Operation Management of BMW

OPERATION MANAGEMENT OF BMW

Overview of BMW:

The primary aim of the assignment is to discuss the challenges as well as opportunities faced by BMW in the current business environment. Bayerische Motoren Werke, better known as BMW is considered a giant in the global automobile industry. BMW was officially inaugurated in 1916, making it one of the oldest automobile companies in the world. The company has earned a tremendous brand value and is known to operate in vast geographic locations. In the year 2019, approximately 250,000 of its units were sold allowing it to earn around £ 104 billion. From its annual financial reports, the net incomes of the company are stated to be approximately £ 228 billion. The company is known to hire a massive workforce of more than 130,000 that is spread all over the world. One of the biggest USP of BMW that has allowed it to earn this unbelievable revenue is its ability to diversify its vehicles. Although BMW is known to manufacture mostly luxury vehicles, it is also known to produce some of the best Formula 1 sporting vehicles. In recent years the company is also experimenting with electronic automated vehicles such as iNEXT and iX3 to reduce the issue of global warming; thus significantly contributing to the future of mankind.

Challenges faced by BMW:

Currently, there are three main challenges faced by the higher management of BMW. The three major challenges have been listed below:

Technical transition: Although BMW has launched iNEXT and iX3 as its premium electronic vehicles, aiming to reduce emissions, however, there is a massive technical issue in these vehicles. For now, the vehicles have to be recharged after covering only 800 to 1000 km. This is a major flaw in these vehicles. For now, the higher authorities of the company lack technical knowledge in improving these vehicles. As per the reports published from the HOD of the R&D department, it would take at least 3 more years before mitigating these issues (Danielis et al. 2020).
Price hikes in developing new types engines: The global automobile engines are witnessing a fast transition from BS4 to BS6 engines. However, as per the accouchements made by the representatives of the company, this transition is proving to be quite expensive to manufacture. It is important to understand that the engines of every BMW vehicles are highly refined even in the cases of B4. Hence, making new transitions would increase the development costs for the company (Bohnsack et al. 2020).
Appropriate levels of inventory: This challenge is known to maintain its consistency for a long time for BMW. The primary cause of this problem lies in the supply chain management of the company that makes often delay in supplying the raw materials required by the company.

Major windows of opportunity for BMW:

 For BMW, the following points are its biggest opportunities:

• Diversification: BMW is perhaps the most diverse automobile company today. BMW not only produces some of the finest luxury vehicles in the world but is also known to produce some of the fastest motorbikes as well. This diversification allows the company to expand its revenue margin and maintain a stable profit margin even during global economic turmoil. Moreover, it is known to manufacture some of the best Formula 1 cars today. Its recent entry in the race of electronic vehicles further proves this statement. The company today is only rivaled in this aspect with Tesla Motors (Kapustin 2020).
• Innovation and alliances: BMW has made a pan-global presence. The factor that has provided this ability to the company due to its strategic alliances. Furthermore, it has recently brought some major automobile companies that have further allowed the company penetrates deeper into the market. The higher management of the company invests a significant portion of its revenue in the R&D department. This allows the company to maintain superior quality in its vehicles. The vehicles manufactured by BMW are also known as one of the safest vehicles to drive.
• Adopting a lean production feature: A major advantage of BMW is its adoption of a lean production model. This has allowed the company to further expand its ability to serve its customers and also control the production and operation expenses.

System operation management:

The term system operation management in simpler terms can be defined as the process of converting or transforming the resources into final goods in a process in a way that is most convenient for the company.  For a company as large as BMW the importance of adopting the system management process is very high. This is due to the fact; it allows the company in implementing its strategic objectives, process as well as maintains a firm control on its branches that are located in different countries. As per Walta et al (2020) it is important to understand the fact that BMW hires a very diverse workforce. Hence, it is critically important for the higher management of the company to make sure that it is adopting a very functional system operation management allowing it to maximize the productive levels of its employees. System operation management can also drastically reduce the capital invested in the logistics by making all the required changes in the supply chain maintained by the company. It is extremely useful for BMW to differentiate between its long and short-term goals preventing the company to be overwhelmed with the sheer number of activities that are involved in either of the two.

Evaluating the system operation management of BMW:

Analyzing the system operation management of BMW will be done in five following manners:

Resource management:

The process of managing the resources in a profound manner is defined as resource management. It is important to understand the fact that, resources do not always have to be the raw materials, infrastructures of a company; the workforces can be also regarded as resources. It is needless to state that, an organization such as BMW has built its reputation on the basis of implementing effective resource management. Resource management is undertaken at operational levels. Resource management is often considered as the foundation of a successful system operation management. At present date, IT and human resources are considered to be the most valuable resource for BMW. It is based on these resources that allow the company to prevent declining of the quality of daily operation undertaken at the workplace of the company and also maintain high degrees of quality in customer service. The process of maintaining resource management is performed by operational managers. It is their duty to come up with the best schedules to transfer the required amount of resources at its right place by maintaining strict deadlines. If the timing of resource allocation is mismatched, it would create an adverse situation for BMW (Viles et al. 2020).

Risk Management:

Every business regardless of its background industry comes with some inherited risks and challenges. For a global enterprise such as BMW, the possibility of occurrence of any risk is very high. Hence, it is one of the core duties of the higher management of the company to make sure that they are well-prepared for such situations. One of the basic strategies minimize the effects of risks is to adopt very flexible risk management. As per Potti (2020) the term flexible is used here due to the fact; it allows the strategies involved in the process of minimizing the risks to be bent if the strategy fails to deliver the expected outcomes. For BMW, risks are not always an external force but can occur in the facilities of its workplaces as well.  An effective system operation management involves the use of risk management in three levels; first at the strategic level, second at the tactical level and third is the operational level. The risks that occur in the strategic levels involve situations such as assessing the right timing and placing of resources or products. Risks in tactical levels include risks while deciding the place to set up a new production or manufacturing plant, making suitable budget plans, etc. At the operational level, the risks are associated with product design, issues in the workforce, etc (Kumar et al. 2020).

Facilities and operation management:

BMW requires facility and operation to run the facilities both in its native place or located in a different nation to run smoothly. A well functional facility and operation management involve the tools, employees, and the services of BMW. For BMW, facility and operation management is mostly involved in its production and manufacturing unit. Today, BMW is known to use some of the most sophisticated tools in its manufacturing units not only to improve its accuracy to develop world-class vehicles but also to avoid any unwanted hazards to its workforces.  Facility and operation management is also applied to the human resources of the company. At present date, one of the biggest threats faced by the global business community is cyber attacks. Hence, adopting a well-structured facility and operation management gives huge importance to adopt and maintain top-notch IT systems that minimize this threat to a good extent. It is important to understand that the higher authorities of BMW implement the facility and operation management at the tactical level. This is primarily done with the aim of maintaining high standards of technology and the safety of the workforce (Guzik et al. 2020).

Quality and innovation management:

BMW is rivaled by other giants in the automobile industry such as Audi, Mercedes, etc. One of the best tools for BMW to maintain a high degree of competitive edge is to monitor the quality of its products and make sure that it is highly innovative. This activity is implemented by the owners of BMW is by adopting quality and innovation management. It is important to understand the fact that, innovation is not only for making high-end products but also to improve the operations undertaken by the company and to solve complex business problems. Several experts have stated that quality and innovation management has become the very core of BMW. It also allows the company in making sure that it is not compromising the quality of its products in the rush of capturing the market. As per recent reports, the owners of the company are known to the EFQM model that allows facilitating the process of the continuous improvement process (Calabrese 2020).

Supply chain management:

The term supply chain management is defined as the process of managing the distribution of goods and services that involves activities such as processing of the raw materials into finished products. Adoption of the supply chain for a large enterprise such as BMW is a matter of its existence in the global markets. Effective use of supply chain management has been known to impact the production as well as the purchasing cost for BMW.  By including sophisticated technologies in its supply chain, the company can lower its logistic timing and the cost involved with this operation. Moreover, the higher authorities of BMW can expect that it is maintaining better synchronicity with the branches that are located at different geographic locations. Furthermore, BMW can expect to witness vast control over its operational qualities. The supply chain management is also implemented also at the tactical levels of BMW (Seyoum 2020).

Summary:

The assignment was aimed to discuss the major challenges faced by BMW and spot out the opportunities as well. It can be stated that for now, the company is facing a huge struggle in competing with Tesla Motors in the race of manufacturing better electronic vehicles. The problem in this context does not lie in the resources, but in expertise. The company is although known for producing a diverse range of vehicles, this segment is new for the company. However, the company can rely on its effective and innovative R&D department that hopes to sort out this issue in the near future. The biggest opportunity for BMW is its global alliances and quality workforce. Moreover, the brand image of the company seems to be working well with its experimentation with electronic vehicles; even though its quality is not at par when compared with Tesla Motors. The assignment also analyzes the system operation management of the company. BMW needs to make a significant improvement in two sub-section of its system operation management; supply chain and facilities and operation management. However, the decision of implementing the EFQM model in quality and innovation management has proven to be an effective decision for the company.

Reference List

Bohnsack, R., Kolk, A., Pinkse, J. and Bidmon, C.M., 2020. Driving the electric bandwagon: The dynamics of incumbents' sustainable innovation. Business Strategy and the Environment, 29(2), pp.727-743.

Calabrese, G.G., 2020. The Italian Automotive Industry: Between Old and New Development Factors. In New Frontiers of the Automobile Industry (pp. 163-201). Palgrave Macmillan, Cham.

Danielis, R., Rotaris, L., Giansoldati, M. and Scorrano, M., 2020. Drivers’ preferences for electric cars in Italy. Evidence from a country with limited but growing electric car uptake. Transportation Research Part A: Policy and Practice, 137, pp.79-94.

Guzik, R., Domański, B. and Gwosdz, K., 2020. Automotive Industry Dynamics in Central Europe. In New Frontiers of the Automobile Industry (pp. 377-397). Palgrave Macmillan, Cham.

Kapustin, N.O. and Grushevenko, D.A., 2020. Long-term electric vehicles outlook and their potential impact on electric grid. Energy Policy, 137, p.111103.

Kumar, N., Mathiyazhagan, K. and Mathivathanan, D., 2020. Modelling the interrelationship between factors for adoption of sustainable lean manufacturing: a business case from the Indian automobile industry. International Journal of Sustainable Engineering, pp.1-15.

Potti, R. and Saurav, S., 2020. Logistics for global automobile manufacturing industry. In Supply Chain and Logistics Management: Concepts, Methodologies, Tools, and Applications (pp. 1299-1310). IGI Global.

Seyoum, B., 2020. Product modularity and performance in the global auto industry in China: the mediating roles of supply chain integration and firm relative positional advantage. Asia Pacific Business Review, pp.1-26.

Viles, E., Bultó, R., Mateo, R. and Jurburg, D., 2020. Production ramp-up in European automotive production systems: a performance analysis. Production Planning & Control, pp.1-18.

Walta, L., Van Driel, C.J.G., Krikke, R.H. and van Arem, B., 2020. Examination of the viability of co-operative road-vehicle systems using qualitative data analysis. European journal of transport and infrastructure research, 5(4).