Published on 06-Jun-2011
Validated on 03 Dec 2012
Customer:
BMW Group
Industry:
Automotive
Deployment country:
Germany
Solution:
Business Integration, Optimizing IT, Optimizing IT, Smarter Planet
IBM Business Partner:
SAP
Overview
BMW Group manufactures its products at 24 locations in 13 countries on four continents. In every location, the same quality, security, process and production standards are maintained. For decades, the central parts distribution arm of BMW Group has played an integral part of the operations at the BMW site in Dingolfing, Germany. The distribution services provide parts to the BMW dealership network worldwide, consisting of over 3,000 dealers, with original parts for products offered under the BMW Group brand. Distribution is supported by 18 regional Distribution Centers in key locations.
Business need:
To ensure the BMW Group’s parts distribution processes meet future needs, a worldwide implementation of a standardized but still individually customizable inventory optimization solution for the parts distribution was required. The solution needed to integrate seamlessly with BMW Group’s standard IT environment including SAP R/3 and SAP APO.
Solution:
IBM Global Business Services implemented IBM Dynamic Optimization Solution (DIOS) for intelligent inventory optimization on a part number level. Before the implementation, IBM Global Business Services designed the solution and performed extensive performance tests with real data from a warehouse in Italy to make sure the solution met BMW Group’s specific requirements. IBM Global Business Services worked with the IBM Research Lab in Rüschlikon, Switzerland, to optimize and customize the IBM DIOS algorithms.
Benefits:
IBM DIOS allows BMW Group to carry out flexible segmentation of target service levels to realize optimal stock levels and increased parts availability. After just a few months inventory stock levels in USA warehouses were reduced by 10 percent without affecting fulfillment of target service levels. The dealers benefit from excellent availability of parts even when sales are heavily fluctuating and new car models are launched. Furthermore IBM DIOS provides the procurement managers with ideal order times for all orders to help them boost efficiency in purchasing.
Case Study
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About the company
BMW Group manufactures its products at 24 locations in 13 countries on four continents. In every location, the same quality, security, process and production standards are maintained. For decades, the central parts distribution arm of BMW Group has played an integral part of the operations at the BMW site in Dingolfing, Germany. The distribution services provide parts to the BMW dealership network worldwide, consisting of over 3,000 dealers, with original parts for products offered under the BMW Group brand. Distribution is supported by 18 regional Distribution Centers in key locations.
General information about the project
To ensure the parts distribution is fit for the future and to maximize efficiency, BMW initiated project ATLAS (Advanced Parts Logistics in After Sales) in 2005, a program to establish a new application based on SAP to support parts distribution worldwide. An important part of ATLAS is an IBM solution for inventory optimization on a strategic and operational level called DIOS (Dynamic Inventory Optimization Solution). IBM DIOS is an inventory planning system based on highly complex and individually customizable algorithms to optimize planning with respect to product line planning, order volumes, minimum inventory levels, service levels, and order points for rush jobs. For demand planning SAP Advanced Planning and Optimization (SAP APO) is being used.
Challenge
To ensure the BMW Group’s parts distribution processes meet future needs, a worldwide implementation of a standardized but still individually customizable inventory optimization solution for the parts distribution was required. The solution needed to integrate seamlessly with BMW Group’s standard IT environment including SAP R/3 and SAP APO.
Solution
IBM Global Business Services implemented IBM Dynamic Optimization Solution (DIOS) for intelligent inventory optimization on a part number level. Before the implementation, IBM Global Business Services designed the solution and performed extensive performance tests with real data from a warehouse in Italy to make sure the solution met BMW Group’s specific requirements. IBM Global Business Services worked with the IBM Research Lab in Rüschlikon, Switzerland, to optimize and customize the IBM DIOS algorithms. The solution was first put into production at the company’s warehouse in Italy, before being rapidly rolled out to six key warehouse locations in the USA. The solution provides BMW Group with an Intelligent Supply Chain. Following the implementation, IBM will offer ongoing support to the BMW Group, providing consulting services and specialist knowledge for continuous improvement of the solution.
Benefits
The solution is already in production at BMW Group warehouses in Italy and the USA, and has greatly exceeded the customer’s expectations. IBM DIOS allows BMW Group to carry out flexible segmentation of target service levels to realize optimal stock levels and increased parts availability. Thanks to IBM DIOS, after just a few months inventory stock levels in USA warehouses were reduced by 10 percent without affecting fulfillment of target service levels. The dealers benefit from excellent availability of parts even when sales are heavily fluctuating and new car models are launched. Furthermore IBM DIOS provides the procurement managers with ideal order times for all orders to help them boost efficiency in purchasing. Overall, the solution lowers inventory levels and reduces process costs, resulting in sustainable cost savings for BMW Group’s parts distribution logistics.
Additional Smarter Planet information:
Instrumented: The solution relies on Advanced SAP Extended Warehouse Management (SAP EWM) and other SAP components to manage the complex warehouse data for the overall inventory management system.
Interconnected: IBM DIOS is seamlessly integrated with SAP and even changes order parameters.
Intelligent: The customized algorithms developed by IBM Research allow IBM DIOS to take into account the uncertainties in supply processes.
Products and services used
IBM products and services that were used in this case study.
Service:
GBS BAO: Advanced Analytics and Optimization, IBM-SAP Alliance
Legal Information
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