Bmw: the 7-Series Project

Topics: Costs, Variable cost, Prototype Pages: 8 (2042 words) Published: July 30, 2011
BMW: The 7-Series Project (A)

Submitted to Prof Ganesh N Prabhu (New Product Development) 12th July, 2011

Group 1F
Abhishek Sonane, 1011297 Namrata Keshwala, 1011254 Nirmal Preethi G, 1011257 Pavan Kumar Uramandith, 1011337

The case elaborates on the different options considered by BMW regarding the manufacture of its prototype vehicles. Historically, BMW's prototypes were handcrafted by highly skilled artisans in the company's shop. A proposal had been made to alter the process so that prototypes are made in a way that can better uncover potential problems that may arise during final production. While the new approach is expected to make production start-up of new models smoother and reduce quality problems, there is some concern within the company that it will lead to less flexibility to change (and improve) designs during the development cycle. Through our analysis, we have tried to address the following issues:   Different ways of competing on quality in a luxury product segment and how the product development process affects each of these The notion of a prototyping strategy and the role prototyping plays in linking development strategy and manufacturing strategy

The segment of automobile industry in question was the luxury car market where cost plays a very small role. Generally, the luxury segment was defined as the market of automobiles with a retail price above $ 20,000. Companies in this segment competed on features like acceleration, comfort and handling and intangibles like perceived quality and image. Major players in this industry were Daimler-Benz, Toyota, Honda, Nissan, Ford, BMW etc. BMW differentiated itself on the basis of its engineering and technical prowess. The evolution of BMW in the luxury car segment and the change in competitive scenario is included in Appendix 1 and 2 respectively.

Product Development Approach
Strategic Objectives
BMW tried to achieve the following objectives to compete with the European players as well as upcoming Japanese entrants: Increased Product Variety: BMW mostly made its cars to order with the new Regensburg plant playing a major role. It produced 420 cars/day but made the same car type only once every month. More frequent introductions: The Japanese automobile companies had lead time of 4 years against an industry average of 6 years due to their philosophy of introducing new models frequently, incorporating incremental changes in contrast to BMW’s philosophy of introducing new product with bold changes. The new strategy was to introduce a new engine, a new series or redesigned series every year. Improved Quality of Newly launched models : BMW tried to develop a strategy to compete with Lexus’s record of 1.5 complaints/car to try and meet the expectation of higher standard of conformance from the customers.


Stages in the launch of redesigned model (Refer Appendix 3) Prototyping (30-32 months): 3-5 batches of prototypes were constructed using handmade tools, sometimes not made up of material to be used in final product. The advantage of this process was that it provided flexibility to make changes without much time consumption and costs. Pilot Production in Engineering Center’s pilot plant (7-9 months): Done with only the three-quarters of the production tools, but thousands of minor problems would be uncovered and investigated. Pilot Production in Factory (3-6 months): “Dress Rehearsal “and final opportunity to fine tune the process, change tooling and troubleshoot. Ramp-up: Mixed Model approach used to avoid significant drop in output and better utilize the fixed assets. In this approach the production of old models is continued to utilize the available capacity till the production of the new model can be brought up to full volume.

Issues in the above method of prototyping
  In spite of multiple cycles of prototyping, the production runs always needed changes. Even though each successive generation of prototype...
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