Bmw Case

Executive Summary

BMW has embarked on a mission to cut its notoriously long product development time in half utilizing a newly developed system code named "Digital Car". Senior management has decided to utilize the new process on the 7-series platform. In order to accomplish this goal, BMW is preparing to take advantage of the latest computer technology in car development. At the forefront of the new plan is a debate over the use of computer-aided-styling (CAS). We recommend that BMW implement the Computer Aided Styling system and processes into their production development program.

Key Areas of Concern

The main business problem that BMW is facing is reducing its long product development time. BMW's current design process began in the early 1990s and utilizes a 60 month design cycle. Senior management set a goal of reducing product development time by 50%. This number is extremely aggressive, but necessary. All of its competitors were attempting to shorten development times as well. A main decision that BMW is facing is whether to adopt CAS in place of its traditional "handcrafted" design techniques.

The need for a shorter design cycle is being driven by customer demand and the extremely competitive automobile market. Customer tastes are ever changing and are demanding more choices. With the long development times, certain features of the car could be out of style by the time the car makes it to market. If BMW doesn't meet the customer demands, their competitors will.

Analysis

BMW sells many low volume vehicle models, as compared to its competitors. To be profitable, they rely on longer production runs, to spread their high fixed costs over a greater time period. The trade-off is a lessened ability to react to changing market demand. To achieve this, they must reduce their product development lead-time. BMW's strategy for value creation lies in its meticulous engineering, including design and styling. BMW designers pride themselves in delivering the unique styling that BMW is known for. They strive for designs that generate emotions - "Works of art". This is evident in the fact that many of the designers came from art or industrial design schools. The current design process involves two full size clay models - which are extremely costly and time consuming. However, the use of clay models provides a visual representation of the final product that many felt irreplaceable. By being able to physically see and touch a model of the final product the model can be handcrafted to make the slightest details apparent. Once the models are complete they are captured digitally by a laser scanner and brought into a Computer Aided Design (CAD) System.

The current process is working well to deliver the unique styling and quality that defines BMW, however, it is very time consuming and a major roadblock to reducing the product development time.

Senior management utilized the functional managers from the five key process areas that accounted for about 90% of the critical processes involved in product development. These managers identified three main changes to the current system that needed to take place in order to meet the development time reduction goals: Increased parallelization of design tasks, elimination of some design iterations, and quicker completion of the remaining design iterations. These changes would greatly modify the current processes and would need to be carefully implemented to avoid catastrophic results.

Strengths:

* Centralized designers - All employees involved with product development (~5,000) are under one roof. This aids in communication and is essential for coordinating activities while attempting to speed up development time. BMW had been the first major automaker to do this.

* Management Buy-In - The senior and functional managers have bought in to the need to reduce product development time. Their support will be instrumental in directing this major organizational change. Management is also committed to installing the necessary IT infrastructure to enable the new process.

* Quality of Design Styling - BMW is known for quality design and styling. This focus will be instrumental in retaining these qualities in the new plan.

Weaknesses:

* Limited CAS Experience - As with any new technology it is not learned overnight. The technology itself is a fairly new development. It will take time for the designers to get up to speed with it and determine how to utilize the software to its potential. A few years prior, BMW designers utilized CAS in designing a new 3-series model. However, they were not impressed. It required laborious hand revisions, partially defeating the purpose of the technology.

Opportunities:

* Reduced development costs - Shortening the product development cycle will result in various cost saving opportunities - less engineering hours per vehicle and reduction in prototype builds. Using CAS tools in the "front-loading" design process can also reduce the cost of tooling changes.

* Reduce product lead-time - Allows BMW to be more responsive to changing market demand and needs.

Threats:

* Dependence on traditional design - BMW's designers are experienced in working with physical models and may be reluctant to switch to CAS. The reluctant designers can undermine the project.

* Design Hindrance - The designers place a lot of value on being able to work with physical models and being able to "handcraft" the model. Using a digital model may hinder their creativeness and limit the styling.

* Competition - The competition is using or beginning to use CAD/CAS tools to reduce product development cycle time. If BMW cannot address this issue, their competition

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