"Customers Drive our Future" reads the banner as a group of 15 students and faculty from RIT entered the corridor to BMW's Spartanburg, SC, plant that is in the process of expanding production to continue to deliver the Z3 roadster and one of the hottest selling new SUVs, the X5. By the end of the day, we believed that the banner was more than just words.
Clearly, this is one of the two successful landed European car assembly plants in U.S. history (Mercedes is a success in Alabama; recall VW's earlier failure in Pennsylvania). BMW operates the cleanest, brightest assembly plant I have ever seen, with the quietest final assembly area of 15 plants I have visited over the years. With local value content running 60 to 70%, Spartanburg is on its way to becoming a model. So what is the secret of BMW's success in the Americas? Or more accurately, what is the secret so far?
At least three things make this location and company great, according to our presenters. First, it's Speed. The way BMW will conquer the cost challenges that remain in the company is to speed things up. The plant was launched in 23 months, and a recent project reduced cost by 19% working with a supplier to the plant. The X5 was developed in 35 months, and with considerably more automation. Watch for things to come in this department. BMW has aggressive (30% reduction) targets for new product development cycles.
This is not the old way, or the Munich way of doing business (which is essentially engineer until it can't be engineered any more). Do things right the first time, and continue to aspire to a "9" on a scale of 1 to 5. One of the real stories here is how BMW, on both sides of the Atlantic, has accelerated learning, which is a new way of doing business embraced during the last five years. From being a Beta test site for SAP's R3 ERP software to learning from Honda plant engineering to set up the Spartanburg plant, BMW is on the move.
The second element is flexibility. The way to customize every car to an individual customer's needs is to have efficient flexibility. There are 22 color options for the Z3, 123 center consoles, and 26 wheel options. BMW has become a master at logistics. And this flexibility extends to management and people, as well. A new shift will be added soon, but not a traditional extension of the day. There will be 11 10- hour shifts. All this is being done to innovatively accommodate the market growth of the X5, which was significantly underestimated by BMW. Product planning is a topic all car companies could improve on, and BMW is now investing much more time in planning future models.
Third and finally, part of the secret is recommitment to what makes BMW unique: quality in all ways. The "Ultimate Driving Machine" is built by a company that knows its customers and believes there are more customers out there waiting to get on the bandwagon of a technology leader in the industry. The company also knows how to produce quality—with consistent fit and finish tolerances being the norm in Spartanburg, and elimination of tolerance "stack-up" with a new door-hanging technology for the X5. BMW is an "emotional" company in the midst of its tradition for German engineering. This is part of the total quality story of a global company.
But BMW is globalizing operations in its own way—without mergers, without further acquisitions, and without the distractions of someone else's philosophy to get in the way. Emotional and independent leadership in management and associates has contributed significantly to this rapid acceleration of learning. This still leaves the company with plenty of challenges. More work with suppliers will challenge BMW to maintain independence and control while still leveraging the best of fewer partners.
"Customers Drive our Future." More than a slogan on a banner, it is clear that it is driving what happens at this BMW plant.