The Concept Of Supply Chain Management Of BMW And BMW

Supply chain management is extremely important for companies with the massive size and customer base of Toyota and BMW. The products and parts these companies use affect millions of people across the entire world, and if for some reason one of these parts prove bad or ineffective, the consequences of the flawed part revert back directly to the company cost millions if not billions of dollars directly out of pocket. And usually these smaller companies that supply BMW and Toyota with their parts do not have the capital, resources, or assets to cover these massive losses when these parts go bad.

“The concept of Supply Chain Management is based on two core ideas. The first is that practically every product that reaches an end user represents the cumulative effort of multiple organizations. These organizations are referred to collectively as the supply chain. The second idea is that while supply chains have existed for a long time, most organizations have only paid attention to what was happening within their “four walls.” Few businesses understood, much less managed, the entire chain of activities that ultimately delivered products to the final customer. The result was disjointed and often ineffective supply chains.” (Handfield)

BMW has a conservative and thorough approach to supply chain management. Their first step in their three step process is to “identify high risk supplier locations based on sustainability, and then analyze high risk suppliers based on media screenings. Second they obtain self-assessment sustainability questionnaire and develop supplier specific corrective action plans. Third, BMW conducts audits by independent external audits and makes corrective action plans based on audit results.” (BMW) While using a...

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... expansion kick and look for new manufacturers of parts in a short amount of time. This increase in volume turned out to lower overall quality, as the expansion did not give enough time for Toyota engineers to thoroughly test and review the products they were using which led to Toyota having to testify in front of the US Congress on its safety problems, which was on the rise in the news the past few years.

When comparing these two companies supply chain management problems and benefits, we clearly see Toyota coming out ahead in profit but also ahead in problems. While BMW is continuing to make their product better in a safe and conscious manner. Business is clearly about the bottom line, however when quality is compromised, the bottom line can be completely removed when the company is faced with lawsuits and federal action due to lack of safety and standards.