Section 1: Overview of the company
BMW Group, headquartered in Munich, Germany, positions itself as a global manufacturer of premium cars and motorcycles, while also providing first-class financial and mobility services. In 2019, BMW Group had over 133 thousand employees and made sales of 2.5 million cars and 175 thousand motorcycles (BMW Group, 2020). The BMW business model focuses on three main sectors: delivering automotive products, including petrol, diesel and electric powered cars (BMW, MINI and Rolls-Royce brands); delivering motorcycles (BMW Motorrad); and leasing, fleet management, funding management and strategic management through the Alphabet brand (BMW Group, 2020).
Revenues for BMW in 2019 were €104,210 million, the automotive segment contributed €91,682 million, the motorcycle segment contributed just €2,368 million and the financial services segment made up the remainder. Net profit for the group was €5,022 million in 2019 (BMW Group, 2019). According to Fortune (2020), the BMW Group was the tenth largest automotive manufacturer by sales revenue in 2019 with a 7% share of the market, compared to the leading manufacturer, Volkswagen, which had an 18% share and 2.4 times the revenue.
The automotive sector covers a wide variety of cars ranging from a hatchback ideal for short trips around town, through saloon cars, multi-purpose vehicles (MPVs), convertibles and sports cars (RAC, 2020). Models traditionally run on petrol or diesel engines are being extended to include plug-in hybrids and all-electric versions. BMW Group delivers cars in the BMW range that run on all 4 drivetrains and recently launched the first all-electric MINI. The third automotive brand, Rolls-Royce will follow suit in the near future, with an electric version currently undergoing development (BMW Group, 2019). The production of BMW Group cars and motorcycles takes place in 31 locations across 15 countries. Of the 31 locations, 20 are BMW Group plants, 8 locations are operated by partners or contract manufacturers and 3 plants are owned by the BMW Brilliance Automotive joint venture in China. The cars are sold across via a global sales network consisting of 3,500 BMW, 1,600 MINI and 150 Rolls-Royce dealerships. Sales in Germany are run by branches of the BMW Group as well as independent authorised dealerships whereas sales outside of Germany are mainly handled by subsidiary companies and independent import companies (BMW Group, 2019).
In addition to the production of vehicles, the primary activities in the BMW value chain include operations, inbound and outbound logistics, marketing and sales and after-sales service. Key partners include DHL who support BMW’s inbound and outbound logistics, BMW Brilliance Automotive and an extensive network of dealers and retailers as well as countless suppliers. Supporting activities in the value chain are also critical to the success of BMW and include the firm’s infrastructure, technology development (R&D), procurement and Human Resources (Dudovskiy, 2016). Human Resources activities have a focus on minimising attrition, attracting talented resources and growing the diversity of its workforce (Pratap, 2019). In order to support primary and secondary activities in the value chain, BMW have implemented a number of Business Process Management (BPM) systems in the organisation. Despite the challenges, namely the time to implementation, the mind-set shift required from the staff, the large upfront cost and the ongoing maintenance costs to the business, the company has experienced several benefits, including improved efficiency and effectiveness of the business operations in addition to being able to drive competitive advantage.
Section 2: Organizational Structure and ERP Implementation Benefits/Problems
BMW Group is comprised of Bayerische Motoren Werke Aktiengesellschaft (BMW AG) and all its Group entities. It has three representative bodies: the Board of Management; the Supervisory Board; and the Annual General Meeting. The Supervisory Board is responsible for monitoring and appointing new members to the Board of Management. The Board of Management is responsible for the operations of the business and keeps the Supervisory board informed through regular reporting meetings. Although it is responsible for the management of the company, the Board of Management must seek approval from the Supervisory Board before conducting certain major business transactions (BMW Group, 2020).
The Board of Management have organised the company into different departments, with IT responsible for the implementation and maintenance of technology used within the organisation. There are three IT centres: in the United States, India and South Africa. The latest centre was opened in South Africa as a SAP competence hub and was setup with the specific purpose of configuring and enhancing the SAP system to the specific needs of BMW’s production network. This in turn, resulted in complex just-in-time and just-in-sequence production processes running seamlessly in locations such as Brazil, India and China. The IT centres also supply SAP solutions to other key activities in the value chain including the Sales and Marketing, Logistics, HR and Finance teams in Germany, the United Kingdom and USA (Kilfoil, 2014). The benefits of the ERP system are not limited to the internal teams such as finance, procurement, and production planning and materials management but are also extended to the suppliers and partners by providing access to up-to-date real-time information.
BMW have implemented SAP with the ARIS Business Process Management functionality. Through this deployment, BMW have realised a reduction in the failure rate of credit financing for cars in one country from 14.3% to 4.2% and in another country, they doubled the number of processed contracts per employee. However, the main problem with this implementation was the roll-out taking longer than anticipated. This was because the drivers of the change, the employees, had insufficient time to spend on process optimisation in addition to their day-today tasks. Once BMW involved the workers in the project design, rather than it being a directive from management, it was much more successful (Scheer et al, 2006).
BMW also implemented the ERP software SAP R/3 to benefit from lower costs and increased speed at which information flows across the organisation. The ERP software integrates and automates the purchasing, production planning, materials management and invoicing departments and provides flexible reporting and analysis options. The ERP system provides BMW with knowledge of precise lead times for everything in their production facilities which enables them to maintain uninterrupted production schedules. Business processes are streamlined and costs are reduced due to the quick and easy access to information across departments (Gupta et al. 2004).
BMW is also driving benefits for their customers by the use of the ERP system. BMW and SAP designed a prototype that employs SAP’s HANA in-memory database platform to deliver personalised services and offers to people as they drive their cars, for example, alerts about petrol stations or restaurants open nearby (Kanaracus, 2014). Furthermore, those businesses, in exchange for a monthly or annual advertising fee, benefit from an increased footfall. This ERP initiative has the potential to improve the customer driving experience and thereby increase customer loyalty to the BMW brand. The disadvantage is the maintenance overhead in keeping up-to-date, relevant services and offers in order to: retain customer engagement, to maintain customer trust in the system and the BMW brand, and to continue the revenue stream from the businesses.
Section 3: Purchasing & Inventory Management
Purchasing Function Basics
The purchasing department at BMW is responsible for procuring parts and components such as brake callipers, tyres, glass windows, audio systems and shock absorbers and indirect items such as stationery, computer equipment and office furniture (Maverick, 2019). Indeed, approximately 80% of BMW’s orders are less than $5000 for items such as stationery supplies and office equipment. These are managed by the online ERP system which allows employees to order their own supplies from a standardised list. The purchasing team preselects buyers, negotiates contracts and then enables managers to manage their own ordering and procurement as and when they need it. This digitisation freed up purchasing staff to work on higher value activities (Wolf, 2005).
Those higher value activities include being a strategic business partner that influences product and process design choices which have a significant financial impact to the organisation. The purchasing department adds valuable feedback during the early conception design stage of product development, providing input on how particular design features will affect the technical equipment in the factories, or the scale of investment that will be necessary to implement the design. They influence what types of materials, components and systems are used. For example, different factories and departments uses various mechanical lifts to help with manufacturing. The purchasing team used ERP system data to influence the teams to use one common lift, which could be modified as needed, rather than each department purchasing their own, resulting in a 30% cost saving companywide (Wolf, 2005).
Inventory Function Basics
BMW uses mySAP Automotive for monitoring production status in real-time. Every three minutes, the mySAP Automotive system saves production confirmation and parts consumption data. Parts that are used in the assembly process are deducted from the inventory count and the cost of the work in progress is updated to reflect the time and parts consumed. BMW uses this data to significantly reduce the order-to delivery time by strengthening activities such as demand planning and tracking and tracing of material deliveries, as well as improving inventory accuracy across the manufacturing site (Ambe and Badenhorst-Weiss, 2010). Duplicate material numbers were reduced by 16% and vendor accounts were halved through employing the mySAP system (Stolle, 2012). The mySAP system is closely integrated with
BMW’s planning system so it can receive custom-configured manufacturing orders which contain all the parts needed to build each car. BMW shares both the long-horizon forecasts and the short-term JIT delivery schedules with its suppliers. Electronic Data Exchange (EDI) is used to transmit the information to the larger suppliers and the mySAP Automotive Supplier Portal, where BMW posts the up-to-date information about its delivery needs, is used by the smaller suppliers. These suppliers can view invoices, purchasing documents and release schedules in addition to engineering documents online, in real-time whenever they need. When a supplier ships parts to BMW, they send an Advance Shipping Notification (ASN) which provides precise information on the number of parts in the shipment and expected delivery dates. Parts arriving at the BMW dock are checked in and transferred directly to the production line. Using a JIT supply system saves BMW valuable warehouse space by minimising the amount of stock held on site: usually, there is only one and a half hours’ worth of stock on the production line at any one time. (Ambe and Badenhorst-Weiss, 2010).
However, at the BMW production site in Dingolfing, a Just in Sequence (JIS) delivery system is used. Orders are sent by BMW to its suppliers as delivery schedules in the form of IDocs. The supplier pre-sorts the parts into containers so that BMW assembly line workers can take the parts out in the correct order defined by the production sequence. The JIS delivery system removes the time required for reloading the parts that have been delivered, from the warehouse to the production line and minimises the potential for gaps or delays in the production process (Lorenc and Szkoda, 2015). All of these parts and components at the production sites must be accounted for so BMW performs regular inventory reconciliation using inventory software Stasam from Stat Control and the difference estimation method (Stat Control, 2016).
Section 4: Production Planning and Execution
The production of cars and motorbikes is the primary activity in BMW Group’s value chain and therefore, careful management of the planning and execution processes is key to the effectiveness of the business. BMW use SNO (Strategic Network Optimization) software, a component of Oracle’s JD Edwards ERP solution, for their strategic planning model. The model optimises the allocation of products to the worldwide production sites using a 12-year planning timescale, starting with the supply of raw materials and components through to the final distribution of finished cars. The model forecasts the investments required and the financial impact on cash flows across all three production departments – body assembly, paint shop, and final assembly – for each of the production sites and provides flexibility and transparency to BMW’s strategic planning process (Fleischmann et al., 2006).
Production planning is heavily dependent on the sales pipeline, especially in Europe where BMW vehicles are built to order. Customers order their choice of car with their chosen options and accessories either from their local dealer or online and they expect to have to wait for the vehicle to be built and delivered. The US has a different model, customers expect to be able to walk into a dealership, choose a vehicle from stock and drive it home straight away. VP of vehicle distribution, Anita Pieper (2019), stated “We have a stock market model and a built to order model. The built to order market, with its lead times from order to delivery of up to three months is current in Europe but for almost all the world we build for stock. Our sales organisations are very familiar with customers’ tastes for ordering stock models and they have sophisticated templates for this”. The software at the dealerships is tightly integrated with the manufacturing and procurement system at BMW, so special orders are automatically sent to suppliers to ensure the right parts are delivered at the right time. This tight integration between sales orders and material management means that delivery of bespoke cars happens within just two to six weeks of ordering (Muller, 2010). BMW also provide an opportunity for the customer to participate in the “design-to-order” process by offering an online product and component catalogue that enables customers to specify product requirements (Economist Intelligence Unit, 2001). This necessitates that the production process must be lean and agile enough to satisfy the increased varying demands on it (Gunasekaran et al. 2007).
The production of every car is completed according to a clearly defined routing and a multilevel Bill of Materials (BOM), both of which are stored in a PLM system along with requirements and specifications documentation. A BOM consists of 8 to 9 thousand components, some of which in turn are sub-assemblies, for example, the engine, suspension system and gearing. The PLM system enables BMW designers to manage and iterate on their design concepts from CAD tools whilst maintaining the relationship to the requirements and specification documents. The benefits of the PLM system were extended to the launch of the first electric version of the Mini in July 2019. Costs were kept down by using the same fundamental design and the same production lines for its full-electric, hybrid and internal combustion models and delivery times kept to a minimum by reusing the Bill of Materials and Routings to quickly switch between fuel types in response to customer demand (Jolly, 2019).
The PLM system provides BMW with a single source of truth, version-controlled system and a tight integration between the CAD, PLM and ERP worlds, with full traceability (Hirsch and Koch, 2007). Parts in the BOMs are serial numbered, giving BMW complete traceability even after the car is sold. This has proved critical in the event of safety recalls such as the rupturing airbags (Guardian, 2014) and the electrical fault that caused some vehicles to cut out
(Monaghan, 2018) where it was imperative to inform the impacted customers.
Section 5: HR Management & Asset Management
The HR function at BMW is responsible for the recruitment and systematic retention management of employees. It is also responsible for managing the payroll, benefits package and competitive compensation plans (Kastner and Heiss, 2014). The global strategy to maintain and enhance the attractiveness of BMW as an employer, to identify and retain talent and develop employees is defined by the strategic HR team in Munich. Whereas the
implementation of these strategies on a local level is the responsibility of the HR departments at the respective locations (BMW Group, 2019).
BMW traditionally hired people with manufacturing skills but with increased automation, robotics and the development of autonomous cars, there has been a shift towards hiring people with technology skills. At the BMW autonomous driving campus at Unterschleissheim, near Munich, the HR policy has been instrumental in recruiting talented young engineers with technology skills. BMW changed their HR policy to remove the requirement to know the German language which has led to a more diverse workforce representative of different races and cultures (Krüger, 2019). This diversity brings with it communication challenges, so to aid collaboration and increase employee engagement and retention, the HR department implemented Happeo, an employee engagement platform that combines the intranet, enterprise social network and collaboration in one system (Trajkovska, 2019).
The HR team is also responsible for managing payroll and to support this, the company utilises the SAP time management component of the mySAP Human Resources (mySAP HR) solution. This software was critical at a time when BMW forecasted high demand of a new vehicle and needed to increase production of their X5 model quickly. BMW partnered with KABA Benzing to integrate time keeping hardware (terminals) with mySAP HR. The terminals are placed by building entrances and employees swipe in and out for their shifts. Data is transferred from the terminals to the mySAP software where HR process the payroll for each employee based on the exact hours worked each week. This integration simplifies the payroll process and gives BMW the ability to change the shift patterns and offer flexible working hours (Register and Brigham, 2003).
Asset Maintenance (Management)
In addition to managing resources such as employees, BMW has a number of assets including machinery, raw materials (commodities), parts inventories and other physical assets in its many offices and production plants that require management. In the UK, BMW use Assettrac to enable the assets around their UK sites to be reconciled with head office asset data in real-time. The system provides details about every asset from delivery through to disposal, including where it is, where it has been and inspections that have occurred (Cline, 2019).
Machinery assets must be managed with regular servicing and maintenance. In the US manufacturing plant of Spartanburg, South Carolina, this involves taking ERP data from the past, the present and the future (up to seven years ahead) to plan the maintenance schedule. Technicians perform preventive, predictive (through infrared thermography and motor current monitoring) and corrective tasks, either whilst the production line is operational or when the equipment is not in use e.g. after shifts. The reliability, uptime and overall equipment effectiveness is carefully measured and monitored by the asset management system (Arnold, 2008).
In the recently opened production plant in Mexico, this has been taken to the next level with the introduction of Smart Maintenance Assistant Software which enables asset maintenance throughout the site to be planned proactively using predictive analytics. Data from the machinery is used to determine optional Condition Based Maintenance (CBM) strategies rather than relying on predefined standard maintenance schedules. The status of the equipment, along with manuals and manufacturer information is available to technicians on their mobile devices in real-time, enabling them to access the relevant data and perform maintenance including ordering spare parts at the precise time it is required. This means the technicians respond more quickly and effectively at the right time which results in higher availability of equipment (Roberts, 2019).
Additionally, BMW Brilliance Automotive Ltd. (BBA) in China utilise the SAP Commodity Risk Management application. The real-time monitoring of commodity risk and automated end-to-end process for reporting of commodity-based transactions across the business, allows BMW to respond faster to market changes, reduce external and internal audit time while also reducing the time required for financial closing (SAP, 2019).
Section 6: Financial Accounting System
The financial year for BMW Group runs from 1 January through 31 December and annual accounts are reported in March the following year. Owing to BMW Group being registered as a German company, accounts are drawn up according to International Financial Reporting Standards (IFRS), as recognised by the European Union (EU). BMW’s accounting team use the cost of sales method for the income statement and the equity method, with measurement on initial recognition based on acquisition cost, for associated companies and joint ventures. Although not required by IFRS 8 (Operating Segments), the company provides an income statement and a balance sheet for the Automotive, Motorcycles, Financial Services and Other Entities segments. The company also provides a statement of cash flows for the Automotive and Financial Services segments to supplement the Group cash flow statement. BMW use their intranet system to share guidelines for recognising, allocating and measuring items to accounts. The introduction of new accounting standards are assessed by BMW’s internal control process for their impact on the company’s accounting and financial reporting. The company revises the accounting guidelines and processes at least once a year and keeps them under continuous review (BMW, 2019).
To facilitate the recording of transactions and reporting of operating data at the end of every period, BMW Group are using the SAP accounting software. The Financial Services sector of BMW Group in America uses SAP FICA and FICO. This SAP system is integrated with other BMW Group systems to provide 12 interfaces, three forms and three custom reports for the organisation (Navigator Management Partners, 2014). The Contract Accounts Receivables and
Payables (FICA) module is a sub-ledger alternative for the Accounts Receivable (FI-AR) and Accounts Payables (FI-AP) modules (Patil, 2020). It is used by BMW Financial Services to handle their large number of different customers and different types of receivables, whereas the FICO is the Controlling module. This module, comprised of sub-modules that handle specific processes including Cost Elements, Cost Centres, and Internal Orders and so on, will be discussed later in this report (Rouse, 2018).
The SAP accounting system supports the principal of dual control, namely that requests cannot be submitted and approved by the same employee which makes it easier for BMW to detect errors early and prevents potential wrongdoing. BMW regularly use the accounting system to compare internal forecasts with their external financial reports to increase the quality and accuracy of their financial reporting. The internal auditing team have access to the same system, allowing them to assess the effectiveness of the internal control system and propose improvements when appropriate (BMW Group, 2011). A side benefit of the SAP system is that employees spend more time on value-added activities such as analysing trends and identifying opportunities to grow the business (Fasttrack, 2020).
Section 7: Sales Management
One such opportunity to grow the business was the launch of the electric MINI. The original MINI motorcar was built by the British Motor Corporation as a response to fuel rationing resulting from the Suez crisis of 1956 and the need for more efficient city cars (Boeriu, 2012). Six decades later, in 2019, BMW Group launched the first electric MINI in response to a need to reduce the emissions of the cars it sells in order to meet EU carbon dioxide emissions limits (Jolly, 2019). BMW were able to use their ERP system to identify a gap in the market, then design, manufacture and launch the new MINI.
Within the ERP system, the Sales Information System provides data about the sales volumes and revenues of the various MINI models as well as the company’s electric BMW cars. Analysing this sales data, along with the global market trends and European emissions limits enabled the firm to identify the need for an electric version of the MINI and what that MINI should look like in order to maximise profits. The development team used the integrated PLM system to create a design that enabled the company to reuse the same fundamental design and the same production lines for its electric, hybrid and internal combustion models, thus minimising costs associated with a new model. The integration with the warehouse system enabled checks on reusing existing parts and components to be made and therefore forecasts were created for human and material resource requirements. The integration with the accounting and project modules enabled costs to be validated, available resources to be identified and the impact on existing manufacturing efforts recognised. The sales team had
15,000 expressions of interest for the new car before it opened its order books in July 2019 (Jolly, 2019).
The production planning team used this initial sales forecast and information about new parts from the materials management system to create a production plan focused on delivering the first cars in early 2020. When there are changes in the cost of parts or components, in particular if a supplier sees an increase in the cost of raw material and passes that cost on to BMW, this is flagged up to the materials management, accounting and profitability analysis teams via the unified ERP system. The strategy team work with the accounting team to identify the correct RRP to maximise profit, taking into account any increases in the cost of parts and components as well as lost revenue from petrol or diesel equivalents, whilst still remaining an attractive proposition to the purchaser. Customers can either visit their local dealer or purchase online via the BMW website with is powered by the SAP Hybris ecommerce platform (Deutscher, 2013). Faull (2016) stated “After entering the site, potential buyers answer five questions on their lifestyle which BMW uses to suggest an appropriate model which they are able to then customise.
Meanwhile an online specialist is on hand to answer any questions via a live-chat function. Users can select their nearest dealer to process the transaction there and then or set up a time to visit for a test drive”. The data from these online sales as well as the web traffic on the site is leveraged by BMW to identify future marketing prospects and product improvement opportunities as well as feeding back into the Group’s accounting system.
Section 8: Controlling Function and Project Management
Controlling Function (Management Accounting Activity based Costing)
BMW, like many other German companies, are using the Grenzplankostenrechnung (GPK) cost accounting system to provide detailed financial information for managers. The system, focuses on cost centres and cost centre accounting, and separating costs into fixed elements e.g. business rates and variable elements e.g. raw materials, for easy profit analysis. The GPK accounting system is embedded into the SAP FICO system that BMW are using for their controlling function. It puts additional emphasis on analysing direct costs or costs that vary in proportion to the output of the activity. This cost control at the cost-centre level benefits managers who are held accountable to adjust resource consumption as required when output volumes vary (Sharman and Vikas, 2004). This is in contrast to the business areas e.g. cars, motorbikes and financial services, which are geared towards an external viewpoint e.g. the shareholders.
BMW is similar to other motor companies when it comes to the flow of costs. The company has to purchase component parts (raw goods) to manufacture the cars it sells. Added to this are the costs to pay employees to operate the assembly line, the costs to operate the machinery and the costs associated with the building where the machines are located e.g. electricity and business rates (Kenton, 2019). The costs of raw materials, work in progress, finished goods inventory (completed cars and motorbikes) and cost of goods sold are all calculated using the SAP system. Furthermore, marginal costing is used to decide which products to reduce focus on and which products to increase marketing campaigns for, and the contribution margin calculated for products and customers is used to direct sales efforts. The SAP system supports all of these activities by providing the data in consolidated and segmented form to corporate management, decision makers working on the production floor and to the sales and marketing teams (Sharman and Vikas, 2004).
BMW manage many projects such as internal IT projects, the design of innovative new component parts and the construction and maintenance of production plants. Projects are internally run projects or collaborations with partners or suppliers.
The internal IT organisation have established an integrated IT continuous management process which covers strategy, architecture, planning and controlling. The following processes are incorporated: “architecture and standardization” which defines standards for architectural patterns; “landscape management” which provides an overview of the current and future IT landscape; “portfolio management” which coordinates, evaluates and prioritizes action items; “synchronization management” which manages ongoing projects, their dependencies and the cross-functions; and “strategy and objectives” which defines guidelines for the other processes and adjusts strategies based on feedback from the other processes. The controlling process consists of the synchronization management, which checks ongoing project plans and their dependencies. The synchronisation plan provides an overview of all the ongoing projects and is updated on a regular basis with new information from each of the IT projects. Projects that are not running to time or are overrunning on budget are managed by the controlling process. Changes in requirements for the projects and general budgetary cuts or even changes to the company strategy and goals are also managed in the synchronization management process (Fischer, et al., 2005).
Strong Business Process Management combined with the use of project management software have led to successful projects at BMW. In 2015, the project for the construction of the BMW plant in Brazil was a finalist for the German Project Excellence Award. The project was managed and delivered in accordance with a project excellence model, whereby the processes included rigorous planning, risk identification and mitigation, communication and continuous improvement. Subcontractors with access to the project management system were integrated as partners resulting in a 500 thousand square meter site being built in under a year and within budget by several million Euros (IPMA, 2015). The following year, BMW was nominated for the “Deutscher Zukunftspreis”. This nomination was for the partnership between BMW and OSRAM.
The two companies collaborated on a project to create the world’s first precision laser vehicle headlamps. The close supplier-customer relationship laid the strong foundation for the project which resulted in the innovative lamp design now included in the BMW i8 and BMW 7 series models (IAPM, 2016). In another large project, the construction and ongoing maintenance of the BMW Amsterdam site, BMW used the Thinkproject platform to manage the project. The Thinkproject platform was used to manage the work breakdown structure including the administration and collaboration efforts of the design team, storing planning meeting minutes, budget and contract-relevant correspondence, design approvals and the process of tendering of construction services. The system provided BMW with an audit log of the project activities and facilitated a lessons learned exercise post construction of the site (Thinkproject, 2020).
Section 9: Business Warehouse, Data Lifecycle and Business Intelligence
The management of internal project documentation for car design, development and manufacturing is closely linked to the Product Lifecycle Management (PLM) system. BMW are using Windchill PDMLink for their PLM system to manage CAD data and documents (PTC, 2018). Designers create and iterate on digital parts and assemblies within their CAD environment and check their CAD documents into the PLM system. The system manages the individual parts, BOMs and documentation with version-control and access-control through the different stages of the lifecycle (In Work, Released, Obsolete etc.). The system also manages the different options and variants, for example, whether a car has 18” or 19” alloy wheels or whether it has air conditioning or a sunroof, right from concept all the way through to manufacturing. The built-in Change Management workflows provide a standard process for managing changes, for example, when BMW changed the headlamps on the BMW 7 series models to the new OSRAM precision laser vehicle headlamps. The PLM system integrates with the ERP systems used at BMW to provide a holistic view of the Product Lifecycle Management. In 2007, BMW had 5 model lines and technical specifications, 160 configured model types, 20,000 assemblies, 300,000 component variants, an average of 10,000 new engineering change requests every year and 1800 users online every day (Hirsch and Koch,
2007). Eichiner (2011) stated at the launch of the then latest version of the BMW 3, “We are sharing many of the same parts and components throughout the whole product portfolio and especially with the BMW 1 Series. Over its lifecycle, this improves quality and it generates considerable economies of scale for purchasing as well as efficiencies in development”. The PLM system is central to being able to achieve this through its single source of truth, reusable content that is easily shared across internal departments and with external suppliers.
It’s not only the design data that BMW manages but also the large quantities of data generated at many stages of the car production. BMW are realising major benefits from the intelligent analysis of production line data. For example, sensors monitor electric drives for lifts and turntables, the data from these sensors can be analysed and used to predict breakdowns of machinery before they occur. This reduces costly machine downtime and ensures optimal utilisation of production facilities (BMW Group, 2017).
Another area where BMW are leveraging business intelligence is through its customer experience data using SAP Qualtrics. BMW’s network of dealerships around the globe have access to a tailored, real-time dashboard which displays customer feedback that the dealers use to identify and solve problems (SAP Taiwan, 2020). Since implementing the Qualtrics system, BMW realised a 23-point increase in their NPS in the first nine months, increased repurchase and return service rates and were able to resolve 90% of issues within 5 days (Qualtrics, 2020). Additionally, the Qualtrics platform provides smart analytics for drawing conclusions from analysing thousands of free-form responses. This enables BMW to aggregate their customer feedback at the regional and global levels and potentially use the data as a predictor of warranty issues, since it gives an early warning of recurring problems being reported by customers (Wainewright, 2019).
BMW are taking it to the next level by creating a high performance D3 (Data-Driven Development) platform to support the next product innovation, autonomous vehicles. This data-driven development involves combining real life driving data with simulated data, using data analytics and simulation to develop the autonomous vehicles. BMW has partnered with technology company, DXC, for the setup of the data centre, the data warehouse and to develop applications to support the autonomous driving development process. The digital solutions from DXC enable BMW to collect, store and manage the data from vehicle sensors and use advanced analytics to drive their development. The data centre’s close proximity to the BMW autonomous driving campus in Unterschleissheim provides virtually instant access to the data, giving BMW the opportunity to lead the way with Artificial Intelligence (AI) training and BI analytical techniques (BMW Group, 2019).
Section 10: Conclusion
BMW Group is a well-established automotive company with a mature set of business processes supported by their implementation of the SAP ERP system, additional modules and integrations. The company has realised several benefits already but in order to maximise the full potential of having an ERP system, they will need to consider some of the challenges such as the ongoing IT maintenance cost overheads, the storage and management of big data and ensuring the access control is rigorous enough to prevent accidental or malicious misuse. For example, the company should look to consolidate systems across departments and geographies where possible, to reduce maintenance efforts of the IT team. BMW should also look to work closely with the software vendors to have their customisations built into the standard product which in turn will reduce the ongoing maintenance burden, especially around system upgrades. The company should investigate what other modules of the SAP system they have licenses for but are not utilising, for example, SuccessFactors which provides performance management functionality. BMW will need to leverage all the data at its disposal to facilitate process improvements and data-driven decisions for product design, for example, to keep up with market trends in the innovation and development of new products such as autonomous vehicles. In the current worldwide COVID-19 pandemic circumstances, enabling non-production employees to have remote access to the ERP systems with high availability and performance, as well as redesigning working processes to enable safe working on the production lines, will be key to the company being able to maintain close-to-normal business operations and survive the present situation.
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