Every organization is focused on improving its performance. Managers adopt a variety of methodologies to achieve higher performance. Operations, logistics and chain management are crucial efforts that a company focuses on to obtain a competitive edge (Li, 2014, p. 45). Logistics is concerned with the management of the flow of goods or services between its point of origin and the place of consumption aimed at meeting the requirements of the corporation or the company (Li, 2014, p. 45). Logistics manages a variety of company resources including equipment, materials, information, time, particles and energy. Thus, logistic management is a "process of planning, implementing, and controlling the effective, efficient flow and storage of services, goods, and related information from point of origin to place of consumption" (Li, 2014, p. 45). Supply chain management is a systematic strategic coordination of business functions within an organization and across the business in the supply chain for the purposes of enhancing performance in the long-run (Li, 2014, p. 45). On the other hand, operations management is the coordination of business practices to achieve the highest level of efficiency in conversion of labour and materials into services or goods so that profit can be maximized (Li, 2014, p. 45). Effective and efficient operations, logistics and supply chain management ensures that a business undertakes its tasks in a smooth manner leading to realization of maximum profits as well as obtaining a competitive edge in the marketplace against the competitors.
BMW Automobile Company
BMW is an automobile company producing motorcycles as well as producing premium financial and mobility services. It was established in 1916 with its headquarters in Munich, Bavaria. It produces motor vehicles in Germany, United Kingdom, China, India, Brazil, South Africa and the United States. It was ranged 12th world largest producer of motor vehicles in 2015 having produced a total of 2, 279, 503 vehicles. The BMW company is advancing its production towards technology-based with sustainability being a main concern (Anon., 2019).
Arguably, successful story of BMW is attributed to efficient and effective management of quality and new product development and process. Quality management is the process of overseeing business operations to sustain a desired level of excellence. BMW has committed itself to setting standards for all other vehicle manufacturers. The company aspires to reach aesthetic levels of museum-quality sculpture with vehicles manufactured to exacting tolerances. In regard to new product development and process, BMW ensures that engineers, suppliers, designers, and technicians all put their input into the product development process (Anon., 2019). But what quality models and product development frameworks does BMW employ to ensure that it produces top-notch vehicles? The next section examines quality management and new product development process followed at BMW.
Quality Management Theories
Total Quality Management
A business must provide a reason as to why a customer should choose their product over that of the competitor. One of the reasons may be unique quality. To achieve unique quality, a business needs to have a theory that outlines the guiding principles. Total Quality Management (TQM) is one such program. TQM is a continuous process of detecting and minimizing or eliminating errors in manufacturing, improving customer experience, streamlining supply chain management, and ensuring that employees are well trained to maintain commitment to customer requirements (Vouzas and Katsogianni, 2018, p. 749). TQM maps out the organisational processes used to produce products calling for that particular organisation to define the processes, monitor them continuously, measure their performance, and use performance data to drive improvements (Vouzas and Katsogianni, 2018, p. 749). TQM also aims to increase efficiency and eliminate waste.
TQM is a quality guideline that helps a business continuously improve quality of products through participation of all levels of the organization with key focus being delivering quality product to win customer loyalty (Vouzas and Katsogianni, 2018, p. 752). Implementing TQM is a stepwise process involving understanding of quality, commitment to quality, establishment of quality policy, organizing for quality, measuring cost of quality, designing quality, planning for quality, control of quality, encouraging teamwork, and training employees for quality delivery of products or services to customers (Vouzas and Katsogianni, 2018, p. 752). Nonetheless, TQM focuses much on product standardization to deliver constant quality which discourages creativity among the employees and may lead to lowered innovativeness in a company in the long run (Wei et al., 2017, p. 3).
BMW maintains the co-location point which is the Engineering Centre located in Munich where engineers, suppliers, designers, researchers and technicians are brought together to deliberate on how to develop top quality vehicles (Automotive Intelligence, 2019). Furthermore, TQM is applied in the manufacturing processes that are standardized throughout the production sites in which the company operates. Whereas BMW applies TQM with focus to increasing efficiency and minimizing waste to maximize profits and deliver top quality for the customer, a hospital focuses on TQM to maximize service delivery for higher patient satisfaction as well as improving healthcare performance.
Six Sigma Quality Model
Six Sigma is a data-drive, disciplined model aimed at eliminating defects while driving towards six standard deviations between the mean and the nearest specification limit in any of the organizational operational processes (Pande and Holpp, 2001, p. 12). It is statistically presented as a quantitative description of how a process is performing. It is presumed that for a business to attain Six Sigma, it must not produce more than 3.4 defects per million opportunities (Pande and Holpp, 2001, p. 12). A Six Sigma opportunity is described as the total quantity of chances for a defect. Fundamentally, Six Sigma helps an organization to implement a measurement-based strategy that helps in process improvement and reduction in variation. Six Sigma identifies any hurdle that prevents a process from producing a product that satisfies the customer as a defect which should be removed. Six Sigma is implemented through phases. The first phase is analyzing the data on operations. The data collected is used to improve the current processes. A control phase follows where defects are prevented from reoccurring. However, strict implementation of Six Sigma may encourage bureaucracy in an organization and stifle creativity.
BMW applies the Six Sigma model to lean its operations especially by incorporating technology to make vehicles in a superb speed and a high quality. The company is employing robots which have proven to be defect free as compared to humans and are faster. This kind of application of Six Sigma to lean production processes can be unique to automobile industry because the manufacturing can easily be robotized. In healthcare, for instance, there are many operations related to the patients that Six Sigma can be applied to lean process of service delivery because they deal with human beings and not just machines as in car manufacturing or assembly.
New Product Development and Process
New Product Development (NPD)
New product development (NPD) is a linear model followed by businesses in development of new products. It is a carefully designed business process which is comprehensive in understanding the reasons why a new product will succeed or fail. NPD process starts with idea generation, proceeds to idea screening, concept development and testing, marketing strategy development to provide a framework of where and whom to sell the product to, product development and testing marketing, and commercialization of the product (Petersen, Handfield and Ragatz, 2005, p. 371). Idea generation and screening entails a systematic search for ideas that later give birth to a new product. Ideas come from research and development, competitors, suppliers, and customers. BMW has a co-location Engineering Centres (FIZ) known as satellites strategically placed around the world to allow quick idea generation. These centres bring together engineers, designers, technicians and suppliers to interact and share new ideas on possible products that meet market demands. The FIZ are placed in high tech regions where geniuses can easily be accessed to share new product ideas.
Concept development and testing provides an opportunity for an organisation's marketing team to determine the most attractive concept to customers. It allows the organisation to test the concept of the new product with selected customers before further development of the product. Testing allows the company to receive feedback on the quality and operation of the product which then creates room for improvement. On marketing strategy development, NPD framework provides for the marketers to research internal and external marketing environments of an organisation before designing a marketing strategy for a new product. This allows the organisation to segment the market to attract customers who are likely to identify with the new product. Then the product is developed incorporating feedback from testing stage and the concepts lead to new product lines, additions to existing lines, improvements and revisions to existing products or repositioned products (Petersen, Handfield and Ragatz, 2005, p. 371. It is them produced in commercial scale.
Although NPD process is considered stage-gate and widely applied by BMW in development of new products, the model is not always sufficient. NPD may not be of vital use when the business intends to develop an exceptionally innovative product that involves challenging inventive issues and challenges (Mann, 2001, p. 123).
Theory of Inventive Problem Solving (TRIZ)
TRIZ is a problem solving method pinned on logic and data as opposed to intuition, and accelerates ability of a project team to solve problems creatively (Mann, 2001, p. 123). It follows an algorithmic approach which ensures that predictable, reliable and repeatable results ate achieved. TRIZ is an international creativity science that solves problems based on solutions arrived at through analysis and study of patterns not simply coining solutions based on intuition.
A company adopts TRIZ when approaching difficult inventive problems in automobile world that requires more than intuition-based creativity. Analytics are used to process data collected from the market to provide solutions to customer needs that are complex. Nonetheless, TRIZ may be challenging because it needs an advanced level of analytics to apply which may restrict invention or development of new products to a few geniuses in the company. This may delay product development. When TRIZ is used together alongside the NPD, a company can achieve high performance in product development because they complement each other in the sense that they aid decision making.
Triple Bottom Line
Currently, sustainability is having and will continue to have a huge material impact on organisational operations and strategies (Rake and Grayson, 2009. p. 395)This is because there is a general consensus that sustainability-related strategies are crucial to be competitive in the today's business and in the future. Sustainability is supported by three pillars which are economic, environmental and social. Economic sustainability encompasses the ability of a business to make profit consistently but not at any cost. For example, a company that makes profit by evading taxes is not con...
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