Supply Chain

Q2. What are your recommendations to Carl Peter Forster concerning the 7- Series prototypes? What should he do regarding future development project?

Carl-Peter Forster, director of Prototype and Pilot Manufacturing at BMW is proposing a new process for building the cockpits of the 7-Series prototype vehicles. With the new strategy, the cockpit prototypes will be made by outside suppliers that used more automated methods, more specialized tooling, and less skilled workers. Also, one supplier will be selected to construct major subassemblies of the cockpit and ship them to the BMW assembly line where BMW's pilot assembly plant workers will perform the necessary assembly operations rather than prototype specialists. The new approach brings higher tooling costs, longer lead times, and the potential for encountering additional risks, but management believes that it will drastically reduce the problems associated with bringing a new model into production and have a significant influence on product quality. Switching to this new process is a major change for BMW; the individually, hand-crafted process is how the company built itself and earned its highly acclaimed reputation. The design to change the process will significantly affect BMW's image and competition.

Carl-Peter Forster had two options to evaluate concerning the 7-series prototypes:

1) Continue with the existing prototype process wherein prototypes were developed in an in-house prototype shop and involved skilled craftsmen.

2) Use pre-production tools in the prototype process in order to automate the process. The assembling of the components would be done on a pilot assembly line.

The current production process was a poor reflection of estimated production rate and product quality. Another consequence of utilizing highly skilled workers affected testing in a negative manner and was possibly a reason for the increased number of defects; thus, customer complaints were at level that was higher than...