Operation Management at BMW MINI - Case Study Example

Operation Management at BMW MINI Table of Contents Final Assembly Process at Mini 3 Delivery Lead Time 6 Performance Objectives 7 Design of Supply Chain and Inventory Usage 8 Conclusions and Recommendations 9 Conclusion 9 Recommendations 10 Bibliography 15 Introduction BMW is a German based automobile company involved in design, manufacturing and production of luxurious vehicles within global context. The company brands include BMW, Mini along with Rolls-Royce. The market demand for BMW mini has been observed to be constantly increasing globally including the two major automobile markets of the world namely China and the United States. During the year 2012, the sales of Mini rose by 21.7% and other brands of the company had decent growth in terms of sales. The role of the UK is observed to be vital as far as the productions of BMW brands are concerned. The company started production of BMW MINI in 2001 in MINI Plant Oxford and since then the company has produced more than two millions MINIs (BMW GROUP, 2014; BMW GROUP, 2014; Milmo, 2012). Final Assembly Process at Mini The given case provides a rich understanding regarding the operation management at BMW MINI. Numerous themes can be extracted from the given case study. In this regard, few of the major themes from the case study are extracted to explain the model of operational management. The Transformation Model According to the transformational model, operational management relates to the systematic process followed by control method in which resources or the input are transformed into finished goods or output for customers (The Open University, 2011). Below is the pictorial representation of the transformational model. Figure 1: The transformation Model Source: (The Open University, 2011) Notably, some inputs are directly utilized in the process of creating finished goods while others act as a catalyst in the process. The input resources are bifurcated as transformed resources (direct inputs) and transforming resources (supportive inputs). In this regard, transformed resources are categorised as these resources, which are transformed through operation to produce certain goods. On the other hand, transforming resources such as staff and facilities are categorized as those resources that are used to perform the process of transformation. Fundamentally, three kinds of resources are transformed in operations which include materials or physical input, information and customers or people. The output is generally in the form of finished products. However, transformation processes usually leads in the undesirable outputs as well (The Open University, 2011). 4Vs (Volume, Value, Variety, Visibility) Processes are important element of any organisations. They are the building blocks of any organisation. In the contemporary business environment, operational management and supply chain management related challenges such as volume, value, variety and visibility faced by organisations are required to be efficiently managed based on the customers’ perspective. Thus, 4Vs (volume, value, variety, visibility) have been applied in relation to operation management at BMW MINI and their relationships with MTO/MTS. Volume Catering the requirements of the customers by increasing the existing capacity as per the changes in customer demand is one of the major volume related challenges. In order to deal with this challenge, the existing order flow process related to BMW MINI follows customer focused sales as well as production procedure. This process of the company involves providing utmost level of suppleness with regard to ordering fresh cars along with providing internal as well as external suppliers with a secure production arrangement perspective (Sherman, 2012; Hines, 2004; Pycraft, 2000). Value Value expected by the customer in exchange of money for the product is an important element, which needs to be considered by the suppliers. In the present era, the customers may not purchase the supplied quantities of a particular product, which raise challenge related to product value. In order to deal with this problem, the company with respect to the production of MINI embraces variable orders as a major segment of its production pipeline. According to the variable order approach, the company recognises the degree of demand from the customers at a given time. The aspect of flexibility is a major feature of the production pipeline, which involves re-sequencing of variable orders (Sherman, 2012; Hines, 2004; Pycraft, 2000). Variety Variety involves considering the customers’ requirements. Accordingly, suppliers are required to consider the changes in the customers’ requirements and should customized products and/or services based on these changing requirements. With respect to the production of BMW MINI, the company undertakes advertisements and organises cars show prior to the actual commencement of the production (Sherman, 2012; Hines, 2004; Pycraft, 2000). Visibility Visibility is another vital element that deals with managing the supply chain operations from the source to the ultimate consumers. Visibility is based on the concept that all parties involved in supply chain are aware of the current pipeline. As far as the supply of BMW MINI is concerned, a linear order based sequence is developed, which is further communicated to all the concerned suppliers through a special kind of system based on which the suppliers plan their activities of production (Sherman, 2012; Hines, 2004; Pycraft, 2000). MTO (make-to-order) is a popular production system followed by many firms across the world to reduce the costs and waste that is focussed on recognising the customers’ requirements. Under MTO customers places their orders. Thus, based on the understanding derived from the analysis of 4 Vs (volume, value, variety, visibility) with respect to BMW MINI, the production system followed in the manufacturing of BMW MINI radically considers the customers requirements or MTO production system (Kaminsky & Kaya, 2006). Delivery Lead Time The final assemble of BMW MINI takes place in the Plant Oxford where the car is given the final touch and then dispatched to the customers. Every finished car in the Plant Oxford is attached with barcode for the identification purpose during the final stage. The barcode attached to cars also include details regarding the customers individual specifications. Besides, a transponder is fitted to these cars along with other operations are performed such as electrical wiring harness fitting, soft tops fitting to convertibles and cockpit fitment. The final process also involves extensive quality checking through camera visioning systems. Finally, the wheels are fitted and petrol is filled. At the regular interval of every 67 seconds, finished products are rolled out of the physical assembly line. This implies that all orders placed in the virtual pipeline are transferred at an interval of 67 seconds. Performance Objectives The production triangle of BMW emphasise the cross-functional and independent feature of organisational process. In this regard, in the Swindon plant, metal body pieces of BMW MINI are compressed into shape, which are then moved to Oxford for welding different parts by using an automatic process into identifiable unpainted bodies. Engines along with transmissions are produced at the organisation’s plant located in Birmingham. BMW uses special system whenever a linear arrangement is devised to convey the same to its suppliers. Based on these schedules, the suppliers are involved in the planning of production. The operational strategy of BMW MINI is to produce cars according to the market demands. The various assembly processes in the production process of BMW MINI is conducted by robots. The finished products are delivered on the principle of JIT (just in time). As far as the production process choice is concerned, three types of choices can be identified including Lean/Agile production, takt time and capacity level. Lean production process is associated with the maximizing the value added while reducing the waste during the manufacturing process (Andreeva, 2008; Sanchez & Nagi, 2001; Junior & et. al., n.d.). In a similar context, the takt time production process involves production based on the rate of sales (Fekete & Hulvej, 2013; Belokar & et. al., 2012). Another production process is related to the production of products based on the capacity level (Hu & et. al., 2002). With respect to the production process related to the manufacturing of BMW MINI is concerned, the company can be identified to follow takt time production process. In this regard, the takt time production process involves production based on the rate of sales. Notably, the BMW considers the requirements of customers and the order placed by them prior to the production of BMW MINI. Design of Supply Chain and Inventory Usage Supply Chain and Inventory Usage in BMW MINI BMW MINI utilizes MTO approach in order to produce a complete customer oriented products. Thus, the production process is influenced by changes in demand and production breakdowns. The material requirements are specified and thus, the MRP (Material Requirement Systems) facilitate in controlling the production operations as regards the deliverables. One of the major advantages of the BWN MINI production planning is related to ROP (Reorder Point). ROP facilitate in continuous flow of production owing to available inventory. The enterprise resource planning (ERP) system performs the related offsetting and netting after customer order is receipt. At the time when the customer order cannot be altered during Freeze Sequence Time Fence (FSTF), purchase orders are distributed to suppliers and inside six days, the parts are delivered to plant Oxford. FSTF production planners construct a linear order sequence, which a distinctive series of mechanism to be fixed to each body of BMW MINI. Each order subsequently possesses a particular finish date as well as time (on the second). Based on a linear order based sequence, suppliers’ plan their production. Ultimately, a considerable amount of components as well as sub-assemblies is delivered by outsourcing on a just-in-time method. Conclusions and Recommendations Conclusion BMW is a well-recognised manufacturer of luxurious cars. The production system of BMW MINI is based on MTO approach. Based on the analysis of the production system of MINI, certain strengths and weaknesses are determined. The various assembly processes of BMW MINI are conducted by robots. The principle of JIT is followed by the company for delivering the finished products. The production system of BMW MINI has short set up time (second). Moreover, MRP is ascertained to provide company with increased control but at the same time, it does not consider the available capacity. ROP ensures streamlining of the production process based on forecasted demand along with order lead times. Recommendations In addition, based on the evaluation of the production process of BMW MINI, certain recommendations can be made. In this regard, the company can use the control model for acquiring greater picture of the manufacturing and planning processes. The application of control model would lead to a new concept for the coordination and synchronization of master production scheduling (Spenhoff & et. al., 2014). The word Kaizen is derived from the Japanese language, which has been quite popular in many western companies. The word implies continuous improvement in a process or a work. Thus, the production system related to BMW MINI need to recognize the principle of Kaizen or the continuous improvement in its production process for attaining production excellence and at the same time greater competitive advantage in the current highly volatile business environment (Titu & et. al., 2010; Singh & Singh, 2009). In addition, there tends to lay certain serious limitations pertaining to inventory control systems that are practiced in many of the organisations. Thus, the inventory control system in an organisation needs to be linked with major parameters. It can be argued that the efficient management of inventory does not occurs merely espousing the competent inventory planning tools. Thus, the inventory planning manager within BMW MINI needs to consider numerous other measures as well. Usually, inventory planning managers are faced with the challenges associated with ‘part number proliferation’. Therefore, it is essential for the inventory planning managers to exert efforts to moderate part numbers through different controlling measures for ensuring enhanced inventory management. Moreover, the inventory planning manager can use the data obtained from the installed computerized system to analyse various factors affecting the inventory management. Contextually, the inventory planning manager can use this data to analyse consumption patterns as well as to detect any possible flaws pertaining to inventory management. Based on the analysed data, the inventory planning manager can use this information to make appropriate adjustments in the parameters related to inventory control system (Mahadevan, 2010). References Andreeva, N., 2008. Lean Production And Agile Manufacturing –New Systems Of Doing Business In The 21st Century. XVII ННТК, pp. 75-81. BMW GROUP, 2014. International success. The BMW Group. [Online] Available at: http://www.bmw.com/com/en/insights/corporation/bmwgroup/content.html [Accessed November 30, 2014]. BMW GROUP, 2014. BMW Group in the UK. About Us. [Online] Available at: http://www.bmw.co.uk/en_GB/footer/publications-links/aboutus.html [Accessed November 30, 2014]. Belokar, R. M. & et. al., 2012. An Application of Value Stream Mapping In Automotive Industry: A Case Study. International Journal of Innovative Technology and Exploring Engineering (IJITEE), Vol. 1, Iss. 2, pp. 152-157. Fekete, M. & Hulvej, J., 2013. “Humanizing” Takt Time And Productivity In The Labour-intensive Manufacturing Systems. Comenius University in Bratislava, pp. 191-199. Gupta, M. C. & Boyd, L. H., 2007. The Theory of Constraints: A Theory For Operation Management. International Journal of operations & production Management, Vol. 28, No. 10, pp. 991-1012. Hines, T., 2004. Supply Chain Strategies: Customer-driven and Customer-focused. Routledge. HU, J. & et. al., 2002. Capacity and Production Management in a Single Product Manufacturing System. Manufacturing Engineering Department, pp. 1-17. Kaminsky, P. M. & Kaya, O., 2006. MTO-MTS Production Systems in Supply Chains. University of California, pp. 1-36. Mahadevan, B., 2010. Operations Management: Theory and Practice. Pearson Education India. Milmo, D., 2012. BMW Enjoys Record Sales As Upmarket Car Demand Soars. Guardian News and Media Limited [Online] Available at: http://www.theguardian.com/business/2012/jan/09/bmw-record-sales-car-luxury-demand [Accessed November 30, 2014]. Junior, W. A. & et. al., No Date. The Lean Production and Agile Manufacturing Concepts Within Supply Chains. Centro Universitário de Araraquara, pp. 1-9. Sanchez, L. M., Nagi, R., 2001. A Review of Agile Manufacturing Systems. Int. J. Prod. Res., Vol. 39, No. 16, 3561-3600. Spenhoff, P. & et. al., 2014. The Fit of Planning Methods for the Part Manufacturing Industry, a Case Study. Adv. Manuf. Vol.2, pp. 165–172. Simatupang, T. M., 2004. Applying the Theory of Constraints to Supply Chain Collaboration. Institute of Information Sciences & Technology, 1-29. Singh, J. & Singh, H., 2009. Kaizen Philosophy: A Review of Literature. The ICFAI University Press, pp. 52-72. Titu, M. A. & et. al., 2010. Applying the Kaizen Method and the 5S Technique in the activity of Post-Sale Services in the Knowledge-Based Organization. IMECS, Vol. 3, pp. 17-19. The Open University, 2011. Understanding Operations Management. The transformation model. [Online] Available at: http://www.saylor.org/site/wp-content/uploads/2013/04/BUS300-1.3_Understanding-Operations-Management-The-Transformation-Model.pdf [Accessed November 30, 2014]. Bibliography Fleischmann, B. & et. al., 2006. Strategic Planning of BMW’s Global Production Network. Interfaces, Vol. 36, No. 3, pp. 194-208. Guiffrida, A. L. & Nagi, R., 1998. Fuzzy Set Theory Applications in Production Management Research: A Literature Survey. 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