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The Phenomenon of the Operations Management in BMW

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The Phenomenon of the Operations Management in BMW

Introduction

The case study chosen for analysis is BMW during the early production years of the Mini brand. This analysis is restricted to the period between 2001 and 2007 where over three quarter of a million of the latter vehicles came from the UK plant. The latter plant was actually responsible for a large quantity of exports to different parts of the world. At the start of this production, the company was facing a number of challenges with the biggest one being the amalgamation of some of its units.

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Relationship between corporate strategy and operations management in BMW

In the case study, the concerned organisation was at a point where it wanted to be a leader in the production of the Mini. In other words, part of its corporate strategy was to be in the business of Mini production. Part of this strategy also entailed a different approach because production was to be done in a new way. In other words, it was to employ resources in the UK through its Oxford facilities (BMW, 2007). Furthermore, the company aimed at producing vehicles for consumers as demanded and through efficient production approaches. The allocation of resources according to their strategy would therefore depend on the importance of an initiative. In this regard, the Mini brand would have to share its resources with other manufacturing units that specialised in separate products. In other words, this initiative was not going to be the only focus of business as other old ventures that had been proven were still in need of attention.

Operations management was going to be a critical part of this corporate strategy because through the former, the company would be in a position to control its costs of production. The lack of coordination between manufacturing plants at Oxford was one source of spiralling costs and this could be effectively reduced through amalgamation of parallel business units. Secondly, there was the question of quality. BMW wanted to produce top quality customised Minis. This would only imply that the operations function had to be adjusted accordingly in order to produce the right type of automobiles. Furthermore, speed of production would have a big impact on achievement of the objective because operations management was supposed to deliver automobiles according to customer demand. Therefore options such as just in time production would have to be revisited and incorporated with the corporate strategy for customisation of the product. Operations management was also going to be very critical in achievement of this corporate strategy because it would deal with the issue of flexibility. In other words, through operations, the firm would possess the ability of altering the time, volume and automobile parts produced by the manufacturing plants (Krajewski, 2005). These would be essential in making the organisation competitive. In conclusion, it can be said that operations management was going to be a critical aspect of corporate strategy at BMW, Oxford.

How five areas are organised within the operations of the company

Operations strategy

BMW employed a top down operations strategy. In other words, the various production units of the firm were aligned so as to deliver critical aspects of the company’s strategy. In this case, the company wanted prompt delivery of automobiles to consumers so the operations strategy was tailor made to suit that objective by achieving fast production. The company therefore decided to divide production into a systematic procedure composed of three steps. The first would be creation of the body followed by the paint job and lastly putting together the different car parts. These were previously done in separate business units but because of the need to deliver fast and efficient vehicles, then a coordination of all the processes would be done. There were three units that would be affected by these decisions and they had to work towards achieving the operational strategy because they all played a part in production of the Mini.

Process types and layout design

There were two major process layouts that were applicable in this situation so it can be said that the firm utilised a combination layout. The product layout was employed in those instances when the largest part of production had been completed. In other words, after one business unit had completed the body and the paint job then the assembly of various body parts would be done through the product layout. This is because the process of bringing together various parts of the automobile usually takes the shape of a regiment process. At this point of production, all the resources are realigned so as to meet the needs of the Mini. BMW decided to employ such a layout because they wanted to produce a large volume of automobiles as shown by the 850,000 vehicles made from the UK plant at the end of the case study period. Furthermore, the product layout would ensure that the firm would use its resources especially their equipment quite well. In the end, some costs savings were also made.

On the other hand, the firm did not just employ the product layout; it also used the process layout for the earlier portions of manufacture i.e. the paintjob as well as the creation of the body. These processes would be frequently revised so as to employ the best use of the resources (Metal parts, paint, etc). The firm opted to use this kind of layout because they realised that employees would be encouraged to be more creative and to produce the best output because they were not just restricted to one task. Furthermore, it would allow BMW to weed out unnecessary tasks so that lean production could be achieved (Weiss & Gershon, 1989). These two layout designs were therefore critical in ensuring the high results.

Facility design

In coming up with the three step process needed to create the Mini, it was critical to deal with the matter of facility design. BMW decided that they would make an arrangement that would achieve a number of things. First, they needed facilities that would achieve quite easy transitions between materials. The plant placed with the responsibility for assembly of the finished products was designed in a manner that would facilitate a straight line. They wanted to evade the disorder that would come from mixing up materials and equipment needed in this process. However, flow was not necessarily important in the earlier sections of production. Secondly, the company wanted to handle their materials simply, so in making the design, the containers and product areas were arranged in an orderly manner.

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In order to minimise space wastage, the facility design was such that it employed both vertical and horizontal space optimisations. This was especially relevant for storage of the raw materials needed for creation of the body and also for the completed product i.e. the actual Mini. Just enough space was left for passage of workers so that there would not be any danger of harming them in the production process. In fact safety concerns took a lot of precedence in this process because automobile facilities have strict guidelines given by authorities. The company also did not want to be in a position where it would have no place for delivery or reception of supplies so they left ample room for these in their facilities.

Capacity

In order to determine the actual capacity needed to produce the Mini, the company had to analyse a number of issues first. It needed to look at the actual production times for each automobile made, the amount of time needed to perform extra activities related to but not part of actual production such as paint preparation, machine set up and the like. Lastly, the firm needed to look at how effective their production plants would be. All these factors were added together and analysed so that they could plan on the capacity of the plant.

In order to make capacity work for the firm, a number of issues were considered at that time and they included job schedules of their said employees, sourcing of materials, consumer requirements and training needed as the firm implemented the new three step procedure for formation of the Mini.

One of the issues that greatly impeded capacity utilisation was the issue of time. BMW found that they had to work with customer deadlines and this employed the use of just in time management. This also assisted in lean production tremendously. (Stevenson, 2005)

Process design

This was a fundamental process of creation of the Mini for BMW because this automobile was not going to employ the same routine that other brands were going to follow. This company aimed at completing everything in the production process within seven days. The start of the creation process began with the frame which was done in one production facility. Thereafter, different aspects of the automobile would be taken through a painting process. Thereafter, engines would be created through the use of a just in sequence model and these would precede assemblage. The last process was done through the just in time process. It can therefore be argued that the company was rooting for three major goals when making their process design: a high production rate, high quality automobiles and a high output.

However, there were several issues that came in the way of achieving these objectives that the company effectively included in their design. First, they had to think about issues of wastage and the possible environmental effects of the process as the manufacturing industry has restrictions on these factors. In order to accommodate these concerns transport routes were planned for. Additionally, the organisation had to incorporate safety issues and some maintenance concerns. The process design was also prevented from achieving optimal performance because of the material concerns. The components of the automobile came from different parts of the UK; consequently, good coordination was needed between these units. These were the basic issues in the process design but there were still other aspects that had to come in place. For instance, the process had to accommodate any eventualities in case they cropped up in any of the three business units that were under consideration. Additionally, although certain parts were to be expected per day, it was crucial to accept the fact that sometimes supplies would vary and these would also affect outcomes (Stevenson, 2005)

It should be noted that this was not the first time for production of an automobile by BMW, however, because of the business goals and the intentions that the company had for the Mini, there had to be a dramatic change in the kind of approach being used in production. The manufacturing plants in the UK had to revisit their processes and evaluate them. This was done in order to ensure that performance was thoroughly increased. In fact, process design formed the backbone of this operations management case study because without it, the automobile production process in the latter organisation would not have improved and the company would still remain in the same position that it was from the start.

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How the organisation’s operations added value to the delivery of goods and services

There were a number of key areas that were substantially affected by the operations in this company. The first area includes the facilities; the resources and size of facilities was able to be revised so that the right quantity and quality of goods could be produced. The operations also contributed towards capacity (Greasley, 2005). They were able to affect the ability of BMW to meet consumer demand because staffing decisions and part arrangements were effectively done. Also, operations management facilitated reorganisation of the process. It was able to design a well coordinated three step process that worked well towards delivery of goods and services. Lastly, the case study’s operations functions assisted in planning for the network of supplies to be involved in the creation of the Mini brand. They thought about the resources, the time it would need to get those resources from all three units involved in their creation and the communication patterns needed in order to achieve this. It can therefore be said that the corporate strategy of the company would have been abstract without the operations management function. It was vital in practical decision making as well as efficient production of the goods and services.

Some areas of operation management that need improvement in the case study

First and foremost, information technology has played a crucial role in production processes. This case study did not incorporate a lot of computer assistance yet certain simulations can identify weaknesses in a process. It is likely that the firm had not embraced these benefits because in 2001, IT was not as important in business as it is currently. The latter approach would have been especially useful in process design.

This organisation did a good job of dealing with possible operations deterrents, however, when it comes to the issue of capacity management, the firm also has to tackle the problem of possessing several schedules. In some of the units, there may have been some confusion because of this very fact. Ample use of capacity has also been impeded because the company has not yet fully decided on which aspect of performance will be given sole priority. Workers need to have a particular target against which they can work towards.BMW has not yet decided on whether product customisation or production of a high number of cars is essential in achieving this in their operations strategy, capacity or even their process design. Many firms actually face immense losses due to sudden redundancies that emanate from their equipment or machinery. This organisation would therefore be on a better footing if they considered such a matter.

Lastly, the company has not considered employee motivation especially in those units that have embraced product layout i.e. the area where assemblage occurs. Most employees tend to be weary because of carrying out rhythmic functions in such areas and this may hamper their productivity. The company should think of incentives to make them more interested in their work and hence contribute better towards the overall outcome. An operations strategy should be in congruence with other business functions especially those that can harbour production such as human resource.

Conclusion

The latter company was successful in its operations management achievement because they thought about, and implemented most of the key areas of production. Their biggest strength actually lay in process design. However, the firm would be better off if it incorporated certain aspects such as better capacity planning and human resource concerns.

References

Weiss, H. & Gershon, M. (1989), Production and operations management. Boston; Allyn and Bacon.

Stevenson, W. (2005). Operations Management. Boston: Irwin.

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Greasley, A. (2005). Operations management. NY: Wiley and Sons.

Krajewski, L. (2005). Operations management. Upper saddle: Prentice hall.

BMW. (2007). Mini production and operations. Web.

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