Mass Customisation- The BMW way

BMW Opens a New Plant

In May 2005 ,BMW opened its new plant in Leipzig area of Germany.

W invested $1.3 billion.

Manufacture BMW 3-Series car.

Max annual capacity: 650 cars/day

Expected to create 5500 jobs in that area.

Why Leipzig area?

Availability of highly Qualified staffHigh standards of superior qualityLegal securityExcellent InfrastructureThe Leipzig plant was designed to allow

maximum flexibility and communications

The Evolution

In 1913 , Munich, Germany, Karl Friedrich Rapp established

the Rapp-motorenwerke to manufacture Aircraft Engines.

In 1916 ,During First World War Company secured contract to manufacture aircraft for  Austria-Hungarian army

In 1917, Rapp needed additional financing to complete this contract.

He partnered with Camillo Castiglioni.The new partnership company named as Bayerische Motoren Werke Gmbh.

The company soon get into difficulty due to over expansion.

Sold it to Australian industrialist,Franz JosephPopp.

The First Aircraft Engine

In 1918 ,Bayersche Motoren Werke manufactured its first aircraft engine.It reached up to an altitude of 5000 metres in 29 minutes, creating a world record.

Treaty of versailles banned Germany from producing Aircraft. The company shift to manufacture Railwaybrakes.

In 1922 , Bayerische flugzeugwerke AG. Manufacturer of small aircraft merged with BMW to form BMW AG.

BMW AG

BMW started manufacturing MotorcycleR32-500 cc Bike designed by Max Friz.

Company started producing cars in the late 1920’s.

In 1928-BMW setup a car manufacturing unit in Eisenach region of Germany.

There they manufactured DIXI cars and sold under their name.

By early 1930 they started designing their own cars.

Introduced many successful car’s like 327 saloon and 328 roadster. 

Saloon 327 and 328 Roadster

In1959 launched BMW 700 of “sporty exterior´ which was the main selling point.

They launched other models based on BMW 700 and won many competitions.

1961 – BMW launched the “Sporty Sedan”

BMW 1500 launched in 1961

1970: BMW moves its headquarters to Munich.

In 1970 BMW moved its headquarters to Munich,Germany.

The building looks like the four cylinder of cars.

From 1970 to 1990 they focused on exports market.

Like US ,south Africa, Australia, Asia, Japan, Austria and Bavaria.

In1992 BMW outsold the Mercedes for the first time in Europe.

The company became the first European car market to operate in US market.

In1994 BMW attempted to enter in mass market by bringing British Car m/c MG Rover.

The purchase gave the company ownership of many successful brands like Mini, Land Rover, and Triumph etc.

But some of the models were clashing with the BMW model.

In 2000 , BMW sold the MG Rover to Phoneix consortium for a nominal £10.

Mini and Triumph were held by the BMW and Land Rover and Range Rover were sold to Ford.

In Early 2000 BMW launched its 1-series and 6-series.

For launching this car model company faced many criticism.

2000 - 2005

1 SERIES & 6 SERIES

In 2004 company added three 3 car brands-BMW, Mini, and Rolls Royce

In 24 cities,12 Countries on 4 different continents.

Company employed 70,000 people.Customer deliveries increases from

1.2millions unit.Revenue in 2004=US $ 60.47

billions,Profit=US $ 3.03 billions.

WHY MASS CUSTOMISATION?

The factors:◦BMW was reputed for its customisation programs

◦The orders recived were conveyed to the factories which manufactured and delivered to customers in the shortest possible time.

◦Meeting particular customer need on a large scale. 

◦Basically combining the concepts of mass production with customisation

One of the criticisms against B.M.W. was that most of its cars looked alike. 

As a maker of luxury cars it had to deliver value to its customers.

 In older system customer had to do away with whatever limited options they had. 

Total customer satisfaction became the new buzzword.

BENEFITS TOMASS CUSTOMIZATION

Personalized CarHigher Customer SatisfactionGreat Amount of FlexibilityPerfectly Matching the Need’s of the

customer.Better use of working capital.Levels out economic fluctuations.Customer has control over products.

As a result of customization program there was a stocking more in showrooms.

COSP :Customer oriented sales and production.

Production process was defined by the car ordered by the customer.

This was supplemented by the online ordering system launched by the company

Supply Chain Management

Advance planning was the key reason for the excellent management for BMW supply chain management.

B.M.W. had a very efficient ERP solutions provided by SAP.

It connected the supply chain management very well.Once the data entered it reached automatically to the

production areas.50-70% of the plant was automatedUsed extensive use of Robots for heavy manual work.Sophisticated machines moved around to help human

efforts. ( Process , fixed position,product,cellular layouts)

PROCESS FLOW STRUCTURE

Batch shopBatch productionAssembly lineContinuous flow

ONLINE ORDERING SYSTEM

Improved interface

Platform to showcase the company’sproducts

Customize options

Dealer’s role

Good ERP systems

Flexibility

BMW ‘s new plant was constructed in circular design keeping flexibility in mind.

This was done for future expansion and smooth flow of process from one stage to another.

Assembly lines designed in such a way that they can shift between models when demand fluctuated(each plant produced atleast two models of cars)

Flexible work programmes where plants operated in different capacities.

BMW had 300 different worker scheduling programs Interchangeability of parts added to flexibilityCustomised car was delivered in 12 days

Challenges faced

In 2000 , BMW had the lowest delivery times.

Consumer laws in US : Consumer could break a car deal at any time before delivery.

Integrate customer preferences to the image that the company carried.

Future of Mass Customisation

Computers ,cars and other industries are adopting mass customisation.

There was a school of thought which suggested that mass customisation is not economical in automobile industries as they thrived on volumes.

It is widely agreed that the potential of mass customisation is huge.