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MASS CUSTOMIZATION
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THE BMW WAY

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Inaugurated its plant in Leipzig area of Germany BMW invested $1.3 billion in building the Leipzig plant Implementer of mass customisation Leibzig plant was designed to allow maximum flexibility and effective Click to edit Master subtitle style communication

THE BMW WAY

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CONTD..

Old way- customers ordered whatever the dealer had New way- Maker of luxury cars had to offer extra value to customers (example) Website to match the preference Suggestions from dealers using the online ordering system Communicated to suppliers so that order received at the right time. Suppliers close to plants Differentiation- styling with excellent performance, exclusivity and pride

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BACKGROUND

1913, Karl Rapp established Rapp-Motorenwerke: manufacture aircraft engine- Munich, Germany got contract to manufacture aircraft engines for Austria-Hungarian armyPartnership with Camillo Castiglioni & Max Friz in 1917Named BMW(Bayerische Motoren Work GmbH)

1916,

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BMW 700, small car with air cooled, rear mounted engine. had sporty exterior- sport sedan BMW 1500- compact sedanfront disc brakes & 4 wheel suspension moved to new head quarters, Munich focus on exports set up 1st overseas plant in

It

1961,

1971,

Increased 1973,

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MASS CUSTOMIZATION

The ability to satisfy the particular needs and wants of individual customers at competitive prices of mass produced products and services that approximate the wishes of many customers in large market niches It links two production concepts

Mass production Customization

MASS CUSTOMIZATION REQUIREMENTS

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Mass Customization requires:

System for customer to specify requirements easily Advanced manufacturing systems

o

e.g. online ordering, call center

Enable economies of scope (keep cost and price low)

Build-to-order approach
o

Product is not made until order is received

Minimum order quantity of one

1. Eliminating Customer Sacrifice 3. Supply Chain Management 4. Lean Production 5. Process Organization 6. Multi-project Management

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2. Modular Design and Integration

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MASS CUSTOMIZATION

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1990`s criticisms levied Post purchase customization was big business in US & Europe 1998, BMW launched a system called COSP, supported by an interactive web site Did not take online orders by Click to edit Master subtitle style customers Advanced planning became an integral part

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ERP for real time interaction - Suppliers Parts received from suppliers were stored at the highly automated parts warehouse known as Sequence Center Plants were highly automated (50 75%) Assembly lines facilitated shifting between models Interchangeability of parts enhanced flexibility and helped them deliver in approx 12 days

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Our logistics challenge is to let customers change their choices right up until production process starts While a certain part of vehicle was mass produced, combination of final elements was customized BMW looked on its buyers as investors and not as customers Around 80% cars were customized in Europe & 30% in US

BENEFITS TO MASS CUSTOMIZATION

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CUSTOMER

Personalized Car Higher Customer Satisfaction Great Amount of Flexibility Perfectly Matching the need of Customer Brand Image in the auto industry Company's Profitability Cut in Inventory Competitive Advantage

BMW

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HALLENGES TO MASS CUSTOMIZATIO

To Balance the Mass Production and Differentiation Maintaining Supply Chain Reduction in Order Processing Time To carter customers in foreign countries Foreign countries rules and regulations Integrating customer preferences with the image of the country

FUTURE OF MASS CUSTOMIZATION

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The driver of Mass customization was the gap between what the customer wanted and what a company could supply It was used with great efficacy by Dell Inc. in manufacturing computers More than 50 percent of the cars built did not have a potential consumer when they rolled off the final assembly line Companies like Ford and GM had already following built-to-order programs

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CONTD

Several other Industries like consumer durables, packaging equipment, window frames were also using it to improve their production systems In case of auto industry manufacturing in small batches or customizing products was not economical for plants and also the fluctuating production led to inefficiencies of plants This meant that companies would produce a wide variety of options in large batches and then use the internet to find a product from among those already manufactured that exactly matched a customer order

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Thank You.