BMW: The 7-Series Project (A) Cockpit Prototyping Process Submitted to Professor Ganesh N. Prabhu Indian Institute of Management, Bangalore On July 12, 2011 New Product Development Group 2C Gunjan Biruly |Saurabh Maurya |Shivananda Narvajagatkar |Vidhya D | (0911310)(1011352)(1011207)(1011218) Introduction 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 Key characteristics of BMW cars as perceived by the customers are: * High Performance Engineering * Latest Technology High Style Quotient * Customizability It is very important to maintain this perceived image of BMW. This will largely determine the strategy to be followed by BMW. Analysis of prototype development process Hand built prototyping Advantages| Disadvantages| * Useful where design is not frozen * Flexible * Better Inter-functional co-ordination * Lower lead times * Design changes are cheap and quick * Allows greater creativity * No specialized tooling costs| * Masked design and manufacturing problems * Defects hinder the high volume production.
Takes six months to ramp up production instead of three. * Suppliers unable to foresee production problems * Requires Highly skilled labor| The cost under this option used to come around DM 1. 8 million. Prototype outsourcing The idea under contention is to outsource the final stage prototyping to outside vendor who will use “pre-production” tools to make the prototype. The prototype production will be more automated and closer to the actual production.
Advantages| Disadvantages| * Design and manufacturing issues, which earlier cropped up only in the latter parts of the production cycle, would be obvious in the prototyping phase * High savings for each product launch after commercial production * Assembling the cockpits into prototype cars in the pilot plant would give final assembly workers firsthand experience| * The design needs to be frozen 12 months in advance – thus less flexibility. High initial costs – thus design changes very costly * Coordination between design team and prototype vendor can be a bottleneck * High-skill culture of BMW may get hit| The total cost for cockpit prototyping would be DM 8. 5 million, with DM 7 million to be spent on the tools and the rest allocated to materials, labor and overheads. 7-Series cockpit prototype The major issue facing BMW is the long development lead time and the number of customer-reported defects which manifested in the low quality rankings conducted by J. D. Power survey.
The prototyping strategy of BMW could be a source of these problems. The prototypes are made by hand and not with pre-production tools. While this strategy offers flexibility, it adds more development time during the design of the pre-production and production tools and also the fact that the production level issues are found out only at a later stage. This leads to a longer ramp-up time and some undetected issues which crop up at production-level. So if the prototypes were made with pre-production tools, a lot of these problems could be avoided.
If all the parts of the car are made from pre-production grade tools, the savings could be as high as DM 100 million for each model launch. Needless to say, this strategy thus comes with significant cost savings. At the same time, the strategy is laden with risks because if a major design change were to be done at the late stage, a lot of pre-production tools have to be redesigned completely. And moreover, the flexibility with the design engineers is limited (the design has to be frozen 32 months prior to the launch).
Furthermore, the failure of this strategy could prove to be very costly for the E7 series project and the company’s brand image as a whole. A failure in the implementation of the proposed new prototyping strategy will cause irreparable loss. However, as it is, BMW is already not doing very good in terms of competing with the other luxury car manufacturers. It appears that the whole idea of coming up with the redesigning of the cockpit through high precision processes for better quality cockpit was to counter the competition through providing differentiated product offering in their 7-series model.
With the above discussion, it becomes clear that there are both positive and negative sides of the proposed change. Since the proposed change is a radical one which might take time to sink into perfect practical application, our suggestion would be to continue with the existing methodology being followed along with endeavors to implement the new strategy. Not doing away with the regular strategy would ensure something to fall back upon without significant time losses. As it is, the customers of BMW would be looking forward to the 7-series with great expectations.
Any glitch in its successful launch would damage the reputation of the company greatly given the fact that already customer satisfaction was well below the expected market level. If, however, the cost involved to maintain both the processes is too high, it is not advisable to go ahead with the new prototyping strategy at all. In such a case, BMW should just focus on reducing their lead time and improving on customer satisfaction through reduced quality complaints. Recommendations for improving launch quality 1.
BMW should freeze the design changes early so that quality norms can be determined prior to production ramp up. They should define the technical specification well in advance in the product development cycle. This would also help freeze design changes early and save costs. 2. BMW should use production tools at the prototyping stage for the parts which have historically been the problem areas so that production-line related quality and design issues are identified early on. 3. BMW should integrate prototyping activities into the pilot production plant to facilitate learning.
Following are few more recommendations that could lead to reduced development lead times and increase production quality. 1. Co-location of Proto-typing and pilot production runs The prototyping and the pilot production processes are currently being carried out in separate locations. If the proto-typing is to be done using pre-production grade tools, both the processes should be done at the company’s main pilot plant. This will facilitate faster development of the production tools and the early detection of production issues with the car design. . Modularity As hinted in the case, we agree with the idea that BMW should consider carrying out the prototype building process in a modular manner i. e. contracting a single outside vendor to supply fully assembled sub-assemblies like the cockpit. This approach will aid in efficient error detection and correction and individual models can be replaced / improved as required. BMW can outsource the building of certain functional modules to known suppliers/vendors and can work on the critical design modules in-house.
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