BMW: The 7-Series Project (A) Case Solution

2. Introduction & Problem Identification

Despite all the efforts of the engineering department, the company BMW is witnessing more customer complaints about its luxury vehicles than many of its competitors. This is an alarming situation for BMW which spends a lot more time in its design phase and approvals than its competitors. Therefore, the situation at BMW needs to improve for its upcoming 7-series in the backdrop of an increasingly competitive luxury cars market. While the company is not too worried about rising costs, it is a concern that the amount of time investment is not reducing the number of customer complaints. Moreover, the Japanese luxury cars manufacturers have raised the bar further with their improved performance, speedy new launch and variety of vehicles. Hence, the company has come up with three main alternatives to improve its cockpit design, which is believed to be a very important factor in customer satisfaction.

3. Strategic Alternative 1

The first proposed alternative is that cockpit components of the 7-series should be fabricated with pre-production grade tools. Firstly, such a move is likely to improve the performance, and quality of the cars as using pre-production grade tools in the pilot phase would clarify a lot of things to the engineers. With the use of pre-production tools, the BMW 7-series can ensure more accuracy and precision in its performance. The pilot production and the full-run would be more similar as opposed to the current arrangement. It is important to note that the company will retain much of control in its decision-making as it would not be entirely dependent on outside vendors. In-house trainings could help the workforce get familiar with pre-production grade tools. Perhaps the most important aspect is that BMW will then be reducing its lead times and improving production once the new system is in place.

However, some assembly workers and senior engineers would argue that the management does not need to go ahead with this option as pre-production grade tools would make the process complicated. Due to the nature of prototyping and pilot production which is on a much smaller scale, as opposed to full-scale production, the currently used tools give sufficient accuracy to judge about commercial production. Secondly, it would take time for the engineers to get used to the newer tools. It also needs to be understood that costs for the company would go up tremendously if it decides to go ahead with pre-production grade tools.

4. Strategic Alternative 2

Another proposed alternative for BMW is that it should entrust a single vendor with the job of providing fully assembled cockpits. This alternative also has a lot of issues to discuss. Firstly, such a move would unburden the prototype design as well as pilot production team to focus on other areas of improvement. Secondly, the vendor would become a sole and dedicated partner with the company. It will be easier for the company’s design team to communicate with one major supplier and reduce the gap between the comprehensions of teams at both ends. Hence, it is likely that pilot production and subsequently full-scale production would have fewer errors and complaints. Moreover, focusing on one centralized vendor would also be consistent with the Japanese way of manufacturing. Since Japanese luxury cars are setting new trends in the industry, it would be useful to study their example and go for more centralized vendor arrangement.

However, the company would be solely dependent on the performance of one vendor and would have less space to breath and breakaway from its chosen path. For example, if the vendor starts well initially, it may later be in a position to dictate terms which may be unfavorable for the company. Secondly, having one centralized vendor would mean that if, for example, there is some manufacturing fault, a large batch of production and would suffer and get delayed. This is because the same vendor would be asked to fix the problem. Hence, BMW would be putting all its eggs in one basket and increasing its risks.

5. Strategic Alternative 3

A last alternative to consider is that pilot assembly plant workers should be performing assembly operations, and not the prototype specialists. The advantages of such a move would be that pilot workers would be motivated to perform and produce great luxury cars for the company. Secondly, the prototype specialists can then devote more time to designing concerns in the prototype and various other performance features. They can devise more ways to make the customer experience more delightful, for example, by focusing on ergonomics in the prototype. Moreover, since pilot production is an extremely important phase in the whole product development cycle of BMW, it is encouraged that the task of assembly be given to those who are specialists on the assembly plant, rather than those who are specialists with the prototype.

However, such an arrangement also has its disadvantages. There could be increasing conflict in the company as prototype specialists would feel their expertise is not being utilized properly, and the company is giving more value to the pilot assembly plant workers. They may believe that the prototype specialists are the best people for this job whom the company has trusted over the years. Therefore, such a move is likely to cause more pessimism in the organization with different levels of workforce. It is interesting to note that since prototype specialists are involved from a preliminary stage in the product development of BMW (due to the prototype stage), they may have more knowledge about the products rather than the plant assembly workers who enter the process later.