The focus of this paper is on the value stream mapping for BMW Company.
Value stream mapping for BMW
Key metrics of the process blocks
Some of the key metrics that have been documented in the value stream mapping for the BMW Company include Change Over Time, Work in Progress and Process Time and Lead Time.
Calculation of current state summary metric
Total lead time
The total lead time for BMW’s production process is 31 days.
Total lead time=15*100=1500 minutes
Total process time
The total processing time for the BMW Company is 85 minutes
Activity Ratio 2018
AR=Costs of goods sold/Average inventory
Costs of goods sold=$73.6 billion
The activity ratio for BMW for the year ending 2018 was 5.715 and this was far much higher than the industrial average of 2. The activity ratio for BMW shows that it has improved its inventory management and this has in return had a positive impact on its production capabilities.
Rolled Percent Complete and Accurate
The Rolled Percent Complete and Accurate for the company is 34.35%. BMW need to implement strategies that can offer it opportunities for an enhancement in its production.
The current state of the value stream as well as its challenges
BMW Company has integrated new technologies in its production process and this has been critical for the enhancement in its production capability. The lean production system for the company allows for the manufacturing of high-quality vehicles within the shortest time possible. With the aggressive competition in the automobile sector, individual firms such as BMW are keen on ensuring that they gain a competitive edge over their rivals such as Toyota in the market. In the recent past, the company has increased outsourcing and this is aimed at ensuring that it meets the needs for its diverse customer base around the world. The company hires skilled and qualified workers that are tasked with the role of ensuring that the entire value stream meets organizational goals and objectives. Inventory management and operational efficiencies have been bolstered by the firm’s integration of new technologies.
BMW’s supply chain is faced with various deficiencies that have a negative impact on its production. In the past five years, BMW has gone through rough patches in terms of the relationship with some of its suppliers. The firm, in May 2017, failed to produce thousands of luxury vehicles due to shortage of steering systems from Bosch. The company has been on crossroads with The Bosch, one of the companies that it has outsourced. The outsourced firm is faced with financial problems that make it hard for it to meet some of BMW’s demands. Consequently, this has had a negative impact on the production process for BMW. In the quest for dealing with some of the challenges that have been brought by its standstill with Bosch, BMW needs to identify a new supplier that will supply the required raw materials in a timely manner. The disruptions in the firm’s production, have since had a negative impact on its sales.
Another challenge that BMW has to deal with are the delays in the manufacturing that majorly arises due to lack of timely purchase of inventory. In some occasions, consumers that order some of the latest BMW series are forced to wait for longer periods before the vehicles are delivered to them. Some of the consumers have in the recent past raised complaints to the company on the delays in the delivery of the pre-ordered vehicles. According to BMW, the delays arise from the disruptions on its supply chain (Heizer, Render and Munson 67). The company procures raw materials from various suppliers across Europe and Asia. Reported cases of lateness in the acquisition of inventory negatively impact the ability for BMW to manufacture and have the pre-ordered BMW series vehicles delivered to the customers on time.
Longer lead times is an operational issue that is evident in the current value stream for BMW Company. The longer lead times are caused by the issue of lack of adequate raw materials and incompatibility of some of the technologies implemented in the firm with operational systems, an issue that the company is yet to address (Heizer, Render and Munson 85). Consequently, this has since had a negative impact on its market share in the automobile sector.
BMW operates in the automobile sector and has specialized in the production of luxury vehicles. The supply chain is an instrumental aspect of the company. The value stream mapping analyzed in this paper provides a clear picture of the production process for BMW. The firm’s investment in new technologies has contributed to an enhancement in operational efficiencies and product quality. Nevertheless, BMW’s value stream faces various deficiencies including disruptions that are caused by failures by the suppliers to deliver raw materials on a timely manner, delays in the delivery of pre-ordered vehicles and longer lead times.
Heizer, Jay, Barry Render, and Chuck Munson. Operations Management. Pearson Australia Pty Ltd, 2018. Print.