Supply Chain Management: A Comparative Study - Report Example

Supply Chain Management: A Comparative Study By Introduction The concept of supply chain management is of great significance in the current global business environment because today supply chain efficiency is a key element determining the operating success of a company. This paper will compare and analyse the supply chain of BMW 7 Series with that of Apple iPhone 6 giving particular focus to design of the supply chain, decision making, role of consumers, and importance of quality. Design of the supply chains Bayerische Motoren Werke AG, commonly known as BMW or BMW AG, is a German based manufacturer of cars and motorcycles and is the parent company of Rolls-Royce Motor Cars. BMW 7 Series represents full-size flagship executive sedan and it is popular for the introduction of many innovations such as the iDrive system. When it comes to the overall supply chain design of the BMW 7 Series, it is identified that the company gives particular emphasis to value creation, quality, and innovation. As BMW is a provider of luxury automobiles and motorcycles, the company is really concerned about its production facilities and capabilities. The company maintains a local assembly operation with the support of complete knock down components for its 7 Series in countries such as Russia, India, Malaysia, Indonesia, Thailand, and Egypt. The company relies on multimodal traffic, truck, train, and ship to ensure timely and appropriate delivery of products in every supply area. The BMW’s “supply chain consists of several structural elements such as direct delivery, storage onsite and offsite as well as commissioning and sequencing if necessary”. In 2013, the company established a cross docking facility in the Bavarian Worth an der Isar so as to reduce traffic within plants and to optimise transport costs (Automotive supply chain, 2014). Another notable feature of the BMW 7 Series is that it relies on just-in-sequence supply. In addition, the company has the support of a strong global supplier network to promote the success of its 7 Series. The iPhone 6, the latest in the iPhone series of Apple Inc, is a smartphone that runs iOS. The iPhone 6 created new records in terms of pre-orders and sales in the first three days. Compared to the BMW 7 Series, supply chain of iPhone 6 is entirely different. The success of the iPhone 6 is greatly linked to the firm’s sourcing strategy that focuses on cost reduction whilst still adhering to its quality requirements. Apple maintains strong relationships with its suppliers and requires them to invest in their own business to enhance operational efficiency (Barker, 2006). To illustrate, Apple’s biggest supplier Foxconn has invested heavily in robotics to meet its production requirements more effectively (Ibid). Over the last several years, the company has been actively relocating its manufacturing facilities to emerging countries like Brazil where labour and materials are available at cheaper costs. This operational strategy greatly assists the company to offer the iPhone 6 at affordable rates and to create high market demand for this product. The supply chain policy of iPhone 6 is motivated by scalability and supply chain risk rather than cost (Ibid). Decision making When it comes to decision making, it seems that the BMW Group promotes dissent and constructive criticism to form sound and well informed decisions. The company has even included dissent as a key value in its guidelines to ensure the authenticity and viability of decisions made. The BMW’s decision making process is significantly influenced by a set of predetermined criteria. Sustainability is one of the strategic decision making criteria of the company and it also takes into account production quality, security of supply, price credibility, and innovation strength while making decisions (BMW Group). In order to make well informed decisions, the company is always eager to know customer feedbacks and the market trends. For this, the company spends a considerable amount of its revenues on market researches and related activities. The BMW management promotes employee involvement in decision making and is keen to appreciate their creative ideas. The company strongly believes that active employee participation would assist the management to reduce the complexity of decision making. Similar to the case of BMW 7 Series, Apple also encourages employee involvement in decision making in order to remain to be the innovation leader in the industry. Before the death of Apple’s founder Steve Jobs, the process of decision making in the company was solely dependent on him because Jobs had a ‘halo’ around him and hence competitors often conceded to his charisma. Once Jobs passed away, there is some level of uncertainty about the way the company should move on in the marketplace. The current Apple CEO does not assume the role that Jobs had previously played as he emphasises more on a group decision making. The iPhone 6 extensively used the infinite scope of internet, particularly social networking websites like Facebook, to gather customer feedbacks and to form well informed decisions. The Apple’s decision making policy always tries to focus on its core organisational values – loyalty and creativity. In addition, the firm pays specific attention to the concept of sustainable development while planning for the future. It seems that the company follows a centralised decision making strategy to add value to its brand image and to run its business more efficiently. Hence, most of the important business decisions are made at the top. The Apple’s top management believes that this approach is beneficial to avoid delay in decision making and thereby to ensure smooth flow of the business. Role of the consumer As BMW is a prestigious brand, the company’s success is greatly dependent on its relationship with customers. The company management thinks that a satisfied customer can bring more business than any advertising campaign can. According to market surveys, nearly 85 percent of the US customers would recommend their BMW vehicle to a friend. It clearly shows the inevitable role that consumers play in the promotion of BMW brand. Since a BMW car is a luxury product, it costs high and therefore people would be willing to buy this product only if they are really convinced about the quality and performance. The company may not be able to perform this task effectively through the use of advertising campaigns because no consumer would believe 100% in advertisements. However, it is certain that potential consumers would be eager to purchase a BMW car if their relatives or close friends suggest it. Hence, the BMW management uses its existing consumers thoughtfully to generate new sales through promoting the concept of mouth-to-mouth publicity. Realising the key role of consumers in the popular business model of Apple, the BMW has adopted many customer relationship policies of Apple and thus BMW has recently began to replace its sales associates with automotive ‘geniuses’ (Automotive ventures). The role of consumers in Apple’s business promotion is well known across the corporate world. Apple has a huge group of insanely loyal customers who are prepared to defend and argue for the company products in social media websites and other online discussion forums for no cost. To illustrate, the Apple fans strongly defended the company when the iPhone was criticized in social media for quality issues. This strong customer base that is willing to pay a price premium even before the product launch assists the company to cut down its advertising costs significantly and thereby to gain competitive averages over rivals in the marketplace. According to a Forbes article, Apple maintains one of the strongest brands in the world and this improved brand recognition benefits the company to keep its advertising expenses less than $1 billion (YChart Contributor, 2012). It is interesting to note that the company’s sales growth has been far outpacing its advertising budget (Ibid). Apple generally releases only limited information regarding its new product launches so as to create a surprise factor for consumers. Hence, consumers wait eagerly for new product launches and many of them are interested to order the product even before they actually see the product. To sum up, compared to the BMW 7 Series, the iPhone 6 has taken greater advantages of consumer involvement. Importance of quality While analysing the importance of quality in the supply chain of BMW 7 Series and Apple iPhone 6, it seems that both the products particularly emphasise the significance of quality in increasing the market share. To guarantee continuous improvement and to offer quality products to customers in the long term, BMW Group focuses on two main areas. First, the company strives to manage and minimise risk by identifying and evaluating the probability of risks throughout the supply chain in a risk management process. Second, the organisation works closely with its suppliers to leverage potential and thereby to take advantages of opportunities available (Supply chain management). Since BMW is a luxury brand, it would not be possible for the company to remain competitive unless it pays particular attention to the quality standards. The company follows a comprehensive and multi-level quality management system to ensure that a high quality is maintained in all work processes. The company’s quality management system is particularly configured to meet the needs of end consumers. ‘Customer oriented thought and action’ constitutes the essence of the firm’s quality management philosophy and it aids the organisation to achieve improved outcomes in all manufacturing areas (Quality management). These comprehensive quality assurance mechanisms have benefited the company to win many product quality awards. Similarly, Apple also gives specific focus to the quality of its products and services to keep its customers loyal to the company and to generate new sales through them. The Apple founder Steve Jobs created a business culture that primarily emphasises quality and the company is still following that culture. The firm’s corporate philosophy reflects its commitment to a rigorous quality assurance. The company is always interested to keep its customers and the public informed of the firm’s quality enhancement operations. When the iPhone 6 was criticised for bending defects, the company performed a bending test in front of the media to show that the device is free of the defect accused. Official reports indicate that the iPhone 6 is nearing 20 million sales. The vast majority of the buyers are satisfied about the quality and performance of this device. In short, quality is the paramount feature of Apple products including iPhone 6. Conclusion From the above discussion, it is clear that direct delivery, storage onsite and offsite as well as commissioning and sequencing are some of the major features of the BMW supply chain. The Apple’s supply chain encourages innovation. The supply chain of both the products fosters employee involvement in decision making so as to lessen the complexity of making decisions. Although both Apple and BMW depend on consumers to promote their products, it seems that Apple is placed well ahead of BMW in terms of customer relationships. Finally, quality is a superior feature that the supply chain of iPhone 6 and BMW 7 Series is always committed to promote. References Automotive ventures. BMW Genius Concept Focuses on Consumer. Available at: http://www.automotive.ventures/bmw-genius-concept-focuses-on-consumer/ Automotive supply chain (2014) BMW Group has stellar year. Available at: http://www.automotivesupplychain.org/features/234/79/BMW-Group-has-stellar-year/ Barker I (2006) The global supply chain behind the iPhone 6. Beta News available at: http://betanews.com/2014/09/23/the-global-supply-chain-behind-the-iphone-6/ BMW Group (November 28, 2013) sustainability in the procurement process. Available at: http://www.bmwgroup.com/e/0_0_www_bmwgroup_com/verantwortung/lieferkette/beschaffungsprozess.html Quality management. BMW Group. Available at: http://www.bmwgroup.com/e/0_0_www_bmwgroup_com/produktion/fahrzeugfertigung/intelligente_prozesse/qualitaetsmanagement.html Supply chain management. BMW Group. Available at: http://www.bmwgroup.com/com/en/responsibility/sustainability/supply-chain-management/index.html YChart Contributor (2012) Who Spends More on Ads -- Apple or Microsoft? Another Lesson in Quality vs Quantity. Forbes. Available at: http://www.forbes.com/sites/ycharts/2012/08/02/who-spends-more-on-ads-apple-or-microsoft-another-lesson-in-quality-vs-quantity/ Read More