ES4C9 – Supply Chain Management CUSTOMER SERVICE AND LOGISTICS (BMW UK LTD) Kanyinsola Okuboyejo

Customer Service in a Supply Chain Context Freedom of Choice Immediate and reliable order confirmation Information about order status Simple order process Flexible reaction to order modification Fast delivery at promised delivery date Security Customers must have the power/ ability to chose what products and there should be availability of variety of delivery schemes and delivery types as to whether the customer comes to collect the item or it is delivered to the customers doorsteps. Order information has to be readily available and more importantly reliable. Order process has to be as simple as possible. Not signing endless documents or having to go through too many stages, it stresses the customer and you could create a build up of customers and they could decide to abandon the firm as a result of too long of a waiting period. If a customer would like something to make changes to a product or to customised his/her product after the order has been placed, the supplier should have the capability and a fast reaction time to meet such demands as this differentiates an excellent supply chain from an average one. Delivery must b on time. No long waiting times. Product must successfully reach customer without being contaminated.

Customer Service Components of Customer Service Post transaction Pre-transaction Written customer service policy Accessibility Organisation structure System flexibility Order cycle time Inventory availability Order fill rate Order status information Availability of spares Call-out time Product tracing/warranty Customer complaints, claims etc. Diagram Source: ES4C9, Lecture 4.

Logistics Skilful planning and sophisticated IT systems for ‘Just in Sequence’ engine customers. Receipt of raw material to machining – BOR (brought out rough) Receipt of finished material to assembly – BOF (brought out finished) Internal Distribution of material SCW (small container warehouse) Distribution and management of final Engine assemblies – FMU (finished major units) Logistics is the management of the flow of goods between the point of origin and the point of destination in order to meet the requirements of customers or corporations.

Company Overview Produces a wide range of products (BMW, Mini, Rolls Royce) 24 Production sites in 4 continents Over 96,000 associates worldwide Wide Range of Products : 1,3,5,6 and 7 series Z4 & Z8, X1, X3, X5 and X6 Continents : Europe, Africa, Asia, USA.

Existing Supply Strategy (BMW Hams Hall Plant) Build to Stock and Supply to Order Fixed Lead times used throughout process Working time Account and Engine Stock used to manage short term Flexibility requirements, Holiday miss-matches and Shutdowns Daily update of schedule information Engine Auto-store to create sequenced delivery (using call off) How many days required to make an engine from point of order? (P & D times) 6 days plus storage. Now reduced to 4 for NG4 through in-line processes, sequence deliveries – made to order, two days of which are transport. Mini engine is classed as a two day engine – 1 day to make and next day in car, a real time product.

Limitations Supply chain is not efficient in terms of costs of continuous delivery. Environmental impact

Improvements of Customer Service through better SCM Marketing work together with logistics to generate a more effective supply chain. Pareto Prioritisation How could customer service be improved by better supply chain management?

Improvements to Stock Availability Identify products that fall under categories of Strangers, Repeaters and Runners to determine and improve Lead ,P and D time MRP I (Material Requirement Planning) MRP II (Manufacturing Resource Planning) ERP (Enterprise Resource Planning) CRP (Capacity Resource Planning) How could stock availability in this supply chain be improved? Determine which of their products are Strangers, Repeaters Runners Dependent / Independent demand – know forecast demand BMW is currently working on changing their supply strategy to bulk (economic batch quantity) orders , however, it could be risky as their main customers order first could have longer waiting times. MRP I – Helps to determine what to financial resources required for raw materials by using demand expectations. Determines replenishment through integration with Mater Production Schedule. MRP II – Is a technique used for planning and scheduling. Helps to schedule the flow of materials through a manufacturing process Collaboration: Whereby a member of the manufacturing plant goes and monitors future expectations in supply and feeds back to manufacturing plant so they can build to stock based on information as opposed to just building to stock. Need to be lean flexbile and cost efficient.

Impact of Logistics on Shareholder value BMW UK Ltd Shareholders Funds (2001 -2010) Using published financial information for this firm, or firms in this industry, determine whether logistics is improving and evaluate the impact on shareholder value. Recognise the impact of logistics management on return on investment and shareholder value Source - Amadeus

Return on Investments (Shareholders funds) BMW UK Ltd – (2001-2010) 2008 saw plummeting investments as recession was at large. Source - Amadeus

Profit Margin BMW UK Ltd (2001 – 2010) Source - Amadeus

Stock Turnover (2002 -2010)

Could improving cost benefit and systems improve Supply Chain? Definition (Customer Focused) "Supply chain strategies require a total systems view of the linkages in the chain that work together efficiently to create customer satisfaction at the end point of delivery to the consumer. As a consequence costs must be lowered throughout the chain by driving out unnecessary costs and focusing attention on adding value. Throughout efficiency must be increased, bottlenecks removed and performance measurement must focus on total systems efficiency and equitable reward distribution to those in the supply chain adding value. The supply chain system must be responsive to customer requirements.“ Hines (Supply chain strategies: Customer driven and customer focused, 2004, Pg 76) Cost Benefit will improve efficiency of Supply Chain Improving the system as a whole NETWORK DESIGN PROCESS DESIGN COMMUNICATION SYSTEMS ORGANISATION STRUCTURE Could this supply chain benefit from improved costing techniques and systems? Network Design: BLUE PRINT OF WHAT YOU WANT TO DESIGN. THE PROCESS. THE Process Design: Idea generation to Product Communication Systems: Marketing Communicates with the rest of the Supply chain to identify the what the customer values. HAS IMPACT ON THE CUSTOMER. Organisation Structure: WHO IS RESPONSIBLE FOR FOR WHAT? ALLOCATING RESOURCES.

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