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THE BMW WAY

Inaugurated its plant in Leipzig area of Germany.

BMW invested $1.3 billion in building the Leipzig plant.

Implementer of mass customization.

Leipzig plant was designed to allow maximum flexibility and effective

communication. Old way- customers ordered whatever the dealer had.

 New way- Maker of luxury cars had to offer extra value to customers.

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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1913, Karl Rapp established Rapp-Motorenwerke: manufacture aircraftengine- Munich, Germany.

1916, got contract to manufacture aircraft engines for Austria-Hungarian

army- Partnership with Camillo Castiglioni & Max Friz in 1917- Named

BMW(Bayerische Motoren Work GmbH)

1918, BMW manufactured type 3a aircraft engine, which powered biplaneto reach 5000m in 29 min.

1922, Bayerische Flugzeugwerke AG merged with BMW to form BMW

AG.

1923, started manufacturing motorcycles.(R32, 500cc).

1928, BMW bought car manufacturing unit in Eisenach, Germany.-“DIXI”-Austin 7 car. Marketed under name BMW 3/15.

BACKGROUND 

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OPERATION STRATEGY MODEL

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Mass customization is the ability to satisfy the particular needs

and wants of individual customers at competitive prices of massproduced products and services that approximate the wishes of 

many customers in large market niches

Mass Customization links two production concepts - mass productionand customization.

Mass Customization requires: System for customer to specify requirements easily

e.g. online ordering, call center.

Advanced manufacturing systems Enable economies of scope (keep cost and price low)

Build-to-order approach

 product is not made until order is received. Minimum order quantity of one

Mass Customization

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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 customers

Advanced planning became an integral part.

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.

BMW looked on its buyers as „investors‟ and not as customers 

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CUSTOMER

• Personalized Car 

• Higher Customer Satisfaction

• Great Amount of Flexibility

• Perfectly Matching the need of Customer 

BMW

•  Brand Image in the auto industry

• Company's Profitability• Cut in Inventory

• Competitive Advantage.

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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

Companies like Ford and GM had already following built-to-order programs

Several other Industries like consumer durables, packaging equipment, window

frames were also using it to improve their production systems

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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