Bmw Npd Case Analysis

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BMW: The 7-Series Project (A)

Cockpit Prototyping Process

Submitted to
Professor Ganesh N. Prabhu
Indian Institute of Management, Bangalore
July 12, 2011
New Product Development

Group 2C
Gunjan Biruly |Saurabh Maurya |Shivananda Narvajagatkar |Vidhya D |

The case discusses the concept-to-production strategy that BMW followed. BMW had always hand-built and assembled its prototype cars in its in-house prototype shop. However, they were at a crossroad whether or not to try a new process for building cockpits that involved cockpit prototypes to be fabricated by outside suppliers using more specialized tooling. General issues being faced

BMW has identified three strategic issues of increasing product variety, increasing the frequency of product introductions and improving the quality of the newly launched models. If we delve deeper into the case facts, we can break down these issues into more specific problems, which are listed below- 1. Prototypes were hand-built using general purpose tools. The construction of prototypes and the actual high-volume production vehicles practically bore no resemblance. This led to design problems being masked at the prototyping stage which were later uncovered during pre-production runs. This could be avoided if the prototypes were built using specific pre-production tools. 2. The final design was frozen only 16-18 months before the scheduled introduction of the product. It is only then that the production tools were procured and final engineering details confirmed to the suppliers. This left a lot lesser time for the suppliers to sort out any problems they faced during pre-production. This might also be the reason why BMW products were facing quality complaints in comparison to competitors. BMW should essentially leave more time for the suppliers during pre-production phase. This can only be done if the final design is frozen well before the scheduled introduction of the product. 3. Both the old and the new models were getting manufactured during ramp-up phase. This led to a situation of dual quality norms, implementation of which was difficult. This extended the ramp-up time and hence resulted in launch delays. The rationale behind mixed model ramp up was to cover the high fixed costs of the plant during the initial phase when the new model production was not very high. Due to their strategy of ramp up, a lot of confusion resulted and the logistics became more complex, making the products more prone to defects. When we refer exhibit 7 of the case, we find that the mixed model approach took 1.5 months longer than the sudden changeover approach to reach full volume production during ramp-up. The solution to this problem is clear cut in that BMW should stop following the “mixed model” ramp up strategy. If, however, they cannot avoid it, they should have separate manpower for old and new model production to avoid any confusion in quality norms and logistics. 4. BMW typically spent about two years to get the styling right, in comparison to the six months taken by the Japanese luxury car makers. Off late, BMW has changed its design strategy to emphasize accelerated product development. It will have to revisit its current styling time of 2 years if it is to achieve the new goal of introducing a new engine, a new series or a redesigned series every year. 5. If we carefully analyze exhibit 2, we find that in the year 1989, the total production of automobiles was 511,476 units while the total sale was 523,021 units. This meant that an inventory of at least 11,545 units was being maintained, which is very high for a luxury car manufacturer. Similar are the statistics for the year 1990. It is difficult to understand why despite offering customizable products, such a high inventory resulted.

BMW Differentiators
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