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BMW: THE DIGITALCAR PROJECT

Group 4

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History of BMW

Bayerische Motoren Werke AG (BMW)(English: Bavarian Motor Works) is a Germanautomobile, motorcycle and engine manufacturingcompany founded in 1916.

It also owns and produces the Mini marque, and isthe parent company of Rolls-Royce Motor Cars.

BMW produces motorcycles under BMWMotorrad and Husqvarna brands.

In 2010, the BMW group produced 1,481,253automobiles and 112,271 motorcycles across allits brands.

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BMW Journey

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What were the competitive challenges in theAutomotive industry when the case was written?

From the Consumer point of view: By the Mid-1990s the Automobile market had become Consumerdriven.

Fickle consumer tastes: The predictability made thecompetitive environment harder to predict.

Competitors: The competition was strong among US,Japanese , Korean and German Car makers.

Competition was strongest between MercedesBenz and BMW.

Product development cycle had become animportant factor to leverage competition.

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How is BMW affected?

Running in profits but had slower productdevelopment cycles.

It was decided to reduce the Product

development cycle time by 50% and theproject was named as Digital Car Project .

Hard negotiations with the designers,

engineers, and Middle-level managers. Risk of the New method failing.

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Question 2

How would you evaluate the productdevelopment process at BMW?

Why does the senior management want to

reengineer the product development process?

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The product developmentprocess Typically a 5 year cycle- involving development of

package and the skin.

Emphasis on intricate designing.

Designers handpicked from art schools and otherindustrial design schools.

Modelers were those who had prior experience inthe field and had mastered the art.

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Design process

The first part included creation of handsketched designs from pencil, charcoal orwater colors.

1922 model by Paul Jaray

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Clay Models

After the paper designs the company createdclay models of the size of 1:2.5 for betterunderstanding the design.

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Clay Models

A final choice of design was made afterdiscussing on the basis of feedback received.A few life size clay models were made to

choose from.

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Digitization of models

Digital sensors were used to digitize data onthe models to be used for computer aideddesign process.

The digitization would help in speeding uprefinements in the design process itself.

BMW relied heavily on handcraftsmanship.They considered it as a reason for theirsuperior designs ultimately leading to successover competitors.

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Evolution of product developmentprocess

The number of prototyping cycles was reducedto 2.

The help of computer based processesensured that parallel processing of informationcould be done.

Identification of potential problems could bedone much earlier in the developmentschedule.

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Evaluating the product developmentprocess

Superior handcraftsmanship demanded extratime which could prove to be hazardous.

Market demand was changing and peoplewanted new models at a faster rate thanbefore.

Japanese and US competitors were workinghard to reduce lead time in order to better suitthe customer needs.

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Evaluating the product developmentprocess

BMW had typically high fixed costs.

The number of units produced of the samemodel were less and they relied on cashingtheir models for a longer period of time.

Extending current process could meanreduction in sales and an inability in recoveringhigh costs.

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Reengineer the product developmentprocess

Reengineering aimed at reducing the productdevelopment time by 50%.

They aimed at streamlining their existing

engineering processes.

Computer aided simulations to be implementedright up to the brainstorming stage.

The actual number of prototypes generated werehigher.

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Question 3

What are the risks if BMW changes its product

development process quickly? What are therisks of changing too slowly?

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Risk: BMW changes its productdevelopment process quickly

Holding back data

One generation of prototypes might besufficient to identify all potential design

problems Employee dissatisfaction

Barrier to Creativity

Time Management

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Risk: BMW changes its productdevelopment process slowly

Delay in time to market

Giving competitive advantage to others

Losing market share to competitors

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Q4: How to implement New DevelopmentProcess

Derivative 3 series project or flagship 7 seriesproject? BMW should go follow more conservative approach

and use derivative 3 series project for implementingNDP BMW management is not familiar with the new process

and structure of the organization may not be prepared tosupport the new process

Changing rapidly can result in compromise in quality forspeed of production, quality product is BMWs USP

Change is not absolutely critical as revenues aregrowing

After gaining experience and learning frommistakes the should im lement the rocess