Bayerische Motoren Werke AG (BMW), is one of the most successful car manufacturers today. According to the Interbrand’s 2016 survey, it is the 11th most valuable brand in the world. This success is not only due to the superior quality of cars produced but also as a result of the “well designed” operations management strategies. The goal of this report is to demonstrate how BMW effectively combined lean and agile concepts to develop a supply chain strategy that led to great success. In particular, I focus on how lean and agile concepts have been successfully integrated to create a build to order supply chain within BMW and how this chain confers a competitive advantage.
2.1 The Automotive Industry
If we study the history of the automotive industry, it can be said that from the inception of the first automobile, created by Karl Friedrich Benz, till date, the industry has undergone drastic change. It started out with a few automobile manufacturers creating vehicles one at a time for a small number of wealthy individuals who could afford them. However, in 1913, Henry Ford revolutionized the automotive industry by creating the first assembly line which allowed for the mass production of vehicles. Today, this is referred to as Fordism. The assembly line, created at the first Ford plant in Highland Park, Michigan, has now become the basis for mass production methods around the world 1. The process of mass production focused on the ‘push concept’ where products are made to stock and production decisions do not take actual consumer demand into account. Several decades later, Japanese manufacturers introduced several manufacturing processes that transformed the entire industry. Today, with a production volume of around 25 million units, the automotive industry in Japan is currently the largest in the world and this is not expected to change anytime soon2.
In a book titled “Machine that Changed the World”, Womack et al coined the term lean production to describe these processes. The book documented the journey from mass production to lean production in the automotive industry. It describes lean production as the means of developing a value stream to eliminate all waste, including time and to ensure a level schedule3. It also stated that lean production was a superior way to produce goods and suggested lean production was the future. This new concept challenged the already established system of mass production used by many American and European manufactures. The implementation of this production system enabled Toyota, a Japanese manufactured car, become the most profitable car business in the1980s in North America ahead two of the ‘Big Three’ namely Ford and General Motors. As a result of this startling success, lean production became a topic of interests for many, academics, and researchers and operations managers. This process of lean production was based on a Japanese concept of kaizen meaning ‘continuous...