ES4C9 – Supply Chain Management

CUSTOMER SERVICE AND LOGISTICS

(BMW UK LTD)

Kanyinsola Okuboyejo

Customer Service in a Supply Chain ContextFreedom of ChoiceImmediate and reliable order confirmationInformation about order statusSimple order processFlexible reaction to order modificationFast delivery at promised delivery dateSecurity

Customer Service

Post transactionComponents

Transactioncomponents

Pre-transactionComponents

• 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.

Components of Customer Service

Diagram Source: ES4C9, Lecture 4.

Logistics 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.

• 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)

Company OverviewProduces a wide range of products (BMW,

Mini, Rolls Royce)24 Production sites in 4 continentsOver 96,000 associates worldwide

Existing Supply Strategy (BMW Hams Hall Plant)

Build to Stock and Supply to OrderFixed Lead times used throughout processWorking time Account and Engine Stock used

to manage short termFlexibility requirements, Holiday miss-

matches and ShutdownsDaily update of schedule informationEngine Auto-store to create sequenced

delivery (using call off)

LimitationsSupply 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

Improvements to Stock AvailabilityIdentify 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)

Impact of Logistics on Shareholder valueBMW UK Ltd Shareholders Funds (2001 -

2010)

Source - Amadeus

Return on Investments (Shareholders funds)

BMW UK Ltd – (2001-2010)

Source - Amadeus

Profit Margin BMW UK Ltd (2001 – 2010)

Source - Amadeus

Stock Turnover (2002 -2010)

2002 2003 2004 2005 2006 2007 2008 2009 20100

2

4

6

8

10

12

14

16

18

20

Stock Turnover

Stock Turnover

Could improving cost benefit and systems improve Supply Chain?

Cost Benefit will improve efficiency of Supply Chain Improving the system as a whole NETWORK DESIGN

PROCESS DESIGN

COMMUNICATION SYSTEMS

ORGANISATION STRUCTURE

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)

Thank you for listening !