BMW: The 7-Series Project (A) Harvard Case Solution & Analysis


The BMW Company is famous as one of the most luxurious sellers of cars and a major player in the market with a retail price of more than $20,000 along with having a 10 % share in the market. All the companies including BMW are fighting for tangible and intangible features of the product in this market segment. The company has successfully built its image as high performance and quality engineering in its products. The main focus of BMW has always been on launching products that are higher in terms of quality than its competitors. In the case, the management of the company needs to make a decision about the ways to make prototype vehicles that was previously manufactured by skilled and trained artisans. Further, the management has made a proposal to change the process of making a prototype so that potential issues and bottlenecks can be identified and solved. The purpose of this new approach was to decrease the quality related concerns, but it might result is lesser flexibility to make changes during the development.

Causes and cost of the problems related to quality:

One of the most major reasons of increasing quality issues in the production and manufacturing of BMW cars was the use of various materials and tools in the prototyping process in comparison to the production models. The main purpose of providing this dual process of development is to offer ease and flexibility to its artisans so that changes in the design can be done quickly. However, giving such level of flexibility has its negative consequences as well. There is a high probability that the thing that works best in the prototyping phase may fail at the actual production phase. This ended up late identification of issues related to manufacturing and prototyping. Workers often spent lots of time in finding and solving major issues and thus ignored minor complications that affect the overall production process.

Another reason behind the quality problem faced by the company was its mixed model ramp-up strategy. The company has adopted a mixed model ramp up strategy just to manage its high fixed cost. Because of this, BMW was able to utilize its assets in a better way, but also resulted in increasing complexity in the logistics and confusion among the workers. The issue mix with another issue that was the fact that all potential problems cannot be discovered at the initial phases. As of result of this, the quality of cars has been affected to a large extent.

In addition to the ramp up strategy, the company used clay models along with part designer’s drawings rather than pre-production tools in the first prototyping stage for all parts. Because of this, it decreases the opportunity to discover and fix quality problems. In addition, it also requires more skilled craftsmen to take care of the hand-built prototype.

Improving launch quality:

The company can take various measures to improve the launch quality of the BMW products. One way is to decrease and eliminate the gap between the production process and prototype in terms materials and tools that are used. If the prototype is similar or near to the actual production of the product, the issues and problems related to quality can be identified on an early basis. For this, the company needs to engage their suppliers along with utilizing those that are used in pre-production in the prototype stage. However, by doing this, a new set of pre-production tools will be required if there are changes in the designs needed.

The cost of pre-production tools will increase as each set is estimated to cost around DM 50 million. In addition, whole new pre-production tools would be required at every step in the prototyping. The lead time to procure the pre-production tools, will also be increased. Along with this, the company needs to make sure that the performance of manufacturing should be greater or at least equal to the customer’s expectations in terms of durability, reliability, scrap level and defects per unit.

Recommendations for developing new models:

One of the newest models in the case to launch is 7-series Sedan, and it had more than thirty-two months until the schedule starts. In the upcoming months, the company needs to build and test the prototypes so that the company can make a revision round in the end. The project of 7-series is extremely important to for the company as the new model will become the flagship product for BMW. In addition to this, the brand image along with the market share of the company is highly dependent and thus affected by the failure or success of the 7-series in the luxury car market.

As of now, the director Carl peter has two alternatives to consider. One alternative available is to carry on with the current process used in the prototyping that is based on in-house prototype shop with having......................

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BMW explores the decision of how to produce prototype vehicles. Historically, BMW prototypes were handmade by highly qualified craftsmen in the company store. A proposal was made to change the process so that the prototypes are made in a way that is better able to identify potential problems that may arise in the course of the final product. While the new approach is expected to launch production of a new model of fluid and reduce quality problems, there is some concern in the company, which could reduce the flexibility to change (and improve) the structure during the development cycle. Explores different ways of competing on quality of products in the segment of luxury, and as the product development process affects each of them. The second objective is to explore the concept of prototyping strategy and role playing prototype linked strategy and manufacturing strategy. "Hide
by Gary P. Pisano Source: Harvard Business School 20 pages. Published: 18 February, 1992. Prod. #: 692083-PDF-ENG

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