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1917- Bavarian Motor Works came into existence; dealt in aircraft engines only 1918 World War I Treaty

ty of Versailles ban on aircraft engine manufacture 1923 1st foray into motorcycle manufacture 1929 1st foray Automobile manufacture 1930s German rearmament; went back to aircraft engine manufacture 1939-45- World War II, plants bombed, ban on aircraft manufacture 1952- First passenger car since the war

Product development time = 8 years from product concept freeze to market launch Low volume vehicle models Fixed cost recovery depended on high selling price and long production runs Strategic differentiation was meticulous engineering and handcrafted designing

The environment:
Globalization, regionalization and market convergence in the automotive industry Overcapacity in achieving volume production

The nature of demand:

Increasingly diversified and individualised want Consumer characteristics- Price sensitive, bargaining power Consumer demands- whimsical, constantly changing, unpredictable

Market Expansion

Rapid increase In demand

Growth Opportunity

Realized importance of: Adaptability Flexibility accelerated modification and diversification of their product portfolio dramatic compression in the length of time for changes in consumer behaviour to be incorporated into product design Achieving economies of scale to cover fixed costs in place of low margins and short run time

The solution

Reduce Product development time

Engineering lead time reduced by implementing simulation technology for competitive advantage Increasing number of parallel development projects Adoption of new development techniques such as virtual reality or CAD

Early 1990s saw a reduction in sales Decided to cut down on its notoriously long product development time using a newly developed system code named digital car CAD vs. traditional handcrafted design Increased competition with Merc, Audi, Jaguar, and even luxury brands offered by Japan & Korea Late 1990s saw increased BMW appeal for rich young customers who had a passion for speed and fun driving

1970s and 80s 72 MONTHS 3 Prototyping cycles

Early 1990s 60 MONTHS 2 Prototyping cycles

Mid 1990 onwards Aim for 30 MONTHS and 1 Prototyping cycle

Design concept phase

Traditional- done with water-color, pencil, charcoal and tapes Internal and external designers from the best designing and fashion schools Many designs were conceptualized Some of the above designs chosen by senior management Small clay models made of fundamental concepts Only the best ones made into lifesize clay models 4 or 5 Iterative process- each taking 12 weeks Final clay model scanned to get digital CAD image Handed over to engineers Engineers might suggest changes prolonging time of development

Refinement phase

Freeze & Scan

Long lag times but superior handcraftsmanship Three major prototyping cycles with each cycle involving a generation of dozens of physical prototypes Cost for each prototype exceeded $1 million Functional and manufacturing problems identified during testing while commitments had already been made to suppliers and manufacturing

TWO major prototyping cycles Beginning of employment of computer simulation methods throughout the whole development lifecycle Virtual crash tests

Task force

Creation of a task force consisting out of members of the five time critical key process areas -body, climate control, fuel supply, test engines and acoustics

Go Digital

Strategic partnership with Dassault (CATIA provider) to go digital

Project initiation 2 pronged Development approach

Management go for the project, 2 years time to set up infrastructure, machinery etc.

Two parallel development approaches, the old labour intensive one and the new digital one


Selection of a pilot scenario, code name E-DA

Key principles for reengineering: increased parallelization of design tasks elimination of some design tasks such as physical prototyping quicker completion of the remaining design iterations
Constraint: Very high requirements for coordination and cooperation.

"Achieving the first 80% is easy, but getting the rest virtual is tough Hand-specified revisions Designers like doing things "by hand Extreme time pressure may kill invention Toyota thinks at the moment on expanding the lead time to give NPD the chance to bring mature products on the market (see Microsoft) The digital models put huge pressure on very specific functions as through digital models they made become the bottle-neck for the whole system Fear of people to give away immature data Knowledge Management becomes a key factor "Design can not be rushed The latest 7 and 5 series were realised with little CAS -and were very successful

A product development process is all about building core competency of the product

How it Helps?

potential access to wide variety of

markets Increases perceived customer benefits It is hard for competitor to imitate


Production Ramp up

Concept Development

Testing and Refinement Design Detail

System Level Designing

Process Type
Complex System

System Decomposed in several subsystem and many components

Distinct Features
Systems and components are developed in parallel process System Integration and validation

Process begin with Steel and Alumunium Sheets

Press Plant:Giant Presses shape the cut to size sheet metal blanks

Body Shell:robots produce bodies from around 500 sections of sheet metal Pre-assembly Components from BMW production and from suppliers are put together into subassemblies.

Paint shop Four layers of paint protect vehicles from environmental influences and give them a permanent and brilliant gloss.

Light Alloy Foundry:Landmar k casting technology is used

Engine construction Craftsmanship, experience and state-of-the-art industrial systems are the basis for engine technology at the highest level.

Drive shaft Power Assemb ly Power Train

Assembly Experienced and well-trained associates complete the painted bodies for tailor-made vehicles.

Components Seats, cockpits and customer-specific components are individually manufactured and positioned absolutely precisely in the assembly sequence.

Suspension Part

Axle manufacturing Aluminium suspensions ensure outstanding driving properties, but also require great manufacturing skill.

Gear Box

Marriage The drive unit made up of engine, gearbox, axles and exhaust system is placed absolutely precisely on the body belonging to it and bolted on. This is partly automatic, partly manual.

Delivery Well prepared, the BMW and MINI vehicles make the often long journey by lorry, rail or sea to customers in over 160 countries all over the world.

Finish Numerous checks and tests must be carried out before the vehicles leave the lines in the usual premium quality condition.

Final assembly The vehicles are now standing on their own wheels. Final parts and fairings are assembled, fluids are topped up and the engine started for the first time..

BMW has a long product development process of 6072 months.

Risks involved

to competitors(Japanese are giving more variety in shorter span of time) Higher fixed costs because of its significantly smaller volumes per model Customers preference are changing at a fast rate, with the long product cycle it is difficult to meet the customers expectation Superior quality can not be the only differentiator as it restricts BMW to reach customers who are looking for variation

Slashing product development time by 50%

Risks Involved

high degree of cross functional integrity and interaction with members which would be a abrupt change for the employees of the company Reorganizing different groups(Change in behavior of staff) Reduction of prototyping process may hamper the quality of the product Pressuring staff for reduction of time by half may demotivate the workers.

Senior Management has to decide which project to be used for implementing the new product development The company has 2 alternatives - the derivative 3 series project and the flagship 7 Series project

In our opinion, the company should use the 3 series project for testing The idea is unproven and companys future initiatives cant be risked. There are many unanswered questions related to the concept

Using derivative of 3 series Touring station wagon as a pilot project involves little technical risks It could be used a learning laboratory.