How Bmw Is Improving The Way It Works Accounting Essay


This report will be looking at how BMW is improving the way it works. It will focus on how BMW deals with environmental protection, just in time production and employment practices and what effect these improvements have on the company.


The first area this report will look at is how BMW is improving its environmental protection practices. BMW is a charter member of the U.S. Environmental Protection Agency's (EPA) National Environmental Achievement Track which recognises companies for their environmental performance; it is also present on the Dow Jones Sustainability Group Index, which rates environmentally friendly companies (Walker and Bird 2005). The BMW group looks to "conduct responsible and sustainable environmental policies, which are also economically viable." (BMW Group 2003). The BMW Group have set out environmental guidelines as the basis of how they conduct their daily operations as a means of achieving this. BMW aims to use resources in a responsible and efficient manner and undertake to protect our environment for the long term. As a result all divisions of the BMW Group are guided by the International Environment Charter (ICC Charter for Sustainable Development). The group realises it has a corporate commitment and responsibility for environmental protection which reaches to all members of the BMW Group, managers and executives are expected to implement the environmental guidelines and to motivate employees through example setting to assume the same responsibility (BMW Group 2003).

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The BMW Group has made a conscious decision to review the success of the environmental protection measures and to make further improvements where necessary or as directed by regulation or law. BMW strive to reduce the effects of their operation on the environment wherever technical, scientific or managerial know - how can achieve economically viable standards which will always exceed those required by law. In development, design, production and the operation of facilities, BMW use technical and economic means for conserving resources and minimising impact wherever possible especially when introducing new production processes and methods. Any new production process or method is assessed to consider its environmental compatibility in the context of technical, commercial and economic decisions.

As stated in the ICC Charter BMW "take into consideration the efficient use of energy and raw materials, the sustainable use of renewable resources, the minimisation of all adverse environmental impact and waste generation, and the safe and responsible disposal of residual wastes" (BMW Group 2003). The BMW group implement environmental management systems to assess all significant environmental aspects in advance.

BMW are fully aware of their responsibility to the environment and are consistently applying advanced technology to minimise exhaust emissions, fuel consumption and noise emissions. By designing their products to an optimum level BMW ensure that any environmental impacts are kept to a minimum and by educating customers on the use and maintenance of BMW vehicles the group aims to continue protecting the environment long after the vehicle has left the factory (BMW Group 2003). Another way BMW has found of protecting the environment once the vehicle has left the factory comes at the end of the vehicles life where BMW promotes the recycling of the vehicle to avoid waste generation and make use of the secondary raw materials, This decreases the overall energy and resource consumption in production and operation while completing the cycle for the reuse of materials leading to less waste going to landfill and polluting the environment. BMW look to preserve resources and improve the environmental compatibility of their vehicles by developing alternative propulsion technology such as hydrogen cell and biofuel which are constantly being upgraded and improved as progression in technology allows.

BMW have developed the CleanEnergy system which gives vehicles both a Hydrogen and petrol tank which automatically switches between tanks depending on what is required from the engine. The engine combustion of hydrogen produces only energy with water as a waste product which gives a theoretically emission free fuel and possible a future free from emissions. (BMW Group n.d.). Some critics of BMW accuse them of "greenwash" in reference to the BMW Hydrogen 7 which is the first car to be made using CleanEnergy Technology. It is claimed that the emissions produced during hydrogen fuel production outweigh the reduction of tailpipe emissions and that the Hydrogen 7 is a distraction from more immediate and practical solutions for reducing emissions (Wüst 2006). BMW do not limit the alternative fuel philosophy to their vehicles as is seen in the example of the BMW plant in Spartanburg in the U.S. which uses methane gas from a nearby landfill for 60% of its energy needs which resulted in the plant producing almost 60,000 tonnes less C02 per year. For this achievement the Spartanburg plant received the Energy Partner of the Year 2007 from the Us Environmental Protection Agency (EPA). Amid other developments on the site this year the Spartanburg plant will emit 92,000 tonnes of C02 less and save 7 million U.S. dollars per year compared to 2008 (BMW Group 2009) (Njeri 2009).

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With around 16 billion ton-kilometres per transported to supply the BMW Group's production sites with materials, deliver spare parts and accessories to the sales operations and distribute new vehicles worldwide. BMW needs to minimise the environmental impact this creates by using efficient transport logistics, such as meeting goals in increasing the percentage of low emissions carriers and capacity utilisation. BMW look at the percentage of tonne kilometres covered by rail, road, sea and air and Aim to improve these figures annually. BMW sends their transport agents orders bundled according to volume and increasingly only pay them for the volume transported. This has the effect of incentivising the transport agent to organise services in a more time efficient and environmentally friendly manner so capacity is used and empty runs are avoided.

Reusable disposable packaging has also been optimised in order to maximise freight capacity. (BMW Group 2009)

BMW always try to select the method of transportation which produces the lowest emissions. As a result very little if anything is shipped via air as sea freight is the preferred method. Over land road haulage is minimised and rail transportation is maximised wherever possible. In 2008 more than half of all new vehicles left the plants by rail with some plants dispatching as much as 90% of new vehicles to their destination by rail. Specialised trains are used to transport materials and spare parts and thanks to a new port in Brunswick distances cover by road freight in the U.S. have been reduced dramatically. (BMW Group 2009).

BMW use Just In Time production (JIT) which is an inventory strategy that strives to improve a business' return on investment by reducing in-process inventory and associated costs. Implemented correctly, JIT can dramatically improve a manufacturing organisation's return on investment, quality and efficiency. The BMW Group is improving the way it works in the area of Just in Time production to better meet the more specific needs of its customers. BMW customers can make many requests for add-ons and can make their own specifications for their vehicle so JIT is very important. The BMW Spartanburg plant produces many of the latest vehicles such as the X5 Sport Activity Vehicle and the Z3 Roadster. BMW use mySAPâ„¢ Automotive to run a tight supplier network that keeps parts coming to the two assembly lines in a JIT mode to meet customer demand (My SAP 2002).

mySap Automotive receives custom configured manufacturing orders from the BMW planning system. The orders include all the parts required to build each car, the X5 for example has hundreds of components listed in the vehicle bill of materials. mySAP generates the delivery schedules for each part to match BMW's assembly line planning and sequencing. These long term forecasts and short term JIT delivery schedules are then sent by BMW to its suppliers. BMW has an electronic data interchange with its larger suppliers whereas other suppliers can access the mySAP Automotive Supplier Portal where BMW posts the requirements to provide up to date information on its delivery needs. Using only an internet browser, suppliers can view release schedules, purchasing documents, invoices and engineering documents in real time.

When suppliers ship parts they send BMW advance shipping notifications (ASNs) to provide the car manufacturer with exact information on part counts and delivery dates so that when the parts arrive at the BMW delivery dock they can be transferred directly to the manufacturing lines (My SAP 2002). BMW also uses the mySAP Automotive system to monitor production status in real time as it registers production confirmation information every three minutes, any parts consumed during assembly are removed from the inventory count and costs are posted to calculate the value of work in progress.

mySAP Automotive helps BMW to reduce order to delivery time and strengthens the car manufacturers supply chain activities in the areas of demand planning and the tracking and tracing of material deliveries. This significantly reduces time to customer. By using this JIT system BMW efficiently manages material flow. JIT allows BMW to keep the right level of stock at the right stage of production in order to personalise every vehicle to meet the customer's specifications, for example one customer may want sat nav, leather interior and snow tyres whereas another customer may want fabric interior, alloy wheels and cruise control. The JIT processes that BMW has in place allows for this level of personalisation where other companies may only make two versions of a vehicle for example the Nissan Micra where you can either have the vehicle with air conditioning and cruise control or you can have the vehicle with neither you cannot have one or the other.

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BMW are said to have now entered the post just in time era and are currently looking to shift from the just in time method to delivery on demand. Many BMW plants are attempting to make ordering a vehicle and getting it on the same day as easy as possible, at first glance this seems quite an impossible task. To make this possible BMW is making major changes in manufacturing processes; Vehicles are being redesigned to reduce variations in sheet metal to reduce the number of differences in body structure. For example the current three series has only two body variations whereas the one before it had up to sixteen (Chappell 2002). BMW has also improved from JIT by changing its procedure of assigning vehicles to customers. Previously when BMW received an order for a car it would stamp a VIN number onto a freshly welded body which meant the vehicle remained assigned to one customer as it moved through the production process. Now BMW assigns the VIN once the body of the car is constructed and painted. This purposeful delay gives customers longer to change their minds and gives BMW more scheduling freedom. At dealerships BMW has introduced a computer ordering system which allows dealers to work with customers to configure the vehicle wanted, when submitted the delivery date will return to the screen in five seconds. When the order is submitted, it goes directly to BMW's central office in Munich where orders will be calculated nightly and distributed to factories worldwide. (Chappell 2002). By adopting this post JIT method BMW are becoming more flexible to meeting the customers' needs while protecting themselves from one customer changing their minds about a vehicle throwing off the production schedule.

BMW believes that companies are made by people and the more people encouraged to draw on individual competencies, ideas and capabilities, the better the company performs as a whole so the final area this report will look at is BMW's employment practices. BMW bases its human resources and social policies on guidelines detailed in the United Nations Global Compact, the ICC Business Charter for Sustainable Development as well as the BMW Group's Joint Declaration on Human Rights and Working Conditions. BMW promotes the expansion of skills as well as employees' mental and physical productivity. They support a diversity of cultures and ways of life at the company by implementing a variety of working models to help employees achieve a work-life balance.

BMW offers competitive, performance based pay as well as numerous benefits to reward employees for their commitment.

BMW shows appreciation to employees and the management by giving them the opportunity to actively shape the company by means of change management programmes. The company encourages the motivational management of staff and guarantees great employee satisfaction. (BMW Group 2009)

The BMW Group human resources organisation was restructured in 2009 to meet new targets they had set in corporate strategy. Due to the recent economic crisis and the subsequent need to reduce costs the BMW Group human resources sees itself mainly as an innovative, efficient network that assumes a global role in structuring ad designing processes. BMW offers much in terms of performance based remuneration; each employee receives a fixed remuneration of 12 monthly salaries. The fixed salary is complemented with further elements according to local conditions and is assessed and adapted once a year. There is no difference in remuneration between male and female employees. BMW also complements the fixed remuneration with participation in the corporate result. The amount of the company bonuses paid out is based on the overall result of the company. BMW also offer an individual bonus which rewards employees' individual performance and retirement benefits. BMW also offers additional benefits such as favourable conditions on vehicles, collective accident insurance for executives and additional health coverage for health services in India and China. (BMW Group 2009)

BMW is regarded as a family friendly company and has family policy within its human resources policy with the aim of helping employees find a balance between their career and personal objectives. BMW offers teleworking, part time work and sabbaticals to help employees deal with family and personal issues. BMW also offer 20 days unpaid leave per year, many of these flexible working schemes target male employees whose opportunities to take on responsibilities of childcare have improved dramatically. BMW look to actively attract female staff as they are clearly underrepresented among the company's intake from apprentices, interns, students and PhD candidates as well as in managerial positions. The share of female managers at BMW has risen 66% over the last six year and females' now make up 13% of BMWs workforce today (BMW Group 2009).

BMW actively look to guarantee workplace safety and ergonomics to keep staff healthy and to minimise the risk of occupational accidents by integrating staff with performance restrictions and by helping employees lead a healthy lifestyle. BMW have health and occupational safety management systems in line with OHRIS and OHSAS requirements at 12 out of 24 locations. This means that 80% of all employees are certified according to management systems. BMW also lead a variety of campaigns to keep staff healthy such as free health check-ups, nutrition campaigns and fitness concepts. BMW also has various programmes on addiction and disease prevention such as "dealing with alcohol" and "smoke free" as well as flu shots and breast cancer and colon cancer early diagnosis. These programmes raise awareness among employees and encourage employees to look after themselves by taking advantage of these offers.

In conclusion BMW is clearly an industry leader in environmental protection, they are creating new emission free technologies and investing in the infrastructure required to implement these technologies. BMW implement recycling and waste minimising practices in all of their plants and use renewable energy sources to minimise the effects their manufacturing processes have on the environment. BMW have also improved on the just in time production process and have developed delivery on demand to make their production processes more robust and less open to manufacturing delays. By using mySAP BMW has made full use of communication and automation to make the supply chain flow as seamlessly as possible. BMW have excellent employment practises and aim to assist employees in any way the can, from implementing working schemes such as teleworking and part time to looking after their employees' health and fitness through schemes that look at smoking, drinking and general health. Employees are key to BMWs success and are valued as such.