Just Spent An Afternoon With A Car Dealer (BMW)...and...
Discussion
jamoor said:
Toyota in Derby only have enough parts onsite to keep going for 12 hours.
All other parts are delivered when needed.
Yes - but those orders are programmed in some time in advance, and they're forecast some way before that. If you think down to the individual component level - ie the chips that are used in the ECU - some parts could be on 6mth leadtimes.All other parts are delivered when needed.
The ideal situation is massive great pools of every possible part that the car factory could use, and then they could call on those as required. Now that's easy with, say, tyres - you tell Michelin and Continental that you'll use whoever's tyres are available at the local buffer warehouse (owned and run by the tyre supplier, at their expense) and if they're both available then you'll use the cheapest. But it doesn't work that easily with sole sourced, unique parts.
If you take BMW as an example, then what happens is that the production schedule is filled many months in advance with dummy orders based on what the Planners think customers will want, allocated to each sales channel (ie UK, US etc) When you order a car they look for an uncommitted build slot and you get the chance, up to a certain point, to modify the build spec. If no one orders that car, then a car is still built and it's sent to (for example) BMW UK to sit in a field until they can think of some cunning scheme to shift it.
Edited by Deva Link on Wednesday 27th August 17:05
Deva Link said:
If you take BMW as an example, then what happens is that the production schedule is filled with dummy orders many months in advance, allocated to each sales channel (ie UK, US etc) When you order a car they look for an uncommitted build slot and you get the chance, up to a certain point, to modify the build spec. If no one orders that car, then a car is still built and it's sent to (for example) BMW UK to sit in a field until they can think of some cunning scheme to shift it.
Problem is for BMW / BMW UK, is with a load undelivered RHD cars that are not selling (ie. expensive/large models), they are very limited on countries in the world they then can ship them to. Numbers:
2007 Global sales 1,276,793
3er's 555,219
5er's 230,845
1er's 165,803
X5 120,617
X3 111,879
7er 44,421
Z4's 28,383
6er's 19,626
Markets
USA 293,795
Germany 284,523
UK 173,685
Italy 106,985
Spain 72,849
France 65,081
Japan est 50-65k
China 51,588
Australia 17,197
Russia 14,686
The biggest RHD market outside the UK for many years has been Japan (62,068 BMW Group cars in 2006, couldn't find 2007 numbers). But that is a strange one, as they often buy LHD cars from Europe - I would guess less hassle than waiting for a RHD production run on the production line. So you would have to make them cheaper than LHD ones, and the Japs love white ones....
From what I can tell, Australia is the next largest RHD market, but you can't just put them on a boat and ship them over, as Australian cars as a slightly different spec to meet local regulations, so are produced in batches on the production line. It used to be the case, that all BMW's imported into Australia had a sun roof - unless you special ordered and waited a long time(just to save AU$2600 odd..) don't know if that is the case still.
So, you are left with South Africa, Singapore, Malaysia, Thailand, NZ, Hong Kong, as the main countries off the top of my head you could off load them to....
So, what are they going to do???
smack said:
The biggest RHD market outside the UK for many years has been Japan (62,068 BMW Group cars in 2006, couldn't find 2007 numbers). But that is a strange one, as they often buy LHD cars from Europe - I would guess less hassle than waiting for a RHD production run on the production line.
One of the attractions of LHD in Japan is that the driver can easily get out of the car on to the pavement in busy traffic.Deva Link said:
smack said:
The biggest RHD market outside the UK for many years has been Japan (62,068 BMW Group cars in 2006, couldn't find 2007 numbers). But that is a strange one, as they often buy LHD cars from Europe - I would guess less hassle than waiting for a RHD production run on the production line.
One of the attractions of LHD in Japan is that the driver can easily get out of the car on to the pavement in busy traffic.Brucie177 said:
Deva Link said:
smack said:
The biggest RHD market outside the UK for many years has been Japan (62,068 BMW Group cars in 2006, couldn't find 2007 numbers). But that is a strange one, as they often buy LHD cars from Europe - I would guess less hassle than waiting for a RHD production run on the production line.
One of the attractions of LHD in Japan is that the driver can easily get out of the car on to the pavement in busy traffic.
smack said:
The biggest RHD market outside the UK for many years has been Japan (62,068 BMW Group cars in 2006, couldn't find 2007 numbers). But that is a strange one, as they often buy LHD cars from Europe - I would guess less hassle than waiting for a RHD production run on the production line. So you would have to make them cheaper than LHD ones, and the Japs love white ones....
From what I can tell, Australia is the next largest RHD market, but you can't just put them on a boat and ship them over, as Australian cars as a slightly different spec to meet local regulations, so are produced in batches on the production line. It used to be the case, that all BMW's imported into Australia had a sun roof - unless you special ordered and waited a long time(just to save AU$2600 odd..) don't know if that is the case still.
UK spec is UK spec - surprisingly big differences with other RHD markets. It wouldn't be worth the money to change the spec and ship it somewhere else.From what I can tell, Australia is the next largest RHD market, but you can't just put them on a boat and ship them over, as Australian cars as a slightly different spec to meet local regulations, so are produced in batches on the production line. It used to be the case, that all BMW's imported into Australia had a sun roof - unless you special ordered and waited a long time(just to save AU$2600 odd..) don't know if that is the case still.
Production lines also aren't batch of UK spec, batch of NAS spec, batch of Jap spec. The cars come down (not sure what order to be honest - probably just in the order they've been ordered) and the parts are fitted so it becomes the right spec.
smack said:
Problem is for BMW / BMW UK, is with a load undelivered RHD cars that are not selling (ie. expensive/large models), they are very limited on countries in the world they then can ship them to.
Australia, New Zeeland, Japan, Hong Kong, Singapore, Malaysia, Thailand, Vietnam, Indonesia, China (they dont care as they have not yet decided which site of the road to use anyway), India, South Africa, and so on and so on.Lots of markets for them.
BMW are one of the biggest selling "Premium Brands" in SE Asia, and with no Pac Rim factories so all are imported from Europe.
Edit to add - the Main Dealers in SE Asia will happily re-spec the cars to meet local regulations for Asia. They also tend to prefer to bring in poverty spec cars, as the OMV is much lower, then they retro-fit leather seats, alloys, fog spots etc etc to the cars to increase the paper value for sale so already plan to do significant works to these cars.
Edited by XJSJohn on Thursday 28th August 04:42
XJSJohn said:
Edit to add - the Main Dealers in SE Asia will happily re-spec the cars to meet local regulations for Asia. They also tend to prefer to bring in poverty spec cars, as the OMV is much lower, then they retro-fit leather seats, alloys, fog spots etc etc to the cars to increase the paper value for sale so already plan to do significant works to these cars.
Yup - it is amazing what can be done when you are paying very low labour rates.The Japanese view still view LHD cars as having additional "status". The only premium marque I have seen over here with RHD so far is Aston...
Glen
Having worked directly for Honda and Jag car plants, and 1st teir for Johnson Controls, Faurecia and SAS:
Jag build to order, Honda build to order, Landrover build to order, Mini build to order. All just in timeand in sequence. But, the order will vary with a lot of "predicted" builds for dealers.
Just in time is great for the car company.......but a real headache for suppliers, parts built at my place now will be in a car in 50mins. Big pressure for no downtime!
Jag build to order, Honda build to order, Landrover build to order, Mini build to order. All just in timeand in sequence. But, the order will vary with a lot of "predicted" builds for dealers.
Just in time is great for the car company.......but a real headache for suppliers, parts built at my place now will be in a car in 50mins. Big pressure for no downtime!
Edited by crox on Thursday 28th August 05:20
Deva Link said:
smack said:
The biggest RHD market outside the UK for many years has been Japan (62,068 BMW Group cars in 2006, couldn't find 2007 numbers). But that is a strange one, as they often buy LHD cars from Europe - I would guess less hassle than waiting for a RHD production run on the production line.
One of the attractions of LHD in Japan is that the driver can easily get out of the car on to the pavement in busy traffic.
crox said:
Having worked directly for Honda and Jag car plants, and 1st teir for Johnson Controls, Faurecia and SAS:
Jag build to order, Honda build to order, Landrover build to order, Mini build to order. All just in timeand in sequence. But, the order will vary with a lot of "predicted" builds for dealers.
Just in time is great for the car company.......but a real headache for suppliers, parts built at my place now will be in a car in 50mins. Big pressure for no downtime!
My claim to no fame is that I wrote the software for the predictive builds for the US market for Jaguar. It involved a lot of profiling of historical builds and required taking all the options into account. So Jaguar in the early 00's would build to order but for the US they would build a quantity of cars that the market would take regardless of whether they were ordered or not. This is how manufacturers do it they require a certain amount of allocation from each market into which the cars are fitted and the dealers have to get rid of them. Jag build to order, Honda build to order, Landrover build to order, Mini build to order. All just in timeand in sequence. But, the order will vary with a lot of "predicted" builds for dealers.
Just in time is great for the car company.......but a real headache for suppliers, parts built at my place now will be in a car in 50mins. Big pressure for no downtime!
Edited by crox on Thursday 28th August 05:20
crox said:
Having worked directly for Honda and Jag car plants, and 1st teir for Johnson Controls, Faurecia and SAS:
Jag build to order, Honda build to order, Landrover build to order, Mini build to order. All just in timeand in sequence. But, the order will vary with a lot of "predicted" builds for dealers.
Just in time is great for the car company.......but a real headache for suppliers, parts built at my place now will be in a car in 50mins. Big pressure for no downtime!
Yes pressure on the suppliers but they have a close relationship with the car makers and should have access to some of the ordering systems the car maker uses to help anticipate demand, also long term contracts, high quality products to reduce reworking and also the contract will be at a good margin. As the car maker wants to maintain the relationship and certainly doesnt want any hassle of a supplier going out of business.Jag build to order, Honda build to order, Landrover build to order, Mini build to order. All just in timeand in sequence. But, the order will vary with a lot of "predicted" builds for dealers.
Just in time is great for the car company.......but a real headache for suppliers, parts built at my place now will be in a car in 50mins. Big pressure for no downtime!
Edited by crox on Thursday 28th August 05:20
Given as you say Mini operate in that manner and you claim to have worked for the above then what the OP stated about the rover esque style production has been proved to be total rubbish.
Lol mass scale production as its cheaper to keep the production line running.... cheaper how? possibly by assuming that they will all be sold and like the Ford Model T you can have any colour... however thats not the case.
Just in time has no stock holding costs, no obsolete models, no reworking of goods, flexible workforce.
Then you have the bottle neck analysis and multiskilled staff whereby then can tfr skills to alieveate the bottle neck in the short term until the machine causing the bottle neck is revised/increased capacity.
Welshbeef said:
and also the contract will be at a good margin.
Welshbeef said:
Given as you say Mini operate in that manner and you claim to have worked for the above then what the OP stated about the rover esque style production has been proved to be total rubbish.
Lol mass scale production as its cheaper to keep the production line running.... cheaper how? possibly by assuming that they will all be sold and like the Ford Model T you can have any colour... however thats not the case.
Just in time has no stock holding costs, no obsolete models, no reworking of goods, flexible workforce.
Then you have the bottle neck analysis and multiskilled staff whereby then can tfr skills to alieveate the bottle neck in the short term until the machine causing the bottle neck is revised/increased capacity.
I think you're misunderstandng what goes on - sure, the factories don't produce thousaands of cars that are exactly the same and then park them in fields waiting to be sold.Lol mass scale production as its cheaper to keep the production line running.... cheaper how? possibly by assuming that they will all be sold and like the Ford Model T you can have any colour... however thats not the case.
Just in time has no stock holding costs, no obsolete models, no reworking of goods, flexible workforce.
Then you have the bottle neck analysis and multiskilled staff whereby then can tfr skills to alieveate the bottle neck in the short term until the machine causing the bottle neck is revised/increased capacity.
Every car is "ordered", in that it is built to a particular specification. But the point is that unless the manufacturer is able to sell all of its output then many of those orders don't have an end customer attached - they're dummy orders (as SLacKer and Crox have also explained).
To be efficient, a car factory has to work at its designed capacity - many of the costs are fixed and, once everybody and all the machinery etc are there, the incremental cost (just the material) of making a car isn't that great.
It's fine if a manufacturer is able to take advance orders for all of its output but as soon as it can't then it has to make decisions about producing unsold cars, or shutting down the line for periods of time and sending everybody home (still paid, of course). They can't just wait around and make cars on an as and when basis.
(By the way, I used to work in manufacturing engineering for Ford Motor Company).
Edited by Deva Link on Thursday 28th August 10:00
GlenMH said:
XJSJohn said:
Edit to add - the Main Dealers in SE Asia will happily re-spec the cars to meet local regulations for Asia. They also tend to prefer to bring in poverty spec cars, as the OMV is much lower, then they retro-fit leather seats, alloys, fog spots etc etc to the cars to increase the paper value for sale so already plan to do significant works to these cars.
Yup - it is amazing what can be done when you are paying very low labour rates.Glen
Yes, you are right, in SE Asia they will re-spec / fit out the cars when landed, and the goverment regulation on imported cars is slack - all they care about is money. The importers are often local business that got in early years ago to distribute the cars. They can run there business anyway they seem fit.
Back to it, there are high end motors sitting in the UK, that are not getting delivered to dealers as they are not selling what they have at the moment. Which doesn't look like you are going to sell that backlog of cars in the next 12 months. The next biggest market for these RHD is 1/10th of the size (Ruling out Japan with that whole pavement thing). BMW Australia is owned by BMW AG, but you have to do quite a bit of work to change a UK spec car to an AUST spec car, paying European or Australian labour rates to do it (not cheap either side of the world). So they wouldn't bother.
If they have 10,000 5/7/6/X5's cars sitting in storage, that probably would be a very high percentage in numbers of RHD spec cars that the sell outside the JP/OZ in the year.
Found a few more figures (Bloomberg):
Sales climbed to 126,949 cars last year in Asia from 111,571 in 2005, it said in a statement released in Singapore today. The carmaker sold 109,848 BMW-brand cars in the region last year, 16 percent more than in 2005, while Mini car sales increased 3.7 percent to 16,959.
Sales of BMW and Mini cars surged more than 50 percent to 36,357 last year in the Chinese mainland, the second-biggest market for the BMW 7 series in 2006 (US or DE first one would guess).
Japan sales climbed 5.6 percent to 62,068 cars, making it the largest individual market in Asia for the carmaker.
Singapore remained its largest market in the Southeast Asia region, recording sales of 3,857 cars in 2006, 6.4 percent more than the year before, led by the BMW 5 and 7 series (That is BMW Group, so Mini included).
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