Doug BartowVice President PaintBMW Manufacturing Corp. LLC

Vice President PaintBMW Manufacturing Corp. LLC

BMW MC17 May 2007Page 2

Supply Chain Management in a Build To Order Environment The Vehicle Process at BMW

Doug BartowVice President, PaintBMW Manufacturing Co.

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Number of theoreticallypossible alternatives

1929 20031950 1970 19851940

Today: 1032 combinations

BMW Group.Increasing Complexity in the Product Range

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Build-to-OrderBuild-to-Stock

Sale from stock Customized vehicle

BMW optimizes its Built-to-Order strategy

Advantages of build-to-order compared to build-to-stock

Strategy. Build-to-Order Instead of Built-to-Stock

– higher level of customer satisfaction due to personalized equipment

– better inventory management leading to less sales incentives– increased vehicle equipment contingency – reduction of capital commitment costs

Customer StorageProduction ProductionCustomer Customer

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Unpredictable MarketsPreparing our processes, our people and our supply chain to be flexible

BMW MC17 May 2007Page 6 Production and Supply Chain Process

Process Monitoring and Target Control

Distribution Process and Hand-over

Sales Processes andOnline Ordering

Production- Production- and Supply- and Supply- ProcessesProcesses

Dealer SalesSystem

ProductionSystem

SalesSystem

Dealer

Planning

Dealer orderPurchasingLogisticsProductionDistributionHand-over

Ord

eri

ng

Deliv

ery

BMW MC17 May 2007Page 7 Process Chain Parts

Call-off Horizon

Long term requirements go out as forecasts – sent weekly to Suppliers

Short term requirements within 3 week window start to have specific orders assigned – sent weekly to Suppliers

Sequence requirements are generally sent in daily packages, but can be sub-daily depending on Supplier based on trigger signals in the plant.

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JIS Just in SequenceCall off: (SPAB)Delivery: several/day

JIT Just in TimeCall Off: (SPAB)Delivery: several/day

DIMO (Direct Delivery Assembly Line)Call OffDelivery Cycle: Daily or every X days

Direct Delivery = Stock Reception directly to the assembly stock, No warehouse booking necessary

In the order of assembly

Process Chain Parts Supply Methods to BMW Group Plants

In-house:SEQ Bulk Warehouse/

Sequence WH

Warehouse

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Manufacturing Adapting to change

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Build-to-Order strategy has lead to:

• A high customer allocation ratio and minimization of capital commitment costs

• Production stability, customer delivery punctuality and reduction of through put times

• Reliable sequence delivery for the supplier

• Less vehicle and parts storage due to a more reliable parts supply

• Extended planning period and planning certainty

• Sequence suppliers not required to be in close proximity to the assembly plant

The Benefits: Who gains from it? Benefit Effects in Production and Supply

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Thank you for your attention