Case Study Analysis
Based on the BMW Moves Beyond Just In Time Production case study. Prepare a 1,050- to 1,400-word paper in which you:
a. Answer questions 13-15 in the "Review and Discussions Questions" section.
b. Summarize the case.
c. Explain an appropriate measurement for BMW's supply chain performance.
d. Describe the impact of global expansion on BMW's capacity measurement and the role that e-business plays in this expansion.
e. Explain the role of e-business in the global supply chain, and describe the strategic importance of global capacity management as it relates to BMW.
I am seeking your help in this case study in order for me to write my own paper.
APA Format is required.
BMW MOVES BEYOND JUST-IN-TIME PRODUCTION
The department managers, engineers, and computer software developers at BMW AG's U.S. factory are about to drop-kick the auto plant into a new era. Call it the "post-just-in-time" era. "Don't forget the suppliers," says Helmut Leube, president of BMW Manufacturing Corp. in Spartanburg County, South Carolina. "Please don't underestimate the role of our suppliers in this effort." As Leube explains it, "this effort" is a shift from the lean, just-in-time production that automakers have championed since the 1980s to delivery-on-demand. The South Carolina plant and other BMW plants worldwide are attempting to make ordering a vehicle from a BMW factory and getting that vehicle on the day it is promised as easy as possible. Easy probably is the wrong word. To build this flexibility into its factory system, BMW is making major changes, including a $300 million capital expense program that just completed an overhaul of its nearly eight-year-old body shop. The manufacturing changes are as diverse as procedures in the Spartanburg plant and ordering tools for dealerships.
The following changes are under way. Vehicles are being gradually redesigned to reduce variations in sheet metal. The changes will reduce dramatically the number of body structure differences. The upcoming 3-series, for example, will decline from 16 body variations to two. The redesigned Z3 that goes into production in South Carolina late this year will have eight body variations instead of 12.
HOLD THAT VIN
BMW is changing its standard global factory procedure of assigning vehicles to customers. Until now, when a BMW factory received an order for a car, it stamped a VIN number onto a freshly welded body. That vehicle remained assigned to the same customer as it moved through body assembly, paint, and final assembly. Now, once the overhaul is complete, BMW assigns the VIN later. Bodies will be constructed and painted before the production control department claims it for a customer order. That delay will give customers more time to
change their minds. It also will give the manufacturer more scheduling freedom. The company is adopting a computer ordering system at dealerships in Europe. Shoppers there will work with retailers to configure the vehicle wanted and receive the date of delivery. The delivery date will return on the screen five seconds after making the order. When the order is submitted, it will go to BMW's central office in Munich, Germany, where orders will be calculated nightly and distributed to factories worldwide.
To use a system that BMW considers more efficient, the plant is taking some steps that appear to be less efficient. The Spartanburg plant will double the size of its vehicle stacking center-a giant mechanism that can temporarily shelve half of a shift's worth of cars at once. Its role is to solve scheduling glitches caused by vehicles out of sync with the production schedule. Some changes also will be made to allow more parts to stand along the assembly line. This should reduce scheduling glitches caused by a series of cars passing down the line out of order while the worker is loaded with parts for different cars.
DON'T FORGET THE SUPPLIERS
BMW must make this system work throughout its supply chain. That means it must design a computer system that tracks customer orders from dealerships around the world to parts makers in South Carolina and Germany. BMW is working the bugs out of a system that will go online in the fall in preparation for sales of the redesigned Z3 in November. If all goes as planned, BMWwill be able to request a production change from suppliers only a few hours before the parts are needed on the BMW line. Suppliers are accustomed to locking their production plans weeks ahead of delivery. The challenge begins with production forecasting. Normally, the manufacturer would be able to forecast its production needs and notify suppliers six months in advance with only about 60 percent accuracy, Leube explains. Six weeks ahead of production, the forecast is still only about 80 percent accurate. The forecast becomes 100 percent accurate four days ahead of production. BMW wants to be so accurate it can do two things: first, lock into 100 percent accurate production plans much earlier; second, take advantage of that accuracy to liberate suppliers to make more last-minute changes. In other words, the supplier will have the confidence in the forecasts to build most of its parts ahead of schedule. And by doing so, it will have the flexibility to make late schedule changes to accommodate customer requests without throwing off the overall schedule The new global ordering system will allow this to happen, with sales orders processed nightly and communicated to the factory planning departments, Leube says.
The changes also required a new method of managing the Spartanburg plant, says Doug Bartow, vice president of paint for the subsidiary. Itwasn't just amatter of getting newsoftware to track the more complex schedule, Bartow says. "It was a matter of creating a newway of managing it," he says. "Ontime delivery is a very cross-functional effort. You have to have people who can move between the departments to solve problems." Spartanburg created a job title of indicator champion. This person might identify a delay in final assembly, for example, and track its cause to a problem in the paint shop. The champion has the authority to sort issues in various departments to solve schedule problems.
BRAND IDENTITY CRITICAL
Why go through so much factory change just to allow showroom customers a few more days to change their minds? In BMW's strategy, it is a brand identity issue. Ninety-eight percent of all of the cars BMW's German factories build are customer orders. In North America, the number is 60 percent. Though it is unusual by U.S. standards, BMW wants to increase that share. BMW believes shoppers who are confident about getting exactly what they want when they expect it are more likely to buy this way. That requires a more controlled factory and scheduling system, Leube says. "We're not talking about the 20-day car," he says. "Some customers will need their car much sooner than 20 days, and we
will be able to handle that. But other customers won't need it nearly so fast." Leube says there will be gains at the manufacturing level. A precise schedule will lead to a more stable and profitable supplier base, he reasons. Reducing product complexity also will allow a plant to increase production on new products. With fewer variations, the plant can move toward full-line speed faster, Leube says.
"It's certainly challenging," he says. "But BMW is a company that wants to be able to respond at the latest possible moment. And this is how we will get there."
F O R M U L A R E V I E W
Determining the number of kanbans
[12.1] k = DL(1 + S)
S O L V E D P R O B L E M
A local hospital wants to set up a kanban system to manage its supply of blood with the regional blood bank. The regional blood bank delivers blood to the hospital each day with a one-day order lead time (an order placed by 6 P.M. today will be delivered tomorrow afternoon). Internally, the hospital purchasing group places orders for blood each day at 5 P.M. Blood is measured by the pint
and is shipped in containers that contain six pints. For a particular blood type, the hospital uses an average of 12 pints per day. Due to the critical nature of a blood shortage, the hospital wants to carry a safety stock of two days' expected supply. How many kanban card sets should the hospital prepare?
This problem is typical of how a real application might look. Using the data given, the variables for
this problem are as follows:
D = 12 pints per day (average demand)
L = 1 day (lead time)
S = 200 percent (safety stock, as a fraction this is 2.0)
C = 6 pints (container size)
k = DL(1 + S)/C
= 12(1 + 2)/6
This indicates that we need to prepare six kanban card sets. Each time a new container of blood (containing six pints) is opened, the card will be sent to purchasing and another six pints of blood will be ordered. When the blood is received, the card will be attached to the new container and moved to the blood storage area.
R E V I E W A N D D I S C U S S I O N Q U E S T I O N S
13. Why is lean hard to implement in practice?
14. Explain the relationship between quality and productivity under the lean philosophy.
15. Why would a JIT advocate have a problem with the system proposed for the BMW AG's U.S.
factory (discussed in the box "BMW Moves beyond Just-in-Time Production")?
The response addresses the queries posted in 1415 words with references.
//As per the directions, we will write about the difficulties in the implementation of 'Lean' into practice. Then, we will write about the relationship between the quality and productivity under the 'Lean Philosophy'. Along with this, we will also discuss about the problems that have to be faced by the JIT advocate with the system proposed for the BMW AG's US. It will assist in understanding the importance of lean philosophy for the management of supply chain activities of an Organization.//
Difficulties in the Implementation of Lean in Practice
Lean assists the companies in delivering their offerings in less lead time, high quality, lesser cost, superior customer service, high profits and productivity for effectively managing the requirements of the competitive market place. For effective implementation of lean, the companies need to focus on managing the processes and procedures that do not add value to their operations. The major difficulty in the implementation of lean in practice is concerned with the lack of considering lean as a continuous process. The improvements from lean take time and are comparatively slow. Some other problems are concerned with the inadequacy of suppliers' quality, employee commitment is lesser and in keeping down the set up times of machines (Martin, 2006).
Relationship between Quality and Productivity
Quality and Productivity are the important components of Just-In-Time production process according to the 'Lean Philosophy'. With the enhancement of the quality of products supplied to the customers, the productivity of the companies increases. It is due to the reason that the company will be capable in assembling good and perfect units to the suppliers. The overall production process is not diminished in the production of inferior products. Therefore, it can be interpreted that quality and productivity are essential for the lean philosophy (Hutchins, 1998).
Problem with the System for BMW
The main components included in the production process of BMW are aligned with the lean or Just-In-Time production schedule. The major problem is associated with the discrepancy in the vehicle stacking center for resolving the issues concerned with the scheduling. It is mainly focused on the structure erected to commemorate inventory schedules. Therefore, JIT advocate would face problems in handling the vehicle stacking schedule for the computer system proposed for the BMW AG's US.
//Above, we discussed about the review and discussion questions of the case. Now, we will write about the ...
The response addresses the queries posted in 1415 words with references.