Global Supply

Chain Management
Ankit Saluja
Krishna Paladugu
Nigam Mehta
Prashant Gupta

Table of Contents
Supply Chain Management......................................................................................................................... 2
The Make or Buy Decision....................................................................................................................... 2
Baja Auto Ltd vs BMW Motorrad.................................................................................................................. 4
Bajaj Auto Ltd:.......................................................................................................................................... 4
Suppliers.................................................................................................................................................. 4
Operational Details.............................................................................................................................. 5
Distribution Detail................................................................................................................................. 6
Dealers................................................................................................................................................ 6
Transport & Logistics........................................................................................................................... 6
Process of ordering:............................................................................................................................. 7
Relation with the supplier firm:............................................................................................................. 7
Dimensions for Choosing Depot or Factory Approach.........................................................................8
BMW Motorrad......................................................................................................................................... 8
BMW Supplier...................................................................................................................................... 9
BMW Distribution Network:................................................................................................................ 11
Dealers............................................................................................................................................... 11
Logistics as a part of the Overall Strategy......................................................................................... 12
Transportation and Warehousing....................................................................................................... 12
Passing of Property........................................................................................................................... 12
Competitive advantage.......................................................................................................................... 12
Reference:................................................................................................................................................. 14

Supply Chain Management

According to Slack (2007), supply chain is series of operations between origins of products or services
and end customers, which transform (assembly, merging, etc.) an input (usually raw material) into an
output (final products); supply chain management (SCM) aimed to satisfy end customers needs at
competitive cost through managing these operations to achieve improvement in 5 operations objectives
(speed, quality, cost, dependability and flexibility), make sure each operations can satisfy its own
customers and also end-customers regardless of their position in the supply chain. SCM involves
decisions like what capabilities/operations should be outsource or develop internally, the location of firms'
operations and the management of overall long-term capacity.
In conventional fashion industry, each supply chain members relationship is loose, they used to run their
business separately without information sharing and schedule production based on their own forecast
(Lee and Kincade, 2003); lack of information sharing on actual demand and operational differences
caused long lead time (6 months) and "bullwhip" effect , restrained the launching of new items to twice a
years (spring/summer and autumn/winter) and causing high level of inventory, and the risk of each chain
members' inventory-on-hand become obsolescence is high. As a result, conventional-fashion player used
to practice a push-strategy (due to longer lead time needed to introduce a new design)
While fast fashion industry practice a totally different approach in managing its supply chain, the
relationship between each chain is close (Barnes and Greenwood, 2006), many players like Zara often
act as a supply chain leader to coordinate each chain, the close relationship among supply chain
members not only enhance the dependability and flexibility of supply chain, it also allow concepts like QR
(Quick Response) and JIT (Just In Time) to be practice throughout the whole supply chain, and this
effectively shorten the lead time from a normal 6 months to 3-6 weeks (Palladino, 2010).
Fast-fashion player can introduce new design within short period of time (In Zara case, 15 days) and the
"bullwhip" effect is minimized, consequently, inventory level is low, so as the obsolescence risk. Short lead
time allow practice of pull-strategy (as shorter time is needed to introduce a new design), which allow
better respond to customers' demand (Palladino, 2010; Ghemawat and Nueno, 2006; Slack, et al., 2007).
The make-or-buy decision, location decision and supply chain time compression concept can be used to
further understands the differences and similarities between this two industry.
The Make or Buy Decision
In SCM, the make-or-buy decision is used by firm to achieve desired supply chain performance objective,
for example, outsource production to reduce cost or retain production in-house to maintain high quality
(Slack, et al., 2007; Hill, 2005). In reality, company don't usually produce every service and products in
supply chain that it needed to satisfy its end-customers, as Slack et al. (2007) explained, firms can

choose to buy products/services directly through outsourcing or produce the products/services by itself
through vertical integration along supply chain, firm usually choose to outsource activities which it had no
competitive advantage in and retain activities which it believe are critical to firms' success base on the
order winner and qualifier of competing market.
In the make-or-buy decision, conventional-fashion industry player prefer outsourcing to leverage the
cheap labour & material cost in developing country to keep their cost low (Lee and Kincade, 2003),
however, outsourcing (especially to long distance countries) significantly increase lead time, longer lead
time means that retailer must forecast the actual demand few months in advance to place order earlier so
that each collection can be place in store on time.
While fast-fashion industry player like Zara had turn the focus from cost to lead time through vertical
integration, short lead time allow retailer to forecast demand closer to the time it actually occurs
(Ghemawat and Nueno, 2006), consequently, the forecast is more accurate compare with conventionalfashion industry, therefore the inventory level is significantly lower than conventional-fashion player, the
needs to markdown or write-off item is minimized, conventional-fashion industry player averagely had to
mark down 40% to reduce obsolescence stock (Neuno, 2009; Gallaugher, 2008) .
Supply Chain Time Compression

Improved

Beside the make-or-buy and location decision, operational efficiency is also an important elements in
SCM, in-terms of improving supply-chain performance, as Towill (1996) suggest, operations efficiency can
be achieved through time-compression, which is speeding up the flow of materials and information within
the supply chain, time-compression would not only improve supply-chain performance objective (cost,
speed, quality, dependability and flexibility), it also had positive impact towards firms' profitability (Slack et
al., 2007; Towill, 1996; Beesley, 1996).
The fashion market is characterized by its short product life cycle, high volatility and low predictability
(Christopher et al., 2004). Conventional-fashion industry player design their supply-chain to focus on low
material and production cost in order to improve profitability, but at the cost of long lead time; while fast-

fashion player focus is on short lead time, using time compression strategy to improve their profitability
(Slack et al., 2007; Gallaugher, 2008; Towill, 1996).
Lowering material and production cost regardless of increasing lead time greatly reduce conventionalfashion player profitability, the reduction in profit even offset the cost-saving in production and material
cost (Gallaugher, 2008); as shown by Towill (1996) in figure 2.1, short lead time can eventually increase
firms' profitability, that's the reason why fast-fashion industry generally can have a higher profit margin
compare with conventional-fashion industry (fast-fashion industry player sell 85% of their goods in full
price, compare with conventional-fashion industry 65%) (IIBD, 2010).
Consider the characteristic of fashion market, long lead time reduce firms' speed to market new products
and make forecasting become more difficult, consequently, sales is low as they cannot fulfil customers
demand on fast and fashionable products, the mismatch between forecast and actual demand cause high
level of obsolescence inventory, therefore, they had to discount their products to sell obsolescence stock,
greatly reduce their profitability (Towill, 1996; Christopher et al., 2004; Gallaugher, 2008).
Baja Auto Ltd vs BMW Motorrad
As part of our study, we decided to analyze the Operations of the two major Motorcycle manufacturing
companies of India and Germany. We have tried to understand the differences between the Supply chain
management (Suppliers, operational and distribution)strategies of the two companies.
Bajaj Auto Limited is an Indian two-wheeler and three-wheeler manufacturing company. Bajaj Auto
manufactures and sells motorcycles, scooters and auto rickshaws. Bajaj Auto is a part of the Bajaj Group.
It was founded by Jamnalal Bajaj in Rajasthan in the 1940s. It is based in Pune, Mumbai, with plants in
Chakan (Pune), Waluj (near Aurangabad) and Pantnagar in Uttarakhand. The oldest plant at Akurdi
(Pune) now houses the R&D centre 'Ahead'.
Bajaj Auto is the world's sixth-largest manufacturer of motorcycles and the second-largest in India. It is
the worlds largest three-wheeler manufacturer.
BMW Motorrad is the motorcycle brand of the German company BMW, part of its Corporate and Brand
Development division. The current General Director of the unit is Hendrik von Kuenheim. BMW Motorrad
has produced motorcycles since 1923, and revenues for 2009 were 1,069 million from the sale of 87,306
motorcycles, a drop on the 2008 figure of 1,230 million from the sales of 101,685 motorcycles. In May
2011, the 2,000,000th motorcycle produced by BMW Motorrad was an R1200GS.
Bajaj Auto Ltd:
Bajaj Automobiles has factories in three Indian cities (Chakan, Waluj and Patnagar). The two towns
Chakan and Waluj are located in the state of Maharashtra. The Patnagar town is in northern India.
The Bajaj Automobiles caters to three categories of customers: The Entry level segment, Sports or
Performance segment and the super-sports segment.
Suppliers
Bajaj auto has approximately 198 suppliers for their raw materials.
Some of the key suppliers are:

JBM : Frames
MRF & Dunlop : tires
Minda : locks & ignition system
Reinder : headlamps & lights
Endurance : brakes, clutch & Cast wheel
Varroc : Plastic parts & Digital Meter
Max auto components : ignition system and switches

Silco cable :wires and cables

Makino industry : Brake shoes . Brake lining, clutch center

Operational Details

In the last year Bajaj Automobiles sold nearly 3.36 Million motorcycles which amounts to nearly 46 % of
the market. This dominance is achieved by lean manufacturing and various other initiatives.

Bajaj Autos sale of Motorcycles (Annual Report Bajaj Automobiles 2016, www.bajajauto.com)

All the three Plants are recipient of various TPM awards. The awards showcase Optimized Inventory
management, quality processes at the Bajaj Automobiles plants.
The higher number of sales is achieved by not allowing customization options to Consumer. Unlike BMW,
Bajaj Automobiles does not allow Build your own bike option for several models to allow for faster
Assembly. The Bikes are not delivered to consumer address, Instead they are stocked at many dealers.
When a motor cycle purchase is made, the consumer typically visits a dealer and transacts. The
Motorcycle is of largely utilitarian value in India and the average customer does not mind to wait a few
days for delivery. This allows for easier inventory maintenance and better forecasting at the backward
integrated supply chain all the way to Plant.
The small duration after sale offsets the time required to procure parts or transport finished bikes to the
dealers across the Indian subcontinent. Transportation in the Indian subcontinent is slower than in
Europe. Additionally, Inter-state taxes prohibit location of suppliers in states farther away from main plant.
Location of the Manufacturing Plant is critical to control costs of parts procurement.

Distribution Detail
For distribution Bajaj auto uses mix of depots and Carry and forward agents. This is completely
dependent on the distance of manufacturing location from dealer point .For example due to extensive
distance from manufacturing plant from west Bengal to north-east India ,there exist a depot in Khadakpur
with capacity of housing 800vehicles. There are similar depots in Punjab, Rajasthan and southern India.

Dealers
The company has a network of 498 dealers and over 1,500 authorised service centres and 162
exclusive three-wheeler dealers spread across the country. Around 1,400 rural outlets have been created
in towns with population of 25,000 and below. The current dealer network is servicing these outlets.
Dealers can be classified under 3 heads. They are as follows:
- COCOThese are Company Owned & Company Operated showrooms. These concepts exist only for Pro-Biking
showrooms. Here Bajaj Auto has tried showcasing their muscle power in high end biking segment. The
concept has evolved very fast and now there are 52 Pro-Biking showrooms in the country. The company
itself does not take any order from the customer in these showrooms. The giant dealer of the region who
is acting as a logistics partner for the pro-biking concept takes the order on behalf of the company and
fulfils the customer requirement.
- CODOThese are Company Owned & Dealer Operated showrooms. In case of this concept, showrooms are
owned by the company but the operations in the showroom are managed by the dealer. This is generally
the case where Bajaj wants to provide the dealer financial benefits considering the high working capital
requirement of the company.
- DODOThese are Dealer Owned & Dealer Operated. These dealers are fewer in number because they are
generally the giant dealers who are the financial muscle for the company. In our talks, the management
indicated that the top management wants to do away with this concept. The reason behind this is that the
bargaining power increases in the hands of the dealer, which puts the company in adverse situation.
National Level Partnerships
There is an existing generic channel which is used for segmentation of this category of two-wheelers and
three wheelers.
Transport & Logistics
This function of distribution is not owned by the company in any form. This is outsourced to the
third party vendors. The third party here is Transport Corporation of India (TCI) and a few other private
vendors. The fleet to be transported is custom-designed for Bajaj Auto by the vendor. Key Facts
- There are twenty vendors all across India
- A Transit Insurance Compliance Letter (TICL) is signed between the two parties
- The local level sub-dealer sometimes gets to decide the last mile logistics, as he can decide to pick up
the vehicles himself or have it transported to him
- Logistics of the vendor is decided by the company
- Freight charge is built-in in the product price
Bajaj selects those suppliers who provide majority of the required raw materials together.
Process of ordering:
Bajaj lighting refers a systematic process in selecting suppliers and deal with them. Production
manager of the company study the application received by the suppliers and select proper suppliers as
per their requirement. The selected suppliers invite for general meeting with the production manager and
purchase manager of the company. In this meeting they decided conditions and time period of supplying
raw materials to the company.

Once the contract signed by both the routine work continue. Whenever the company required raw
material they send e-mail or call the suppliers just before three days. And within two days company gets
raw materials. If the suppliers are unable to provide raw materials than Bajaj immediately inform them
and getting solution.
Relation with the supplier firm:
Bajaj auto ltd. believes in good relationship with its suppliers and customers. The suppliers who
supply raw material to the company, Bajaj auto pay them regularly. If any when advanced payment
required Bajaj also pay advance for bulky consumption. During annual day of the company, Philips
rewarded those suppliers who contracted with company for whole year and survive company without any
problems.
Bajaj has total of approx. 498 dealers 1500 authorized service stations and 1400 rural outlets for
population of below 25000. Bajaj rides the SAP advantage. In year 2000 Project 110 percent was
launched to spearhead Bajajs growth in the future. Bajaj auto has linked 386 dealers out of 498 and 165
suppliers out of 198 Business information is available to company external community in real time.
The dealers can get real time information, unstructured information like news items, new product
releases, dealer discussion group and internal market place. On operational activities and also the
company can monitor the external members. The suppliers gets up-to date information on purchase
order, contracts and material schedule
Key Deliverables in terms of Sales & Distribution Management
- Order Tracking-Taking a daily account of the order received from various dealers and Regional Offices
(RO). Orders from dealers are punched in by dealer themselves. Orders are followed up in the system
only if the credit limit is not crossed. This credit limit is pre-set into the system depending upon the dealer
and his/her track record.
- Packaging-Packaging in factory is outsourced to third party vendor. These vendors are generally from
the Transport & Logistics partners
- Despatching Goods-Goods need to be despatched via third party vendor TCI. State corporations and
other private players are also part of the vendor list.
- Generating Invoice & Waybill-These documents need to be generated and despatched to the respective
dealer
Key Role & Deliverables of Depots
Setting up depots is a geographical strategy adopted by Bajaj Auto. But this does not mean that
the company has gone all out to open a large number of depots. It has chosen strategic locations. The
key role played by depots is that they are meant to cater to any sudden rise in demand of vehicles, and to
cover the existing geographic span of India. When we spoke to the management, they explained to us the
reasons behind having a depot in Kharagpur. There are two reasons for which Kharagpur was chosen to
hold a depot for Bajaj Auto. They are as follows:
- Catering to a sudden shooting up of demand- In Bengal itself, it is common knowledge that during the
festive season which spans from September to November, there is a huge demand as people spend more
on festival extravaganza, and it is considered an auspicious time to buy household gadgetry. There is a
conspicuous rise in the sales of white goods, motor vehicles and jewellery.
- Reaching the states of the North-East- As per the people at Bajaj, We take 15 days to reach the NorthEast if we go via the carrying and forwarding agent concept. Generally bikes reach West Bengal in 7-8
days. The bottleneck is the Darjeeling route. Hence, came in the concept of a depot whereby we can
reach the North-East in the same time, instead of experiencing a lag of almost a week.

Dimensions for Choosing Depot or Factory Approach

A dealer needs to consider his order requirements and then come up with an order to place to the
regional office. If the demand is immediate, he may approach a Depot for the load. Else, he has to try to
stick to factory load. Both of these loads have their own sets of pros and cons. We have listed them in the
following table

Depending upon the criteria that are more important to the dealer, he places his order to either
the factory or the Depot. Generally, orders are placed to the factory but in case of urgent requirement, due
to which the lead time reduces considerably, the order is procured from the depot.
BMW Motorrad
In a highly favourable market environment, most notably in Europe, BMW Motorrad achieved a significant
increase of 10.9 % with a sales volume of 136,963 units (2014: 123,495 units). This performance was
therefore better than the solid increase forecast in the Annual Report 2014. Apart from the robust market
environment and BMW Motorrads attractive model range, mild weather conditions at the end of the year
also gave the strong performance additional tailwind.
The Motorcycles segment generated a return on capital employed (RoCE) of 31.6 % in the year under
report (2014: 21.8 %; + 9.8 percentage points), a solid increase on the previous year. In the Quarterly
Report at 30 June 2015, the outlook was for a slight increase in RoCE (outlook in the Annual Report
2014: RoCE in line with the previous years level). Contributing factors for the improved performance
were higher sales volume, a sustained high-value model mix and the positive impact of the new brand
strategy embarked upon in 2014.
The manufacturing sites in Chennai (India) and Rayong (Thailand) complete the BMW Groups production
network. Last year, the plant in Thailand celebrated its 15th anniversary and expansion work was
continued at the plant at the same time. It is the only production facility within the network that produces
not only BMW and MINI vehicles, but also BMW motorcycles.
Motorcycle sales particularly strong in Europe The number of motorcycles sold in Europe in 2015 totalled
81,834 units (2014: 73,611 units), an increase of 11.2 %. In Germany, BMW Motorrad reported a solid
increase of 9.7 % with a sales volume of 23,823 units (2014: 21,714 units). Italy also saw a year-on-year
improvement, with sales 6.3 % up at 11,150 units (2014: 10,487 units). Deliveries to customers in France,
at 12,550 units, were also higher than one year earlier (2014: 11,600 units; + 8.2 %), even though the
market as a whole remained flat. The Motorcycles segment sold 16,501 units in the USA (2014: 15,301
units; + 7.8 %).
Further international growth for BMW Motorrad The aim of BMW Motorrads strategic realignment is to
achieve additional growth going forward. With this in mind, the Motorcycles segment is planning to
engage in further markets in Asia and Latin America. The new model initiative will also be expanded,
including the addition of products that provide greater urban mobility. Sales volume growth should also
benefit from the new premium models in the under-500 cc segment and a significantly expanded
dealership network. The market launch of the G 310 R in the second half of 2016 will be an initial step in

this direction. This motorcycle is designed to appeal to new markets and a younger target group and will
be produced in cooperation with the TVS Motor Company in India.
In line with the new growth strategy, during the year under report the decision was taken to expand the
BMW motorcycle manufacturing plant in Berlin. Moreover, a new, state-of-the-art logistics centre is due to
be constructed right next to the Berlin plant.
BMW Supplier
BMWs supplier network makes a major contribution to value creation, quality and innovation and hence
to the success of the BMW Group. Suppliers therefore have a significant impact on our sustainability
performance and the sustainable development of society.BMW work with around 13,000 suppliers in 70
countries.
The key suppliers are

Brembo: Brake calipers

Thyssenkrupp: shock absorbers and suspension parts
BorgWarner: Drivetrain components, such as clutches
Elringklinger: Gaskets and exhaust system components
Mahle: Piston and cylinder components, valve train systems
Bridgestone: Tires
GKN Driveline: Axle assemblies
Delphi: Battery and electric vehicle charger components
Hirschvogel: Wheels
Magna: Body casting stampings

As BMW is supplying to 70 countries, it has therefore a large pool of suppliers as compared Bajaj, which
has a smaller pool with around 200 suppliers currently.
BMW Motorcycles sold worldwide are primarily manufactured in the BMW Motorrad factory in Berlin.
BMW motorcycles factories outside Germany are located in Brazil (Manaus) and Thailand (Rayong).
BMW Motorrad manufactures motorcycles which cater to premium segment. The types of motor cycles
are divided into Sport, Tour, Roadster, Heritage, Adventure and Urban Mobility.
Apart from regular models of each type, BMW also offers customers to Build their own bike on their ecommerce websites for each country. The following picture shows the webpage where a customer buying
S 1000 RR (SPORT bike) can choose
1) Colors of cockpit, petrol tank
2) Premium or standard features like DTC dynamic traction control, Tyre wheel types and many
more.
3) Seat cover, alarm system
4) Accessories for Storage, Safety, Windshield, seat types and many more.
All the above choices may be exercised by the customer for a nominal fee.

The number of motorbikes sold by BMW Motorrad in the year 2015 was 136,963. This calculates to 375
bikes a day.
The impressive manufacturing feat is achieved due to Centralized location of the Manufacturing plant at
Berlin. The customized models are assembled on the same line due to availability of the parts and
accessories.
Efficient plant layout and usage of multiple automated machinery stations along the assembly line
enables BMW Motorrad to achieve such large numbers.
The BMW Motorrad manufactures each bike on confirmed order. This enables BMW Motorrad to notify
suppliers and plan well in advance. The confirmed order based planning allows for the Inventory levels to
be maintained at the most optimum level.

https://www.bmwgroup.com/content/dam/bmw-groupwebsites/bmwgroup_com/ir/downloads/en/2016/Annual_Report_2015.pdf

Two distinct advantages which enable low inventory are European Union and better relationships with
Suppliers.
European Union guarantees lower transaction costs to bring parts to Berlin central manufacturing and
assembly plant. The faster rail and road network also helps in reducing travel time and hence further
transaction costs.

BMW hosts several supplier events, distributing awards to best suppliers. The regular connect with
suppliers group ensures trust building which helps further reduce the transaction costs.
BMW Distribution Network:
BMW motorcycles are manufactured primarily at the BMW Group plant in Berlin. Car brake discs are also
produced at this location. Two further motorcycle production plants are located in Manaus (Brazil) and
Rayong (Thailand).
Products and services are sold in Germany through BMW Group branches and by independent
authorised dealers. Sales outside Germany are handled primarily by subsidiary companies and by
independent import companies in a number of markets. The dealership and agency network for BMW i
currently covers some 950 locations. The BMW motorcycles sales network is organised in a similar way
to that of the Groups automobile business. Currently, there are around 1,150 BMW Motorrad dealerships
worldwide.
BMW Motorrad also focuses on the premium segment with its range of products, comprising motorcycles
for the Sport, Tour, Roadster, Heritage, Adventure and Urban Mobility segments. A wide range of
accessories and equipment is also available to provide customers with additional safety and comfort.
Mostly BMW uses only exclusive distribution. This type of distribution is usually seen with high
end and luxury products, which is absolutely suitable for BMW cars.
The structure of an exclusive distribution favors both the manufacturer and the distributor: All
dealers receive cars and auto accessories without mark up, they have unlimited dealer agreement and
are provided with all necessary corporate identity elements. The headquarters on the other hand have
complete market coverage and a total control over the quality of front office, which is especially important
for luxury products.
All Customer Segments are covered: those customers who are aware of the BMW products are
able to buy very easily what they are intended to buy; those who dont know what they need but want to
buy some BMW car, receive high quality consultancy so that they can make a decision whether to buy a
car and choose the specific package that absolutely suits the customers needs.
Dealers
BMW has the power to influence its dealers decisions. The headquarters put a lot of attention to
the relations with dealers and comes up with different programs and bonuses or penalties. Because of its
commanding brand image and well recognized automobiles after so many years in the industry BMW has
the power to implement different strategies over the dealers to assert their power. Strategies used by
BMW are as follows:
Reward power (Promise Strategy)
Its an often used friendly strategy to reward the dealership if they do follow BMWs rules. This
also serves as great motivation for the dealers. BMW monitors the operations of its dealers and to those
that have best performance the company provides certain rewards, such as discounts, free staff training
and even free accessories.
Coercive power (Threat Strategy)
This is more of an old fashion strategy still used today to get things done. If the dealers dont
adhere the terms of contract, the company can punish them in several ways: call off the delivery, write
articles on the official club website (which is under the BMW headquarters) unflattering references, which
would damage the dealers image completely.
Legitimate power (Legalistic Strategy)
The legalistic strategy where the dealership agreed beforehand to follow BMWs guidelines
accordingly, BMW has the right to make their own rules and the dealership have to follow them because
they agreed beforehand making them dependable of the manufacturer.
Expert, reward power (Recommendation Strategy)

As the BMW has enormously big experience in automobile industry in general and in co-operation
with dealers in particular, obviously the company has know-how in this area, which it shares with the
dealers. There is a so-called concept of three S:
- Service-dealership center. The BMW provides standard Schematic Designs for dealer centers
(of different sizes) according to the architectural and engineering standards of BMW, as well
as furniture and elements of corporate identity.
- Servicing depot also must be designed and equipped according to the BMW standards.
- Spare parts stock, in which there must be a certain amount of different parts and accessories.
Dealers treat all these as both an obligation and at the same time as the right, as it helps a lot for
the new dealer to start its operations.
Most of the strategies that BMW implements in its relationships with dealers refer to High
Pressure Strategies, which generally results in resentment and potential conflicts. However, in our case it
is not so due to the specifics of Russian culture and mentality.
As a luxury vehicle manufacturer BMW has the power necessary to apply any of these strategies
depending on the scenario must be aware that there is many ways to assert their power dominance
however they understand how to use it and when is the most adequate time to do so.
Logistics as a part of the Overall Strategy
Logistics play an important role in the production and manufacturing of the companys products. The
BMW products are created by very flexible and highly efficient production network with mature job
processes and the most advanced plants and facilities. As a global player, the BMW Group is represented
through its premium products of the BMW, MINI and Rolls-Royce brands in more than 140 countries.
Flexible and efficient assembly at BMW is guaranteed by sophisticated logistics for a smooth flow of
materials and efficient production. Efficient logistics ensures precise delivery of the parts required exactly
on time, with a smooth and efficient flow of parts from BMW Group components plats or supplier
companies.
Transportation and Warehousing
Motorcycles assembled in these factories are transported to the warehouse: for more than 30 years the
motor manufacturer BMW has outsourced the management of vehicle exports to the logistics service
provider Logwin (formerly Thiel Logistik).
These long-term relationships are very strong due to the fact that the majority shareholder in Logwins
parent, Delton, is also the largest single shareholder in BMW. However, as Dr. Stephan Freichel,
Managing Director of Logwins Solution business sector points out, Logwin has regularly and successfully
won repeat and additional business in open BMWs tender against the offerings of port operators and
other logistics companies.
Passing of Property
The moment of passing of property (signing the documents) happens directly when the customer comes
to the dealer to pick up the car or when car is transported to the customers place. (Still the potential
customer, who ordered a car even with specific package, can refuse to buy it even after the car is
transported to the dealer or the customers place.) The same happens with Leasing: right of use is passed
in the moment when customer physically takes the car.
Competitive advantage
The most notional competitive advantage that BMW gets through its distribution and logistics
strategies is that the delivery time in not more than 3 months, whereas its competitors deliver vehicles in
6-10 months. This advantage is achieved through several ways:
- Localized Production: BMW sets up the plants in strategic geographical points in order to minimize the
delivery time.

- The high speed of order acceptance due to the well-formed and frictionless structure of client service
and drawing up of an order.
- Outsourcing the transportation to Logwin, which is an international company from Luxembourg that
provides comprehensive logistics and transportation solutions. Logwin has expertise in how to deliver the
products within the minimum time needed.
Other advantage is that customers have a possibility to choose from various accessories for any
BMW model. BMW is the only producer that offers this in the premium segment.
Besides, the service of delivering the car the customers place, which is provided for more than 5
years (whereas Mercedes for example has offered such service for only half a year)

Reference: