cover story

Oxford’s supermodel

The success of the Mini model has prompted serious investment from BMW in the Oxford plant. Maxine Elkin talks to its director of logistics about how the supply chain is supporting growth

Mini production began at Oxford in 2001

ive years ago (in April) the Rover plant in Oxford for the Cooper S in the UK. Such success has caused a became the BMW Group’s Mini plant and its few problems. Ralf Hattler, director of logistics at BMW fortunes since have, thankfully, far exceeded those Group Plant Oxford says: “Currently we have the lucky of its predecessor. However, part of the Rover situation of high demand and we are trying to act on this. It inheritance was the physical structure of the is a nice problem to have! The target for us is clear: the date Fproduction plant, which sits on the outskirts of Oxford. we promise it, the customer gets his vehicle. “In addition, we The Rover plant was a much larger entity than the existing want to push the plant’s flexibility and the throughput time.” Oxford facility, spread over some 220 acres and bisected by At the moment the Group is stating that the investment is the city’s ring road. When the site was divided, 110 acres to reduce customer waiting times for this popular model, but of land, which was once the old pressing area, became the logic points to the company extending the range. Rumours manufacturing site and the remaining land has developed have been circulating about production plans for a larger into a multi-use business park. Plans to invest some £100mn Mini called the Traveller and there have even been ($190mn) before 2007, and a total of £560mn ($1,070mn) whispers of an SUV, prompting speculation that BMW invested in the last decade, demonstrate BMW’s commitment is investing in the plant to prepare for a new model. to the site and the success of the new Mini model. However, while conceding that BMW is planning for the Mini successor, Hattler will only comment that: “Oxford is High demand situation the home of Mini”. The new Mini convertible, launched in 2004, has been The Mini is assembled in the UK, but the diesel engine incredibly popular and there is a six-month waiting list for for it comes from Toyota in Japan and the petrol engine

24 Automotive Logistics • May/June 2005 cover story

currently comes from Tritech, a joint venture with DaimlerChrysler in Brazil. However, BMW The target for us is clear: the date we Group Plant Swindon produces steel pressing promise it, the customer gets his vehicle. for Oxford, and has been flagged to become In addition, we want to push the flexibility the main supplier of pressings for the plant, perhaps signalling a commitment to increasing and the throughput time in the plant use of UK-based suppliers. – Ralph Hattler

Investing in production With demand for Minis outstripping supply, BMW’s Inbound plans investment in Oxford is logical. Oxford is the only At the moment the rail link into Oxford isn’t used for any manufacturing facility building Minis. Most of the inbound logistics at all. The plan was just to use the rail investment is destined for a new 1,500m2 body shell for finished vehicle distribution from the plant but, with production building, which is already underway, and the increase in volume, there are opportunities now to modernisation of the paint shop, designed to increase look at using rail for inbound flow. “We certainly plan to production flexibility. Ralph Hattler says that he is going to increase the rail for inbound logistics but that means we reengineer the traffic flows throughout the plant to prepare need a different entrance to our plant,” says Hattler. “We are for an increase in production. Part of this plan involves talking about this with the city council but we need to get the using the existing rail link more effectively. greenbelt moved and we need confirmation for that. It is a huge area we would have to move. We would like to move traffic away from the roads in the direction of rail and the movement of the greenbelt is crucial to allow us to do this.” Inbound parts and modules are trucked into the 22,000m2 integrated logistics centre (ILC), which is connected to the assembly building by an underground tunnel. The centre existed before BMW Group took over the facility but, according to Hattler, BMW has made some significant changes: “We changed the layout, we changed the content of it, the volume increased, the supplier base developed. We started with one derivative of the Mini and we have increased to the Cooper S, the convertible, so we require more and more parts. Minis are now sold in more than 70 countries and, with the country options as well, the complexity of the parts [and] the complexity of the suppliers has increased, so we have had to readjust the warehouse as well. The Currently 33 per cent of units produced at Oxford leave there by rail but plans warehouse doesn’t just store parts, we also do sequencing of are being discussed to increase its use to incorporate inbound flow parts there, and we have late fitment of suppliers – the late configuration of the headliner, for example.” The UK market is the largest for the Mini, followed by the US and then Germany. Some 140,000 were exported last year Late configuration to more than 70 countries and most of these left the plant by The increasing complexity of models and country road. Only around 33 per cent of the cars leave the plant by specifications is fuelling an industry-wide concentration on rail and these are destined for Europe. the supply chain between Tier Ones and VMs, particularly Cars for the UK market are distributed by road, as are those assembling modules or making parts that require those being exported to the rest of the world via the Port of complex late configuration. At Oxford it takes six hours to Southampton. assemble and fit cockpit modules from the supplier in “It is not yet cheaper to move cars by rail than by Evesham – Intier Automotive. These are then received 4 road,” says Hattler. “We require an improvement of rail service to increase flexibility and then I think we can look Mini production at Oxford at competition between road traffic and rail. We are a customer-orientated operation, we don’t produce stock, Production area 453,248m2 we produce according to customer demand, so we require 3,000 parts from 200 suppliers flexibility. Just being able to use the rail Monday to Thursday, 119 suppliers based in the UK point A to point B, doesn’t help us because then we would April 26 2001 volume production of Mini begins at Oxford raise our stock level; this is economically unviable. We need 2001 42,395 Minis built similar flexibility to road but rail can never be as flexible as 2004 189,492 Minis built the road because you actually have to schedule stuff – on a February 2005 100,000 Minis sold in USA daily basis at least – to have flexibility.”

Automotive Logistics • May/June 2005 25 cover story

Supplier proximity Oxford figures The BMW flagship plant in Leipzig, officially opening on 13 ILC – 22,000m2 May, was built to accommodate major component suppliers Service provider – Rudolph & Hellmann on site in the supply centre, but also to allow for competing logistics service providers on site (see page 22). Hattler says: Conventional Block/bulk stack 2,000 locations “With the headliner, the supplier has moved closer to the Very narrow aisle racking 9,000 locations plant (into the warehouse) to do the late configuration. This 7 VNA trucks is the big difference to Leipzig, where the main suppliers are Kitting operations: sitting in the supply centre. We can’t do that, most of our A/D Post Finisher; Armrests; Hinge/Bumper Covers suppliers are around Banbury and Birmingham. These areas have a higher unemployment rate so it is very difficult for the Contractor sequencing: suppliers to move to Oxford – space in the plant wouldn’t be Struts and dampers; Quarter casings a problem but the availability of people and the much higher cost of living in the Oxford area are constraints. Supplier late configuration and sequencing: “With Leipzig (where suppliers are located inside Headliner (Gruppe Antolin); Harnesses (Draxelmaier) the centre) it is state of the art. Here we didn’t have the Additional services: opportunity to build from scratch, we had a brownfield site Cross-docking operation for Rolls-Royce and the main issues are the availability of suppliers near us and the structure of Oxford, this is the big difference. To do Handles 14,000 pallets a week the same in the supply centre in Oxford as we are doing in Leipzig is almost impossible.” Annual pallet throughput (2004) 680,000 Nevertheless, BMW Group has imported an LSP to manage 400 lorries a week. the inbound flows into the ILC, and also restructured the use of the space to support flexibility in spite of physical limitations of the site, both in the ILC and in manufacturing. lineside, after a process that takes them in sequence “We produce according to KOVP – a customer oriented though the ILC, and delivered to the assembly line via the sales and production process that, at the end, means every connecting tunnel. customer gets the car he wants. You have almost unlimited Space allocated within the ILC allows certain suppliers, options, so for us it was important for us to have flexible such as Gruppe Antolin, to perform late configuration and structures here on site. There was the ILC, but we had sequencing for the headliner, and Draxelmaier does late to work closely with the suppliers, starting with our shift configuration for harnesses. pattern. If we had just-in-time suppliers then they needed Until very recently bumpers used to be configured late to have the same three-shift pattern as we have, so they had in the warehouse, but the supplier (Dacona) now delivers to develop suppliers in that direction as well. Delivery in late-configuration bumpers in sequence from its facility in sequence is important for us because the complexity of our Banbury. main modules demands that our suppliers deliver those in sequence to us.” Integrated support Hattler emphasises: “Logistics is not just the parts supply, Since the beginning of March this year, Rudolph & it is also the control and steering of the vehicle supply. Hellman has been running operations in the ILC for BMW, Logistics here has to control all the technologies – what has to a service that Rachel Stevens, contract manager in the ILC, described to me as “excellent”. Stevens manages the budget and performance of the logistics suppliers, so she is responsible if supply disrupts the assembly line. Under the new arrangement, BMW leases and maintains the building but Rudolph & Hellman provides the logistics services in this warehouse. Parts are automatically requisitioned as cars progress along the assembly line past trigger points. Tow trains are configured in line with drop sequence for the relevant fit points and there are 35 tow train trips per hour (full and empty). The packaging for parts supply is operated in a closed loop though the use of a pallet park next to the ILC. Trucks drop off parts and pick up the “steer” at the same time. The suppliers manage the packaging loop and inform BMW if they don’t have enough packaging. BMW will then undertake The integrated logistics centre uses a combination of blockstack areas and very to source more. narrow aisle (VNA) areas to make the best use of the space

26 Automotive Logistics • May/June 2005 cover story

be produced and when – so we have flexible tools as well, to Ralf Hattler steer, for example, the painted body flow and to arrange the sequence we require for our assembly. Logistics at BMW is Ralf Hattler is director of basically parts supply and production control and planning, Logistics, IT and Structure what has to be produced at the plant, on what day, in what Planning, BMW (UK) sequence.” Manufacturing, based at Oxford. His career with BMW Extended production networks Group stretches over 10 years This integrated approach to logistics, which is also evident and started with project-to- project work before two years in the physical structure of its new manufacturing facilities in South Africa as the 3-Series such as Leipzig, gives BMW an advantage: “It is important project logistics manager. for us to have the overall optimum for the whole production Next he took over the logistics system,” says Hattler. “When we achieve that then we can planning at BMW’s corporate use the potential of the supplier base. It is not possible if we headquarters in Munich. He have interruptions in our process that we then expect our took up his current post in suppliers to deliver just-in-sequence. We have to interfere. October 2003. “Logistics is not an afterthought to manufacturing at BMW. You cannot look just at the assembly or then we need three or four days of inventory. We cannot give manufacturing process, you have to consider the suppliers as a general target but we make our supply chain as lean and as well. We call it the ‘Extended Production Network’ because, flexible as possible. when you recognize how many parts are produced outside of “We are currently in the stages of planning for the Mini BMW, like the cockpit or the seats – major components that successor and the structure will change, we will get more and are delivered directly to the assembly line – you have to look more complex modules, like front-end modules, for example, at the cooperation with the suppliers, the links, especially or cockpit development. But the complexity is also going concerning the lineside supply in . They have to come ahead and we will have increased just-in-sequence supply just-in-sequence as well; we have almost unlimited range and will replan the whole plant from a traffic flow point of of complexity for colours for options, so that has to link view because of the planned increase in volume. together very closely.” Hattler continues: “We are restructuring the whole logistics area in the assembly building as well. The increased Lean targets complexity means we are designing the whole assembly BMW doesn’t call itself a lean manufacturer, as Toyota does process again, including additional docks and traffic flows, but, according to Hattler the target is to be lean: “We have to support just-in-sequence supply. We don’t have just to look at our suppliers. Here in the UK we have a complex assembly and then logistics planning, we have groups, we supplier base, both in the UK and mainland Europe, so what have the philosophy of ‘lineback planning’, meaning we have we have to do with logistics planning in advance of the new to find the optimum for the whole supply chain back to the model is very complicated. suppliers by an integrated process. And we always have to “We need to look at each and every supply chain, and then look at the demands of assembly on the logistics structure. we have to optimise it. We don’t have a general target for Then we try to optimise it and build the whole chain inventory because sometimes a part is coming from Italy, and backwards up the supply chain.”

Vehicles for the UK market are distributed by road (here by Walon), as are those being exported to the rest of the world via the Port of Southampton

28 Automotive Logistics • May/June 2005