During the crisis, automakers and their suppliers accelerated their adoption of digital tools to support strategies aimed at improving supply chain visibility. At this week’s Automotive Logistics and Supply Chain Digitalization Strategy Conference in Munich, Germany, Michael Ströbel, head of process management and digitalization at BMW Group, outlined several areas where the company is improving inbound supply chain visibility and increasing manufacturing flexibility. . At the same time, it is changing the way it sells finished vehicles to end customers.
Oxford Pioneer
BMW embarks on a global manufacturing and logistics transformation at its Mini plant in Oxford, UK. Built around a core warehouse system based on SAP software, the automaker has migrated core functions from legacy systems to cloud services, starting with functions such as line-side sorting and picking to the cloud to ensure a smooth transition.
“We shut down all the functionality in the legacy system and moved it to cloud services, but we already had the shell of a cloud service,” Ströbel explains. “It took us several weeks to move the core data to a cloud-based system.”
BMW’s approach at the Oxford plant also fundamentally shifted from the traditional pillar approach typical of SAP implementations, where logistics follows silos such as finance and HR, to a horizontal structure built from the ground up. This means that customs, finance, and logistics are all integrated to enable end-to-end transactions. According to Strobel, this is a big change for BMW.
The automaker has also moved to extended warehouse management (EWM) with SAP, which he says has improved visibility. SAP EWM enables BMW to manage high-volume warehouse operations and integrate complex supply chain logistics with warehousing and distribution processes.
“We are now able to track our processing units through all stages of the manufacturing process, including assembly,” says Ströbel. “We used to have a huge assembly inventory, [but now] we can track every container and pallet all the way back to the car the part ends up in…[. The cloud is] a more technical aspect, but we are also leveraging our existing service-oriented integration platform.”
Operational deployment
Since the successful implementation at the Oxford Mini plant, BMW is accelerating the move from factory to factory to its common cloud architecture.
“When everything comes together, [we] will have more factories using one solution, and we will also be able to see, for example, one supplier delivering parts to multiple factories,” Ströbel said. “It sounds like a setup that everyone has and it’s easy to manage, but it’s not always easy to understand when each plant has different legacy systems.”
From a purchasing and materials control perspective, BMW is gaining better visibility across the plant to show inventory levels, which is the next important step in building more innovation on a common architecture and services.
One of the benefits is the digitization of goods receipts, where delivery notes must be matched to the original purchase order and request.
“We’re seeing some real benefits, and we’re rolling this out plant by plant, and we can do pattern matching,” Ströbel said.
Delivering a manufacturable product
To deliver finished cars to customers, BMW is moving to a direct sales model in Europe.
“We will sell directly to customers online, starting with the Mini,” he said. “That means we need upstream capabilities to get the cars to the sites, to funnel them into the European market, and then to decide where they go.”
As the semiconductor shortage illustrates, automakers are prioritizing critical production and still distributing vehicles with missing parts and retrofitting them where they are stored. BMW is adapting what it learned then to mitigate future parts shortages and address issues before vehicles are ultimately delivered to customers.
BMW is now promoting flexible production and parts assembly inside and outside the factory based on availability upstream in the supply chain and delivery priorities downstream. This includes allowing end customers to select vehicle options as much as a week before the vehicle is actually built.
Strobel said BMW’s strategy is to “build cars with holes in them,” which depends on the flexibility of the production system.
“We’ve turned a corner, and it’s allowed us to change the way we build cars based on the parts that are available,” he said. “It’s a change in mindset and a fundamental change in how we look at production.”
