Bmw Case Submission

Puneet Singh 1514034

1. What are the causes and consequences of BMW's quality problems with newly launched products?  What should be done to improve "launch quality"?

Answer:

Following causes can be ascribed for Quality related issues:

A] One major cause which I could identify for BMW’S quality problems is the usage of different types of tools and materials used for manufacturing of the prototypes. This “flexible” approach of BMW was a major cause for quality issues.

If anything had to be altered in the prototype, it was quite easy as the lead time for production tools was only 1 week while the pre-production tools had a lead time of 6 months. Because of this incoherence in the production processes, a lot of issues used to crop in later part of the production cycle. These were:

1. Production problems, if any, could be identified only during the late phase of the development and then it becomes very costly and time consuming to rectify the same.
2. Number of faults per car were increasing and this was mainly because no time was left usually to fix minor problems and fine tune the production process.

B] Mix-model ramp strategy: BMW opted for this production modality considering its high fixed costs involved. So, before the plant reached full production capacity for the new model and to further capitalize on the popularity of the model about to be phased out, BMW planned for a production model in which after every 9 new models, 1 model of the older version would be put on line. This resulted in: a) confusion at the production line b) made logistics more complex. An indirect effect of this complexity was non-discovery of all problems/faults in the pilot production phase. This further resulted in:

a) Quality of car not up to the BMW level of brand.

b) Frequent changes in the production schedule.

c) Escalation in the manufacturing costs.

These could be ascribed as the main reasons for losing out to Japanese car manufacturers viz. Toyota and Honda.

To improve the “launch quality”, I believe that BMW should make every effort to bring suppliers as well as pre-production tools, under the same roof, in the prototype phase itself. This will result in significant improvement in the production process as fault detection frequency.

1. What are your recommendations to Carl-Peter Forester concerning the R-series prototypes?  What should he do regarding future development projects?

ANSWER:

I would recommend Carl to continue with the current production arrangement for the time being. But as has been discussed in previous question, would recommend BMW to go for full time introduction of pre-production tools in the prototype development cycle itself.

Further, as has been discussed in previous question, Forster has two options to choose from:

1. Either continue with the current strategy of late introduction of preproduction tools in the production cycle, or

1. Early introduction of the pre-production tools during the prototyping phase itself.

The introduction of later option in the production phase would have a significant impact on the production cycle as well as the quality of product being manufactured, i.e. BMW’s flagship, the seven series. But following points need consideration:

1. With the ‘flexible’ approach, it was possible to alter the production tools in a span of 1 week only but then the use of pre-production tools during prototyping would require a lead time of 6 months and then there is an order lead time of 6 months further.

B) Another major block on the road is that cockpit design has still not been frozen and if some alterations in the manufacturing process are made at this point of time, it will further delay the production by 6 months (lead time for new set of pre-production tools).

Considering above factors I would not recommend ‘experiments’ at this stage of production cycle as I have said in the beginning of this discussion too. 7 series is the flagship product for BMW and a lot of company’s image depends on how well the product turns out and that too in time. This also involves market share in the luxury car segment.

1. What changes would you recommend in the way BMW develops new models?  What attributes of newly launched products would you expect to improve as a result of these recommendations?  Which attributes might deteriorate?

ANSWER:

My recommendations would be:

1] Pre-production tools should be used from the prototype stage itself. This will immensely help in reducing lead time for product as a whole plus may result in lesser number of faults per vehicle.

2] Continue with the concept of supplier involvement in the design process. In fact, even BMW looks forward to outsource design and manufacture of components to suppliers.

3] All eggs are not equal and hence it is recommended that a different strategy be adopted for BMW cars priced in 20-50k segment.