BMW - striving for excellence and making time for innovation

Andreas Wendt, BMW Board of Management Member for Purchasing and Supplier Network talks to Simon Duval Smith about using better time management and faster communication to speed the supply chain and stimulate process improvement at the carmaker and its suppliers

On October 1, 2018, Dr.-Ing. Andreas Wendt was appointed to his new role. He was trained as a mechanical engineer and had been Director of the BMW Group’s largest German plant in Dingolfing, since early 2017. Prior to that, Wendt managed the company’s Regensburg plant for eight years. He began his career at BMW Group in 2002, as head of Strategy Development Production. Wendt then went on to manage the production of 'Suspension and Drive Train Components' for Plants Landshut, Dingolfing and Berlin. From May 2006 until moving to Regensburg, Wendt was director of the BMW Group’s largest engine plant in Steyr, Austria. This has given him a great passion for the 'DNA' of BMW vehicles and particularly its engines, and this devotion to the character of a BMW was something I especially wanted to explore in our meeting at the recent Geneva Motor Show.

With BMW manufacturing vehicles in so many locations, the structure of the purchasing organisation has changed a great deal over the years and its centralised sourcing decision-making has evolved, as Andreas Wendt tells me. "First of all our philosophy at BMW is, like most OEMs, that production follows the market. This means that the supply chain has to follow also. As you say, we are active all over the world and our current organisational structure has a core group dedicated to process change and the move to new technologies in digital, body-in white and powertrain, for example. In addition to these initiatives we have a global cluster; we have a centre in Europe but also we have appropriate resources in NAFTA and in China, two very important regions for us."

Innovation opportunities for the supply base

The changing balance of innovation - between OEMs and suppliers - has never been more relevant as EV, connected, autonomous and sharing ownership is increasing and these moves throw up many more opportunities for suppliers to contribute to OEMs' technology portfolio. Does Wendt see more innovation opportunities for suppliers? He says that we are in a time of important opportunities for all players in global automotive. "It is important that we [BMW and its suppliers] jointly try to find the best opportunities to satisfy, surprise and delight the end customer and our task at BMW is to integrate all the possible technology offerings to the best possible package for the customer."

Future outsourcing for EV technology

Many people have said that suppliers will be producing battery packs, motors, controller hardware and software for EVs and hybrids to be almost generic, changing the balance of OEM/supplier input to vehicles, and that an OEM making its own batteries would be like drilling for oil to power its petrol or diesel fleets. While BMW has always prided itself on its distinctive and technologically advanced powertrains, is the thought of an off-the-shelf powertrain or even a generic platform appealing to Wendt? He says that if. "If it offered a strong and decisive enough BMW 'USP' for its customers, BMW would even drill for oil for its i.c.-engined cars. In the case of electro-mobility, the supply chain from the battery to the motor is so important that we are keen to have really deep process knowledge in this area and that is why we are active in nearly all tiers of the EV supply chain. This means that we produce the majority of the electric motors that we use. We are building the high-voltage package ourselves, including the control units, and we have also just established a technical battery technology research centre.”

Coming back the Ultimate Driving Machine' character of a BMW vehicle, Wendt says that whether it is petrol, diesel or electric powertrain, the customer expects to feel the brand's DNA in the vehicle. "We are premium car makers; our customer does not buy an engine, they buy an integrated package which they feel is a BMW through and through. We are not just assemblers of parts, we integrate performance in a premium vehicle."

Responsible and sustainable raw materials

There has been much talk of exploitation of, and dangerous working conditions for, cobalt and lithium miners in Africa and other countries and Wendt is adamant that BMW is doing everything it can to ensure that its materials come from sustainably-run and safe sources. “We are active in the raw material sourcing sphere, all the way back to the mines where the lithium and cobalt are harvested. There is no significant mine that we source from anywhere in the world that a BMW purchasing manager has not visited." I suggest that BMW might join a council to work with other OEMs to ensure good working conditions and practices in places where these materials are mined, such as the Democratic Republic of Congo. He says that BMW is working with BASF and the GIZ, a federal enterprise which supports the German Government in achieving its objectives in the field of international cooperation for sustainable development. "We work with the GIZ to improve the lives of families who are working in this area. We want to help these people, and not just in the larger mines, to work under healthy conditions. We are also members of responsible sourcing councils for copper and aluminium."

The One Belt and New Silk Road

The One Belt/New Silk Road route for inbound parts in and out of Europe and China is an exciting but some would say under-utilised route and I ask Wendt if he thinks that there needs to be more collaboration between OEMs, and between suppliers, to make it really cost-efficient. "We are buying space on this route and in my opinion this railroad connection is an interesting alternative to flight and shipping; we are already using it to transport parts between Leipzig and Shengyang and there is much more to come."

Local and global suppliers

In the newer locations where BMWs are being made, we still see many of the traditional global suppliers working with the carmaker and I ask Wendt whether he and his teams are truly open to locally-owned suppliers coming forward and bidding for BMW business. He says that BMW is generally well-balanced in its choice of suppliers. "I think it is important to keep a close eye on local vendors in every region in respect of their leadership, competence and responsiveness, in order to make our partnerships fruitful. It is all about leadership and creating the BMW 'spirit’ for the customer. Global suppliers must always keep an eye on how local conditions have to be dealt with in order to maintain top quality and service to us." I ask Wendt about how he is looking at the next major production and sales areas in the world, such as North Africa. He says that he is open to locally-owned suppliers: "Generally we are very open and always interested in new opportunities in every territory, new and established, and the purchasing department is investigating these opportunities very thoroughly. 

“We have three important parts to the business, one is purchasing, one is the quality management of components and one is concerned with in-house production of parts. We are doing this with battery packs in order to gain and maintain knowledge of processes and to help with this we have a cost engineering department with more than 300 engineers. With this team we know what is involved in every process of making supplied parts and systems and how quality and cost can be maintained."

IT infrastructure and communication

As BMW spreads its sales and production footprint around the globe so it comes into contact with differing levels of IT expertise and infrastructure at suppliers and I wonder if Wendt is happy with the level of IT infrastructure of his supply base, and what initiatives or programmes would he like to see the suppliers adopt to 'mesh' better with BMW's purchasing organisation? He says that, "A purchasing director is never happy! In IT infrastructure we have a valid and workable set of connections, knowing and pointing out that IT connectivity is important for all real-time connections with our partners [suppliers]. To avoid any kind of miscommunication, in some cases it could be helpful for us to enlarge these activities in order to reduce the interference of different systems and achieve simpler and more real-time communication. Depending on the maturity of the supplier we might have to use simpler systems but the point is always: 'keep it simple but accurate'. 

“We are dealing with a network of some 4,500 first tier suppliers and we are shipping 30 million components per day. This is an ocean of opportunities for incidents and my request is for no surprises and first time right zero defects. Therefore information and communication but also strong leadership and the right mindset are important."

Striving for excellence by better management

Wendt says that following the tenets of good time management and simply getting the job done in good time will leave both BMW and suppliers more time for innovation and process improvement. "Our key success factors are flexibility, delivery, safety, quality and cost but also innovation; these are all driven by the same 'pinion' in the middle, which is the desire for excellence and to make each day a day without any incidents," he says, adding: "This is very important in order to give us time; in a typical week, if we can achieve our goals by say, Wednesday evening, then we have time on Thursday and Friday to think about innovation and not about sorting out any shipment problems or quality issues.

"This is really my philosophy; in the past I showed while working as a plant manager for many years, what is possible when you really strive for excellence, when you try to make a difference and really aim for zero defect, you can achieve seamless launches and you can make a tremendous difference in resolving internal issues and so make time to shape the future.

"My ambition in my new role [as Board of Management Member for Purchasing and Supplier Network] is to carry over this mindset as an entire way of thinking, in our entire supplier network. This mindset also includes treating our supplier partners with respect in order to share the BMW values of trust, transparency and openness."

Wendt says that maintaining the sustainability of suppliers is vital and this is enabled by good process management. "I am interested in going through the various processes, to understand where we have waste in our organisation and in our partners' businesses, and at all places in between. Sustainability of the supply base will follow from this."

What football can teach the automotive world

Wendt rounds off our discussion by talking about his beloved game, football. He says that if the industry could just play Tiki-Taka, the Spanish style of play in football characterised by short passing and movement, working the ball through various channels, and maintaining possession, then we would all be winners. "If we just played Tiki-Taka, this would be the best. As in football, we are now working on shorter deadlines, the ball is going forward very fast, unlike in the 1960s or 1970s when we made very long passes in what we called Rumpelfussball [a slower and some would say scrappy style of play]. Now, in making tomorrow’s cars, we must emulate Tika-Taka, we must measure every pass and make every one count, and count quickly." 

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