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BMW Prototyping

BMW Prototyping It is 1990 and BMW (Bavarian Motor Works), along with other European Luxury car makers, is beginning to feel significant market pressure from the new Japanese entrents into the traditionally European market of Sport/Luxury cars. With new Marques like Lexus, Infinity, and Acura, the large Japanese auto makers are attacking the lucrative market of auto companies like Audi, Jaguar, Mercedes, and BMW. The new Japanese makes have been able to establish a market presence by offering a lower price for the same level of content and by raising the bar on metrics like build quality and customer complaints per vehicle. BMW must act to counter the threat that these new makes pose to their market share. Top officials of BMW are meeting to set the future of the company’s prototyping activities. The prototyping and product development process is one of many aspects that will need to change if the company is going to adapt to the new global Sport/Luxury car maket In the post-war era, the Sport/Luxury car market had been dominated by the European auto makers. Up till now these auto makers have only had to compete against each other. In this market BMW’s strategy was well defined and successful. They built automobiles that were always on the leading edge of technology and offered a level of design refinement that was matched by only a few. This formula allowed them to command a price premium and, as the demand from North America increased, BMW became very sucessfull. According to the Harvard case study, BMW production of automobiles increased from 150,000 cars in 1970 to over 500,000 cars in 1990. Technological content and level of refinement are the factors that drive the demand for BMW automobles in the marketplace. BMW’s reputation for posessing a high level of technology reaches the potential buyer through the automotive press. Articles on the technical innovation of BMW automobiles and glowing reviews of new BMW products are the best form of advertising the company could posess. BMWs are purchased by enthusiasts and these enthusiasts read the automotive press. The new Japanese makes have been able to usurp some of the space in these publications from BMW by introducing new features and technology updates on a more continuous basis. BMW buyers also make their choice based on the level of refinement in these automobiles. A BMW "just feels right". This refinement of BMW products has traditionally come from a long development process with many levels of prototyping and product re-design. The Japanese have been able to approach this level of refinement in a much shorter development cycle by making smaller changes to the product but on a more frequent basis. The Japanese have also introduced much higher levels of build quality into the Sport/Luxury car market. While initial build quality is not the main marketing strategy for BMW as it would be for a company like Toyota, it is still highly important to stay at a world class level. If the build quality of BMW vehicles begins to fall behind their competition, they risk losing a portion of the brand equity that took 50 years to build. It is recognized by many people in the BMW organization that many of initial quality problems thay take place at the start of a new product are a result of insuficient time building the new product by a large scale production process. In the Harvard business case Carl-Peter Forster states: "All our time in pilot production is spent identifying and solving the big problems. Do the parts fit? If not we redisign the tooling. Then, in theory, we are supposed to move on to the fine tuning: How does the surface look? Are the edges of the parts perfectly aligned? Unfortunately, by the time we solve the big problems, we don’t have much time left for fine tuning and a lot of minor problems have to be dealt with in production." The questions that the leaders of BMW are currently faced with are whether to use the old practice of hand building prototypes for the new 7-series project and what should be the direction for prototyping of future projects. One way to make prototype vehicles is to hand build them with highly skilled craftsmen. This process gives the most flexibility towards design changes since the investment is low and the parts are made with non-specific tools. The other method of making prototype vehicles involves making specific tools that are similar to production tooling. This gives the benafit of discovering some possible manufacturing problems in the prototype phase that might otherwise not have been discovered until pilot production. To compete sucesfully in the future market BMW’s prototyping activities will require improvement in 2 important aspects while maintaining one overriding priority. First BMW must reduce the amount of time that products spend in development. New features need to be implemented into the products on a move continous basis to keep the company at the forefront of the automotive press. This will involve the making of more frequent prototypes. Second, these prototypes must resemble production cars in both desgn and manufacture. This means using specific tooling for prototypes. The danger of this approach is that the investment associated with the tools for a prototype vehicle will make it difficult for a manager to authorize those last few minor design changes to get the product just right. This is a trap that BMW cannot afford to fall into. The overriding priority of BMW’s product development activities must be to maintain the level of refinement that buyers of this marque have come to expect. Bibliography:

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