BMW has an innovative reputation for producing high-class luxury vehicles. Much of the German car manufacturing giant’s continued success stems from its ever-evolving and improving supply chain.
In the years since BMW’s founding in 1916, its supply chain processes have gone from abject simplicity to what you’ll find today — an uber-efficient, complex and expertly optimized process continually providing quality vehicles to consumers worldwide.
How Does BMW Keep Doing It?
Despite admissions of a short-lived blip in its supply chain, BMW has returned strong again.
What drives the manufacturer’s quality standards year after year? Since the auto industry’s supply chain issues earlier in the decade, further refining BMW’s smooth and innovative supply chain processes has undoubtedly played a considerable role in its success.
It’s time to explore BMW’s supply chain in more detail.
1. Planning the Supply Chain
With BMW’s expert planning and forecasting techniques, production delays are practically nonexistent. Its just-in-time (JIT) production benchmark ensures precise material delivery and finely honed inventory management that improves flexibility while maintaining storage budgets.
BMW’s ability to foster long and successful partnerships with its suppliers is crucial to planning a seamless supply chain process, which involves forecasting material quality and costs and pinpointing delivery schedules.
2. Considering Key Supply Chain Elements
BMW considers these key components when planning the supply chain, connecting them in a way that guarantees customers receive products of the highest quality and craftsmanship.
Material Sourcing and Supply
Through a preplanned global supplier network, BMW’s experts source only the very best raw materials and components for the production of their vehicles. Each BMW supplier conforms to the company’s reliability, quality and sustainability standards.
Vehicle Manufacturing and Production
With strategically positioned manufacturing facilities worldwide, BMW assigns different models or components to plants specializing in their specific production. This approach substantially reduces waste and promotes manufacturing efficiency.
Company Logistics and Customer Distribution
BMW is logistically sound. A comprehensive network facilitates the prompt transportation and delivery of vehicle parts and finished products from one plant to another — and between distribution hubs and car dealerships.
3. Using Innovative Supply Chain Technology
BMW’s supply chain operates well due to the technologies it incorporates. The company factors in new, innovative technologies as they appear, meaning that BMW’s decisions are always data-driven and cutting-edge. With digitized methods to simplify supplier collaboration, the supply chain has minimal delays and disruptions.
Among other technologies, BMW incorporates the Internet of Things (IoT), artificial intelligence (AI) and blockchain in its supply chain processes.
The Internet of Things
The German car manufacturer began incorporating IoT during the last decade to assist with global warehousing capabilities. Introducing this technology increased the rate of daily car repairs as BMW immediately improved its logistics to track the location of newly received vehicles. IoT sensors fitted in BMW repair centers more than doubled repair processing. Now, the company uses the technology in its supply chain warehousing process.
Artificial Intelligence
According to projections, AI’s contribution to supply chain management and logistics will increase at an annual compound growth rate (CAGR) of 45.9% between 2023 and 2032. By this period’s end, it should reach $348.62 billion.
BMW’s AI innovations, Car2X and AIQX, contribute to this growth with the technologies providing built-in feedback from vehicles in production. After independently finding and reporting assembly faults, these AI tools enable BMW to rectify and manufacture its cars faster.
Blockchain
In 2019, BMW tested blockchain technology with specific suppliers to improve its supply chain purchasing transparency. The following year, it incorporated the technology to include many other suppliers, which allowed the company and its consumers to trace the ESG compliance of materials and parts.
4. Implementing Sustainability Initiatives
As concerns about environmental protection rose to prominence in the 1970s, BMW adapted its supply chain to include sustainability and eco-friendly initiatives — now firmly entrenched as core values in the company’s corporate philosophy. Its supply chain planning process includes renewable energy source exploration and the responsible, ethical sourcing and validation of raw materials and components.
Beyond its manufacturing processes and facilities, BMW partakes in social responsibility initiatives and community projects as part of its dedicated focus on sustainability and inspiring positive change within the automotive industry. By incorporating sound sustainability initiatives into its supply chain, BMW is leading the way for other global vehicle manufacturers.
Keeping Abreast of Change
As a major player in global automotive manufacturing and production, BMW offers a shining example of supply chain efficiency. By keeping a firm finger on the pulse of the industry, implementing state-of-the-art technologies, and tirelessly advancing environmental initiatives, BMW’s innovative processes ensure the manufacturer will keep doing what it’s done since 1916 — providing a blueprint for lasting success in supply chain management.