network - between customers, dealers, suppliers, and plants around the world.

This is made possible through the "Customer-Oriented Sales and Production Process", or COSP for short.

This ensures that customers can change their orders even shortly before their vehicles go into production without affecting the delivery deadline.

On-Time Delivery Reliability100%

Order Change Flexibility –Up to 6 days prior to end of production

Reduction of Lead Time –

10 Days (process time)

TIME AND FLEXIBILITY TARGETS

None of this would happen with any coordination without BMW's advanced information systems

Involves purchasing, quality and logistics personnel because they are not just developing parts for a vehicle; they are developing a supply chain right up to the supplier.

The planning process involves management of information flow as well and requires sophisticated information technology.

In Spartanburg all the major component suppliers are within 20 miles

BMW's suppliers, both near and far, are integrating into the carmaker's IT system in real time. BMW has a long-standing relationship with German enterprise resource planning software producer SAP.

About 600 personal computers are linked About 600 personal computers are linked through the global network. through the global network.

BMW sends long horizon forecasts to its suppliers as well as posting requirements to provide up-to-date information on its delivery needs, using EDI or SAP.

SAP registers production confirmation and parts consumption information every three minutes.

Parts consumed during assembly are removed from the inventory count, and costs are posted through the system to calculate the value of work in process.

BMW has invested heavily in sequencing technology to support its production process.

BMW also has developed sophisticated transatlantic communications.

It spent more than $35m for the sequencing system at the Spartanburg plant.

Welding is performed with manufacturing robots and some manual labor.

Car bodies are placed on lifters on the center of the skillets. The lifters raise and lower the bodies to make it easier to add consoles, lights and other parts to the assembly.

Ergonomic assist devices and manipulators also aid in placing other heavy parts onto the frames.

Each assembly station uses around a 1 minute and 30 second cycle timeEach assembly station uses around a 1 minute and 30 second cycle time..

1992- Construction of the plant in Spartanburg, South Carolina begins.

The BMW plant near Spartanburg in South Carolina, USA, began producing BMW automobiles for the world market in 1994.

Today, it manufactures the BMW X5 and the BMW Z4 Roadster.

The 2.1 million square foot plant builds X-5 Sports Activity Vehicle (BMW’s SUV) and the two-seater Z-4 roadster

On the X-5 alone, there are 8 body variances, 12 colors, 19 engine choices, 16 interior choices, and 85 other options

BMW has a devised system that allows it to accept customer specs only six days before final production of the vehicle begins.

That cuts lead time by 50% between order placement and production

Two automated storage and retrieval systems (AS/RS) (also known stackers) act as a buffer to make the delayed assignment possible.

One AS/RS holds 220 car bodies while the other holds 230.

Due to the success of these automobiles, the Spartanburg plant has had to be substantially enlarged. Its output was expanded by adding additional shifts, introducing flexible working hour models, and hiring new employees. Today, the Spartanburg plant is open six days a week, producing automobiles approximately 110 hours a week. Circa 4,700 employees manufacture over 500 vehicles daily.

The Sequence Center assures that the right parts get to the right places at the right times.

Was created to feed sequenced and build parts from distant suppliers just in time to the assembly line.

TNT and the Sequence Center

BMW chose to partner with a third party logistics provider (3PL) to manage its Sequence Center

BMW owns the Sequence Center building and inventory, but hired TNT Logistics to manage the facility.

3PL handle their logistics, which includes labor in the warehouse.

TNTTNT

TNT's Supply Chain Execution technology is a vital component supporting BMW's Materials Management process.

It provides real-time materials status - proactive information critical to BMW's productions schedules.

TNT manages BMW’s North American supply chain from the moment a part is dispatched by supplier until its installation in one of the Z4 sports cars or X5 sports utility vehicles made in Spartanburg.

TNT has been a transportation partner with BMW since the inception of the manufacturing plant back in 1994.

TNT handles BMW’s total transportation, including deliveries from suppliers to warehouse and to the manufacturing facility.

They also bring materials from BMW’s off-site warehouse which holds larger parts not stored in the on-site warehouse.

TNT is under contract and works to meet the deliverables of their agreement.

They have their own human resources department, management and supervisors onsite here to deal with the entire labor operations.

TNT does all of the training BMW had new processes that

required specialized training and they had to rely on their expertise to get through it

TNT operates two material processing centers totaling 600,000 sq. ft. supporting BMW's production of its X5 Sport Activity Vehicle and Z4 Roadster.

The supply chain contract calls for TNT to manage material flow from all suppliers to the materials processing center and to the plant

Waggoner’s Trucking Company is the motor carrier moving the Z4s and X5s from the plant in South Carolina to

Brunswick.

Another integral part of BMW's supply chain to the overseas market includes the ocean carrier, Wallenius Wilhelmsen Lines (WWL).

Once the product arrives at Colonel's Island, Atlantic Vehicle Processors (AVP), a subsidiary of WWL, performs the minor cosmetics of auto processing to make the cars ready for dealer lots and showrooms.