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MASSCUSTOMIZATION
THE BMWWAY
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THE BMW WAY Inaugurated its plant in Leipzig area of
Germany BMW invested $1.3 billion in building the
Leipzig plant
Implementer of mass customisation
Leibzig plant was designed to allowmaximum flexibility and effectivecommunication
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CONTD..
Old way- customers ordered whatever thedealer had
New way- Maker of luxury cars had to offerextra value to customers (example)
Website to match the preference
Suggestions from dealers using the onlineordering system
Communicated to suppliers so that orderreceived at the right time. Suppliers close toplants
Differentiation- styling with excellenterformance, exclusivit and ride
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BACKGROUND
1913, Karl Rapp establishedRapp-Motorenwerke: manufactureaircraft engine- Munich, Germany
1916, got contract tomanufacture aircraft engines forAustria-Hungarian army-
Partnership with CamilloCastiglioni & Max Friz in 1917-Named BMW(Bayerische Motoren
Work GmbH)
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BMW 700, small car with air cooled,rear mounted engine.
It had sporty exterior- sport sedan
1961, BMW 1500- compact sedan-front disc brakes & 4 wheelsuspension
1971, moved to new head quarters,Munich
Increased focus on exports
1973, set up 1st overseas plant in
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MASS CUSTOMIZATION
The ability to satisfy the particular needs andwants of individual customers at competitiveprices of mass produced products and servicesthat approximate the wishes of many
customers in large market niches
It links two production concepts
Mass production
Customization
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REQUIREMENTS
q Mass Customization requires:
System for customerto specify requirementseasily
e.g.online ordering, call center
Advanced manufacturing systems
o Enable economies of scope (keep cost and pricelow)
Build-to-orderapproach
o Product is not made until order is received
Minimum order quantity ofone
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5/5/12MASS CUSTOMIZATIONREQUIRES SIX CORE
COMPETENCIES1. Eliminating Customer Sacrifice
2. Modular Design and Integration
3. Supply Chain Management4. Lean Production
5. Process Organization
6. Multi-project Management
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1990`s criticisms levied
Post purchase customization was big business inUS & Europe
1998, BMW launched a system called COSP,supported by an interactive web site
Did not take online orders by customers
Advancedplanning became an integral part
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ERP for real time interaction - Suppliers
Parts received from suppliers were stored at thehighly automatedparts warehouse known asSequence Center
Plants were highly automated (50 75%) Assembly lines facilitatedshifting between
models
Interchangeability of parts enhanced flexibilityand helped them deliver in approx 12 days
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Our logistics challenge is to let customerschange their choices right up until productionprocess starts
While a certain part of vehicle was mass
produced, combination of final elements wascustomized
BMW looked on its buyers as investors andnot as customers
Around 80% cars were customized in Europe& 30% in US
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BENEFITS TO MASS CUSTOMIZATIO
q
CUSTOMER Personalized Car
Higher Customer Satisfaction
Great Amount of Flexibility Perfectly Matching the need of Customer
q BMW
Brand Image in the auto industry Company's Profitability
Cut in Inventory
Competitive Advantage
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ALLENGES TO MASS CUSTOMIZATI
To Balance the Mass Production andDifferentiation
Maintaining Supply Chain
Reduction in Order Processing Time
To carter customers in foreign countries
Foreign countries rules and regulations
Integrating customer preferences with theimage of the country
FUTURE OF MASS
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The driver of Mass customization was the gapbetween what the customer wanted and what acompany could supply
It was used with great efficacy by Dell Inc. inmanufacturing computers
More than 50 percent of the cars built did nothave a potential consumer when they rolled off
the final assembly line Companies like Ford and GM had already
following built-to-order programs
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CONTD Several other Industries like consumer
durables, packaging equipment, windowframes were also using it to improve theirproduction systems
In case of auto industry manufacturing insmall batches or customizing products wasnot economical for plants and also thefluctuating production led to inefficiencies ofplants
This meant that companies would produce awide variety of options in large batches andthen use the internet to find a product fromamong those already manufactured thatexactly matched a customer order
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ThankYou.
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