Managing Business Operations at Oxford MINI Plant - Case Study Example

Managing Business Operations at Oxford MINI Plant Introduction The MINI is a British-based automotive brand that specializes in manufacturing small cars and is owned by BMW. The MINI brand is one of three brands under the BMW umbrella, including the BMW and Rolls-Royce. The original Mini with two doors was produced between 1959 and 2000 by the British Motor Corporation and was widely considers one of the 60s iconic cars, similar to the Volkswagen Beetle that was considered an equivalent of the Mini (Noakes, 2013: p13). The company was acquired by BMW in 1994 after buying out the Rover Group, which continued to produce the Mini brand but featuring iconic characteristics of BMW to uphold their image and standards. Beginning 2001, the BMW Group began to produce Minis at the MINI Plant Oxford. Some of the cars produced at this plant include the MINI Convertible, the MINI Clubman, the MINI hatch, the MINI Roadster, and the MINI Coupé (Noakes, 2013: p13). The MINI is highly customizable and the customer expects to have available a range of options to choose from. As such, its production and sales process is customer oriented, while it also seeks to provide suppliers with a stable horizon for production planning. Final Assembly Process at MINI According to Wilson (2010: p18), the transformation process involved in the final assembly process is influenced by the 4Vs, which are volume, variety, variation, and visibility. The volume aspect refers to how many of the vehicles the plant needs to produce, in which the ability to produce more using the same processes of production results in greater cost savings. For instance, the plant can make one car specification in the final assembly process, while it can also make twelve car specifications. However, it would be important for the Oxford Plant to ensure that there is demand for the large numbers of cars being produced; failure to which production cost savings will not lead to significant gains on profits. Another factor that will influence the transformation process is variety. The process of production must be adequately flexible to ensure variety, which means that, although the plant is producing one basic product in the Mini, this process can be adapted so as suit the needs of individual customers (Anupindi, 2011: p34). At the Oxford plant, for instance, the same process is used to make basic car models with the plant making slight adaptations for cars of different colours. It is important for the Oxford plant to build volume flexibility in the final assembly process, which would enable them to adjust the amount produced to meet demand variations. As the Plant seeks to ensure lead times to achieve customer satisfaction, the operations department should have the capability to adapt to demand changes (Slack & Lewis, 2013: p38). An inflexible process may lead to resource wastage, as well as undue delays in meeting orders from customers. Demand fluctuations will influence the Plant, especially as they expand to foreign markets where huge demand from new markets may require them to drastically adapt their final assembly process. Finally, visibility in this context would refer to BMW Mini building customer relations to enable the Plant improve their operations (Gong, 2013: p34). This would refer to the customers and dealerships receiving cars from the Plant ability to order via the operations process. By getting feedback from this group on their experience, the data can be used to tailor appropriate production processes to suit their needs and increase BMW Mini’s profits (Anupindi, 2010: p29). Since the assembly, process only begins after the Oxford Plant receives an order from the customer, their final assembly process can be defined as make-to-order. Forms of this process can vary, such as when the Plant after actual demand occurs or with development planning. In beginning their assembly process following the receipt of customer orders, the Plant uses a pull-type operation in their chain of supply after confirming demand (Simchi-Levi, 2010: p41). This is the opposite of a made-to-stock operation that would require the Plant to assemble their products for stock, in which case their assembly would be push-type. Specifically, the Plant uses the assemble-to-order process, in which they begin the assembly process according to custom-made demands. Such pull-type production processes are especially useful as a business model for manufacturing companies where required quantity per product customization or specification is only a few (Krajewski & Ritzman, 2012: p60). By shortening lead times and satisfying customer due dates, BMW Mini gains a competitive advantage. In order to ensure that the assembly process succeeds in adding value, the Plant’s operations management sets out various performance objectives. These objectives are quality, speed, cost, customization, and flexibility. These performance objectives enable the Plant to examine particular parts of their assembly process in order to effect necessary adjustments, especially for operations that depend on customer orders to begin assembly (Goetsch & Davis, 2010: p48). Management will set performance objectives around design quality, which is normally monitored during different assembly stages from output quality, process quality, and input quality to ensure customer satisfaction. With regards to speed, the Plant must ensure that they meet the customer’s order when the customer wants it, specifically by reducing the time involved in taking the order, assembling the car, and delivering to the customer (Shim & Siegel, 2014: p65). Thirdly, it is important for the Plant to ensure consistency in their assembly process, which means they must be dependable and reliable to retain customers and their loyalty. In this case, the Plant should seek to reduce customer complaints by ensuring their product is of a reliable and consistent standard (Loader & Biggs, 2012: p46). Another performance objective should be flexibility in the way the Plant can adjust to changes in customer demand, for example, which would require the Plant to meet this demand as quickly as they can. Finally, the Plant’s operations management will also pursue customization as a performance objective in order to meet its customer’s needs. Technology has enabled manufacturing plants to adapt their assembly processes to satisfy the customer’s desires and preferences (Hamson & Zuckerman, 2012: p27). In this case, performance objectives involve the use of technology to enable the customer a wider variety of choice on the final product. Delivery Lead-time The final assembly point is the manufacturing process’ last stage, in which a product’s components are put together and preparation for delivery is made. As the Plant makes its cars to order for customized applications, these cars are finished and possess all the parts following the final assembly (Moore, 2011: p66). The Plant at Oxford assembles ten variants of the BMW MINI, in which all the parts are welded together to form recognizable unpainted bodies. The Plant also assembles at least eight hundred vehicles a day, while its operations are customer-oriented with regards to production and sales. At the Oxford plant, all customer orders flow through a virtual production pipeline where a finished car exits the physical assembly line with a cycle time of 67 seconds. The entire assembly process begins with variable orders that are dependent on demand and can be re-sequenced as planning requires, after which the process moves on to the fixed order sequence (McCormik, 2012: p33). During this stage, linear order sequences of components for each body are made and component purchase orders are sent to suppliers and received after six days. At the final assembly line, sequence interruptions are stopped completely and cars are checked for faults and tested at the end of the fixed sequence. This transformation process, which is actually a conversion of inputs into outputs, the plant’s management must ensure that the process is as profitable and efficient as possible with a cycle time of 67 seconds. The length of time taken by the process of assembly varies on the basis of the facility and the product and, in this case, the customization requirements take longer as the specific steps could vary (Chopra & Meindl, 2011: p44). As a result, supervisors on the assembly line time the time spent on the assembly line to keep these times below a particular target. The delivery lead-time refers to the time taken at the Plant between final assemblies of the cars to delivery of the customer order. Delivery lead-time is normally static, depending on the destination distance and the mode of transportation. This can be shortened by reducing steps that do not add value during waiting or handling. Delivery lead-time is not as time consuming in make-to-order processes as it is in make-to-order processes, however. Adoption of a lean assembly process that meets customer orders, instead of marketing forecasts, leads to significant reductions in product development times and reduces market cycle time (Wang, 2011: p20). Usually, lean capabilities in manufacturing are because of introducing more automated, flexible, computer-controlled machinery for assembly. An agile organization, on the other hand, is one that embraces change aggressively, operating profitably in an environment that is highly competitive with unpredictable, shifting customer opportunities (Krajewski et al, 2010: p44). This would allow the Oxford Plant to adapt to almost any customization requirements from their customers. This transition to agility can be justified via a vision of partaking in a very profitable market, in which presence of data from customers about their preferences enables the assembly plant to configure products to individual customer requirements. By becoming agile, the Plant’s administrative processes and organizational structures will enable a fluid and fast translation of initiatives into activities that are customer-enriching. An agile Plant will permit suppliers and customers to determine the product’s nature. However, Cooke (2010: p51) notes that an organization must pass through the lean organization phase prior to becoming agile, as failure to do so would be wasteful and expensive. In the lean orientation, there is a customer burden with the challenge being that a wide range of consumer choices are driven by the supplier, while the consumer drives choice in the agile operation. In order to synchronize the production rate with their demand rate, a manufacturing plant would use takt time, which is an adjustable unit of time utilized in lean and agile production (Schlickel 2,013: p56). In short, this is the available time for production divided by demand from customers, providing the lean assembling process’ heartbeat. This is the time interval at which the car will be moved on to the next station of production, as well as how often the completed car units from the virtual production pipeline as established by demand from the customer. In this case, the customer demand is adjusted via operations and sales planning for factors like new product introductions, planned down-time, and seasonal demand (Samson, 2011: p49). To achieve their performance objectives, the Plant would also have to consider the design of their supply chain and their usage of inventory. One way to go about this would be using the re-order point, which is the quantity of inventory units on hand that lead to buying of a particular replenishment inventory amount that is pre-determined (Kirchmer, 2013: p81). Where supplier fulfilment and the purchasing process have worked as planned, replenishment inventory as a result of the reorder point should arrive just as the assembly line uses up its last on-hand inventory. As a result, they would reduce interruptions in fulfilment and assembly activities, at the same time reducing total inventory amount on hand. The reorder point is important for inventory optimization and automation. Another way to plan their assembly process and control inventory would be through material requirement planning, which would ensure that all materials are available for the assembly process and the final product is available for customer delivery (Daniels et al, 2014: p36). It would also enable the Plant to maintain the lowest inventory level possible, while also enabling them to plan assembly activities, purchasing activities, and delivery schedules. This will avoid shortages of necessary components and parts and to reduce wastage. However, the data that the plant feeds into the system should be accurate to avoid stock and production errors. Finally, as noted, most of the sub-assemblies and components are delivered and out-sourced on a just in time basis. Thus, they could also use the just-in-sequence as an inventory strategy, which matches complete fit in sequence, especially where there are variations of production in the assembly line (Hill & Hill, 2012: p59). Parts and components arrive as scheduled right in time at the assembly line before assembly. The Plant also uses data and information collected from the manufacturing line to coordinate component and part transportation to the process area and away. Just in sequence seeks to achieve just in time and, when successfully implemented, it improves the return on assets for the company without loss in overall efficiency, quality, or flexibility (Greasley, 2011: p62). It will also enable the Plant to eliminate supply buffers. Conclusions and Recommendations In conclusion, it can be said that the BMW Mini brand, despite having a premium and customizable character, remains largely a mass production brand in its manufacturing and assembly. Because the BMW Mini brand is only produced in the Oxford Plant in the UK, the company has to incur high costs when shipping their products to other countries. In addition, the Plant does not seem to take the ideas of employees on board in improving quality of their manufacturing process. This can be remedied using the continuous improvement or Kaizen process, which involves constant introduction of slight incremental changes to improve efficiency and quality. In this case, the company will have to assume that, on top of the suppliers and customers, the employees are in a good position to identify where improvements can be made. For example, the Oxford Plant should institute a quality circle or a Kaizen group that identifies potential improvements. These small changes, such as increasing flexibility after the freeze sequence time fence, would not be radically different and would not require major capital investments. 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