MODULE ASSIGNMENT
COST MANAGEMENT
&
Composed by:
Maylinda Irmayanti
023111146
EXCELLENT CLASS
TRISAKTI UNIVERSITY
PREFACE
The writer would like to acknowledge her countless thanks to the Most Gracious and the
Most Merciful, ALLAH SWT who always give her all the best of this life and there is no
doubt about it. Shalawat and Salaam to the Prophet Muhammad SAW and his family. This
paper is presented to fulfill one of the requirements in accomplishing 5th semester final
project ‘Cost Management’ courses.
In this paper the writer present the result of analyzing cost management in Bayerische
Motoren Werke or in English named Bavarian Motor Works (BMW) company. The writer
collected the data before she made this paper.
In the process of making this paper, of course the writer got the guidance, direction,
correction, and advice. For the sense gratitude that deep inside, the writer also wish to express
many thanks to:
 Mrs. DR. Yvonne Augustine, Ak, MM. as lecturer Cost Management
 My parents who always encouraged me to complete this paper
 All friends in excellent class B that help me and support me to made this
assignment
Hopefully, this paper can be useful for readers and expanding horizons about
implementation of cost management in the real company. And do not forget also the writer
apologizes for any shortcomings here and there of the paper’s authors do. Please critique and
suggestions. Thank you.
Jakarta, November 3rd, 2013
Maylinda Irmayanti
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TABLE OF CONTENT
PREFACE ………………………………………………………………………………….. 1
TABLE OF CONTENT ……………………………………………………………………. 2
CHAPTER I INTRODUCTION …………………………………………………………. 3
1.1 Background ………………………………………………………………… 3
1.2 Problem Statement …………………………………………………………. 3
1.3 Objective …………………………………………………………………… 3
1.4 Methodology ……………………………………………………………….. 4
1.5 Systematization …………………………………………………………….. 4
1.6 Company Profile …………………………………………………………… 4
1.6.1 BMW Group ………………………………………………………… 4
1.6.2 Volkswagen Group ………………………………………………….. 7
CHAPTER II LITERATURE REVIEW …………………………………………………. 10
2.1 Cost Management and Strategy …………………………………………… 10
2.1.1 Cost Leadership ……………………………………………………. 10
2.1.2 Differentiation ……………………………………………………….10
2.2 Contemporary Management Techniques ………………………………… 10
2.2.1 The Balanced Scorecard ……………………………………………..10
2.2.2 Sustainability ……………………………………………………… 11
2.2.3 SWOT Analysis …………………………………………………….. 11
2.2.4 Value Chain ………………………………………………………….12
2.3 Activity-Based Costing ……………………………………………………..12
2.4 Six Sigma ………………………………………………………………….. 12
2.5 Lean Accounting …………………………………………………………… 13
CHAPTER III RESULT OF IMPLEMENTATION ………………………………………..14
3.1 Cost Management and Strategy ……………………………………………..14
3.1.1 Vision, Mission, and Strategy ……………………………………….. 14
3.1.2 SWOT Analysis …………………………………………………… 16
3.1.3 Value Chain …………………………………………………………. 20
3.1.4 Balanced Scorecard and Sustainability ………………………………22
3.2 Decision Process …………………………………………………………….27
3.3 ABC System ……………………………………………………………… 29
3.4 Six Sigma …………………………………………………………………... 36
3.5 Lean Accounting …………………………………………………………… 37
3.5.1 Supplier ……………………………………………………………… 37
3.5.2 Implementation of Supply Chain Management …………………….. 39
3.6 Environmental Accounting ………………………………………………… 40
3.6.1 Environmental Activities ……………………………………………. 40
3.6.2 Environmental Plan ………………………………………………….. 55
3.6.3 Environmental Benefit ………………………………………………. 57
CHAPTER IV CONCLUSION …………………………………………………………….. 63
REFERENCES …………………………………………………………………………….. 64
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CHAPTER I
INTRODUCTION
1.1 Background
Every company must have the vision to be achieved and the mission will be in the
running. How companies achieve that vision in accordance with their respective
companies in running it. Therefore the company with all their hard work to make
strategies to support the operations of the company in order to reach their vision. They
also used various approaches to achieve that vision, such as using the balanced scorecard
or sustainability. The company also makes the value of their company is high so that
customers will be loyal to the company. Therefore the company is building a strong value
chain.
The company is also maintaining the effectiveness and efficiency of the company in
many ways. As in calculating cost of production resulting in lower costs, companies can
use the ABC system which divides the cost drivers to each activity. Because of the wide
variety of ways to create the production company to effective and efficiency so it takes
the right decision making by managers that the company can achieve the goals of the
company.
Nowadays, companies must create value higher in the society so that the society loyal
to the product produced by companies. One of them is by keeping the environment and
help the community with social programs, such as charity. Therefore many companies do
Corporate Social Responsibility (CSR) to show how care they are to the environment. By
keeping the environment around them, the companies will get benefit as well, namely the
effectiveness and efficiency of their production due to CSR can reduce the cost of
production of the company.
1.2 Problem Statement
Based on background issues this paper contains cost management of BMW Group
compare to Volkswagen Group. Here is the problem that I want to solve:
1. How BMW Group and Volkswagen Group reach their vision?
2. How BMW Group and Volkswagen Group implemented the ABC system in their
daily activities?
3. How BMW Group and Volkswagen Group doing their decision making process?
4. Who is the supplier from each company?
5. What are the environmental activities of their companies?
6. What is the environmental plan in each company?
7. What is the environmental benefit in each company?
1.3 Objectives
The general objectives of writing this paper is to investigate the cost management that
implement in Bayerische Motoren Werke or in English Bavarian Motor Works (BMW)
company to compare with its rival Volkswagen Group (VW).
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1.4 Methodology
The process of making this paper is adopted by looking for all of the information from
internet and website of BMW company.
The writer also use the method of literature and content analysis method by adopting
the theories in the text book that the writer usually use which is Cost Management a
Strategic Emphasis 6th edition. Additionally, the writer also ask to her lecturer who
always give the information to the writer and help her along the way.
1.5 Systematization
This paper is arranged in a sequence in the form of chapter in which each chapter
consist of several sub-chapters in order to facilitate the reader understand the core of this
paper. Here’s part of it:
CHAPTER I
: INTRODUCTION
Background of cost management, problem statement, objectives, and
company profile of BMW company
CHAPTER II : LITERATURE REVIEW
Consist of theory about balanced scorecard,
CHAPTER III : RESULT OF IMPLEMENTATION
Consist of result of implementation balanced scorecard,
CHAPTER IV : CONSLUSION
This chapter contains two things. The first is conclusion and detailed
data that has been described in chapter III. It also included suggestions
that results of writers mind.
1.6 Company Profile
1.6.1 BMW Group
Bayerische Motoren Werke AG or in English Bavarian Motor Work,
commonly known as BMW or BMW AG, is a German automobile, motorcycle and
engine manufacturing company founded in 1916.
BMW headquartered in Munich, Bavaria, Germany. It also owns and produces
Mini cars, and is the parent company of Rolls-Royce Motor Cars. BMW produces
motorcycles under BMW Motorrad. In 2010, the BMW group produced 1,481,253
automobiles and 112,271 motorcycles across all its brands. BMW is part of the
“German Big 3” luxury automakers, along with Audi and Mercedes-Benz, which
are the three best-selling luxury automakers in the world.
Business Segments
The BMW Group – one of Germany’s largest industrial companies – is
one of the most successful car and motorcycle manufacturers in the world.
With BMW, MINI and Rolls-Royce, the BMW Group owns three of the
strongest premium brands in the automobile industry. The vehicles
manufactured by BMW set the highest standards in terms of aesthetics,
dynamics, technology and quality, borne out by the company’s leading position
in engineering and innovation. In addition to its strong position in the
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motorcycles market with the BMW brand, the BMW Group also offers a
successful range of financial services.
Locations
 Headquarters
BMW Group activities worldwide are coordinated from the corporation’s
head office in Munich. A city landmark, the “four-cylinder” tower at the
Olympic park is the nerve centre of organization which covers over 150
countries.
 Research and development
BMW Group research and development centre are: BMW Group
Research and Innovation Centre (FIZ), Munich; BMW Group Research and
Technology, Munich; BMW Group Car IT, Munich; Innovation and
Technology Centre in Landshut Plant; BMW Group Designworks, Newbury
Park, USA; BMW Group Engineering and Emissions Test Centre, Oxnard,
USA; BMW Group Technology Office, Palo Alto, USA; BMW Motoren
GmbH Steyr, Austria; BMW Group Technology Office, Tokyo, Japan;
BMW Group Development Office, Beijing, China.
 Production
The worldwide production network of the BMW Group is the backbone
for growth in all BMW global markets. The BMW Group currently has 28
productions facilities in 13 countries.
 Sales and marketing
BMW Group marketing subsidiaries are present in the following
countries: Argentina, Australia, Austria, Belgium, Brazil, Canada, Denmark,
Finland, France, Germany, Great Britain, Greece, Hungary, Indonesia,
Ireland, Italy, Japan, Luxembourg, Malaysia, Mexico, Netherlands, New
Zealand, Norway, Singapore, Poland, Portugal, Russia, South Africa, South
Korea, Spain, Sweden, Switzerland, Thailand, USA.
Compliance
The BMW Group’s corporate culture is characterized by clear responsibility,
mutual respect and trust. Lawful conduct and fair competition are integral to
BMW business activities and an important condition for securing the long-term
success of BMW company. BMW primary goal is to avoid risks which could
jeopardize the trust BMW customers, shareholders, business partners and the
general public place in the BMW Group.
For this purpose, the BMW Group has established a Compliance
Organization equipped with instruments and measures to help associates and
managers handle legal risks and therefore ensure legal compliance. Measures to
prevent corruption and anti-trust risks are particular focus. Together, the BMW
Group Compliance Organization and the BMW Group’s environmental and
social initiatives from the cornerstones or BMW corporate responsibility.
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Brands
 BMW

MINI
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
Rolls-Royce Motor Cars

BMW Motorrad
1.6.2 Volkswagen Group
Volkswagen Group (parent company Volkswagen Aktiengesellschaft) is a
German multinational automotive company headquartered in Wolfsbrug, Lower
Saxony, Germany. It is the largest automotive company in the world measured by
revenue. It designs, manufactures and distributes passenger and commercial
vehicles, motorcycles, engines, and turbo machinery and offers related services
including financing, leasing and fleet management. In 2012, it produced the thirdlargest number of motor vehicles of any company in the world, behind General
Motors and Toyota. It has maintained the largest market share in Europe for over
two decades. As of 2013, it ranked ninth in the Fortune Global 500 list of the
world's largest companies.
Volkswagen Group sells passenger cars under the Audi, Bentley, Bugatti,
Lamborghini, Porsche, SEAT, Skoda and Volkswagen marques. It is divided into
two primary divisions, the Automotive Division and the Financial Services
Division, and has approximately 340 subsidiary companies. The company has
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operations in approximately 150 countries and operates 100 production facilities
across 27 countries. It holds a 19.9% non-controlling shareholding in Suzuki and
has two major joint-ventures in China-FAW-Volkswagen and Shanghai
Volkswagen.
Volkswagen was founded in 1937 to manufacture the car which would become
known as the Beetle. The company’s production grew rapidly in the 1950s and
1960s, and in 1965 it acquired Auto Union, which subsequently produced the first
post-war Audi models. Volkswagen launched a new generation of front-wheel drive
vehicles in 1970s, including Passat, Polo and Golf, the latter became its bestseller.
Volkswagen acquired a controlling stake in SEAT in 1986, making it the first nonGerman marquee of the company, and acquired control of Skoda in 1994, of
Bentley, Lamborghini and Bugatti in 1998, Scania in 2008 and of Ducati, MAN and
Porsche in 2012. The company’s operations in China have grown rapidly in the past
decade with the country becoming its largest market.
Volkswagen Aktiengesellschaft is a public company and has a primary listing
on the Frankfurt Stock Exchange, where it is a constituent of the DAX index, and
secondary listings on the London Stock Exchange, Luxembourg Stock Exchange,
New York Stock Exchange and SIX Swiss Exchange. As of September 2012, the
government of Lower Saxony holds 12.7% of the company’s shares, granting it
20% of the voting rights.
History
Volkswagen was founded on May 28 1937 as the Gesellschaft zur
Vorbereitung des Deutschen Volkswagens mbH (“Society for the preparation
of the German People’s Car”, abbreviated to Gezuvor) by the National Socialist
Deutsche Arbeitsfront (German Labor Front). The purpose of the company was
to manufacture the Volkswagen car, originally referred to as the Porsche Type
60, then the Volkswagen Type 1, and commonly called the Volkswagen Beetle.
This vehicle was designed by Ferdinand Porsche's consulting firm, and the
company was backed by the support of Adolf Hitler. On 16 September 938,
Gezuvor was renamed Volkswagenwerk GmbH ("Volkswagen Factory limited
liability company").
In 1960, upon the flotation of part of the German federal government's stake
in the company on the German stock market, its name became
Volkswagenwerk Aktiengesellschaft (usually abbreviated to Volkswagenwerk
AG).
From the late 1970s to 1992, the acronym V.A.G was used by Volkswagen
AG as a brand for group-wide activities, such as distribution and leasing.
Contrary to popular belief, "V.A.G" had no official meaning, and was never the
name of the Volkswagen Group. On 30 September 1982, Volkswagenwerk
made its first step expanding outside of Germany by signing a co-operation
agreement with the Spanish car manufacturer SEAT, S.A. Three prestige
automotive marques were added to the Volkswagen portfolio in 1998:
Bentley, Lamborghini and Bugatti.
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From 2002 up to 2007, the Volkswagen Group's automotive division was
restructured so that two major Brand Groups with differentiated profile would
be formed, the Audi Brand Group focused on more sporty values – consisted of
Audi, SEAT and Lamborghini – and the Volkswagen Brand Group on the field
of classic values – consisted of Volkswagen, Skoda, Bentley and Bugatti – with
each Brand Group's product vehicles and performance being respectively under
the higher responsibility of Audi and Volkswagen brands.
Operations
Rooted in Europe, the Volkswagen Group operates in 153 countries.
Volkswagen Passenger Cars is the Group's original marque, and the other
major subsidiaries include passenger car marques such as Audi, Bentley,
Bugatti, Lamborghini, Porsche, SEAT, and Škoda. Volkswagen AG also has
operations incommercial vehicles, owning Volkswagen Commercial Vehicles,
along with controlling stakes in truck, bus and diesel engine manufacturers
Scania AB and MAN SE.
Brands
Our activities may focus on the automobile, but the Volkswagen Group is far
more than just a carmaker. A wide variety of mobility-related services round
off our portfolio.
Uniting a wide variety of brands and companies with all their individual
characteristics and focuses under one umbrella is a great challenge, especially
as the Volkswagen Group is committed to maintaining their individual
identities. But this is the only way all the brands and companies can make their
own contributions to the common value stream and form cornerstones of the
Group.
The model range of the Volkswagen Group - Overview including Links to the
international Brand Websites.
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CHAPTER II
LITERATURE REVIEW
2.1 Cost Management and Strategy
In developing a sustainable competitive position, each firm purposefully or as a result
of market forces arrives at one of the two competitive strategies: cost leadership or
differentiation.
2.1.1 Cost Leadership
Cost leadership is competitive strategy in which a firm outperforms competitors
in producing products or services at the lowest cost. The cost leader normally has a
relatively large market share and tends to avoid niche or segment markets by using
the price advantage to attract a large portion of the board market. A potential
weakness of the cost leadership strategy is the tendency to cut costs in a way that
undermines demand for the product or service.
2.1.2 Differentiation
Differentiation is a competitive strategy in which a firm succeeds by developing
and maintaining a unique value for the product or service as perceived by
consumers. The differentiation strategy is implemented by creating a product or
service that is unique in some important way, usually higher quality, customer
service, product features, and innovation. A weakness of the differentiation strategy
is the firm’s tendency to undermine its strength by attempting to lower costs or by
ignoring the necessity of having a continual and aggressive marketing plan to
reinforce the differentiation.
2.2 Contemporary Management Techniques
Management accountants, guided by a strategic focus, have respond to the six changes
in the contemporary business environment with 13 methods that are useful in
implementing strategy. The first six methods are the balanced scorecard/strategy map,
value chain, activity-based costing, business intelligence, target costing, and life-cycle
costing. The next seven methods help to achieve strategy implementation through a focus
on process improvement: benchmarking, business process improvement, total quality
management, lean accounting, the theory of constraints, sustainability, and enterprise risk
management. The writer will explain some of them.
2.2.1 The Balanced Scorecard
The balanced scorecard (BSC) is an accounting report that includes the firm’s
critical success factors in four areas:
Financial Performance – Measures of profitability and market value, among
others, as indicators of how well the firm satisfies its owners and shareholders.
Customer Satisfaction – Measures of quality, service, and low cost, among
others, as indicators how well the firm satisfies its customers,
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Internal Processes – Measures of the efficiency and effectiveness with which the
firm produces the product or service.
Learning and Growth – Measures of the firm’s ability to develop and utilize
human resources to meet its strategic goals now and into the future.
Here is the picture of balanced scorecard
The strategy map is a method, based on the balanced scorecard, that links the
four perspectives in a cause-and-effect diagram.
2.2.2 Sustainability
Sustainability means the balancing of the company’s short- and long-term goals
in all three dimensions of performance – social, environmental, and financial.
2.2.3 SWOT Analysis
SWOT analysis is a systematic procedure for identifying a firm’s critical success
factor: its internal strengths and weaknesses and its external opportunities and
threats. Strength are skills and resources that the firm has more abundantly than
other firms. Skills or competencies that the firm employs especially well are called
core competencies. The concept of core competencies is important because it points
to areas of significant competitive advantage for the firm. In contrast, weaknesses
represent a lack of important skills or competencies relative to the presence of those
resources in competing firms.
Opportunities and threats are identified by looking outside the firm.
Opportunities are important favorable situations in the firm’s environment.
Demographic trends, changes in regulatory matters, and technological changes in
industry might provide significant advantages or disadvantages for the firm. In
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contrast, threats are major unfavorable situations in the firm’s environment. These
might include the entrance of new competitors or competing products, unfavorable
changes in government regulations, and technological change that is unfavorable to
the firm.
2.2.4 Value Chain
Value-chain analysis is a strategic analysis tool used to better understand the
firm’s com-petitive advantage, to identify where value to customers can be
increased or costs reduced,and to better understand the firm’s linkages with
suppliers, customers, and other firms in theindustry. The activities include all steps
necessary to provide a competitive product or serviceto the customer. For a
manufacturer, this starts with product development and new producttesting, then to
raw materials purchases and manufacturing, and finally sales and service.
2.3 Activity-Based Costing
Activity-based costing (ABC) is a method for determining accurate costs. While ABC
is a relatively recent innovation in cost accounting, it is rapidly being adopted by
companies across many industries and within government and not-for-profit
organizations.
An activity is a specific task or action of work done. An activity can be a single action
or an aggregation of several actions. A resource is an economic element needed or
consumed in performing activities. A cost driver is a factor that cause or relates to change
in the cost of an activity because cost drivers cause or relate to cost changes, measured or
quantified amounts of cost drivers are excellent bases for assigning resource costs to
activities and for assigning the cost activities to cost objects.
Activity-based costing (ABC) is a costing approach that assigns resource costs to cost
object such as products, services, or customers based on activities performed for the cost
objects. ABC recognizes the casual or direct relationships between resource costs, cost
drivers, activities, and cost objects in assigning costs to activities and then to cost object.
ABC assigns factory overhead costs to cost objects such as products or services by
identifying the resources and activities as well as their costs and amounts needed to
produce output.
Steps in developing ABC system:
1. Identify Resource Costs and Activities
2. Assign Resource Costs to Activities
3. Assign Activity Costs to Cost Object
Benefit of ABC System is better profitability measures, better decision making,
process improvement, cost estimation, and cost of unused capacity.
2.4 Six Sigma
Six sigma is an overall strategy to accelerate improvements and achieve
unprecedented performance levels by focusing on characteristics that are critical to
customers and identifying and eliminating causes of errors or defects in processes. Six
Sigma is based on a simple problem-solving methodology, DMAIC – Define, Measure,
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Analyze, Improve, and Control. Typically, the application of Six Sigma is done using
cross-functional teams, more or less on a consulting project basis.
Implementation tips of six sigma are:
 First and foremost, provide necessary leadership and resources
 Implement a reward system
 Provide ongoing training
 Judiciously select early projects
 Break up difficult projects
 Avoid employee lay-offs
2.5 Lean Accounting
Accounting for lean (lean accounting) uses value streams to measure the financial
benefits of a firm’s progress in implementing lean manufacturing. Lean accounting places
the firm’s product and services into value streams, each of which is a group of related
products or services.
There are three reasons why improvements in financial results typically appear later
than operating improvements from implementing lean manufacturing:
1. Customers will benefit from the improved manufacturing flexibility by ordering in
smaller, more diverse quantities.
2. Improvements in productivity will create excess capacity
3. Because full-cost accounting methods include all manufacturing costs as part of
product cost, fixed manufacturing costs are included in the balance sheet as part of
inventory until the product is sold.
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CHAPTER III
RESULT OF IMPLEMENTATION
3.1 Cost Management and Strategy
3.1.1 Vision, Mission, and Strategy
Like other companies, BMW group has it own vision and mission in achieving
the goals of the company. Here are the vision and mission from BMW group.
Vision:
To be a leader in the future development of individual mobility
Mission:
The BMW Group is the world’s leading provider of premium products and
premium services for individual mobility.
BMW group between cost leadership strategy and differentiation strategy, they
using differentiation strategy. It can look in their product such as BMW, Rolls
Royce, Mini, and Motorrad. Their cost to produce their product is not cheap
because BMW is have their specialty to make a luxury car that’s why BMW using
differentiation strategy.
BMW Group has a strategy too. To meet any challenges in their business,
BMW group formulated their Strategy Number ONE, which aligns the BMW
Group with two targets: to be profitable and to enhance long-term value in times of
change. And this applies to technological, structural as well as cultural aspects of
BMW group company. Since 2007, BMW group have been implementing various
initiatives in keeping with strategy’s for pillars: Growth, Shaping the Future,
Profitability and Access to Technologies and Customers.
BMW activities will remain firmly focused on the premium segments of the
international automobile markets. BMW mission statement up to the year 2020 is
clearly defined: the BMW Group is the world’s leading provider of premium
products and premium services for individual mobility.
In the other hand, the competitors of BMW Group such as Volkswagen Group
has it own vision, mission, and strategy to achieving it goals of the company. Here
is the vision, mission, and strategy of Volkswagen Group.
Vision:
Be the best solution in financial services to the clients and dealers of
Volkswagen Group.
Mission:
Strengthen Volkswagen Group business through innovative, competitive and
profitable financial services, overcoming the expectations of clients, dealers,
employees and shareholders.
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The strategy that used by Volkswagen Group is same with BMW Group which
is differentiation strategy because of the same reason with BMW Group. It is show
in their product such as Volkswagen, Audi, Bugatti, Ducati, Seat, etc.
Volkswagen Group strategy 2018 focuses on positioning the Volkswagen
Group as a global economic and environmental leader among automobile
manufacturers. They have defined four goals that are intended to make Volkswagen
the most successful and fascinating automaker in the world by 2018:
Volkswagen intends to deploy intelligent innovations and technologies to
become a world leader in customer satisfaction and quality
The goal is to increase unit sales to more than 10 million vehicles a year; in
particular, Volkswagen intends to capture an above-average share of the
development of the major growth markets
Volkswagen intends to increase its return on sales before tax to tat least 8% so
as to ensure that the Group’s solid financial position and ability to act are
guaranteed even in difficult market periods
Volkswagen aims to become the top employer across all brands, companies and
regions; this is necessary in order to build a first-class team
We are focusing in particular on the environmentally friendly orientation and
profitability of our vehicle projects so that the Volkswagen Group has the right
products for success even in more challenging economic conditions. At the same
time, this will mean that capital expenditure remains at manageable levels. Our
attractive and environmentally friendly range of vehicles, which we are steadily and
judiciously expanding, and the excellent position enjoyed by our individual brands
in the markets worldwide, are key factors allowing us to leverage the Group’s
strengths and to systematically increase our competitive advantages. Our activities
are primarily oriented on setting new ecological standards in the areas of vehicles,
powertrains and lightweight construction. Our modular toolkit system, which we are
enhancing on an ongoing basis, allows us to constantly improve production
efficiency and flexibility, thus increasing the Group’s profitability.
In addition, we want to expand the Volkswagen Group’s customer base by
acquiring new, satisfied customers around the world. In addition, we aim to increase
satisfaction among our existing customers. We shall continue the measures we are
currently taking to improve our productivity and quality regardless of the economic
situation and without any time limit. Key elements include standardizing processes
in both the direct and indirect areas of the Group and reducing throughput times in
production. Together with disciplined cost and investment management, these
efforts play a major role in ensuring that we reach our long-term profitability targets
and safeguard solid long-term liquidity.
Strategy Map helps the company set the best way to achieve the goals in short,
medium and long terms. With this powerful management scorecard tool, it is
possible to align all employees and their personal goals to the company’s ones. That
way, everyone understands how their activities contribute to make Volkswagen
Serviços Financeiros achieve its objectives.
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Complementing the effectiveness of our Strategy Map, we have FSWay values,
that provide supporting pillars of the strategy. All these links together allow the
company to seek long-term goals, shared by our headquarters, known as WIR2018.
This way, everyone understands the importance of our Strategy Map (101%
Performance), our Values (FSWay) and how to achieve our long-term goals
(WIR2018).
Source: http://volkswagenag.com
3.1.2 SWOT Analysis
Here is the SWOT analysis for BMW Group:
Strength
1. Constant product innovations and technological
advancements
2. Diversified portfolio including SUVs and Luxury Sedans
as well as sports car
3. Most of the cars are equipped with iDrive, an in-car
infotainment system, which connects all the inner
functionalities and capabilities
4. Great styling and elegant interiors
5. One of the oldest car manufactures and have a strong
market presence and legacy
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Weakness
6. Diversification in business through brands like Mini and
Motorrad as well as Husqvarna
7. Excellent advertising and top of the mind luxury brand,
also involved in motorsport and sponsorship of global
events
8. Nearly 100,000 employees and produces approx 1.5
million cars per annum
9. Environment friendly vehicles. The company tries to
develop environment friendly cars by making them more
efficient. It offers nearly 20 models that emit CO2 as low
as 140g/km. To make BMW cars more environment
friendly firm’s engineers develop new types of fuels,
such as hydrogen, too
10. Corporate Social Responsibility (CSR). BMW is strongly
committed to the environment protection, employee and
community well-being and sustainability programs. The
company invests large sums in employee health
management, programs promoting balanced work life,
sustainability requirements for its suppliers and
producing zero waste at its plants
11. Highly skilled workforce. Quality cars requires premium
materials and skilled workforce and BMW employs only
the most skilled workers to produce its vehicles. BMW
sets up its assembly plants at the countries, such as USA
and Germany, where there is only the most skilled
vehicles assemblers
1. Strong competition from other luxury manufactures
means constant fight for market share
2. Being a popular brand, minor controversies are blown
out of proportion which affects the image
3. High cost structure. Producing quality cars and hiring
skilled workforce results in high costs for the business.
BMW cost structure is higher than of its biggest
competitors such as Toyota, GM, and Volkswagen
4. Weak brand portfolio. BMW Group manufactures and
sells only 3 brands: BMW, MINI, and Rolls Royce.
Although these brands perform well in their segments,
they are unable to serve large market needs. Therefore,
BMW has introduce more brands to its portfolio to meet
diverse consumer needs
5. Perception of high prices. BMW manufactures luxury
cars that require best quality materials, skilled workforce
and a great brand image. All this result at a higher car
prices that are often considered as too pricey compared to
other cars prices
6. Too few acquisitions and strategic partnerships. 90% of
BMW growth is organic and only 10% is form
acquisitions. Without acquisitions, the company finds it
hard to grow even with exclusive engineering
capabilities. Thus, if the company wants to grow
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1.
2.
3.
4.
5.
6.
Opportunity
7.
8.
1.
2.
3.
Threats
4.
5.
6.
significantly, it has to acquire more brands and enter into
more strategic partnerships.
Expanding automobile market and available space for
competitors
Increasing the offered product portfolio along with
diversification
The reputation and brand identity earned by so many
years of existence, can be laveraged to acquire new
customers
More inclination of affluent customers to purchase
international brand
Augmenting the distribution and service network in
various countries
Increasing fuel prices. Increasing fuel prices open up
large markets for BMW hybrid and hydrogen cars as
consumers shift towards cheaper fuel types
Positive attitude towards “green” vehicles. Today
consumers are more aware of the negative effects (air
pollution) caused by cars fueled by petrol and diesel.
Large quantities of CO2 emissions intensify greenhouse
effect and negatively impact the life on earth. Thus,
consumers are more likely to buy new hybrid and
hydrogen fueled cars that emit less or no CO2 at all
New emissions standards. A new wave for stricter
regulations on vehicle emission standards would
positively affect BMW position in automotive industry.
The firm produces one of the most ecological vehicles
and has introduced hydrogen fuels that emit zero CO2.
New vehicle emission regulations would mean 0
additional investment for BMW while its competitors
would have to invest large sums of money to comply
with regulations and lose a share of profits
Decreasing fuel prices. Due to increasing extraction of
shale gas, future fuel prices should drop and make
electric, hybrid and hydrogen cars less attractive. This
creates huge losses for BMW most ambitious projects,
hydrogen fueled and electric cars
Competition from other big automobiles giants
Competitive products offering same level features at a
lesser price
Product innovations and frugal engineering by
competitors
Rising raw material prices. Rising prices for raw material
will lift the costs for auto manufactures and result in
squeezed profits
Growing euro exchange rate. BMW earns part of its
profits outside the euro zone. Exchange rate fluctuations
threaten BMW profits if the euro will start appreciating
against other currencies
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We already see the SWOT analysis of BMW Group. Now we see the SWOT
analysis for one of BMW Group competitors is Volkswagen Group to compare the
SWOT analysis from BMW Group with Volkswagen Group. Here is the SWOT
analysis of Volkswagen Group.
Strength
Weaknesses
Opportunity
1. Global presence. Volkswagen operates in 153 countries
worldwide and was the third biggest auto manufacturer in
2012, down from the 1st place in 2011. The company
manufacturers its cars in 100 plants in Europe, North and
South America, Asia, Africa and Oceania.
2. Strong brand portfolio. The business owns and sells 13
automotive brands: Audi, Bentley, Bugatti, Lamborghini,
Porsche, SEAT, Škoda, Volkswagen, MAN, Scania and
other commercial vehicles. With such wide range of
vehicles models the company satisfies nearly all consumer
needs and have an access to an immense consumer market.
3. Synergy. Volkswagen Group benefits from the synergy
created between all 13 separate automotive brands. All 13
separate companies share a part of research and
development and servicing costs, learn from each other
best practices and shares distribution channels.
4. Strong presence in China. China is the largest automotive
market and is an emerging economy that grows steadily. It
also the biggest market for Volkswagen vehicles where the
company captures nearly 20% of the market mainly with
its Audi and Volkswagen brands.
5. Well performing brands. Without its namesake brand, the
company owns a few other very successful brands,
including Audi and Porsche. Audi brand is valued at $7
billion, while Porsche is valued at $5 billion. Audi is also
the second biggest brand in the firm’s portfolio and is
growing impressively.
1. Weak position in the US passenger car market. In 2012,
Volkswagen had only about 5% market share in the US
passenger car market. US is the second largest automotive
market in the world and weak Volkswagen’s position there
results in comparably lower sales.
2. Most cars are not environment friendly. Volkswagen owns
three sport car brands Porsche, Lamborghini and Bugatti
that emit high amount of CO2 and are fuel inefficient.
Besides Volkswagen group is strongly opposing to
legislation requiring tighter regulations on CO2 emissions
and energy efficiency as their cars are not as fuel-efficient
and environment friendly as their competitors
1. Changing customer needs. Volkswagen could introduce
more fuel-efficient models that also emit much less CO2
across all its automotive brand, thus meeting new
customer needs (environment friendly cars) and increasing
brand reputation
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Threat
2. Increasing fuel prices. Consumers are very sensitive to
rising fuel prices and when prices go up, their demand
tends to grow for fuel-efficient and hybrid cars
3. Positive attitude towards “green” vehicles. Cars that emit
large quantities of CO2 and fuel inefficient cars pollute air
and negatively affect the environment. Consumers are
aware of this negative impact and are more positive to
“green” vehicles that emit much less CO2 and are fuelefficient
4. Growth through acquisitions. So far, Volkswagen Group
was very successful in acquiring other auto manufacturers
and getting access to larger consumer markets as well as
faster than organic growth. To continue grow at current
rates and to access vital US market, Volkswagen should
continue acquiring competitors
5. Increasing global demand for buses. Demand for buses is
expected to grow by 5% annually until 2016. Volkswagen
being a major bus supplier has an opportunity to expand
its manufacturing increase sales.
1. New emission standards. Volkswagen strongly opposes
stricter regulations for lower emission standards. If such
legislation would be passed the business would have to
make huge investments to engineer newer engines that
emit less CO2.
2. Fluctuating fuel prices. Due to increasing extraction of
shale gas, future fuel prices should drop and make hybrid
cars less attractive. Volkswagen’s investments to hybrid
and electric cars would be treated as losses, rather than
perspective future cars. On the other hand, steeping fuel
prices would make current Volkswagen models less
attractive to cost conscious consumers, as they demand
smaller cars that consume lower amounts of fuel.
3. Rising raw material prices. Rising prices for raw materials
will lift the costs for auto manufacturers and result in
squeezed profits for the companies.
4. Growing euro exchange rate, The business earns more
than 70% of its revenue outside the euro zone. Exchange
rate fluctuations threaten Volkswagen’s profits if the euro
will start appreciating against other currencies.
3.1.3 Value Chain
Volkswagen produces most of the units needed for the production of an
automobile. However, most of the details part of those units are produced by other
companies. The company has plants in all of the continents and each plants
produces only for the local market. One reason for that decision is lower expenses
when details and cars are not shipped longer distances and the other is helping the
local economy. The decision the other companies took is to produce different
models in different plants. However, VW factories manufacture many models at the
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same time.Another majour product Volkswagen supplies to its customers is the
original parts. The company has several majour warehouses in different areas and
every single dealer orders separately and directly to VW, which make the
transportation of the parts much faster.A new factory was recently built In
Chatanooga, which was not only the next VW factory but it introduced a lot of
environmental friendly technology.
Volkswagen's assembly line is the longest in the automobile world because of
the number of operations needed to produce a car. Most of the operations are done
by robots which decreases waste, enery and time needed. However, people still
work in the assembly line but they mainly do the quality checks. A different factory
is the class factory in Dresden. Volkswagen produces Phaeton (unfortunately, the
model is not offered in the USA) and some of the Bentley models (dont't forget that
Bentley is in fact Volkswagen's brand). Most of the work there is manual. The
Transparent Factory is situated in the city center of Dresden, the 800-year-old
German city known for its arts and craftsmanship. It stands at the former location of
the convention center. The factory's walls are made almost completely of glass. Its
floors are covered entirely in Canadian maple. Its visitor-friendly layout was
designed to accommodate up to 250 tourists per day. The transparent factory
handles final assembly only. To keep birds from flying into the glass, an outdoor
speaker system emulates bird language marking the territory as "taken."
Volkswagen ships cars mainly to the same continent using boats, trains and
trucks. There are logistics centers in several areas where cars are shipped to the
single dealer. No cars are produced without being ordered by somebody, which
means that cars are not stored anywhere. They are produced for the customer. Then
how do we see all those cars parked in the dealers' yards? Well, Dealers order and
purchase those cars so that you can see and touch your car before you buy it.
However, those are not considered stocked by the Volkswagen company but by the
franchiser company.
The Volkswagen brand is recognized worldwide. Beautiful logo almost
unchanged for decades. The company has a full list of brand standards that has to be
followed in each advert produced or in each product offered- placement of the logo,
font style, colours, architecture. The company offers various models- from the tiny
Up to the luxurious Phaeton and Touareg, which suggests that the company has
different price policy for all of them. The company is aiming at world leadership
and to achieve that it introduced new models- Schirocco, CC, Tiguan, Up, new
technology which makes the cars more efficient and new production technology
which makes the cars cheaper without decreasing the quality of the materials and
the final product. The company carefully examined which feature is most popular
and slightly changed what equipment is offered with each model. For instance the
biggest engines are no longer offered with the New Jetta and the smallest ones are
no longer offered with the New Passat, which makes the cars cheaper to produce.
Volkswagen advertises in all of the medias. It is famous for its nontraditional
advertisement. You can see an example on the picture where all of the cars are
dreaming they were VW GTI.
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3.1.4 Balanced Scorecard and Sustainability
As I already said in chapter II, the balanced scorecard is easiest way to help
company to implement their vision and mission. BMW Group also using the
balanced scorecard in their company. Here is the balanced scorecard of BMW
Group.
Financials
 Higher the EPS to satisfy
the stakeholders
 Management risk
Customers Satisfaction
 Quality product
 Innovations
 Great styling and elegant
interiors
 CSR
 Equipped with modern
technology
Vision:
To be a leader in the
future development of
individual mobility
Strategy:
Strategy Number ONE
Internal Business Process





Diversified portfolio
Highly skilled workforce
Excellent advertising
Increasing fuel prices
Distribution in various
countries
Learning and Growth
 Hire good engineer
 Training the employees
 Strong market presence
and legacy
Sustainability management is an investment in BMW Group future success.
They leverage new business opportunities, minimize risk and seek to overcome
social and business challenges such as scarcity of resources, climate change and
demographics at an early stage.
By the year 2020, the BMW Group will be the world’s leading provider of
premium products and premium services for individual mobility. That is the goal
BMW set themselves in 2007 when they established their Strategy Number ONE,
which has undergone continued development ever since. As BMW strive to achieve
their vision, they will focus consistently on growth, profitability, working actively
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to shape the future, and on access to new technologies and customers. These core
areas of action form the four pillars of Strategy Number ONE. Sustainability is one
of the BMW Group’s core principles and an integral part of each of the four strategy
pillars.
For BMW Group, however, premium also means setting standard in the
development of sustainable solutions for individual mobility needs. They are
convinced that the manufacture with the most efficient and resource-friendly
production processes will be the future leader, offering its customers state-of-the-art
solutions for environmentally compatible individual mobility.
Sustainability strategy of BMW Group:
Source: http://bmwgroup.com
The sustainability strategy passed in 2009 is derived directly from Strategy
Number ONE and is applicable worldwide as the overarching strategy for all
corporate divisions. The main aim is to establish sustainability along the entire value
chain and in all basic processes – thus creating added value for the company, the
environment and society. BMW derive specific requirements and targets for each
individual division from the sustainability strategy, which allow BMW to
systematically establish sustainability criteria in all areas of the company.
BMW core principles form the foundation for consistently sustainable
operations at the BMW Group. They stipulate that taking social responsibility is
inextricably linked to the Group’s perception of itself as a business enterprise. At
the same time, sustainability is seen as making a positive contribution to the
business success of the company.
Sustainability has also been established as a strategic corporate objective in the
BMW Group Balances Scorecard since 2009. This means that every project must be
measureable in terms of “Sustainability” as a corporate objective, ensuring that, in
addition to economic factors, environmental and social aspects are also accounted
for in the decision-making process – because BMW know that, today, the value of a
company is not measured solely by direct financial indicators but also by so-called
non-financial performance indicators. In addition, sustainability as a corporate
objective cascades down to personal target agreements for managers and is thus part
of their performance-based remuneration.
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BMW sustainability targets
Source: http://bmwgroup.com
As an active member of the World Business Council for Sustainable
Development and the UN Global Compact, BMW recognize that it is a global
challenge to further increase their efforts on sustainable development. It is essential
that they take a long-term approach. They intend to further expand their leading
position and focus on the topics they can have most impact. With this in mind, they
developed a target vision for 2020 in the year under report.
The balanced scorecard is implementer for Volkswagen Group too. Here is the
balanced scorecard of Volkswagen Group to compare with the balanced scorecard
of BMW Group.
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Financials
 Higher the EPS to satisfy
the stakeholders
 Management risk
Customers Satisfaction
 Elegant styling of both
interiors and exteriors
 Using high technology
 Many differentiation
Vision:
Be the best solution in
financial services to the
clients and dealers of
Volkswagen Group
Internal Business Process
 Low cost
 Increasing manufacturing
capability
Learning and Growth
 Hire good engineer
 Training the employees
 Well established brand
Volkswagen’s model for sustainable development formulated back in 2002 for the
world summit for sustainable development in South Africa links their tradition with the
future. It is to be considered as a measure of a long-term oriented corporate policy with
three central elements:
Lasting balance of economic, ecological and social systems and the aim for a longterm balance of divergent interests,
Responsibility for own actions at the regional, national and global level,
Transparent communication and fair cooperation.
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Volkswagen has identified essential activities for the implementation of
sustainability:
Resource saving/optimized resource usage,
Water management,
Renewable energies,
Education and development as well as
The behavior of suppliers.
Sustainability has also been one of their group values since 2003. As one of these
seven core values, sustainability prescribes that they take “the agreed, long-term aims of
the company into consideration in their daily work”. They are responsible for the “longterm success in the balancing of economic, ecological and social goals” and consider
“securing the future in all aspects” as a core task. The following sustainability
organization was set up to implement the task in the whole group.
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Source: http://volkswagenag.com
3.2 Decision Process
According to Kotler et al. (2009, p. 247) the consumer decision making process
incorporates five stages: problem (need) recognition, information search, evaluation of
alternatives, purchase decision, and post-purchase behavior.
In the case of a car, the problem recognition means that people realize their need for
a comfortable personal vehicle. After the need is identified, a persons start to collect
information about the kinds of cars available. Kotler et al. distinguish four groups of
information sources to which customers might turn: personal (family, friends),
commercial (advertising, corporate website), public (mass media, consumer-rating
organizations), and experiential (handling, examining, using the product).
BMW uses all of them to facilitate customer purchasing behavior. Firstly, 83%-85%
of BMW customers in the US would definitely recommend their vehicle to a friend.
Secondly, advertising campaigns and official website are used to highlight all the
advantages of BMW cars. Thirdly, in 2009-2010, BMW cars were granted first places in
such reputable customer satisfaction ratings as J.D. Power and ADAC. Fourthly, visitors
in BMW distribution centers can have a test drive.
After the next stage, the customer evaluates alternative proposals, which means
comparing automobiles by their performance, fuel efficiency, design, and price. In
addition, modern customers tend to be concerned with the environmental footstep of their
cars. BMW respond to this challenge by reducing CO2 emissions significantly in all their
new vehicles and developing alternative drive technologies. In 2013, everyone will be
able to purchase an environmentally friendly BMW vehicle.
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If the customer concludes a BMW car to be the best alternative, then the decision to
purchase is made. However, it can be affected by some unexpected circumstances.
Customers might get information about a less priced competitor can and prefer that one;
or their personal financial situation might deteriorate, and they would be forced to
postpone or deny the purchase. Such situations are beyond the company’s direct control,
but their aftermaths can be mitigated, e.g. by granting the right to purchase on credit.
Finally, after the car is purchased, the customer starts using it and finds out whether
it meets his/her expectations or not. The post-purchasing dissonance is especially likely to
be experienced by consumers who do not feel confident to evaluate the product quality,
e.g. those who have little driving experience. Salespeople in BMW address this issue by
informing their customers fully and honestly about the car characteristics in order to
reduce the perceived high risk associated with a car purchase, build customer confidence,
and reduce the probability of post-purchase dissonance.
The decision process in Volkswagen Group is not different than in BMW Group.
Here is the decision process in Volkswagen Group.
Aiming to achieve maximum quality and productivity, Volkswagen intended to
make the indicators of their activity available in a user-friendly and dynamic manner, and
to build a base platform for future expansion. In order to achieve this, they needed to
make criteria, parameters and analysis charts uniform, as to allow for the online follow-up
of over 380 indicators, to speed up the decision-making or decision support process, and
make it comply with processes set on an internal level. The company used Excel and file
share tools, but due to the proliferation of files, data handling security and uniformity
issues aroused, which made this change necessary. The proposal presented by NOESIS
was viewed as positively disruptive regarding the usual implementations, in the sense
there’s a greater usability and response time, together with Business Discovery and BI
Self Service concepts, remarkably standing out from other BI platforms.
To meet the challenges presented by Volkswagen, NOESIS has implemented a
Business Intelligence (BI) solution based on the organization indicators monitoring and
control, comprehending 11 Volkswagen areas, technically based on the QlikView
platform and complemented by Web extensions that facilitate data entering and
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indicators’ behavior configuration processes. The solution has currently 97 users and
stands out for being dynamic and interactive, with real time calculation. Likewise, almost
all parameters of an indicator are configurable, such as, for example, the thresholds’
colors.
The implementation took 4.5 months (2.5 months for analysis and interactive
development and 2 months for rollout); it went on as predicted in smooth weekly cycles
with the project team and comprehended 6 NOESIS and 6 Volkswagen employees
(including Sponsors). Throughout the project, the NOESIS team has been in charge of
understanding the
customer's requirements and of the corresponding mapping for QlikView
technology, integrating its consultants’ know-how and experience from prior projects to
add greater functional value to a reference project in the field. On their part, Volkswagen
team has participated, discussed, and perfected the end product's mechanisms, in strict
cooperation with NOESIS.
3.3 ABC System
BMW Manufacturing is a component of the Munich, Germany-based BMW Group
and the corporation’s only auto production plant located in North America. Constructed
in 1993 and opened for full manufacturing in 1994, it is today the world’s sole source for
the X5 sports activity vehicle, Z4 roadster, Z4 coupe, M roadster and M coupe. More than
2,000 of these high-end, technologically advanced, customization-heavy vehicles are built
here on weekly basis.
BMW is all about performance – on the road and inside the plant. Phil Volino, an
assistant manager focused on maintenance in the Assembly Shop, ratchets up that
thought. Herman Adams, a maintenance planning specialist in the Body Shop said people
who buy a BMW are paying for the engineering and quality, not for breakdowns on the
plant floor. To achieve maintenance and reliability excellence, it’s all about being the
driver.
On the macro level : BMW Group look at ways that can ensure the equipment is going
to be able to do what they want it to do
On the micro level : BMW Group plan all of their maintenance and schedule it. It does
not schedule them
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The setup is very unique. The 4.7 million-square-foot plant is divided into four units: the
Body Shop, Assembly, the Paint Shop and Facilities or Energy. Each unit takes a slightly
different spin on maintenance.
For instance, the Body Shop takes an integrated approach. There is no “maintenance
department”, per se. While there are associates who focus strictly on maintenance, they work
together as a team with production and quality associates, and report to the shop supervisor.
The 106 Body Shop ESAs work 10-hour base shifts plus receive two hours of mandatory
overtime. If the line is running in top form after Hour 10, they punch out early. ESAs are not
specialists. They are multi-craft technicians who perform preventive, predictive and
corrective tasks. Since the vast majority of the line consists of automation equipment (there
are 477 robots), the base shift involves heavy doses of predictive maintenance (infrared
thermography and motor current monitoring lead the way), scheduled corrective work and
project planning. Preventive maintenance (PM) on robots occurs after the shift or at any other
scheduled point when the equipment isn't running (that's why planning is so important).
Assembly, meanwhile, operates in a more traditional manner. The 65 multi-craft ESAs
report to assembly/installations engineering manager B.J. Watkins, who serves as the
manager of maintenance. Shifts are similar to the Body Shop, but PM activities comprise the
lion's share of the in-shift work.
Outsourcing plays a key staffing role in the maintenance of all four plant units. It provides
flexibility and allows the groups to focus on their core competencies. BMW Group all have
made the decision to contract out a certain percentage of their maintenance. If there is a
volume fluctuation, they always keep their core group of maintenance personnel. Outsourcing
gives us the flexibility to expand and contract. If they have to balance a little bit, they just
eliminate some contracts. They aren’t eliminating their own people.
Facilities/Energy, with a staff of 22, including 18 ESAs, relies on contractors. They
perform 30 percent of that unit's workload.
They run very lean. They have looked at their core competencies and what they need to
be doing. They really need to move toward equipment management - making equipment run
as efficiently as possible. There are commodity skill opportunities that can be easily
purchased from their external partners - changing air filters, for example. That isn't a
technical skill to which they should be devoting their staff's time.
While there is independence by unit, there is also a collective presence. No overall plant
maintenance manager position exists. Instead, managerial representatives from each unit form
the eight-person Plant Maintenance Steering Committee, an oversight entity that guides the
site's M&R efforts.
In Volkswagen Group, the ABC costing that they implemented is not different with ABC
costing that implemented in BMW Group. Here is the explanation about implementation of
ABC costing in Volkswagen Group.
Volkswagen (VW) has been using activity-based costing (ABC) for the last five years,
while persevering through management changes, company reorganizations, upsizing,
downsizing, rightsizing, project leader changes, ABC software changes and, now, ownership
changes. While the ABC system is presently stronger than ever, there are still more frontiers
to push in the goal of fully ingraining ABM into the culture of the VW organization.
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Volkswagen's story is not unlike many stories in the automotive or manufacturing
industries of the 1990s. Massive changes in technology and competition have caused the
company to take drastic action to continue being profitable and prosperous, and to satisfy
ever-increasing expectations from the corporate head office. These actions range from
aggressive pricing and selling policies to cost cutting and downsizing. Activity-based costing
has helped management make tough decisions, with a degree of clarity that otherwise would
not have been possible.
The company's facility, located in Barrie, Ontario (about 100 km north of Toronto) is
VW's only manufacturing plant in either Canada or the United States. The plant currently
makes aluminum wheels, catalytic converters and die cast engine parts. These parts are, in
turn, sold to both Volkswagen and third party OEM (original equipment manufacturing)
customers throughout the world. In the past, the Barrie plant almost exclusively supplied
parts to its parent company but a strategic change dictated that the parent company would buy
product from the cheapest producers, not just sister companies. This led to a 25 - 30 per cent
decrease in prices, as well as an emphasis for the plant to not only cut costs, but to also find
new third- party business to fill the gaps left from declining parent company orders.
The Pilot Project
An ABC project was first undertaken in 1991 in the die casting area. The initial results
were encouraging enough to continue the project and expand it to the full plant. The results of
this initial project came as a large surprise to some and a validation of already known, but
unproved, results for others. "The initial study showed VW that while the die cast area in
general was profitable, over 80 per cent of the products were either losing money or
contributing very little to the operating results. There were a couple of parts with very high
revenues that brought up the results of the whole area," explains John McIlmoyle, one of the
two VW employees to be positioned as full-time ABC analysts at the beginning of 1994. This
revelation brought a whole set of issues to management's attention that, before, were
unknown.
ABC is all about giving management information it can use to make changes. Activitybased costing cannot make the changes itself. What VW lacked, when this information was
presented, was a culture and an urgency to face these issues and tackle the problems in the die
cast area. Back then, the focus was on expanding the wheel business and as long as the other
areas were not losing money, they were not a priority. The net result was that nothing major
changed, and the ABC information was essentially shelved. The leader of the project became
very busy with other issues and, without a champion, the project went to sleep.
The Rebirth
The summer of 1993 saw the reawakening of ABC at VW. "Management needed accurate
cost information which was not being provided by the traditional accounting methods,"
explains John McIlmoyle. The ABC project had a new leader and a new team. They decided
to use the information gathered from the old model to reconstruct a new ABC model.
The revitalization of activity-based costing coincided with a newly installed management
team and the decision to re-engineer the major business processes of the company. As the
ABC team worked away at building the ABC structure, the re-engineering team worked away
at redesigning the plant's business strategies and processes. Preliminary ABC results were
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passed on to the re-engineering team which helped it in its decision making, and gave it a
taste of the type of information available from an activity-based costing system.
The importance of ABC to the new design led the re-engineering team to recommend the
repositioning of John McIlmoyle and Chris Atkinson as full-time ABC analysts in January of
1994. These two gentlemen brought a great deal of experience with them to their new jobs.
"Our skills and abilities complement each other well. John has a strong financial and
purchasing background, and I have a strong production background. Between the two of us
we have a very good understanding of the plant," explains Chris.
As compared to the first attempt at ABC, which started with a pilot project, this
incarnation of ABC began as a full- blown implementation. Pilot projects generally look at
one small part of an organization. They look at one product line or one service area along
with the shared resources of the organization such as finance, information systems, and sales
and marketing. Pilot projects are generally small in nature and allow management to see if
ABC will work before launching into a big, long-term project. A full ABC implementation,
instead, looks at the whole organization or location and takes into account all of the activities
performed. It aims to fully reconcile to the general ledger, and trace all costs to cost objects
(products, services, customers, sustaining costs). A full implementation gives far more
detailed information than a pilot project, and it is usually far more quicker to implement,
organization-wide. There are efficiencies in data collection and model building that greatly
speed up the process. As the people at VW had already tried a pilot project, they were
confident the information would help them and, so, launched right into a full-blown ABC
implementation.
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Sharing The Results
It was decided that the ABC results should get as wide a use as possible and, to that end,
the results are shared quarterly with management and all other employees in the plant.
Through the use of departmental meetings, all shop floor employees have the opportunity to
see the ABC results, discuss them and, hopefully, try to act on them. John and Chris have
also made themselves available anytime an employee wants to know the costs of a certain
activity or consider potential activity-cost savings related to a particular improvement idea.
Chris Atkinson explains their approach this way: "The results are shared with the process
leaders, then at the production meetings with the personnel support co-ordinators, and then at
departmental shift meetings with all production employees. In the shift meetings, we show
them information on process costs, good and bad trends from the last quarter, and information
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relating to specific products. We find that if we can keep the information basic and specific to
an individual product, the employees can relate better to it. For instance, a casting machine
operator can relate much better to a wheel costing $3.30 to cast and a scrap wheel costing us
$15.50 at the end of the process, than to a casting machine costing $50.00/hour to operate.
Also, because I have a lot of experience working in many of the production departments, the
message is much better received than if it were given by some "faceless" accountant."
While the re-engineering project came and went, the ABC data is actively being used by
the processes and structures that the re-engineering left behind. It is fair to say that the reengineering outcome had met with very mixed results, whereas the activity-based costing
team that was created has thrived, and has expanded its role in the decision-making process
of the entire company.
ABC is primarily a management decision-making tool. In order to track progress, the
ABC analysts, along with the finance-process leader, share the quarterly results with the
management team, as well as information on progress towards certain cost, quality and cycletime goals. Management has accepted the task of using the information to drive the
organization towards its strategic goals.
Using ABC Information to Drive the Business
So, what is Volkswagen Canada's Barrie plant currently doing with its activity-based
costing information? In short, it is gradually moving from activity-based costing to activitybased management. From product and customer profitability, to quotation pricing (see chart
1), to budgeting, to cost of quality and non-conformance report costing, to process
improvement initiatives, to outsourcing decisions, to new investment studies, and to product
rationalization. It is using the information any way it can to help the decision-making process
(see chart 2). Activity-based costing provides valuable core information that helps
management make key decisions around pricing, product costing, and purchasing. This is
only a first step in the use of ABC. By extending the ABC analysis, Volkswagen has been
able to transform ABC into full activity-based management (ABM). It has been able to use
the information to support KVP2 (total quality), process re-engineering, cost of quality,
resource utilization and much more. While not the only factor, it is hoped that the ABM
information will help VW to achieve its goal of becoming the ultimate, cost-conscious,
world- class, customer-focused supplier.
The quotation costing sheet has allowed management to see exactly where costs are
incurred in producing a product. It very clearly highlights areas that increase product costs,
and areas where costs need to be cut. The costing sheet has found uses, both for pricing
current products, and also for pricing future business. It is one of the many pricing and
analysis tools VW has developed to utilize the ABC information.
ABC Results to Increase Efficiency
The ABC system is used extensively in Volkswagen's process-improvement work. VW
uses a tool named KVP2 (Kontinuierliche Verbesserungspozess) to drive all of its process
improvement work. KVP2 is a form of continuous improvement whereby a group of
employees, knowledgeable about a particular process, will spend a week at a time delving in
to process in an effort to improve it. "First we take an area and map out the exact process as it
is happening, right now," explains Chris Atkinson. "Next we take that process and brainstorm
on waste, listing all the problems that are occurring. Then we brainstorm on improvements,
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implement them, and measure their effectiveness." One of the ABC analysts are included in
every KVP2 session. This ensures that the team has accurate cost information. Processimprovement projects which lack costing information tend to be unfocused exercises which
concentrate on perceived problems. The cost and economic data provided by ABC ensure the
process-improvement team concentrates on what is important, and allows it to prioritize its
improvement targets.
Strategic Uses
While the ABC information and its many uses have proved invaluable to many functions
and improvement initiatives, in the end, the ABC information simply helps managers and all
employees do their jobs better and with more certainty. It provides accurate, precise data that
decision makers can use. While standard costing gives you detailed but incorrect product
information, activity-based costing gives you accurate and detailed product, customer,
process and activity information. It tells you not only what your organization does, but also,
how well it does it.
The die cast pilot project showed that, overall, the area was profitable but only because
two of the parts were making most of the profit, and five of the parts were making all the
profit. The other 15 parts were losing money or, at best, breaking even. In general, we find
that, in most companies, 20 per cent of the parts produce 80 per cent of the profits. What
happens when strong competitive forces hit the die cast business? In Volkswagen's case,
several things occurred. The first was a price reduction of the two big money makers in the
neighborhood of 75 per cent. This knocked the profit margin on these parts down to almost
nothing. The second blow occurred when two of the other three profit-producing parts were
discontinued.
Unfortunately, while improvements had been made, they were not enough to turn the area
around. The ABC model was able to show that, even under the most optimistic scenario, the
die cast area would not make a sufficient return on investment in the near future.
Consequently, the decision was made to move the die casting operations to another VW
plant.
In this case, the ABC data was used to help make the toughest decision management ever
has to make -- the decision to close down an operation with its corresponding effects on
employees, and the community at large.
While activity-based costing has proved to be a very useful tool to help drive
improvements throughout the company, and to provide management with a clear picture of
the costs and profitability of the Barrie operations, the biggest opportunity and challenge may
lie in the not too distant future. Volkswagen has decided that it no longer wishes to operate
the Barrie plant, and has put the operations up for sale. Only time will tell if ABM at VW
remains a healthy, vibrant process, or ends up as a victim of company reorganization. The
new owners will have to see for themselves how useful the ABC information is, and chart
their own course for its use. The journey has only yet begun.
As Volkswagen's experience has shown, the road to implementing activity-based
management is long and hard. It is full of many ups and downs and requires a strong,
dedicated leadership team to drive the project forward. The rewards of such perseverance,
however, are worth it. The information ABC provides can dramatically alter the way a
company does business. It cannot tell management what to do to improve results but points it
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to where the potential opportunities are. As a decision-making tool, it provides the most
potentially valuable data that decision makers can have in their toolbox of resources.
3.4 Six Sigma
The plant and its maintenance organizations are fanatical about identifying the source of
problems and preventing the chance of reoccurrence.
In the Body Shop, if a line breakdown takes 15 or more minutes to resolve (in Assembly,
the standard is 10 minutes), maintenance leaders and ESAs perform a full-blown “five-whys”
root cause analysis to determine if it found and corrected the true root of problem. Findings
and solutions are implemented on all similar pieces of equipment in the plant. The groups
also make sure to share this information with senior departmental managers.
They get to see what maintenance is doing and why it’s important. They see what BMW
Group are continually doing to ensure that their processes are going to stay up and running.
They want to provide a constant spotlight on equipment performance and maintenance.
The plant, as a whole, also investigates and eliminates the root cause of problems through
Lean Six Sigma projects. Currently, four master black belts, 18 black belts and more than 20
green belts play key roles on five – to seven – person attack teams.
Lean Six Sigma is data driven in BMW Group. That’s the difference between it and the
other problem-solving measures. Looking at the data and analyzing it will lead them to the
correct solution to a particular problem.
Here is the implementation of Six Sigma in IMAC process:
Customer Profile – 3,000 Seat Auto Manufacturing Company
Business Problem & Impact
Installs Moves Adds and Changes process not affording consistent asset tracking.
Inconsistent database and time waited tracking down missing equipment.
Measure & Analyze
Data collection: Installs Moves Adds and Changes completed and entered into asset
management data base
The existing process sigma was 3.4
Root Cause:
1. Technician did not think a blank field was critical
2. IMAC request process not being followed by BMW customer
3. Lack of Technician Experience/Training
Improve & Control
Use the operational definitions to provide training to the technical staff on how to
properly complete the IMAC form. Set policy in place measuring each employee on form
completeness. Service Delivery Leader will monitor employee conformity to this policy.
Results/Benefit
Improved employee process knowledge and IMAC form accuracy. Resulting in asset data
base improvements which in turn save indirect and direct dollars
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3.5 Lean Accounting
3.5.1 Supplier
Every company must be have at least one supplier to run their daily operations
activities. The supplier network that have by BMW Group with more than 12,000
suppliers in 70 countries makes a significant contribution to success of the BMW
Group. Within this network, BMW Group have many longstanding partnerships
with suppliers and business. Their cooperation is characterized by a shared
understanding of product and production quality, supply chain security, price
credibility, and innovative strength as well as the continuous integration of
sustainability.
In order to achieve this, BMW Group aim to identify and subsequently enhance
potential in areas such as the efficient use of resources, as well as to reduce
environmental, societal and governance related risk. Considering the magnitude of
the global supply and value-added chains, composed of a large number of suppliers
and sub-suppliers, their demands present a considerable challenge, but also great
opportunity.
Within the BMW Group, responsibility for the development of a sustainable
supply chain lies with their Purchasing and Supplier Network division and the
specialist departments Sustainability and Environmental Protection and Raw
Materials Management. The objective is to enable their purchases, suppliers and
business partners to integrate aspects of sustainability such as environmental, social
and governance standards into their operations by implementing process-related and
capacity-building measures.
Let us differences between BMW Group and Volkswagen Group. Here is the
explanation of Volkswagen Group.
Since 2006 Volkswagen has been implementing its “Sustainability in Supplier
Relations” concept, which is built on four pillars:
Sustainability requirements for suppliers, which all suppliers must read before
submitting quotes
An early warning system for minimising risk
A transparent procurement process
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A supplier monitoring and development process
From the very start, the concept has undergone continuous, systematic
development. Regular evaluations of all concept structures and components ensure
that it continues to evolve. To effectively monitor implementation, a newlydeveloped, cross-functional process was put into action in 2012. It is based on a
digital questionnaire, which is mandatory for all suppliers. If the entries made do not
meet Volkswagen’s specifications, the supplier is requested to provide a written
statement. Ad-hoc teams of experts from the various brands and regions evaluate
suppliers’ answers. The focus is on supplier development through dialogue.
Available documents are analysed, and suppliers may also be visited on site. If a
supplier does not demonstrate sufficient willingness to develop, the Volkswagen
Group has in the past suspended the business relationship and will continue to do so
in future.
Even so, twelve possible violations in the areas of pay, occupational health and
safety, working hours, discrimination, freedom of association as well as
environmental protection were reported in supplier operations during 2011. All
cases were clarified, corresponding measures were introduced and any deficits
eliminated. Throughout this process, Volkswagen seeks to provide its suppliers and
partners with practical support.
The regular meetings and videoconferences held by the “Sustainable
Procurement Network” include reports on how concept implementation is
progressing in the brands and regions. In light of this, Volkswagen India organised a
third series of supplier development events, focusing on supplier awareness and
development opportunities. The network’s activities centre on collectively taking
the concept forward while catering for regional differences.
In 2011, the central business platform www.vwgroupsupply.com was
successfully re launched. Featuring improved navigation, the platform promotes
direct, global exchanges between Volkswagen and its suppliers. The “Sustainability
in Supplier Relations” concept has become integral to this portal – parallel to the re
launch, a globally-accessible eLearning module was developed in nine languages.
This module will be available on the Group business platform in 2012.
Volkswagen also works on sustainability in supplier relations from the inside
out, educating its own employees. New hires in Procurement participate in the
WISTA familiarization program, which includes skills related to sustainable
supplier relations.
In the year under review, Volkswagen further developed and intensified
relations with its business partners – strengthening the foundations for fair, stable,
long-term partnerships with suppliers. The Volkswagen Group Award, honoring
suppliers who excel in topics such as sustainability and environmental protection,
once again highlighted particularly successful partnerships.
To take the concept of “Sustainability in Supplier Relations” forward,
Volkswagen actively engages in dialogue with other organizations and companies,
for example in the Forum for Sustainable Development of German Business
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(econsense). In 2011, Volkswagen took on a leading role in the “Supply Chain”
project group.
In the next few years, the ongoing development of our suppliers will become an
increasingly decisive factor in implementing our sustainability concept.
3.5.2 Implementation of Supply Chain Management
Bayerische Motoren Werke (BMW) is a company that uses the integrated
management of the supply chain, which enables the company to make significant
savings in the management of raw material received from the supplier.
The cycle of the wheel move raw materials from suppliers, so it accepted and
did a production process, then flow to the distributor to the Subscriber. Each cycle is
carried out within the framework of a separate and independent organization. The
success of BMW starting from agreement on goals, with suppliers and support
consistent with the corporate culture of trust.
Here is a chart of the supply chain from BMW Group
Since the introduction of integrated supply chain, BMW substantially increase
efficiency in raw materials management obtained from suppliers. Management
system that they used was cycle suppliers commodities displacement flow and
accepted and make production, and then distributed to distributors and consumers.
Each cycle done within the framework of separate and self-contained organization
(independent).
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Due to the success of BMW is in the process of doing measurements, trust with
the suppliers and support compliance with company culture. To build a management
system for integrated supply chains, BMW applies:
 Pull Accurate Data
BMW distribute information point-of-sale (POS) to vendor that each member
planning connected supply chains effective. Second, the use of information
technology for computer aided product (CAD-order). So that puts the POSTAL
system of the existing inventory data and the rest of work. Raw materials are
then sent directly from the supplier.
 Reduction in Lot Size
Suppliers submitting material feedstock is limited in size and not too large, then
the raw materials that have been received can be directly processed.
Advantages of sending raw materials is not too big to deliver raw materials to
the factory at least reduce maintenance costs of raw materials.
 Managed Inventory
Existing inventory currently managed by the vendor (Vendor Managed
Inventory – VMI), so when inventory reaches almost zero, VMI then sends the
request directly to the suppliers of raw materials. Directly sends the raw
material supplier to the production and not through the warehouse, resulting in
savings flow that also affects the cost savings.
 Standardization
BMW special measures to increase the level of standardization (normalization)
of the ordered raw materials suppliers. Because in addition to maintaining the
quality of products, also can improve the quality of BMW products.
 Electronics Reservation and Transfer Funds
For data exchange, transaction control, purchasing, receiving, document, and
other activities related to BMW suppliers using Exchange System Data.
3.6 Environmental Accounting
3.6.1 Environmental Activities
BMW Group aim to be the most resource-efficient carmaker in the world. In
order to achieve this goal, they are pursuing a policy of comprehensive, Group-wide
environmental management. This entails integrating environmental considerations
into all their major investment decisions at an early stage as well as tracking and
monitoring all the relevant environmental indicators. They set the bar high and
transfer best-practice solutions from within the company to the whole production
network.
Their group-wide environmental protection approach is based on a Clean
Production strategy which aims to keep our consumption of resources and the
environmental impact of all their production processes as low as possible. In 2001,
they committed to achieving this goal when they signed the International
Declaration on Cleaner Production of the United Nations Environment Programme.
The Group established its own environmental guidelines back in 1993 based on the
ICC Charter for Sustainable Development and Agenda 21.
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Clean Production: First Milestone Reached
They reduce their environmental impact and the level of resources they
consume by integrating environmental management into all production processes
throughout their worldwide production network. They see this as an ongoing
process. In 2007, they set themselves the goal of reducing their consumption of
resources and emissions per vehicle produced by an average of 30% between 2006
and 2012. The perimeter they use to measure this are energy, water, process
wastewater, waste for disposal and solvent emissions. Here is the details of the
individual parameters below:
Source: http://bmwgroup.com
The BMW Group plays its part in limiting greenhouse gas emissions, and CO2
emissions in particular, by manufacturing efficient vehicles, implementing effective
production processes, using renewable energy sources and carefully selecting its
production locations. This is they contribution towards combating climate change.
It’s a challenge to achieve further reductions when processes are already very
efficient. In spite of this, they have set themselves an ambitious new target for 2020.
They want to reduce their consumption of resources by 45% compared to 2006.
Environmental management systems are in place in all of their production
facilities worldwide as well as in their central planning departments. With the
exception of the Manaus and Cassinetta locations (national standard), these systems
are certified in accordance with ISO 14001. The German and Austria sites have
undergone additional external audits and meet European Eco-Management and
Audit Scheme (EMAS) standards. Environmental management coverage of BMW
Group production facilities is therefore at 100%. They also installed environmental
management systems at our dealerships in Germany, Austria, and Switzerland. In
summer 2012, the German dealerships were also successfully certified in
accordance with ISO 14001/OHSAS 18001.
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Energy Consumption and Emissions
BMW Group vision is to achieve a completely carbon-neutral energy supply
for the BMW Group. With this in mind, they set themselves the goal of becoming a
leader in the use of renewable energy by 2020. Each year they are also reducing
their energy consumption and their emissions per vehicle produced.
By 2012, they had reduced their energy requirements per vehicle from 3.28
MWh to 2.44 MWh compared to the base year 2006.
Source: http://bmwgroup.com
This 26% improvement meant that they almost achieved their stated aim of a 30%
reduction by 2012. They plan to further reduce energy consumption per vehicle by
2020 – by 45% compared with 2006.
They face the challenging task of increasing their vertical range of
manufacturing the amount of energy they produced themselves. In 2012, two of the
main areas of focus in this regard were CFRP production and the global installation
and commissioning of state-of-the-art facilities. They are also expanding their
highly efficient and environmentally sustainable combined power and heat systems.
Gas in used in these systems to generate energy and heat simultaneously. By
installing these systems on site at their facilities, a very high efficiency rate can be
achieved. However, during this process, more energy is consumed due to
conversion which would otherwise be generated outside their production facilities,
and it is thus not included in the scope or their reporting.
In order to further enhance their energy efficiency and to move forward with
the use of renewable energy, they have defined five strategic areas of action:
 Further development of an integrated energy management system (transparency
of consumption, targets management, monitoring at all locations) for which
they collaborate with a range of process partners
 Continuous improvement of ongoing operations
 Planning and implementation of energy-efficient property, plants and
technologies
 Implementations of renewable energy projects
 Raising awareness, training and motivating managers and employees on the
topics of energy and energy efficiency
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Materials Use and Waste Management
BMW Group think of as waste is often a valuable resource. With raw materials
worldwide becoming increasingly scarce, the BMW Group engages in recycling
management throughout material life cycles.
Five-Step Hierarchical Model
When we recycle waste, we comply with the five-step hierarchical model set
down by the EU:
Source: http://bmwgroup.com
The volume of waste for disposal is a good indicator of how successful we have
been in achieving our goal of avoiding or reusing waste wherever possible. With
6.11 kg of waste for disposal per vehicle produced in 2012, figures are down by
23.5% compared with the previous year and even by 65% compared to 2006. We
thus significantly exceeded our target of a 30% reduction compared with 2006. The
main contributing factor here was improvements in recycling at our plants in the
UK.
Source: http://bmwgroup.com
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Source: http://bmwgroup.com
Fulfilling all product-specific legal regulations is a challenging task. The
BMW Group mastered this challenge again in 2011 and 2012. New cleaning
processes that make more sparing use of water were introduced at BMW’s
paintshops. Their innovations in the area of electromobility and lightweight
construction go hand in hand with new recycling processes for residual materials
from vehicle production or recycling. A new handling machine is now in use at their
recycling centre. It separates materials such as copper or aluminium from old
vehicles, leading to an increase of 150% in the recycling rate for copper in 2012.
The process of recording and reusing the waste they produce is managed
worldwide by their own BMW waste information system ABIS, which was
designed for the German plants in accordance with the law on life cycle
management. In the 2012 financial year, a further plant, in Rayong, Thailand, was
integrated into ABIS. ABIS can be applied worldwide to determine the best method
of disposal for a particular type of waste. The method specified is then implemented
at all plants, providing this is possible in the individual countries. ABIS is also used
to document the individual waste flows and categorizes waste as hazardous or safe.
This categorization takes place in accordance with country-specific regulations.
There were no incidences of the import or export of treated or untreated hazardous
waste in the reporting period.
Water
Water is a valuable resource – not only for the BMW Group. For this reason,
they are working hard to reduce their water consumption and are developing
wastewater-free processes for their production lines. For the BMW Group, water is
an important resource. Without it, operations at our paintshops would come to a
halt.
At the same time, water is becoming increasingly scarce worldwide. For this
reason, we aim to achieve significant reductions in our water consumption. In 2012,
it was at 2.10 m3 vehicle. This drop of 30% compared to 2006 was in line with our
water consumption reduction target.
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Source: http://bmwgroup.com
Source: http://bmwgroup.com
The three largest water consumers at the BMW Group are the sanitary facilities
for their workforce (46%), evaporation mainly at cooling towers (31%) and the
production processes, in particular at the paintshops (23%).
Currently, there is no risk to water supply at the BMW Group’s production
plants, even though they are active in countries with high water risk, such as South
Africa, the USA and China. In these countries in particular, they are continuing to
reduce their water consumption. For example, in the USA they halved water
consumption between 2006 and 2012. They try to use drinking water only when it is
necessary for reasons of hygiene. They want their wastewater to contain only as
many substances as can be broken down naturally. Worldwide, they fulfill the
applicable legal requirements on wastewater processing. At all international
production plants and at their German and many international dealerships, they have
implemented an environmental management system in accordance with ISO 14001
and which also manages their water consumption.
Efficient Transport Logistics
As a global supplier of premium products and services, the BMW Group
transports large volumes of goods, and people within the Group are always on the
move. They keep their CO2 emissions as low as possible by continuously
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optimizing their transport logistics. In addition, they are successively expanding the
number of low-emission transport vehicles they use.
Source: http://bmwgroup.com
They also have to keep the CO2 emissions resulting from their transport
activities as low as possible if they want to fulfill the BMW Group’s targets on
efficient use of resources. As part of the Group’s sustainability strategy, they are
currently developing an efficient transport logistics strategy. This pools their
activities in this area and defines clear key indicators which will enable them to
formulate specific targets, for example for reducing CO2 emissions. They are also
identifying the main influencing factors on the development of transport capacity
and CO2 emissions.
The global transport volume required for the supply of materials to the
production plants, for delivery of their vehicles and for spare parts supply to the
markets has grown considerably in the past few years. This is primarily due to an
increase in global production and sales volume, combined with regional shifts in
these volumes. Above-average growth in North America and Asia means that long
transport distances must be covered.
In 2012, they had a total transport volume of around 30.9 billion tonnekilometers, emitting 1.25 million tonnes of CO2 in the process. Compared to 2011,
transport volume increased by 10.6%. This equates to the increase in the number of
BMW and MINI brand vehicles sold worldwide, which also lies at 10.6%.
To keep CO2 emissions caused by their transport logistics as low as possible,
their basic principle is "production follows the market". In addition, they are
successively expanding our share of low-emission transport vehicles.
To optimize their transport logistics, they developed a concept to avoid large
transport volumes and to shift to environmentally friendly transport carriers. As a
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result, rail transport will be given preference as a carrier wherever possible. The
share of rail transport in overall transport volume rose from 8.2% in 2011 to 8.9% in
2012.
As part of their network strategy, they sent out a new invitation to bid for
Europe-wide transport of material supplies to the German plants. As a result, the
existing rail transport arrangements were secured for the long term. Vehicles for
export from the MINI plant in Oxford are now transported by rail to the port. This
led to a further increase in the average volume of rail transport of BMW Group
vehicles from the plants to 56.9%. This was up from 53.1% in the previous year.
Source: http://bmwgroup.com
Employee Mobility
Staff commuting is a major concern on the BMW Group’s logistics balance
sheet. They try to keep their impact on the environment in this regard as low as
possible.
Among the measures that are in place are their plant buses which reduce the
number of individual drives to work. Works buses make sense when they are
heavily used by shift workers and employees who live close to one another. Public
transport is the better solution if working hours are more flexible and employees are
travelling from further afield. BMW Group have works buses in operation both in
Germany (Munich, Landshut, Dingolfing, Regensburg, Berlin) as well as at their
international locations (Tiexi in China, Rosslyn in South Africa). Around 85% of
employees in China and South Africa use the buses to travel to work.
Most of their buses are recent, energy-efficient models. All newly purchased
works buses comply with the Euro 5 standard. A twelve-meter bus with about 50
seats consumes around 28 liters of diesel per 100 kilometers. In 2011, the BMW
Group also launched its very successful ProBike program in Munich. ProBike
allows employees to cycle between BMW locations in the city of Munich. A total of
42,000 such trips were made in 2012. This not only saves on fuel and reduces
CO2 emissions: with the ProBike program, they also motivate their employees to be
more health conscious and use bikes more often – for example to cycle to work with
their own bike.
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The CO2 footprint per employee at their German locations was 4.5 kg CO2per
employee and day of production in 2012. From 2013 onwards, we plan to add one
large international location each year to our calculations of CO2.
Source: http://bmwgroup.com
VOC Emissions and Biodiversity
In BMW Group-wide environmental efforts, they aim to reduce emissions of
volatile organic compounds (VOC). Furthermore, they monitor the impact their
business activities have on flora and fauna and use a biodiversity indicator to
determine the environmental status of some selected properties.
VOC Emissions
The BMW Group aims to keep emissions of volatile organic compounds
(VOC) as low as possible. With an average of 1.68 kg VOC per vehicle produced,
they are below the maximum levels stipulated in Germany at all plants worldwide,
with the exception of their Chinese plant in the Dadong and their plant in Rosslyn,
South Africa.
In 2010, they already achieved their target of a 30% reduction compared to
2006. However, due to unexpected volume increases in China, emissions have risen
since. The reason for this was that the paintshop in the new Tiexi plant is not yet
operational and the older paintshop at the Dadong plant has higher levels of VOC
emissions. Although they were able to significantly reduce VOC emissions at their
other plants, the overall decrease was only 27% by 2012 compared to 2006. Figure
21 illustrates this trend. They identified the relatively high VOC emissions issue in
Dadong in 2011, and in 2012 they decided to construct a treatment system. The
system will be ready to go live in the second half of 2013, and VOC emissions in
Dadong will decrease considerably as a result.
Biodiversity
At all BMW Group locations, they monitor the impact their business activities
have on the animal and plant world. They have gathered environmental evidence at
selected locations such as Leipzig and Regensburg to identify local animal and plant
species and introduce special protective measures for endangered species. For
example, at their testing centre in Aschheim, they identified the butterfly species
Polyommatus bellargus and Colias hyale/alfacariensls, both of which are on
Germany’s red list of endangered species.
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They use a biodiversity indicator to regularly identify the environmental status
of properties at selected locations in order to gain an understanding of which flora
and fauna are present there. Their Spartanburg plant in the USA as well as their
testing centers in Miramas (France) and Aschheim (Germany) are the only locations
that directly border on a protected area. In the period under report, there were no
significant emissions of hazardous substances. They are not aware of any impact
their products and services have had on protected areas or regions of high
biodiversity.
They try to protect and restore natural habitats. Just a few years after
construction of the Leipzig plant, the location was certified as having a high
biodiversity factor due to its natural landscape design. The testing centre in Miramas
(France) was built away from natural habitats. Driving is only allowed on marked
routes at the Enduropark in Hechlingen. Maintenance measures are carried out
regularly to further improve biological diversity. We continue to gather data at
locations where the protection of nature is relevant (e.g. Miramas, Regensburg,
Wackersdorf, Leipzig and Aschheim).
The environmental activities that did by Volkswagen Group is same with
BMW Group. Here is the explanation about environmental activities that did by
Volkswagen Group.
The Group’s environmental management is responsible for ensuring that the
ecological aspects of sustainability are firmly anchored in our product development
and production strategy at all sites. For Volkswagen, the priorities here include the
efficient handling of resources such as energy and water, efficient use of materials,
minimizing emissions of noise and pollutants, waste and wastewater, and preserving
and promoting biodiversity.
The Corporate Environmental and Energy Steering Group helps to safeguard
the long-term value of the Company and avert potential environmental threats. The
Steering Group plays an overarching role in the pursuit of environmental goals and
is subdivided into seven modules to address measures at each stage of the process
chain. All decisions made by the Steering Group are directly incorporated into the
Volkswagen Group’s management processes. Their implementation falls partly
within the remit of the plant environmental officers, who meet several times a year
to discuss projects, goals and measures.
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Source: http://volkswagenag.com
Climate Protection
With efficient vehicles built using efficient production processes, and with its
Power train and Fuel Strategy as a roadmap, Volkswagen is making an important
contribution to the fight against climate change (> p. 99).
Climate Protection in the Production Sector
Among other things, Volkswagen’s climate goals include a commitment to
reducing the greenhouse gas emissions associated with production-related energy
supplies. In Germany the aim is to cut these emissions by 40 percent by 2020 versus
2010 levels. This will only be possible through increased use of renewable energy,
based on further diversification of the energy-generating mix.
Volkswagen has put in place uniform standards of efficient production. In one
example of the implementation of these standards, in 2012 Volkswagen do Brazil
received the first ever external certification of its greenhouse gas emissions
inventory. Certification confirms that the underlying process complies with ISO
14064 and the GHG Protocol. Since 2010, Volkswagen do Brazil has reduced its
CO₂ emissions per vehicle produced by 4.8 percent, and has increased its waste
recycling rate to over 95 percent.
In the reporting year, the Volkswagen Group brands implemented a wide range
of initiatives and actions at their sites to combat climate change. At Scania, for
example, climate impacting of carbon dioxide from internal goods transportation
have been reduced by around 70 percent by switching from diesel fuel to
bioethanol. Scania also participated in Earth Hour, switching off the lights for an
hour at its production facilities in Europe and South America.
Climate Protection Through Efficient Product
Volkswagen’s most effective lever in the development of more
environmentally compatible mobility is its vehicles themselves. In 2012, global
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fleet-average new-car CO₂ emissions of the Volkswagen Group stood at 134 g
CO₂/km – 25 g less than in 2008.
The EU new-car fleet-average emissions target of 130 g CO₂/km is being
introduced in four stages, starting in 2012. In 2012, 65 percent compliance was be
required, rising to 100 percent in 2015.
Life Cycle Assessment
To minimize the environmental impacts from its vehicles, Volkswagen looks at
the whole life cycle of the vehicle. Using Life Cycle Assessments (LCA), we
calculate which life cycle processes generate the biggest environmental impacts.
Using LCAs, Volkswagen analyses the life cycle of new vehicles, components
and materials from the first design sketches, through the manufacturing and use
phases to final disposal. After all, a vehicle begins to generate environmental
impacts long before it takes to the road.
The Four Steps of Life Cycle Assessment
The first stage in the Life Cycle Assessment is the Life Cycle Inventory, in
which data is collected on every single component and process in the life cycle.
Volkswagen extracts this information from sources such as vehicle parts lists, the
Volkswagen Material Information System (MISS) and the processing-related GABI
database. The next step is to calculate how much raw materials and energy each of
these components and processes consumes over the course of the life cycle. The use
phase too, based on an assumed useful life of 150,000 kilometers, is analyzed in
detail. Fuel consumption and CO₂ emissions are computed using the statutory New
European Driving Cycle. In addition, we also calculate the amount of energy
consumed in end-of-life dismantling and recycling of vehicle components.
Together, these calculations enable us to compute all airborne and water-borne
emissions, all emissions released into the soil and all waste and wastewater
generated during the life cycle of the vehicle.
The second stage in the Life Cycle Assessment is the Life Cycle Impact
Assessment, which calculates the potential environmental impacts of the vehicle.
The various material flows from the manufacturing, use and recycling phases are
classified into five environmental impact categories: global warming potential,
photochemical ozone creation potential, acidification potential, ozone depletion
potential and eutrophication potential. This process involves defining an indicator
substance for each environmental impact category. Carbon dioxide (CO₂), for
example, is the indicator substance for the impact category “global warming
potential”. All other substances that also contribute to global warming are then
expressed in terms of this category indicator – as “CO₂ equivalents”.
In the third stage, a materials composition analysis shows the constituent
materials of which a given vehicle is composed. From this analysis, it can be seen
how much primary energy is consumed over the complete life of the vehicle, and
also how much CO₂, carbon monoxide, sulphur dioxide, nitrogen oxides,
hydrocarbons and methane the vehicle emits.
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The final stage in a comparative Life Cycle Assessment is certification. The
requirements for this process are defined in ISO 14040. Volkswagen arranges for
external auditors, such as the TÜV NORD technical inspectorate, to verify its
compliance with this standard. Following validation, Volkswagen provides a
transparent presentation of the LCA results in an Environmental Commendation. A
recent example, published during the reporting period, is the Environmental
Commendation for the new Golf.
Efficient Vehicles
Eco-compatible Product
In 2012, Volkswagen launched a raft of new models which set new standards in
efficiency. One highlight was the launch of the Volkswagen brand’s new Golf.
Despite the improved comfort and safety of this model, its DIN unladen weight has
been reduced by up to 80 kilograms. This increases to as much as 100 kilograms if
frequently specified optional equipment – for example: four doors, or air
conditioning – is taken into account. Fuel-saving technologies such as automatic
start-stop and braking energy recuperation systems are fitted as standard equipment,
i.e. at no additional cost.
Efficient vehicles launched during the reporting year also included the eco up!
With emissions of 79 g CO₂/km, the eco up! has the lowest CO₂ emissions of any
internal combustion- engined vehicle in the world.
Zero Emissions, 100% Emotion: Electric Mobility
In 2013, the Volkswagen Group will launch its first production electric vehicles
(EV). ŠKODA will launch the Octavia Green E Line. Also starting in 2013, the
Volkswagen brand, which is aiming to play the leading role in electric mobility by
2018, will be launching the all-electric e-Up! and e-Golf, along with a limitedproduction XL1 plug-in diesel hybrid.
Ahead of the actual market launch of its electric vehicles, in the reporting year
the Volkswagen brand took further measures to get the service network up to speed.
It provided special training for service staff and outfitted workshops with all the
necessary tools and equipment, such as the new VAS 6558A high-voltage
diagnostic and measuring system, launched in 2012. At the plants too, Volkswagen
is now all set for the start of production of electric vehicles. Employees working on
standard vehicle assembly processes, involving exclusively non-technical activities,
have undergone general EV product training.
However, all-electric powertrains are only one side of the coin. The concept of
electric mobility also includes hybrid technology, in which an electric motor is
combined with another propulsion system, such as an internal combustion engine.
For example, the Detroit Auto Show 2012 saw the debut of the new Jetta Hybrid,
which is powered by a combination of a 1.4-litre TSI engine and an electric motor.
Efficient Product
The following real-life examples from the reporting period illustrate some of
the steps being taken by Volkswagen Group factories to make their production
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processes more energy-efficient. For the Volkswagen brand, since 2012 the
Chattanooga plant in the USA has been using variably controllable compressed air
generating equipment in the manufacture of its vehicles. That is to say, the amount
of compressed air generated is always matched to the amount required, at any given
time. Baseload and intermediate demand is met by turbo-compressors. At peak load
periods, variable-speed-drive screw compressors also come on stream. The two
variable speed drive compressors are rated for an operating pressure of six bar and
can be controlled in tandem and on demand. The overall result of these measures is
a 15 percent reduction in energy consumption.
In order to reduce purchasing of primary energy from external suppliers, many
Volkswagen sites are also looking to produce their own renewable energy. One
example is the solar panel system on the roof of the Audi A3 body shop in
Ingolstadt, which is capable of generating around 460 MWh of electricity a year.
Similar installations also came on stream at other plants during the reporting period,
including the Braunschweig (420 MWh/a) and Hanover (420 MWh/a) plants. Early
in 2013, a further solar facility comprising over 33,000 modules will be installed at
the Volkswagen brand’s Chattanooga plant. And a new solar system installed by
Group brand Lamborghini at its Sant’ Agata Bolognese plant brought a marked
reduction in CO₂ emissions in the reporting period.
Traffic Noise
Cars, buses and trucks, motorcycles, trams and trains all generate noise which
impacts on the health and quality of life of urban residents in particular.
Safeguarding mobility while at the same time reducing noise is a challenge.
Volkswagen is facing up to this challenge not only by developing ever quieter
vehicles but also through intensive activities in the field of traffic noise in general.
In cooperation with internationally recognised partners, a “noise level tool” has
been developed. Based on a model city, the tool can be used to carry out a
quantitative comparison of noise-reduction measures, looking at their effect in terms
of both noise levels and numbers of people exposed to noise. The focus is on traffic
noise in general, not the individual vehicle.
Volkswagen’s work on vehicle noise reduction at the Acoustics Centre in
Wolfsburg is focused on improvements to the powertrain – comprising the engine,
the transmission, the drive shafts and the air intake and exhaust system – and on
tyre/road noise.
Green Logistics
Volkswagen Logistics took further action to reduce environmental impacts
from the transport of products and materials during the period under review.
Measures were geared to ensuring that logistics products and processes deliver
sustained environmental value.
Volkswagen has identified the following significant environmental aspects for
this sector at the present time: energy consumption, emissions, fine particulate
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pollution, water consumption and waste. To achieve improvements in these areas,
the following action areas have been defined:
> reduction in freight traffic, for example through optimized transport structures,
a reduction in the number of empty runs and improved load factors
> a shift from road transport to other modes of transport
> reduction in fuel consumption through use of efficient technologies. In 2012,
Volkswagen made progress in implementing these strategic objectives, as the
following examples show.
“Green Trains” have now gone into service on further routes. On the Wolfsburg
to Zwickau line, Volkswagen has become the first German car manufacturer to use
DB Schenker Rail’s EcoPlus trains for the transport of materials. Eco-Plus trains are
powered entirely by renewable energy.
Green IT
Particularly in view of the large number of computer workstations in the
Company, Green IT offers Volkswagen significant scope for reducing its use of
consumables and energy and, by the same token, its CO₂ emissions. Green IT is also
a key to more efficient networking in a global corporation.
A major project from the period under review indicates the scale of potential
savings: in 2011, Volkswagen launched iDOMP, a global tender process for
approximately 35,000 printers. As part of this process, shortlisted printers and
suppliers were subjected to a green IT evaluation covering the entire life cycle of
the product – from the materials and type of packaging used to reductions in energy
consumption and reduced electronic scrap at the end of the product life cycle.
Following this evaluation, in 2012 the supplier structure was optimized and the
existing printers are now being replaced. By the time the changeover is completed,
the printer fleet as a whole will be 32 percent more energy-efficient than the
previous fleet, resulting in annual energy savings of 2.18 GWh. A one-off 33
percent reduction in packaging volumes and a 36,000 kilogram reduction in the
volume of items packaged with the products have also been achieved.
Source: http://volkswagenag.com
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Water
Volkswagen uses this valuable resource sparingly and responsibly. Key points
in Volkswagen’s sustainable water management policy include reduced water
consumption, reduced wastewater volumes, treatment of wastewater and protection
of habitats in and around water.
In 2012, the water supplies of Volkswagen AG and Volkswagen Sachsen
GmbH were taken from surface water (0.77 million m3), groundwater (2.14 million
m3), on-site rainwater harvesting and treatment (1.85 million m3) and water
supplied by public utility companies (3.67 million m3). During this period, the
various forms of water withdrawal are not known to have caused damage to the
ecosystem of these water sources. In fact, in Mexico the measures undertaken are
contributing approximately 2.6 million m3 annually to groundwater replenishment –
significantly in excess of the amount the Volkswagen Puebla plant actually
withdraws from the groundwater. Wastewater discharges are in line with the official
permits and are closely monitored.
Biodiversity
As an industrial company, Volkswagen is committed to the protection of
biodiversity, primarily by reducing its greenhouse gas emissions and via
conventional environmental management practices designed to reduce and eliminate
waste, exhaust air, wastewater or noise. Direct nature and species conservation
measures in the environment of our factories likewise play an important role,
alongside the important issue of land use.
Volkswagen’s commitment to the conservation of biodiversity includes
implementing statutory guidelines and conventions, such as the International
Convention on Biological Diversity (CBD) and the European and national
biodiversity strategy of the German Government. The Company was also involved
in both the international Business & Biodiversity (B&B) initiative and the
Biodiversity project group of the econsense sustainability forum. As co-founder of
the B&B initiative, Volkswagen donated €50,000 to this dedicated learning and
dialogue platform for industry in 2012. At the same time, Volkswagen stepped up
its efforts to incorporate species conservation into its factories’ environmental
action plans, using the regular Regional Conferences staged by global
Environmental Management as a platform.
3.6.2 Environmental Plan
BMW Group have plans associated with the internal and external environment
the company to achieve its business goal. These plans include:
 In 2020, BMW Group make target to reduce their consumption of resources by
45% compared to 2006. It have function to less the cost of production and to
protect nature and avoid pollution that dangerous for the people and the
environment.
 Make a plan to set themselves the goal of becoming a leader in the use of
renewable energy by 2020.
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BMW Group plan to significantly increase the share of renewable energy in
their overall energy consumption in the near future.
Make a strategy of producing their own energy and ensure security of supply
for the BMW Group
BMW Group plan to install wind turbines at their plant in Tiexi, China
Pay a higher price per tonne of waste
Reduce their consumption water by 45% in 2020
Continuously improving their resource efficiency in all three areas by:
 Replacing sanitary fittings with water-efficient versions,
 Gradually replacing open cooling towers by closed ones
 Closing water cycles at the paintshops and introducing waterless processes
(dry separations)
Make use of membrane bioreactor (MBR) will further optimize waterconserving processes.
Membrane bioreactor (MBR) at the plant site it will be used to treat the
wastewater in two stages. In the first step, bacteria clean the water; they break
down substances such as paint solvents, while they bind hazardous inorganic
materials like heavy metals – e.g. nickel and zinc – to their surfaces, removing
them from the water. In the second step, membranes prevent the bacteria from
entering the output water
The environmental plans that planned by Volkswagen Group are:
In the coming years Volkswagen will therefore be investing around €600
million in the expansion of renewable energies such as solar, wind and
hydroelectric power.
In the mid-term, by 2015, Volkswagen will have reduced the average CO₂
emissions of its European new-car fleet by approximately 30 percent compared
to 2006 levels, bringing its fleet-average emissions down below the 120 g
CO₂/km mark for the first time. The goal of the development departments is to
make each new model generation between 10 and 15 percent more efficient
than its predecessor. At the same time it should be noted that the Volkswagen
Group’s vehicles already offer impressive CO₂ performance (> p. 103).
A further significant reduction in the EU average fleet emissions target, to 95 g
CO₂/km by 2020.
In order to become the most sustainable automobile manufacturer in the world
by 2018, Volkswagen has defined the following product-related goals:
> To offer the most efficient and environmentally compatible model in every
segment and vehicle class in which Volkswagen is represented
> To reduce CO₂ emissions from its European new-car fleet by 30 percent
between 2006 and 2015
> To ensure that every new vehicle generation is on average 10 to 15 percent
more efficient than its predecessor
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> To offer efficiency technologies such as start-stop and recuperation systems
as standard equipment on all new models
> To ensure that newly launched models always offer better life cycle
environmental performance than their predecessors.
From 2013 onwards, further efficient models are due to be launched. As well as
the third-generation Golf TDI BlueMotion, with fuel consumption of 3.2 l/100
km, and CO₂ emissions of 85 g CO₂/km, the first CNG version of the Golf TGI
BlueMotion, a production version of the e-Golf electric model and the first
Golf TSI twinDRIVE are also planned.
BlueMotion Technology will be offered as standard on all new-model vehicles
in Europe.
By 2018, ŠKODA is aiming to reduce its energy and water consumption by 25
percent, to reduce emissions and to further increase its recycling performance.
With these measures, the Czech manufacturer will also contribute to achieving
the environmental goals of the Volkswagen Group as a whole for 2018. The
“GreenFuture” principles are part of the 2018 ŠKODA growth strategy, whose
aim is to combine improved economic performance with reduced
environmental impacts.
Volkswagen is aiming to reduce water consumption across all plants by 25
percent by 2018 over 2010 levels. Important strides have already been made
towards this goal: between 2010 and 2012, water consumption per vehicle
produced fell by 0.45 m3 (scope 1).
3.6.3 Environmental Benefit
Environmental benefit that accepted by BMW Group is a lot. From they clean
production: first milestone reached they improved efficiency by over one third
(35.7%), so they even managed to exceed the ambitious target to savings of
around €9 million in the 2012 financial year. In energy consumption and emissions,
once they are up and running, new facilities such as the Tiexi plant in China make a
contribution towards further enhancing their resource efficiency. With the installing
the systems in energy consumptions and emissions on site at their facilities, a very
high efficiency rate can be achieved. So the production will more efficient.
Continuous reductions in energy requirements as well as a strategy of
producing their own energy or drawing energy from local renewable sources
increase their autonomy and ensure security of supply for the BMW Group. As a
result, the probability of their production lines being affected by energy bottlenecks
decreases.
Energy Savings Pay Off
In times of emissions trading and allowances, reducing CO2 emissions not only
makes environmental sense – it also a business opportunity for the BMW Group. In
the third period of the European CO2 emissions trading system (2013-2020),
emissions rights allocations will be further reduced. Therefore, every unit of energy
saved pays off twofold, as the costs of energy consumption and the purchase of
emissions allowances can be reduced as a result.
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Source: http://bmwgroup.com
Renewable Energy Consumption
BMW Group vision is to draw 100% of their energy requirements from
renewable energy sources. Instead of relying on energy from one specific source,
they will decide which concept makes most sense at each location, based in local
conditions. In 2010, they implemented a development plan to assess the potential of
each production facility.
Source: http://bmwgroup.com
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From 2013 onwards, around 30% of the heat required for their engine plant in
Setyr will be supplied by a neighbouring biomass thermal power plant (fuelled
by timber waste from the region). This will mean an annual reduction in CO2
emissions of up to 3,000 tonnes.
At their Rosslyn plant in South Africa, the new independent operator Bio2Watt
will provide 40% of the required electricity from a twin-unit power station
based on landfill gas (biogas firing, i.e. waste from cattle ranches or chicken
farms as well as food waste). This could reduce CO2 emissions by 8,300 tonnes
per year.
Carbon-neutral electricity will be used for the entire production process of the
BMW i3 in Leipzig. For this purpose, four wind turbines will be commissioned
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on the plant’s premises in the first half of 2013, each with a capacity of 2.5
megawatts.
Sustainable Construction and Process
In general, every new plant is designed to raise the bar in terms of energy
efficiency and to become a benchmark for all other plants. The most recent example
of this is our plant in Tiexi, China, which opened in 2012. Lessons learned and
innovations from other plants were integrated into the design of this plant. Over 50
measures were taken to optimise consumption levels of energy, water and waste.
The reference system for sustainable construction is the basis for new-building
projects and building conversions at the BMW Group. It sets down principles and
concepts for buildings throughout the BMW Group and enables the measures taken
during the individual project phases to be monitored. The aim is to minimize
consumption of energy and resources and put as small a burden as possible on the
environment during all phases of building lifecycles – from planning, construction,
use and renovation right up to demolition and renaturation.
Sustainability is also an integral part of any new-building advice provided to
their dealers by the BMW Group’s international construction and facility
consultancy. Dealers, investors and local architects are informed about the benefits
of green building measures when planning new buildings and modernization
measures for their dealers’ operations. This enables them to protect the environment
and at the same time enhance their image, save on operating costs and increase the
value of the buildings.
Raising Workforce Awareness
Vocational training courses at the BMW Group already teach trainees how to
deal with energy efficiently. In addition, they offer courses on value-creating
production systems. This is a systematic approach to improving efficiency in
technical and administrative processes.
Material Use and Waste Management
In the 2012 financial year, the total waste volume increased due to the
modification of their metal casting process in Landshut (30,000 tonnes of foundry
sand recycled). Since 2006, they have been able to reduce the volume of materials
that are removed from the life cycle and not reused by 65% per vehicle produced
(2012: 23.5% per vehicle produced). Paintshop waste in particular is now recycled
rather than disposed.
At least four times a year, every positive step we take with regard to waste
prevention and recycling is the subject of discussions by our worldwide network of
waste management officers. As a result, best practice solutions can be successively
applied to other plants. The Center of Competence Waste and Recycling
Management, which has now been expanded to cover all plants worldwide, also
makes a contribution here. The Center of Competence is made up of the
environmental experts from the different plants as well as the experts from the
Environmental Protection department. They discuss best-practice solutions and
develop reference systems for future planning and process improvements.
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BMW Group implement a whole range of measures to work towards achieving
their vision of waste-free production. In 2012, the recycling rate at their UK plants
increased significantly compared to the previous year. To achieve this, the
BMW Group is willing to pay a higher price per tonne of waste. At their plant in
India, they send all waste that is similar to household waste to a waste facility which
produces agricultural fertilizer. At their Regensburg plant, a screw compacter was
introduced in 2012 to dispose of recyclable synthetic packaging that has reached the
end of its lifetime. The compressing process has saved them 24,000 truck kilometers
that would have been necessary to transport the synthetic waste to the recycling
plant.
A Step-by-Step Approach to Wastewater-Free Production Processes
After carrying out tests to identify the three largest sources of water
consumption, they introduced the following measures:
The measures taken in Spartanburg, Munich and Dingolfing alone led to
savings of €155,974 in 2012. 88% of the water used by the BMW Group comes
from the public drinking water system. 12% is groundwater. There was no
consumption of water from sensitive sources in the reporting period.
 To identify potential for optimization at their paintshops, they carried out a
feasibility study on operations that were almost wastewater-free. As a result,
technically and economically feasible measures are being implemented on an
ongoing basis.
 At the Spartanburg plant in the USA, they are already using a state-of-the-art
dry separation process at the paintshop. The overspray paint, which does not
reach the body of the vehicle during the painting process, can be bound by
stone powder and then discharged using this process. No water is used. As a
result, over 26,000 m3 of water was saved.
 Since 2012, part of the purified wastewater that is created in the corrosion
protection process in the paintshop at the Munich plant has been reused in
another paintshop process. The overspray paint is washed out of the process
and discharged. This led to a reduction in water consumption of over 21,000
m3 in 2012.
 At the Dingolfing plant, an old ion exchanger was replaced by a more efficient
one. The number of regenerations that consume water and chemicals was
significantly reduced as a result. In addition, the wastewater produced during
regeneration is reused in another process. As a result, around 15,000 m3 of
water was saved in 2012.
 At many plants, for example in Shenyang, China, they replaced the bathroom
fittings to reduce sanitary water consumption by up to two thirds. At their store
in Parklane, London, they have also installed water-saving fittings throughout.
 In South Africa, we installed measuring devices to manage our consumption of
resources there.
VOC Emissions
Changing over from powder paint to 2K clear paint was a challenging task.
Powder paints cause no VOC emissions, whereas clear paint does. However,
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because the other carmakers have continued to use clear paint, it was no longer
economically viable for our supplier to provide them with the necessary range of
powder paint colours. Nevertheless, they were still able to make the shift to clear
paint without causing additional VOC emissions. At their Regensburg, Leipzig and
Dingolfing plants, the emissions are concentrated and then burned to minimise their
impact on the environment.
The environmental benefit obtained from Volkswagen’s environmental
activities do not differ greatly with that obtained in a BMW. Volkswagen is
developing ever more new technologies, products and services whose goal is to
offer solutions to the challenges of climate change. Examples include efficient,
environmentally friendly vehicles, backed up by mobility services and fuel-saver
courses, as well as energy-related products for use outside the mobility sector.
The LCA results also highlight improvement potential which can be targeted in
future development work.
Volkswagen believes it has a duty to inform its customers as fully as possible
about the options for achieving sustainable mobility during the use phase of the
product. Communication starts with the purchase of the vehicle, where efficiency
badging identifies the most environmentally friendly models and provides clear
orientation for customers.
In 2012, the Environmental Commendation for the new Golf was certified by
TÜV NORD, confirming that the new model offers significantly better
environmental performance than its predecessor, based on an ISO 14040/14044compliant Life Cycle Assessment.
Source: http://volkswagenag.com
A closer look at energy consumption makes this clear. In 2012, an average of
2.21 MWh of energy was consumed for every Volkswagen Group vehicle produced
– a reduction of 0.32 MWh compared with 2010. At first glance such improvements
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may seem small, but when multiplied by the total number of vehicles produced, they
actually represent an important lever for improving sustainable production.
Volkswagen’s goal of reducing the environmental impact of its production
operations by 25 percent by 2018 is being systematically followed up at all currently
participating sites. For example, at many Volkswagen brand plants, workshops have
already been held to produce detailed roadmaps for the necessary ecological
measures, complete with a timeline for their phased implementation through 2018.
Despite increased production throughout the Group, and the introduction of
new vehicle models, Volkswagen reduced its total waste quantities per vehicle
produced (passenger cars and light commercial vehicles) during the period under
review. In 2012, 188.72 kg of metallic waste was produced per vehicle (2011:
210.59), along with 10.62 kg of hazardous waste for recycling (2011: 11.27), 10.37
kg of hazardous waste for disposal (2011: 9.86), 10.62 kg of non-hazardous waste
for disposal (2011: 11.74) and 34.46 kg of non-hazardous waste for recycling (2011:
34.14). The overall reduction was mainly down to the use of more resource-efficient
production processes.
Volkswagen believes reduction traffic noise activities can result in better
coordination of future noise reduction measures and more effective targeting of
funding.
At the end of 2012, one of the most advanced wastewater treatment plants in
China came on stream at the new Volkswagen plant in Foshan. The wastewater is
recycled in an environmentally compatible process that returns 100 percent of the
water to the factory. Here it is used for, among other things, the rain test in the
assembly shop and to replenish the cooling water. As a result, the plant’s freshwater
uptake has been reduced by some 30 percent. During the site approval process,
agreements were already drawn up on future water use, and plans were developed
for a biological treatment plant.
In 2012, Volkswagen also reported positive results from its ongoing
reforestation project in the vicinity of the Popocatépetl volcano in Mexico. Since
2008, the Company has reforested a total area of 750 hectares on the slopes of this
volcano. The trees stabilise the ecosystem and improve rainwater retention. So far
420,000 trees have been planted, 47,000 soakaways have been constructed and 350
sizeable dams have been built. These measures are contributing around 2.6 million
m3 to groundwater replenishment annually – significantly in excess of the amount
the Volkswagen Puebla plant actually withdraws from the groundwater.
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CHAPTER IV
CONCLUSION
From the above comparison between BMW Group and Volkswagen Group, we can
conclude that operational matters in both of manufactures company are nearly equal despite
their stretcher vision are very different but they are both pursuing a strategy of differentiation
in their products. It can be seen from their products varying.
We also seen both of the company is using ABC system in their production to make their
cost efficient and effectively. Although their activities and cost driver that their using is not
really same but overall their activity and cost driver that they using is same. Example like
they are using same activities in assembly.
In their supplier, both of the company is collaboration with the countries where they
market their products. They get the material and human resources from the countries where
they produce. It was at once able to minimize operating costs and also help the community
because of the open jobs in their area and also the income for the country because the taxes
that must be paid.
In maintaining the natural and social environment, they are both doing activity in
maintaining natural and social environment as well as internal company. One example is the
well Volkswagen Group and BMW Group are both thinking about the use of their water so
that it does not use a lot water and do not cause waste. Another example is they are equally
committed to maintaining the biodiversity of the natural environment remains pristine and
keep the surrounding flora and fauna. It also serves to keep the environment can also
minimize production costs so that efficiency and effectiveness can be achieved.
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http://focusedmanagement.com
http://mbaksool.com
http://nachhaltigkeitsbericht2011.volkswagenag.com
http://noesis.pt
http://ralph3719.blogspot.com
http://reliableplant.com
http://scribd.com
http://slideshare.net
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http://tsvetelinapantalee.blogspot.com
http://volkswagen-vans.co.uk
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http://volkswagengroupamerica.com
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