mass customization at bmw
TRANSCRIPT
MASS CUSTOMIZATION
BMW
Abstract
bull For years BMW had a reputation for cars that combined great styling with exceptional performance However since the 1990s the company has also gained recognition for its customization program which allowed buyers to design their own cars from a set of available options The cars were then delivered within 12 days of the order being placed Industry analysts have termed this process mass customization implying that it combined the features and advantages of both mass production and customization
This case discusses the process and elements of mass customization at BMW It traces the process from the time an order is placed till the final delivery of the carsIt talks about the supply chain and logistics practices that BMW followed It also discusses the benefits of mass customization to the company and customers and the challenges in the implementing the process The case concludes with a note on the future of mass customization
Issues
bull raquo Understand the concept of mass customization and how it differs from mass production and customization
raquo Competitive advantages accruing to a major car maker employing mass customization
raquo The role of suppliers in implementing manufacturing changes and lowering inventory
Keywords
bull BMW Group Karl Friedrich Rapp Mercedes-Benz MG Rover Land Rover Range Rover Ford Motor Company Rolls Royce Mass Customization General Motors Corporation Enterprise Resource Planning Toyota Motor Corp Volkswagen AG DaimlerChrysler AG Mass production
bull For us the experience of driving a BMW has to be aspirational special The RampD is designed to take that ultimate driving experience one step further There will never be a boring BMW
bull - Helmut Panke Chairman of BMW in 2002bull BMW is setting an industrial benchmark Our
focus is to follow the market demand It is a challenge to our supply chain but gives us a competitive advantage
bull - Manfred Stoeger vice president of logistics and information technology in 2004
BMWs New Plantbull In May 2005 the BMW Group (BMW) inaugurated its new plant in the Leipzig area of
Germany Gerhard Schroumlder Germanys Chancellor opened the plant along with Helmut Panke (Panke) the Chairman of BMW The opening was also attended by several other political dignitaries from Germany
The foundations of the Leipzig plant were laid in 2001 Panke said that availability of highly qualified staff high standards of supplier quality legal security and excellent infrastructure were the main reasons for choosing Leipzig over hundreds of other German and foreign locations that had bid for the plantBMW had invested more than euro13 billion in building the Leipzig plant which was to manufacture the BMW 3-series3 cars The plant had a maximum annual production capacity of 650 cars per day and was expected to create 5500 jobs in the area when operated at full capacity
bull As with all other BMW plants the Leipzig plant was designed to allow maximum flexibility and effective communications - two factors that BMW emphasized for customization of its cars BMW was reputed for its customization program which allowed buyers to design their own cars from a set of available options These orders were then conveyed to the factory which manufactured them according to the specifications and delivered them to the buyers in the shortest possible time In manufacturing circles this system is called mass customization as it combines the advantages of mass production with those of customization Most analysts agree that BMW was one of the prominent implementers of mass customization in the auto industry
Backgroundbull BMWs history can be traced back to 1913 when Karl Friedrich Rapp (Rapp) established the Rapp-Motorenwerke
to manufacture aircraft engines in the Munich district of Germany In 1916 while the First World War was on the company secured a contract to manufacture aircraft engines for the Austria-Hungarian army Rapp needed additional financing to honor this contract To meet this need he entered into a partnership with Camillo Castiglioni and Max Friz in 1917 The new partnership company was named Bayerische Motoren Werke GmbH However the company soon ran into difficulties because of over-expansion and the partners had it to sell to Austrian industrialist Franz Josef Popp in 1917In 1918 Bayerische Motoren Werke manufactured its first aircraft engine the Type IIIa which powered a biplane to reach an altitude of 5000 meters in 29 minutes creating a world record After the First World War the Treaty of Versailles (1919) banned Germany from producing aircraft Therefore the company had to shift to manufacturing railway brakes In 1922 Bayerische Flugzeugwerke AG another company from the Munich region that manufactured small aircraft was merged with the Bayerische Motoren Werke to form BMW AG
bull BMW started manufacturing motorcycles in 1923 and the companys first model the R32 was launched in the same year It was a 500cc shaft-driven cycle designed by Max Friz BMW continued manufacturing motorcycle models until the companys foray into car manufacture in the late 1920s
In 1928 BMW bought a car manufacturing unit in the Eisenach region of Germany Along with the unit the company acquired the rights to manufacture a small car called Dixi which was based on the Austin Seven car4 This was BMWs first car and was marketed under the name BMW 315 By the early 1930s BMW had begun designing and manufacturing its own cars and by the late 1930s had introduced several successful models The companys 327 saloon and 328 roadster were considered very advanced at that time (the roadster especially was the most successful sports car of its time and was even nominated as the Car of the Century in 1999 by a panel of auto experts)
Excerptsbull Mass Customization at BMWbull BMWs reputation was built on cars that combined great styling with
exceptional performance However one of the main criticisms levied against the company in the 1990s was that all BMW cars looked alike - like sausages cut to different lengths This was one of the drivers of the customization program that BMW introduced in the 1990s In addition to this BMW understood that as a maker of luxury cars it had to offer extra value to customers to be able to make an impact on the market The average price of a BMW is close to $40000 For that wed like to make sure that customers can receive exactly the car they want said Vic Doolan (Doolan) president of BMW of North America (BMWNA)
Benefits and Challenges
bull Analysts said that the main reason for BMWs global success despite being much smaller than auto giants like GM Toyota Motor Corp (Toyota) Ford Volkswagen AG and DaimlerChrysler AG in terms of annual sales volume was that the company offered personalized cars BMW offered customers a wide variety of options while allowing them to get their car manufactured exactly the way they wanted it Because of this customer satisfaction with a BMW purchase was higher than what they obtained by buying a mass produced car This enhanced the companys image in the auto industry
The Future of Mass Customization
bull Analysts said the driver of mass customization was the gap between what the customer wanted and what a company could supply Mass customization was used with great efficacy by Dell Inc in manufacturing computers While it was simpler to mass customize computers than cars analysts were of the opinion that the auto industry could benefit from building products to order
It was said that more than 50 percent of the cars built did not have a potential consumer when they rolled off the final assembly line
What is Mass Customization
bull Mass Producing vehicles with highly customized parts
bull At BMW it combines economic advantage of mass production with the differentiation and exclusivity of customization
bull Mass producing body shell and other individual parts
bull Customizing interiors finishing
Advantage
bull Advantage to company
Less Inventory parked with dealer
Customer satisfaction
Huge sales
bull Advantage to customers
Cars as per their requirement
Satisfying their Ego
Challenges
bull Time taken for an order to processbull US consumer Protection lawbull Integrated Customer Preferencebull Intensive focus on Supply Chain Management bull Changing Customer needs bull Depend on the Suppliersbull Different Scheduling Programsbull Having a Proper Assembly Line
ldquoInvestorsrdquo rather than ldquoCustomersrdquo
bull Differentiation was an essential attribute for an luxury car
bull Customer bought from the lot and Investors where choosy what they bought laid down the specification and ready to wait for a long period of time
bull BMW promoted differentiations by proving 1000 bumper variation 4000 instrument panel choices and 488 different door panels
bull With the help of Dealers too
Role of Suppliers And IT
bull Everything was plannedbull Many suppliers were located near the
factory bull ERP Systembull The suppliers interacted with company in
real timebull BMW kept the suppliers constantly in the
Information loopbull Information Systems for assembling
Mass Customization
Ubiquitous Integration is a Ubiquitous Integration is a mustmust to to the Automotive Businessthe Automotive Businesshelliphellip
Source Automotive News 2003
The BMW factory produces The BMW factory produces 800 cars and 1250 engines a 800 cars and 1250 engines a day ndash each one built to orderday ndash each one built to order
Why Canrsquot We Do This With SoftwareWhy Canrsquot We Do This With Software
On average no more than a On average no more than a handful of cars are produced with handful of cars are produced with exactly the same features in a exactly the same features in a yearyear
The number of possible The number of possible variants of is approximately variants of is approximately 10 to the 1310 to the 13
THANK YOU
bull THANK YOU
- MASS CUSTOMIZATION
- Abstract
- Issues
- Keywords
- Slide 5
- BMWs New Plant
- Background
- Excerpts
- Benefits and Challenges
- The Future of Mass Customization
- What is Mass Customization
- Advantage
- Challenges
- ldquoInvestorsrdquo rather than ldquoCustomersrdquo
- Role of Suppliers And IT
- Mass Customization
- THANK YOU
-
Abstract
bull For years BMW had a reputation for cars that combined great styling with exceptional performance However since the 1990s the company has also gained recognition for its customization program which allowed buyers to design their own cars from a set of available options The cars were then delivered within 12 days of the order being placed Industry analysts have termed this process mass customization implying that it combined the features and advantages of both mass production and customization
This case discusses the process and elements of mass customization at BMW It traces the process from the time an order is placed till the final delivery of the carsIt talks about the supply chain and logistics practices that BMW followed It also discusses the benefits of mass customization to the company and customers and the challenges in the implementing the process The case concludes with a note on the future of mass customization
Issues
bull raquo Understand the concept of mass customization and how it differs from mass production and customization
raquo Competitive advantages accruing to a major car maker employing mass customization
raquo The role of suppliers in implementing manufacturing changes and lowering inventory
Keywords
bull BMW Group Karl Friedrich Rapp Mercedes-Benz MG Rover Land Rover Range Rover Ford Motor Company Rolls Royce Mass Customization General Motors Corporation Enterprise Resource Planning Toyota Motor Corp Volkswagen AG DaimlerChrysler AG Mass production
bull For us the experience of driving a BMW has to be aspirational special The RampD is designed to take that ultimate driving experience one step further There will never be a boring BMW
bull - Helmut Panke Chairman of BMW in 2002bull BMW is setting an industrial benchmark Our
focus is to follow the market demand It is a challenge to our supply chain but gives us a competitive advantage
bull - Manfred Stoeger vice president of logistics and information technology in 2004
BMWs New Plantbull In May 2005 the BMW Group (BMW) inaugurated its new plant in the Leipzig area of
Germany Gerhard Schroumlder Germanys Chancellor opened the plant along with Helmut Panke (Panke) the Chairman of BMW The opening was also attended by several other political dignitaries from Germany
The foundations of the Leipzig plant were laid in 2001 Panke said that availability of highly qualified staff high standards of supplier quality legal security and excellent infrastructure were the main reasons for choosing Leipzig over hundreds of other German and foreign locations that had bid for the plantBMW had invested more than euro13 billion in building the Leipzig plant which was to manufacture the BMW 3-series3 cars The plant had a maximum annual production capacity of 650 cars per day and was expected to create 5500 jobs in the area when operated at full capacity
bull As with all other BMW plants the Leipzig plant was designed to allow maximum flexibility and effective communications - two factors that BMW emphasized for customization of its cars BMW was reputed for its customization program which allowed buyers to design their own cars from a set of available options These orders were then conveyed to the factory which manufactured them according to the specifications and delivered them to the buyers in the shortest possible time In manufacturing circles this system is called mass customization as it combines the advantages of mass production with those of customization Most analysts agree that BMW was one of the prominent implementers of mass customization in the auto industry
Backgroundbull BMWs history can be traced back to 1913 when Karl Friedrich Rapp (Rapp) established the Rapp-Motorenwerke
to manufacture aircraft engines in the Munich district of Germany In 1916 while the First World War was on the company secured a contract to manufacture aircraft engines for the Austria-Hungarian army Rapp needed additional financing to honor this contract To meet this need he entered into a partnership with Camillo Castiglioni and Max Friz in 1917 The new partnership company was named Bayerische Motoren Werke GmbH However the company soon ran into difficulties because of over-expansion and the partners had it to sell to Austrian industrialist Franz Josef Popp in 1917In 1918 Bayerische Motoren Werke manufactured its first aircraft engine the Type IIIa which powered a biplane to reach an altitude of 5000 meters in 29 minutes creating a world record After the First World War the Treaty of Versailles (1919) banned Germany from producing aircraft Therefore the company had to shift to manufacturing railway brakes In 1922 Bayerische Flugzeugwerke AG another company from the Munich region that manufactured small aircraft was merged with the Bayerische Motoren Werke to form BMW AG
bull BMW started manufacturing motorcycles in 1923 and the companys first model the R32 was launched in the same year It was a 500cc shaft-driven cycle designed by Max Friz BMW continued manufacturing motorcycle models until the companys foray into car manufacture in the late 1920s
In 1928 BMW bought a car manufacturing unit in the Eisenach region of Germany Along with the unit the company acquired the rights to manufacture a small car called Dixi which was based on the Austin Seven car4 This was BMWs first car and was marketed under the name BMW 315 By the early 1930s BMW had begun designing and manufacturing its own cars and by the late 1930s had introduced several successful models The companys 327 saloon and 328 roadster were considered very advanced at that time (the roadster especially was the most successful sports car of its time and was even nominated as the Car of the Century in 1999 by a panel of auto experts)
Excerptsbull Mass Customization at BMWbull BMWs reputation was built on cars that combined great styling with
exceptional performance However one of the main criticisms levied against the company in the 1990s was that all BMW cars looked alike - like sausages cut to different lengths This was one of the drivers of the customization program that BMW introduced in the 1990s In addition to this BMW understood that as a maker of luxury cars it had to offer extra value to customers to be able to make an impact on the market The average price of a BMW is close to $40000 For that wed like to make sure that customers can receive exactly the car they want said Vic Doolan (Doolan) president of BMW of North America (BMWNA)
Benefits and Challenges
bull Analysts said that the main reason for BMWs global success despite being much smaller than auto giants like GM Toyota Motor Corp (Toyota) Ford Volkswagen AG and DaimlerChrysler AG in terms of annual sales volume was that the company offered personalized cars BMW offered customers a wide variety of options while allowing them to get their car manufactured exactly the way they wanted it Because of this customer satisfaction with a BMW purchase was higher than what they obtained by buying a mass produced car This enhanced the companys image in the auto industry
The Future of Mass Customization
bull Analysts said the driver of mass customization was the gap between what the customer wanted and what a company could supply Mass customization was used with great efficacy by Dell Inc in manufacturing computers While it was simpler to mass customize computers than cars analysts were of the opinion that the auto industry could benefit from building products to order
It was said that more than 50 percent of the cars built did not have a potential consumer when they rolled off the final assembly line
What is Mass Customization
bull Mass Producing vehicles with highly customized parts
bull At BMW it combines economic advantage of mass production with the differentiation and exclusivity of customization
bull Mass producing body shell and other individual parts
bull Customizing interiors finishing
Advantage
bull Advantage to company
Less Inventory parked with dealer
Customer satisfaction
Huge sales
bull Advantage to customers
Cars as per their requirement
Satisfying their Ego
Challenges
bull Time taken for an order to processbull US consumer Protection lawbull Integrated Customer Preferencebull Intensive focus on Supply Chain Management bull Changing Customer needs bull Depend on the Suppliersbull Different Scheduling Programsbull Having a Proper Assembly Line
ldquoInvestorsrdquo rather than ldquoCustomersrdquo
bull Differentiation was an essential attribute for an luxury car
bull Customer bought from the lot and Investors where choosy what they bought laid down the specification and ready to wait for a long period of time
bull BMW promoted differentiations by proving 1000 bumper variation 4000 instrument panel choices and 488 different door panels
bull With the help of Dealers too
Role of Suppliers And IT
bull Everything was plannedbull Many suppliers were located near the
factory bull ERP Systembull The suppliers interacted with company in
real timebull BMW kept the suppliers constantly in the
Information loopbull Information Systems for assembling
Mass Customization
Ubiquitous Integration is a Ubiquitous Integration is a mustmust to to the Automotive Businessthe Automotive Businesshelliphellip
Source Automotive News 2003
The BMW factory produces The BMW factory produces 800 cars and 1250 engines a 800 cars and 1250 engines a day ndash each one built to orderday ndash each one built to order
Why Canrsquot We Do This With SoftwareWhy Canrsquot We Do This With Software
On average no more than a On average no more than a handful of cars are produced with handful of cars are produced with exactly the same features in a exactly the same features in a yearyear
The number of possible The number of possible variants of is approximately variants of is approximately 10 to the 1310 to the 13
THANK YOU
bull THANK YOU
- MASS CUSTOMIZATION
- Abstract
- Issues
- Keywords
- Slide 5
- BMWs New Plant
- Background
- Excerpts
- Benefits and Challenges
- The Future of Mass Customization
- What is Mass Customization
- Advantage
- Challenges
- ldquoInvestorsrdquo rather than ldquoCustomersrdquo
- Role of Suppliers And IT
- Mass Customization
- THANK YOU
-
Issues
bull raquo Understand the concept of mass customization and how it differs from mass production and customization
raquo Competitive advantages accruing to a major car maker employing mass customization
raquo The role of suppliers in implementing manufacturing changes and lowering inventory
Keywords
bull BMW Group Karl Friedrich Rapp Mercedes-Benz MG Rover Land Rover Range Rover Ford Motor Company Rolls Royce Mass Customization General Motors Corporation Enterprise Resource Planning Toyota Motor Corp Volkswagen AG DaimlerChrysler AG Mass production
bull For us the experience of driving a BMW has to be aspirational special The RampD is designed to take that ultimate driving experience one step further There will never be a boring BMW
bull - Helmut Panke Chairman of BMW in 2002bull BMW is setting an industrial benchmark Our
focus is to follow the market demand It is a challenge to our supply chain but gives us a competitive advantage
bull - Manfred Stoeger vice president of logistics and information technology in 2004
BMWs New Plantbull In May 2005 the BMW Group (BMW) inaugurated its new plant in the Leipzig area of
Germany Gerhard Schroumlder Germanys Chancellor opened the plant along with Helmut Panke (Panke) the Chairman of BMW The opening was also attended by several other political dignitaries from Germany
The foundations of the Leipzig plant were laid in 2001 Panke said that availability of highly qualified staff high standards of supplier quality legal security and excellent infrastructure were the main reasons for choosing Leipzig over hundreds of other German and foreign locations that had bid for the plantBMW had invested more than euro13 billion in building the Leipzig plant which was to manufacture the BMW 3-series3 cars The plant had a maximum annual production capacity of 650 cars per day and was expected to create 5500 jobs in the area when operated at full capacity
bull As with all other BMW plants the Leipzig plant was designed to allow maximum flexibility and effective communications - two factors that BMW emphasized for customization of its cars BMW was reputed for its customization program which allowed buyers to design their own cars from a set of available options These orders were then conveyed to the factory which manufactured them according to the specifications and delivered them to the buyers in the shortest possible time In manufacturing circles this system is called mass customization as it combines the advantages of mass production with those of customization Most analysts agree that BMW was one of the prominent implementers of mass customization in the auto industry
Backgroundbull BMWs history can be traced back to 1913 when Karl Friedrich Rapp (Rapp) established the Rapp-Motorenwerke
to manufacture aircraft engines in the Munich district of Germany In 1916 while the First World War was on the company secured a contract to manufacture aircraft engines for the Austria-Hungarian army Rapp needed additional financing to honor this contract To meet this need he entered into a partnership with Camillo Castiglioni and Max Friz in 1917 The new partnership company was named Bayerische Motoren Werke GmbH However the company soon ran into difficulties because of over-expansion and the partners had it to sell to Austrian industrialist Franz Josef Popp in 1917In 1918 Bayerische Motoren Werke manufactured its first aircraft engine the Type IIIa which powered a biplane to reach an altitude of 5000 meters in 29 minutes creating a world record After the First World War the Treaty of Versailles (1919) banned Germany from producing aircraft Therefore the company had to shift to manufacturing railway brakes In 1922 Bayerische Flugzeugwerke AG another company from the Munich region that manufactured small aircraft was merged with the Bayerische Motoren Werke to form BMW AG
bull BMW started manufacturing motorcycles in 1923 and the companys first model the R32 was launched in the same year It was a 500cc shaft-driven cycle designed by Max Friz BMW continued manufacturing motorcycle models until the companys foray into car manufacture in the late 1920s
In 1928 BMW bought a car manufacturing unit in the Eisenach region of Germany Along with the unit the company acquired the rights to manufacture a small car called Dixi which was based on the Austin Seven car4 This was BMWs first car and was marketed under the name BMW 315 By the early 1930s BMW had begun designing and manufacturing its own cars and by the late 1930s had introduced several successful models The companys 327 saloon and 328 roadster were considered very advanced at that time (the roadster especially was the most successful sports car of its time and was even nominated as the Car of the Century in 1999 by a panel of auto experts)
Excerptsbull Mass Customization at BMWbull BMWs reputation was built on cars that combined great styling with
exceptional performance However one of the main criticisms levied against the company in the 1990s was that all BMW cars looked alike - like sausages cut to different lengths This was one of the drivers of the customization program that BMW introduced in the 1990s In addition to this BMW understood that as a maker of luxury cars it had to offer extra value to customers to be able to make an impact on the market The average price of a BMW is close to $40000 For that wed like to make sure that customers can receive exactly the car they want said Vic Doolan (Doolan) president of BMW of North America (BMWNA)
Benefits and Challenges
bull Analysts said that the main reason for BMWs global success despite being much smaller than auto giants like GM Toyota Motor Corp (Toyota) Ford Volkswagen AG and DaimlerChrysler AG in terms of annual sales volume was that the company offered personalized cars BMW offered customers a wide variety of options while allowing them to get their car manufactured exactly the way they wanted it Because of this customer satisfaction with a BMW purchase was higher than what they obtained by buying a mass produced car This enhanced the companys image in the auto industry
The Future of Mass Customization
bull Analysts said the driver of mass customization was the gap between what the customer wanted and what a company could supply Mass customization was used with great efficacy by Dell Inc in manufacturing computers While it was simpler to mass customize computers than cars analysts were of the opinion that the auto industry could benefit from building products to order
It was said that more than 50 percent of the cars built did not have a potential consumer when they rolled off the final assembly line
What is Mass Customization
bull Mass Producing vehicles with highly customized parts
bull At BMW it combines economic advantage of mass production with the differentiation and exclusivity of customization
bull Mass producing body shell and other individual parts
bull Customizing interiors finishing
Advantage
bull Advantage to company
Less Inventory parked with dealer
Customer satisfaction
Huge sales
bull Advantage to customers
Cars as per their requirement
Satisfying their Ego
Challenges
bull Time taken for an order to processbull US consumer Protection lawbull Integrated Customer Preferencebull Intensive focus on Supply Chain Management bull Changing Customer needs bull Depend on the Suppliersbull Different Scheduling Programsbull Having a Proper Assembly Line
ldquoInvestorsrdquo rather than ldquoCustomersrdquo
bull Differentiation was an essential attribute for an luxury car
bull Customer bought from the lot and Investors where choosy what they bought laid down the specification and ready to wait for a long period of time
bull BMW promoted differentiations by proving 1000 bumper variation 4000 instrument panel choices and 488 different door panels
bull With the help of Dealers too
Role of Suppliers And IT
bull Everything was plannedbull Many suppliers were located near the
factory bull ERP Systembull The suppliers interacted with company in
real timebull BMW kept the suppliers constantly in the
Information loopbull Information Systems for assembling
Mass Customization
Ubiquitous Integration is a Ubiquitous Integration is a mustmust to to the Automotive Businessthe Automotive Businesshelliphellip
Source Automotive News 2003
The BMW factory produces The BMW factory produces 800 cars and 1250 engines a 800 cars and 1250 engines a day ndash each one built to orderday ndash each one built to order
Why Canrsquot We Do This With SoftwareWhy Canrsquot We Do This With Software
On average no more than a On average no more than a handful of cars are produced with handful of cars are produced with exactly the same features in a exactly the same features in a yearyear
The number of possible The number of possible variants of is approximately variants of is approximately 10 to the 1310 to the 13
THANK YOU
bull THANK YOU
- MASS CUSTOMIZATION
- Abstract
- Issues
- Keywords
- Slide 5
- BMWs New Plant
- Background
- Excerpts
- Benefits and Challenges
- The Future of Mass Customization
- What is Mass Customization
- Advantage
- Challenges
- ldquoInvestorsrdquo rather than ldquoCustomersrdquo
- Role of Suppliers And IT
- Mass Customization
- THANK YOU
-
Keywords
bull BMW Group Karl Friedrich Rapp Mercedes-Benz MG Rover Land Rover Range Rover Ford Motor Company Rolls Royce Mass Customization General Motors Corporation Enterprise Resource Planning Toyota Motor Corp Volkswagen AG DaimlerChrysler AG Mass production
bull For us the experience of driving a BMW has to be aspirational special The RampD is designed to take that ultimate driving experience one step further There will never be a boring BMW
bull - Helmut Panke Chairman of BMW in 2002bull BMW is setting an industrial benchmark Our
focus is to follow the market demand It is a challenge to our supply chain but gives us a competitive advantage
bull - Manfred Stoeger vice president of logistics and information technology in 2004
BMWs New Plantbull In May 2005 the BMW Group (BMW) inaugurated its new plant in the Leipzig area of
Germany Gerhard Schroumlder Germanys Chancellor opened the plant along with Helmut Panke (Panke) the Chairman of BMW The opening was also attended by several other political dignitaries from Germany
The foundations of the Leipzig plant were laid in 2001 Panke said that availability of highly qualified staff high standards of supplier quality legal security and excellent infrastructure were the main reasons for choosing Leipzig over hundreds of other German and foreign locations that had bid for the plantBMW had invested more than euro13 billion in building the Leipzig plant which was to manufacture the BMW 3-series3 cars The plant had a maximum annual production capacity of 650 cars per day and was expected to create 5500 jobs in the area when operated at full capacity
bull As with all other BMW plants the Leipzig plant was designed to allow maximum flexibility and effective communications - two factors that BMW emphasized for customization of its cars BMW was reputed for its customization program which allowed buyers to design their own cars from a set of available options These orders were then conveyed to the factory which manufactured them according to the specifications and delivered them to the buyers in the shortest possible time In manufacturing circles this system is called mass customization as it combines the advantages of mass production with those of customization Most analysts agree that BMW was one of the prominent implementers of mass customization in the auto industry
Backgroundbull BMWs history can be traced back to 1913 when Karl Friedrich Rapp (Rapp) established the Rapp-Motorenwerke
to manufacture aircraft engines in the Munich district of Germany In 1916 while the First World War was on the company secured a contract to manufacture aircraft engines for the Austria-Hungarian army Rapp needed additional financing to honor this contract To meet this need he entered into a partnership with Camillo Castiglioni and Max Friz in 1917 The new partnership company was named Bayerische Motoren Werke GmbH However the company soon ran into difficulties because of over-expansion and the partners had it to sell to Austrian industrialist Franz Josef Popp in 1917In 1918 Bayerische Motoren Werke manufactured its first aircraft engine the Type IIIa which powered a biplane to reach an altitude of 5000 meters in 29 minutes creating a world record After the First World War the Treaty of Versailles (1919) banned Germany from producing aircraft Therefore the company had to shift to manufacturing railway brakes In 1922 Bayerische Flugzeugwerke AG another company from the Munich region that manufactured small aircraft was merged with the Bayerische Motoren Werke to form BMW AG
bull BMW started manufacturing motorcycles in 1923 and the companys first model the R32 was launched in the same year It was a 500cc shaft-driven cycle designed by Max Friz BMW continued manufacturing motorcycle models until the companys foray into car manufacture in the late 1920s
In 1928 BMW bought a car manufacturing unit in the Eisenach region of Germany Along with the unit the company acquired the rights to manufacture a small car called Dixi which was based on the Austin Seven car4 This was BMWs first car and was marketed under the name BMW 315 By the early 1930s BMW had begun designing and manufacturing its own cars and by the late 1930s had introduced several successful models The companys 327 saloon and 328 roadster were considered very advanced at that time (the roadster especially was the most successful sports car of its time and was even nominated as the Car of the Century in 1999 by a panel of auto experts)
Excerptsbull Mass Customization at BMWbull BMWs reputation was built on cars that combined great styling with
exceptional performance However one of the main criticisms levied against the company in the 1990s was that all BMW cars looked alike - like sausages cut to different lengths This was one of the drivers of the customization program that BMW introduced in the 1990s In addition to this BMW understood that as a maker of luxury cars it had to offer extra value to customers to be able to make an impact on the market The average price of a BMW is close to $40000 For that wed like to make sure that customers can receive exactly the car they want said Vic Doolan (Doolan) president of BMW of North America (BMWNA)
Benefits and Challenges
bull Analysts said that the main reason for BMWs global success despite being much smaller than auto giants like GM Toyota Motor Corp (Toyota) Ford Volkswagen AG and DaimlerChrysler AG in terms of annual sales volume was that the company offered personalized cars BMW offered customers a wide variety of options while allowing them to get their car manufactured exactly the way they wanted it Because of this customer satisfaction with a BMW purchase was higher than what they obtained by buying a mass produced car This enhanced the companys image in the auto industry
The Future of Mass Customization
bull Analysts said the driver of mass customization was the gap between what the customer wanted and what a company could supply Mass customization was used with great efficacy by Dell Inc in manufacturing computers While it was simpler to mass customize computers than cars analysts were of the opinion that the auto industry could benefit from building products to order
It was said that more than 50 percent of the cars built did not have a potential consumer when they rolled off the final assembly line
What is Mass Customization
bull Mass Producing vehicles with highly customized parts
bull At BMW it combines economic advantage of mass production with the differentiation and exclusivity of customization
bull Mass producing body shell and other individual parts
bull Customizing interiors finishing
Advantage
bull Advantage to company
Less Inventory parked with dealer
Customer satisfaction
Huge sales
bull Advantage to customers
Cars as per their requirement
Satisfying their Ego
Challenges
bull Time taken for an order to processbull US consumer Protection lawbull Integrated Customer Preferencebull Intensive focus on Supply Chain Management bull Changing Customer needs bull Depend on the Suppliersbull Different Scheduling Programsbull Having a Proper Assembly Line
ldquoInvestorsrdquo rather than ldquoCustomersrdquo
bull Differentiation was an essential attribute for an luxury car
bull Customer bought from the lot and Investors where choosy what they bought laid down the specification and ready to wait for a long period of time
bull BMW promoted differentiations by proving 1000 bumper variation 4000 instrument panel choices and 488 different door panels
bull With the help of Dealers too
Role of Suppliers And IT
bull Everything was plannedbull Many suppliers were located near the
factory bull ERP Systembull The suppliers interacted with company in
real timebull BMW kept the suppliers constantly in the
Information loopbull Information Systems for assembling
Mass Customization
Ubiquitous Integration is a Ubiquitous Integration is a mustmust to to the Automotive Businessthe Automotive Businesshelliphellip
Source Automotive News 2003
The BMW factory produces The BMW factory produces 800 cars and 1250 engines a 800 cars and 1250 engines a day ndash each one built to orderday ndash each one built to order
Why Canrsquot We Do This With SoftwareWhy Canrsquot We Do This With Software
On average no more than a On average no more than a handful of cars are produced with handful of cars are produced with exactly the same features in a exactly the same features in a yearyear
The number of possible The number of possible variants of is approximately variants of is approximately 10 to the 1310 to the 13
THANK YOU
bull THANK YOU
- MASS CUSTOMIZATION
- Abstract
- Issues
- Keywords
- Slide 5
- BMWs New Plant
- Background
- Excerpts
- Benefits and Challenges
- The Future of Mass Customization
- What is Mass Customization
- Advantage
- Challenges
- ldquoInvestorsrdquo rather than ldquoCustomersrdquo
- Role of Suppliers And IT
- Mass Customization
- THANK YOU
-
bull For us the experience of driving a BMW has to be aspirational special The RampD is designed to take that ultimate driving experience one step further There will never be a boring BMW
bull - Helmut Panke Chairman of BMW in 2002bull BMW is setting an industrial benchmark Our
focus is to follow the market demand It is a challenge to our supply chain but gives us a competitive advantage
bull - Manfred Stoeger vice president of logistics and information technology in 2004
BMWs New Plantbull In May 2005 the BMW Group (BMW) inaugurated its new plant in the Leipzig area of
Germany Gerhard Schroumlder Germanys Chancellor opened the plant along with Helmut Panke (Panke) the Chairman of BMW The opening was also attended by several other political dignitaries from Germany
The foundations of the Leipzig plant were laid in 2001 Panke said that availability of highly qualified staff high standards of supplier quality legal security and excellent infrastructure were the main reasons for choosing Leipzig over hundreds of other German and foreign locations that had bid for the plantBMW had invested more than euro13 billion in building the Leipzig plant which was to manufacture the BMW 3-series3 cars The plant had a maximum annual production capacity of 650 cars per day and was expected to create 5500 jobs in the area when operated at full capacity
bull As with all other BMW plants the Leipzig plant was designed to allow maximum flexibility and effective communications - two factors that BMW emphasized for customization of its cars BMW was reputed for its customization program which allowed buyers to design their own cars from a set of available options These orders were then conveyed to the factory which manufactured them according to the specifications and delivered them to the buyers in the shortest possible time In manufacturing circles this system is called mass customization as it combines the advantages of mass production with those of customization Most analysts agree that BMW was one of the prominent implementers of mass customization in the auto industry
Backgroundbull BMWs history can be traced back to 1913 when Karl Friedrich Rapp (Rapp) established the Rapp-Motorenwerke
to manufacture aircraft engines in the Munich district of Germany In 1916 while the First World War was on the company secured a contract to manufacture aircraft engines for the Austria-Hungarian army Rapp needed additional financing to honor this contract To meet this need he entered into a partnership with Camillo Castiglioni and Max Friz in 1917 The new partnership company was named Bayerische Motoren Werke GmbH However the company soon ran into difficulties because of over-expansion and the partners had it to sell to Austrian industrialist Franz Josef Popp in 1917In 1918 Bayerische Motoren Werke manufactured its first aircraft engine the Type IIIa which powered a biplane to reach an altitude of 5000 meters in 29 minutes creating a world record After the First World War the Treaty of Versailles (1919) banned Germany from producing aircraft Therefore the company had to shift to manufacturing railway brakes In 1922 Bayerische Flugzeugwerke AG another company from the Munich region that manufactured small aircraft was merged with the Bayerische Motoren Werke to form BMW AG
bull BMW started manufacturing motorcycles in 1923 and the companys first model the R32 was launched in the same year It was a 500cc shaft-driven cycle designed by Max Friz BMW continued manufacturing motorcycle models until the companys foray into car manufacture in the late 1920s
In 1928 BMW bought a car manufacturing unit in the Eisenach region of Germany Along with the unit the company acquired the rights to manufacture a small car called Dixi which was based on the Austin Seven car4 This was BMWs first car and was marketed under the name BMW 315 By the early 1930s BMW had begun designing and manufacturing its own cars and by the late 1930s had introduced several successful models The companys 327 saloon and 328 roadster were considered very advanced at that time (the roadster especially was the most successful sports car of its time and was even nominated as the Car of the Century in 1999 by a panel of auto experts)
Excerptsbull Mass Customization at BMWbull BMWs reputation was built on cars that combined great styling with
exceptional performance However one of the main criticisms levied against the company in the 1990s was that all BMW cars looked alike - like sausages cut to different lengths This was one of the drivers of the customization program that BMW introduced in the 1990s In addition to this BMW understood that as a maker of luxury cars it had to offer extra value to customers to be able to make an impact on the market The average price of a BMW is close to $40000 For that wed like to make sure that customers can receive exactly the car they want said Vic Doolan (Doolan) president of BMW of North America (BMWNA)
Benefits and Challenges
bull Analysts said that the main reason for BMWs global success despite being much smaller than auto giants like GM Toyota Motor Corp (Toyota) Ford Volkswagen AG and DaimlerChrysler AG in terms of annual sales volume was that the company offered personalized cars BMW offered customers a wide variety of options while allowing them to get their car manufactured exactly the way they wanted it Because of this customer satisfaction with a BMW purchase was higher than what they obtained by buying a mass produced car This enhanced the companys image in the auto industry
The Future of Mass Customization
bull Analysts said the driver of mass customization was the gap between what the customer wanted and what a company could supply Mass customization was used with great efficacy by Dell Inc in manufacturing computers While it was simpler to mass customize computers than cars analysts were of the opinion that the auto industry could benefit from building products to order
It was said that more than 50 percent of the cars built did not have a potential consumer when they rolled off the final assembly line
What is Mass Customization
bull Mass Producing vehicles with highly customized parts
bull At BMW it combines economic advantage of mass production with the differentiation and exclusivity of customization
bull Mass producing body shell and other individual parts
bull Customizing interiors finishing
Advantage
bull Advantage to company
Less Inventory parked with dealer
Customer satisfaction
Huge sales
bull Advantage to customers
Cars as per their requirement
Satisfying their Ego
Challenges
bull Time taken for an order to processbull US consumer Protection lawbull Integrated Customer Preferencebull Intensive focus on Supply Chain Management bull Changing Customer needs bull Depend on the Suppliersbull Different Scheduling Programsbull Having a Proper Assembly Line
ldquoInvestorsrdquo rather than ldquoCustomersrdquo
bull Differentiation was an essential attribute for an luxury car
bull Customer bought from the lot and Investors where choosy what they bought laid down the specification and ready to wait for a long period of time
bull BMW promoted differentiations by proving 1000 bumper variation 4000 instrument panel choices and 488 different door panels
bull With the help of Dealers too
Role of Suppliers And IT
bull Everything was plannedbull Many suppliers were located near the
factory bull ERP Systembull The suppliers interacted with company in
real timebull BMW kept the suppliers constantly in the
Information loopbull Information Systems for assembling
Mass Customization
Ubiquitous Integration is a Ubiquitous Integration is a mustmust to to the Automotive Businessthe Automotive Businesshelliphellip
Source Automotive News 2003
The BMW factory produces The BMW factory produces 800 cars and 1250 engines a 800 cars and 1250 engines a day ndash each one built to orderday ndash each one built to order
Why Canrsquot We Do This With SoftwareWhy Canrsquot We Do This With Software
On average no more than a On average no more than a handful of cars are produced with handful of cars are produced with exactly the same features in a exactly the same features in a yearyear
The number of possible The number of possible variants of is approximately variants of is approximately 10 to the 1310 to the 13
THANK YOU
bull THANK YOU
- MASS CUSTOMIZATION
- Abstract
- Issues
- Keywords
- Slide 5
- BMWs New Plant
- Background
- Excerpts
- Benefits and Challenges
- The Future of Mass Customization
- What is Mass Customization
- Advantage
- Challenges
- ldquoInvestorsrdquo rather than ldquoCustomersrdquo
- Role of Suppliers And IT
- Mass Customization
- THANK YOU
-
BMWs New Plantbull In May 2005 the BMW Group (BMW) inaugurated its new plant in the Leipzig area of
Germany Gerhard Schroumlder Germanys Chancellor opened the plant along with Helmut Panke (Panke) the Chairman of BMW The opening was also attended by several other political dignitaries from Germany
The foundations of the Leipzig plant were laid in 2001 Panke said that availability of highly qualified staff high standards of supplier quality legal security and excellent infrastructure were the main reasons for choosing Leipzig over hundreds of other German and foreign locations that had bid for the plantBMW had invested more than euro13 billion in building the Leipzig plant which was to manufacture the BMW 3-series3 cars The plant had a maximum annual production capacity of 650 cars per day and was expected to create 5500 jobs in the area when operated at full capacity
bull As with all other BMW plants the Leipzig plant was designed to allow maximum flexibility and effective communications - two factors that BMW emphasized for customization of its cars BMW was reputed for its customization program which allowed buyers to design their own cars from a set of available options These orders were then conveyed to the factory which manufactured them according to the specifications and delivered them to the buyers in the shortest possible time In manufacturing circles this system is called mass customization as it combines the advantages of mass production with those of customization Most analysts agree that BMW was one of the prominent implementers of mass customization in the auto industry
Backgroundbull BMWs history can be traced back to 1913 when Karl Friedrich Rapp (Rapp) established the Rapp-Motorenwerke
to manufacture aircraft engines in the Munich district of Germany In 1916 while the First World War was on the company secured a contract to manufacture aircraft engines for the Austria-Hungarian army Rapp needed additional financing to honor this contract To meet this need he entered into a partnership with Camillo Castiglioni and Max Friz in 1917 The new partnership company was named Bayerische Motoren Werke GmbH However the company soon ran into difficulties because of over-expansion and the partners had it to sell to Austrian industrialist Franz Josef Popp in 1917In 1918 Bayerische Motoren Werke manufactured its first aircraft engine the Type IIIa which powered a biplane to reach an altitude of 5000 meters in 29 minutes creating a world record After the First World War the Treaty of Versailles (1919) banned Germany from producing aircraft Therefore the company had to shift to manufacturing railway brakes In 1922 Bayerische Flugzeugwerke AG another company from the Munich region that manufactured small aircraft was merged with the Bayerische Motoren Werke to form BMW AG
bull BMW started manufacturing motorcycles in 1923 and the companys first model the R32 was launched in the same year It was a 500cc shaft-driven cycle designed by Max Friz BMW continued manufacturing motorcycle models until the companys foray into car manufacture in the late 1920s
In 1928 BMW bought a car manufacturing unit in the Eisenach region of Germany Along with the unit the company acquired the rights to manufacture a small car called Dixi which was based on the Austin Seven car4 This was BMWs first car and was marketed under the name BMW 315 By the early 1930s BMW had begun designing and manufacturing its own cars and by the late 1930s had introduced several successful models The companys 327 saloon and 328 roadster were considered very advanced at that time (the roadster especially was the most successful sports car of its time and was even nominated as the Car of the Century in 1999 by a panel of auto experts)
Excerptsbull Mass Customization at BMWbull BMWs reputation was built on cars that combined great styling with
exceptional performance However one of the main criticisms levied against the company in the 1990s was that all BMW cars looked alike - like sausages cut to different lengths This was one of the drivers of the customization program that BMW introduced in the 1990s In addition to this BMW understood that as a maker of luxury cars it had to offer extra value to customers to be able to make an impact on the market The average price of a BMW is close to $40000 For that wed like to make sure that customers can receive exactly the car they want said Vic Doolan (Doolan) president of BMW of North America (BMWNA)
Benefits and Challenges
bull Analysts said that the main reason for BMWs global success despite being much smaller than auto giants like GM Toyota Motor Corp (Toyota) Ford Volkswagen AG and DaimlerChrysler AG in terms of annual sales volume was that the company offered personalized cars BMW offered customers a wide variety of options while allowing them to get their car manufactured exactly the way they wanted it Because of this customer satisfaction with a BMW purchase was higher than what they obtained by buying a mass produced car This enhanced the companys image in the auto industry
The Future of Mass Customization
bull Analysts said the driver of mass customization was the gap between what the customer wanted and what a company could supply Mass customization was used with great efficacy by Dell Inc in manufacturing computers While it was simpler to mass customize computers than cars analysts were of the opinion that the auto industry could benefit from building products to order
It was said that more than 50 percent of the cars built did not have a potential consumer when they rolled off the final assembly line
What is Mass Customization
bull Mass Producing vehicles with highly customized parts
bull At BMW it combines economic advantage of mass production with the differentiation and exclusivity of customization
bull Mass producing body shell and other individual parts
bull Customizing interiors finishing
Advantage
bull Advantage to company
Less Inventory parked with dealer
Customer satisfaction
Huge sales
bull Advantage to customers
Cars as per their requirement
Satisfying their Ego
Challenges
bull Time taken for an order to processbull US consumer Protection lawbull Integrated Customer Preferencebull Intensive focus on Supply Chain Management bull Changing Customer needs bull Depend on the Suppliersbull Different Scheduling Programsbull Having a Proper Assembly Line
ldquoInvestorsrdquo rather than ldquoCustomersrdquo
bull Differentiation was an essential attribute for an luxury car
bull Customer bought from the lot and Investors where choosy what they bought laid down the specification and ready to wait for a long period of time
bull BMW promoted differentiations by proving 1000 bumper variation 4000 instrument panel choices and 488 different door panels
bull With the help of Dealers too
Role of Suppliers And IT
bull Everything was plannedbull Many suppliers were located near the
factory bull ERP Systembull The suppliers interacted with company in
real timebull BMW kept the suppliers constantly in the
Information loopbull Information Systems for assembling
Mass Customization
Ubiquitous Integration is a Ubiquitous Integration is a mustmust to to the Automotive Businessthe Automotive Businesshelliphellip
Source Automotive News 2003
The BMW factory produces The BMW factory produces 800 cars and 1250 engines a 800 cars and 1250 engines a day ndash each one built to orderday ndash each one built to order
Why Canrsquot We Do This With SoftwareWhy Canrsquot We Do This With Software
On average no more than a On average no more than a handful of cars are produced with handful of cars are produced with exactly the same features in a exactly the same features in a yearyear
The number of possible The number of possible variants of is approximately variants of is approximately 10 to the 1310 to the 13
THANK YOU
bull THANK YOU
- MASS CUSTOMIZATION
- Abstract
- Issues
- Keywords
- Slide 5
- BMWs New Plant
- Background
- Excerpts
- Benefits and Challenges
- The Future of Mass Customization
- What is Mass Customization
- Advantage
- Challenges
- ldquoInvestorsrdquo rather than ldquoCustomersrdquo
- Role of Suppliers And IT
- Mass Customization
- THANK YOU
-
Backgroundbull BMWs history can be traced back to 1913 when Karl Friedrich Rapp (Rapp) established the Rapp-Motorenwerke
to manufacture aircraft engines in the Munich district of Germany In 1916 while the First World War was on the company secured a contract to manufacture aircraft engines for the Austria-Hungarian army Rapp needed additional financing to honor this contract To meet this need he entered into a partnership with Camillo Castiglioni and Max Friz in 1917 The new partnership company was named Bayerische Motoren Werke GmbH However the company soon ran into difficulties because of over-expansion and the partners had it to sell to Austrian industrialist Franz Josef Popp in 1917In 1918 Bayerische Motoren Werke manufactured its first aircraft engine the Type IIIa which powered a biplane to reach an altitude of 5000 meters in 29 minutes creating a world record After the First World War the Treaty of Versailles (1919) banned Germany from producing aircraft Therefore the company had to shift to manufacturing railway brakes In 1922 Bayerische Flugzeugwerke AG another company from the Munich region that manufactured small aircraft was merged with the Bayerische Motoren Werke to form BMW AG
bull BMW started manufacturing motorcycles in 1923 and the companys first model the R32 was launched in the same year It was a 500cc shaft-driven cycle designed by Max Friz BMW continued manufacturing motorcycle models until the companys foray into car manufacture in the late 1920s
In 1928 BMW bought a car manufacturing unit in the Eisenach region of Germany Along with the unit the company acquired the rights to manufacture a small car called Dixi which was based on the Austin Seven car4 This was BMWs first car and was marketed under the name BMW 315 By the early 1930s BMW had begun designing and manufacturing its own cars and by the late 1930s had introduced several successful models The companys 327 saloon and 328 roadster were considered very advanced at that time (the roadster especially was the most successful sports car of its time and was even nominated as the Car of the Century in 1999 by a panel of auto experts)
Excerptsbull Mass Customization at BMWbull BMWs reputation was built on cars that combined great styling with
exceptional performance However one of the main criticisms levied against the company in the 1990s was that all BMW cars looked alike - like sausages cut to different lengths This was one of the drivers of the customization program that BMW introduced in the 1990s In addition to this BMW understood that as a maker of luxury cars it had to offer extra value to customers to be able to make an impact on the market The average price of a BMW is close to $40000 For that wed like to make sure that customers can receive exactly the car they want said Vic Doolan (Doolan) president of BMW of North America (BMWNA)
Benefits and Challenges
bull Analysts said that the main reason for BMWs global success despite being much smaller than auto giants like GM Toyota Motor Corp (Toyota) Ford Volkswagen AG and DaimlerChrysler AG in terms of annual sales volume was that the company offered personalized cars BMW offered customers a wide variety of options while allowing them to get their car manufactured exactly the way they wanted it Because of this customer satisfaction with a BMW purchase was higher than what they obtained by buying a mass produced car This enhanced the companys image in the auto industry
The Future of Mass Customization
bull Analysts said the driver of mass customization was the gap between what the customer wanted and what a company could supply Mass customization was used with great efficacy by Dell Inc in manufacturing computers While it was simpler to mass customize computers than cars analysts were of the opinion that the auto industry could benefit from building products to order
It was said that more than 50 percent of the cars built did not have a potential consumer when they rolled off the final assembly line
What is Mass Customization
bull Mass Producing vehicles with highly customized parts
bull At BMW it combines economic advantage of mass production with the differentiation and exclusivity of customization
bull Mass producing body shell and other individual parts
bull Customizing interiors finishing
Advantage
bull Advantage to company
Less Inventory parked with dealer
Customer satisfaction
Huge sales
bull Advantage to customers
Cars as per their requirement
Satisfying their Ego
Challenges
bull Time taken for an order to processbull US consumer Protection lawbull Integrated Customer Preferencebull Intensive focus on Supply Chain Management bull Changing Customer needs bull Depend on the Suppliersbull Different Scheduling Programsbull Having a Proper Assembly Line
ldquoInvestorsrdquo rather than ldquoCustomersrdquo
bull Differentiation was an essential attribute for an luxury car
bull Customer bought from the lot and Investors where choosy what they bought laid down the specification and ready to wait for a long period of time
bull BMW promoted differentiations by proving 1000 bumper variation 4000 instrument panel choices and 488 different door panels
bull With the help of Dealers too
Role of Suppliers And IT
bull Everything was plannedbull Many suppliers were located near the
factory bull ERP Systembull The suppliers interacted with company in
real timebull BMW kept the suppliers constantly in the
Information loopbull Information Systems for assembling
Mass Customization
Ubiquitous Integration is a Ubiquitous Integration is a mustmust to to the Automotive Businessthe Automotive Businesshelliphellip
Source Automotive News 2003
The BMW factory produces The BMW factory produces 800 cars and 1250 engines a 800 cars and 1250 engines a day ndash each one built to orderday ndash each one built to order
Why Canrsquot We Do This With SoftwareWhy Canrsquot We Do This With Software
On average no more than a On average no more than a handful of cars are produced with handful of cars are produced with exactly the same features in a exactly the same features in a yearyear
The number of possible The number of possible variants of is approximately variants of is approximately 10 to the 1310 to the 13
THANK YOU
bull THANK YOU
- MASS CUSTOMIZATION
- Abstract
- Issues
- Keywords
- Slide 5
- BMWs New Plant
- Background
- Excerpts
- Benefits and Challenges
- The Future of Mass Customization
- What is Mass Customization
- Advantage
- Challenges
- ldquoInvestorsrdquo rather than ldquoCustomersrdquo
- Role of Suppliers And IT
- Mass Customization
- THANK YOU
-
Excerptsbull Mass Customization at BMWbull BMWs reputation was built on cars that combined great styling with
exceptional performance However one of the main criticisms levied against the company in the 1990s was that all BMW cars looked alike - like sausages cut to different lengths This was one of the drivers of the customization program that BMW introduced in the 1990s In addition to this BMW understood that as a maker of luxury cars it had to offer extra value to customers to be able to make an impact on the market The average price of a BMW is close to $40000 For that wed like to make sure that customers can receive exactly the car they want said Vic Doolan (Doolan) president of BMW of North America (BMWNA)
Benefits and Challenges
bull Analysts said that the main reason for BMWs global success despite being much smaller than auto giants like GM Toyota Motor Corp (Toyota) Ford Volkswagen AG and DaimlerChrysler AG in terms of annual sales volume was that the company offered personalized cars BMW offered customers a wide variety of options while allowing them to get their car manufactured exactly the way they wanted it Because of this customer satisfaction with a BMW purchase was higher than what they obtained by buying a mass produced car This enhanced the companys image in the auto industry
The Future of Mass Customization
bull Analysts said the driver of mass customization was the gap between what the customer wanted and what a company could supply Mass customization was used with great efficacy by Dell Inc in manufacturing computers While it was simpler to mass customize computers than cars analysts were of the opinion that the auto industry could benefit from building products to order
It was said that more than 50 percent of the cars built did not have a potential consumer when they rolled off the final assembly line
What is Mass Customization
bull Mass Producing vehicles with highly customized parts
bull At BMW it combines economic advantage of mass production with the differentiation and exclusivity of customization
bull Mass producing body shell and other individual parts
bull Customizing interiors finishing
Advantage
bull Advantage to company
Less Inventory parked with dealer
Customer satisfaction
Huge sales
bull Advantage to customers
Cars as per their requirement
Satisfying their Ego
Challenges
bull Time taken for an order to processbull US consumer Protection lawbull Integrated Customer Preferencebull Intensive focus on Supply Chain Management bull Changing Customer needs bull Depend on the Suppliersbull Different Scheduling Programsbull Having a Proper Assembly Line
ldquoInvestorsrdquo rather than ldquoCustomersrdquo
bull Differentiation was an essential attribute for an luxury car
bull Customer bought from the lot and Investors where choosy what they bought laid down the specification and ready to wait for a long period of time
bull BMW promoted differentiations by proving 1000 bumper variation 4000 instrument panel choices and 488 different door panels
bull With the help of Dealers too
Role of Suppliers And IT
bull Everything was plannedbull Many suppliers were located near the
factory bull ERP Systembull The suppliers interacted with company in
real timebull BMW kept the suppliers constantly in the
Information loopbull Information Systems for assembling
Mass Customization
Ubiquitous Integration is a Ubiquitous Integration is a mustmust to to the Automotive Businessthe Automotive Businesshelliphellip
Source Automotive News 2003
The BMW factory produces The BMW factory produces 800 cars and 1250 engines a 800 cars and 1250 engines a day ndash each one built to orderday ndash each one built to order
Why Canrsquot We Do This With SoftwareWhy Canrsquot We Do This With Software
On average no more than a On average no more than a handful of cars are produced with handful of cars are produced with exactly the same features in a exactly the same features in a yearyear
The number of possible The number of possible variants of is approximately variants of is approximately 10 to the 1310 to the 13
THANK YOU
bull THANK YOU
- MASS CUSTOMIZATION
- Abstract
- Issues
- Keywords
- Slide 5
- BMWs New Plant
- Background
- Excerpts
- Benefits and Challenges
- The Future of Mass Customization
- What is Mass Customization
- Advantage
- Challenges
- ldquoInvestorsrdquo rather than ldquoCustomersrdquo
- Role of Suppliers And IT
- Mass Customization
- THANK YOU
-
Benefits and Challenges
bull Analysts said that the main reason for BMWs global success despite being much smaller than auto giants like GM Toyota Motor Corp (Toyota) Ford Volkswagen AG and DaimlerChrysler AG in terms of annual sales volume was that the company offered personalized cars BMW offered customers a wide variety of options while allowing them to get their car manufactured exactly the way they wanted it Because of this customer satisfaction with a BMW purchase was higher than what they obtained by buying a mass produced car This enhanced the companys image in the auto industry
The Future of Mass Customization
bull Analysts said the driver of mass customization was the gap between what the customer wanted and what a company could supply Mass customization was used with great efficacy by Dell Inc in manufacturing computers While it was simpler to mass customize computers than cars analysts were of the opinion that the auto industry could benefit from building products to order
It was said that more than 50 percent of the cars built did not have a potential consumer when they rolled off the final assembly line
What is Mass Customization
bull Mass Producing vehicles with highly customized parts
bull At BMW it combines economic advantage of mass production with the differentiation and exclusivity of customization
bull Mass producing body shell and other individual parts
bull Customizing interiors finishing
Advantage
bull Advantage to company
Less Inventory parked with dealer
Customer satisfaction
Huge sales
bull Advantage to customers
Cars as per their requirement
Satisfying their Ego
Challenges
bull Time taken for an order to processbull US consumer Protection lawbull Integrated Customer Preferencebull Intensive focus on Supply Chain Management bull Changing Customer needs bull Depend on the Suppliersbull Different Scheduling Programsbull Having a Proper Assembly Line
ldquoInvestorsrdquo rather than ldquoCustomersrdquo
bull Differentiation was an essential attribute for an luxury car
bull Customer bought from the lot and Investors where choosy what they bought laid down the specification and ready to wait for a long period of time
bull BMW promoted differentiations by proving 1000 bumper variation 4000 instrument panel choices and 488 different door panels
bull With the help of Dealers too
Role of Suppliers And IT
bull Everything was plannedbull Many suppliers were located near the
factory bull ERP Systembull The suppliers interacted with company in
real timebull BMW kept the suppliers constantly in the
Information loopbull Information Systems for assembling
Mass Customization
Ubiquitous Integration is a Ubiquitous Integration is a mustmust to to the Automotive Businessthe Automotive Businesshelliphellip
Source Automotive News 2003
The BMW factory produces The BMW factory produces 800 cars and 1250 engines a 800 cars and 1250 engines a day ndash each one built to orderday ndash each one built to order
Why Canrsquot We Do This With SoftwareWhy Canrsquot We Do This With Software
On average no more than a On average no more than a handful of cars are produced with handful of cars are produced with exactly the same features in a exactly the same features in a yearyear
The number of possible The number of possible variants of is approximately variants of is approximately 10 to the 1310 to the 13
THANK YOU
bull THANK YOU
- MASS CUSTOMIZATION
- Abstract
- Issues
- Keywords
- Slide 5
- BMWs New Plant
- Background
- Excerpts
- Benefits and Challenges
- The Future of Mass Customization
- What is Mass Customization
- Advantage
- Challenges
- ldquoInvestorsrdquo rather than ldquoCustomersrdquo
- Role of Suppliers And IT
- Mass Customization
- THANK YOU
-
The Future of Mass Customization
bull Analysts said the driver of mass customization was the gap between what the customer wanted and what a company could supply Mass customization was used with great efficacy by Dell Inc in manufacturing computers While it was simpler to mass customize computers than cars analysts were of the opinion that the auto industry could benefit from building products to order
It was said that more than 50 percent of the cars built did not have a potential consumer when they rolled off the final assembly line
What is Mass Customization
bull Mass Producing vehicles with highly customized parts
bull At BMW it combines economic advantage of mass production with the differentiation and exclusivity of customization
bull Mass producing body shell and other individual parts
bull Customizing interiors finishing
Advantage
bull Advantage to company
Less Inventory parked with dealer
Customer satisfaction
Huge sales
bull Advantage to customers
Cars as per their requirement
Satisfying their Ego
Challenges
bull Time taken for an order to processbull US consumer Protection lawbull Integrated Customer Preferencebull Intensive focus on Supply Chain Management bull Changing Customer needs bull Depend on the Suppliersbull Different Scheduling Programsbull Having a Proper Assembly Line
ldquoInvestorsrdquo rather than ldquoCustomersrdquo
bull Differentiation was an essential attribute for an luxury car
bull Customer bought from the lot and Investors where choosy what they bought laid down the specification and ready to wait for a long period of time
bull BMW promoted differentiations by proving 1000 bumper variation 4000 instrument panel choices and 488 different door panels
bull With the help of Dealers too
Role of Suppliers And IT
bull Everything was plannedbull Many suppliers were located near the
factory bull ERP Systembull The suppliers interacted with company in
real timebull BMW kept the suppliers constantly in the
Information loopbull Information Systems for assembling
Mass Customization
Ubiquitous Integration is a Ubiquitous Integration is a mustmust to to the Automotive Businessthe Automotive Businesshelliphellip
Source Automotive News 2003
The BMW factory produces The BMW factory produces 800 cars and 1250 engines a 800 cars and 1250 engines a day ndash each one built to orderday ndash each one built to order
Why Canrsquot We Do This With SoftwareWhy Canrsquot We Do This With Software
On average no more than a On average no more than a handful of cars are produced with handful of cars are produced with exactly the same features in a exactly the same features in a yearyear
The number of possible The number of possible variants of is approximately variants of is approximately 10 to the 1310 to the 13
THANK YOU
bull THANK YOU
- MASS CUSTOMIZATION
- Abstract
- Issues
- Keywords
- Slide 5
- BMWs New Plant
- Background
- Excerpts
- Benefits and Challenges
- The Future of Mass Customization
- What is Mass Customization
- Advantage
- Challenges
- ldquoInvestorsrdquo rather than ldquoCustomersrdquo
- Role of Suppliers And IT
- Mass Customization
- THANK YOU
-
What is Mass Customization
bull Mass Producing vehicles with highly customized parts
bull At BMW it combines economic advantage of mass production with the differentiation and exclusivity of customization
bull Mass producing body shell and other individual parts
bull Customizing interiors finishing
Advantage
bull Advantage to company
Less Inventory parked with dealer
Customer satisfaction
Huge sales
bull Advantage to customers
Cars as per their requirement
Satisfying their Ego
Challenges
bull Time taken for an order to processbull US consumer Protection lawbull Integrated Customer Preferencebull Intensive focus on Supply Chain Management bull Changing Customer needs bull Depend on the Suppliersbull Different Scheduling Programsbull Having a Proper Assembly Line
ldquoInvestorsrdquo rather than ldquoCustomersrdquo
bull Differentiation was an essential attribute for an luxury car
bull Customer bought from the lot and Investors where choosy what they bought laid down the specification and ready to wait for a long period of time
bull BMW promoted differentiations by proving 1000 bumper variation 4000 instrument panel choices and 488 different door panels
bull With the help of Dealers too
Role of Suppliers And IT
bull Everything was plannedbull Many suppliers were located near the
factory bull ERP Systembull The suppliers interacted with company in
real timebull BMW kept the suppliers constantly in the
Information loopbull Information Systems for assembling
Mass Customization
Ubiquitous Integration is a Ubiquitous Integration is a mustmust to to the Automotive Businessthe Automotive Businesshelliphellip
Source Automotive News 2003
The BMW factory produces The BMW factory produces 800 cars and 1250 engines a 800 cars and 1250 engines a day ndash each one built to orderday ndash each one built to order
Why Canrsquot We Do This With SoftwareWhy Canrsquot We Do This With Software
On average no more than a On average no more than a handful of cars are produced with handful of cars are produced with exactly the same features in a exactly the same features in a yearyear
The number of possible The number of possible variants of is approximately variants of is approximately 10 to the 1310 to the 13
THANK YOU
bull THANK YOU
- MASS CUSTOMIZATION
- Abstract
- Issues
- Keywords
- Slide 5
- BMWs New Plant
- Background
- Excerpts
- Benefits and Challenges
- The Future of Mass Customization
- What is Mass Customization
- Advantage
- Challenges
- ldquoInvestorsrdquo rather than ldquoCustomersrdquo
- Role of Suppliers And IT
- Mass Customization
- THANK YOU
-
Advantage
bull Advantage to company
Less Inventory parked with dealer
Customer satisfaction
Huge sales
bull Advantage to customers
Cars as per their requirement
Satisfying their Ego
Challenges
bull Time taken for an order to processbull US consumer Protection lawbull Integrated Customer Preferencebull Intensive focus on Supply Chain Management bull Changing Customer needs bull Depend on the Suppliersbull Different Scheduling Programsbull Having a Proper Assembly Line
ldquoInvestorsrdquo rather than ldquoCustomersrdquo
bull Differentiation was an essential attribute for an luxury car
bull Customer bought from the lot and Investors where choosy what they bought laid down the specification and ready to wait for a long period of time
bull BMW promoted differentiations by proving 1000 bumper variation 4000 instrument panel choices and 488 different door panels
bull With the help of Dealers too
Role of Suppliers And IT
bull Everything was plannedbull Many suppliers were located near the
factory bull ERP Systembull The suppliers interacted with company in
real timebull BMW kept the suppliers constantly in the
Information loopbull Information Systems for assembling
Mass Customization
Ubiquitous Integration is a Ubiquitous Integration is a mustmust to to the Automotive Businessthe Automotive Businesshelliphellip
Source Automotive News 2003
The BMW factory produces The BMW factory produces 800 cars and 1250 engines a 800 cars and 1250 engines a day ndash each one built to orderday ndash each one built to order
Why Canrsquot We Do This With SoftwareWhy Canrsquot We Do This With Software
On average no more than a On average no more than a handful of cars are produced with handful of cars are produced with exactly the same features in a exactly the same features in a yearyear
The number of possible The number of possible variants of is approximately variants of is approximately 10 to the 1310 to the 13
THANK YOU
bull THANK YOU
- MASS CUSTOMIZATION
- Abstract
- Issues
- Keywords
- Slide 5
- BMWs New Plant
- Background
- Excerpts
- Benefits and Challenges
- The Future of Mass Customization
- What is Mass Customization
- Advantage
- Challenges
- ldquoInvestorsrdquo rather than ldquoCustomersrdquo
- Role of Suppliers And IT
- Mass Customization
- THANK YOU
-
Challenges
bull Time taken for an order to processbull US consumer Protection lawbull Integrated Customer Preferencebull Intensive focus on Supply Chain Management bull Changing Customer needs bull Depend on the Suppliersbull Different Scheduling Programsbull Having a Proper Assembly Line
ldquoInvestorsrdquo rather than ldquoCustomersrdquo
bull Differentiation was an essential attribute for an luxury car
bull Customer bought from the lot and Investors where choosy what they bought laid down the specification and ready to wait for a long period of time
bull BMW promoted differentiations by proving 1000 bumper variation 4000 instrument panel choices and 488 different door panels
bull With the help of Dealers too
Role of Suppliers And IT
bull Everything was plannedbull Many suppliers were located near the
factory bull ERP Systembull The suppliers interacted with company in
real timebull BMW kept the suppliers constantly in the
Information loopbull Information Systems for assembling
Mass Customization
Ubiquitous Integration is a Ubiquitous Integration is a mustmust to to the Automotive Businessthe Automotive Businesshelliphellip
Source Automotive News 2003
The BMW factory produces The BMW factory produces 800 cars and 1250 engines a 800 cars and 1250 engines a day ndash each one built to orderday ndash each one built to order
Why Canrsquot We Do This With SoftwareWhy Canrsquot We Do This With Software
On average no more than a On average no more than a handful of cars are produced with handful of cars are produced with exactly the same features in a exactly the same features in a yearyear
The number of possible The number of possible variants of is approximately variants of is approximately 10 to the 1310 to the 13
THANK YOU
bull THANK YOU
- MASS CUSTOMIZATION
- Abstract
- Issues
- Keywords
- Slide 5
- BMWs New Plant
- Background
- Excerpts
- Benefits and Challenges
- The Future of Mass Customization
- What is Mass Customization
- Advantage
- Challenges
- ldquoInvestorsrdquo rather than ldquoCustomersrdquo
- Role of Suppliers And IT
- Mass Customization
- THANK YOU
-
ldquoInvestorsrdquo rather than ldquoCustomersrdquo
bull Differentiation was an essential attribute for an luxury car
bull Customer bought from the lot and Investors where choosy what they bought laid down the specification and ready to wait for a long period of time
bull BMW promoted differentiations by proving 1000 bumper variation 4000 instrument panel choices and 488 different door panels
bull With the help of Dealers too
Role of Suppliers And IT
bull Everything was plannedbull Many suppliers were located near the
factory bull ERP Systembull The suppliers interacted with company in
real timebull BMW kept the suppliers constantly in the
Information loopbull Information Systems for assembling
Mass Customization
Ubiquitous Integration is a Ubiquitous Integration is a mustmust to to the Automotive Businessthe Automotive Businesshelliphellip
Source Automotive News 2003
The BMW factory produces The BMW factory produces 800 cars and 1250 engines a 800 cars and 1250 engines a day ndash each one built to orderday ndash each one built to order
Why Canrsquot We Do This With SoftwareWhy Canrsquot We Do This With Software
On average no more than a On average no more than a handful of cars are produced with handful of cars are produced with exactly the same features in a exactly the same features in a yearyear
The number of possible The number of possible variants of is approximately variants of is approximately 10 to the 1310 to the 13
THANK YOU
bull THANK YOU
- MASS CUSTOMIZATION
- Abstract
- Issues
- Keywords
- Slide 5
- BMWs New Plant
- Background
- Excerpts
- Benefits and Challenges
- The Future of Mass Customization
- What is Mass Customization
- Advantage
- Challenges
- ldquoInvestorsrdquo rather than ldquoCustomersrdquo
- Role of Suppliers And IT
- Mass Customization
- THANK YOU
-
Role of Suppliers And IT
bull Everything was plannedbull Many suppliers were located near the
factory bull ERP Systembull The suppliers interacted with company in
real timebull BMW kept the suppliers constantly in the
Information loopbull Information Systems for assembling
Mass Customization
Ubiquitous Integration is a Ubiquitous Integration is a mustmust to to the Automotive Businessthe Automotive Businesshelliphellip
Source Automotive News 2003
The BMW factory produces The BMW factory produces 800 cars and 1250 engines a 800 cars and 1250 engines a day ndash each one built to orderday ndash each one built to order
Why Canrsquot We Do This With SoftwareWhy Canrsquot We Do This With Software
On average no more than a On average no more than a handful of cars are produced with handful of cars are produced with exactly the same features in a exactly the same features in a yearyear
The number of possible The number of possible variants of is approximately variants of is approximately 10 to the 1310 to the 13
THANK YOU
bull THANK YOU
- MASS CUSTOMIZATION
- Abstract
- Issues
- Keywords
- Slide 5
- BMWs New Plant
- Background
- Excerpts
- Benefits and Challenges
- The Future of Mass Customization
- What is Mass Customization
- Advantage
- Challenges
- ldquoInvestorsrdquo rather than ldquoCustomersrdquo
- Role of Suppliers And IT
- Mass Customization
- THANK YOU
-
Mass Customization
Ubiquitous Integration is a Ubiquitous Integration is a mustmust to to the Automotive Businessthe Automotive Businesshelliphellip
Source Automotive News 2003
The BMW factory produces The BMW factory produces 800 cars and 1250 engines a 800 cars and 1250 engines a day ndash each one built to orderday ndash each one built to order
Why Canrsquot We Do This With SoftwareWhy Canrsquot We Do This With Software
On average no more than a On average no more than a handful of cars are produced with handful of cars are produced with exactly the same features in a exactly the same features in a yearyear
The number of possible The number of possible variants of is approximately variants of is approximately 10 to the 1310 to the 13
THANK YOU
bull THANK YOU
- MASS CUSTOMIZATION
- Abstract
- Issues
- Keywords
- Slide 5
- BMWs New Plant
- Background
- Excerpts
- Benefits and Challenges
- The Future of Mass Customization
- What is Mass Customization
- Advantage
- Challenges
- ldquoInvestorsrdquo rather than ldquoCustomersrdquo
- Role of Suppliers And IT
- Mass Customization
- THANK YOU
-
THANK YOU
bull THANK YOU
- MASS CUSTOMIZATION
- Abstract
- Issues
- Keywords
- Slide 5
- BMWs New Plant
- Background
- Excerpts
- Benefits and Challenges
- The Future of Mass Customization
- What is Mass Customization
- Advantage
- Challenges
- ldquoInvestorsrdquo rather than ldquoCustomersrdquo
- Role of Suppliers And IT
- Mass Customization
- THANK YOU
-