With its four brands BMW, MINI, Rolls-Royce and BMW Motorrad, the BMW Group is the world’s leading premium manufacturer of automobiles and motorcycles and also provides premium financial and mobility services.
The BMW Group production network comprises over 30 production sites worldwide, where millions of vehicle parts must be delivered daily. The complexity of these supply chains motivated the company to undertake a transformation of its existing procurement processes, one involving SAP solutions.
As recently discussed at SAP Spend Connect Live, the German automaker has launched the connectedProcurement program to address myriad challenges — disparate data, legacy systems, and manual processes — that had historically hindered its global supply chain management.
The expansive nature of the BMW Group’s supply chain can be illustrated in a few figures. Alexander Scholz, head of digital supply chain projects at BMW Group, noted at the conference that the company produces around 10,000 cars per day, sourcing approximately 3,600 components for each vehicle, translating to a whopping 36 million parts per day that must be managed.
The complexity is further compounded by the BMW Group’s build-to-order business model, which allows customers to configure their vehicles up to a week before production. Consequently, the company handles a high percentage of just-in-sequence deliveries.
To meet these demands, BMW Group’s suppliers take on a key role in enabling their production. “More than 70% of our total value added is generated by our suppliers; this is not only value added from a monetary point of view but also from an innovation point of view,” said Scholz, underscoring the importance of long-term supplier relationships and effective collaboration in the BMW Group’s procurement strategy.
“We had disconnected data, legacy systems, and manual efforts from System A to System B. We had complex workflows. It was not made easy for our procurement professionals.”
However, the company’s procurement process was far from optimal. “We had disconnected data, legacy systems, and manual efforts from System A to System B. We had complex workflows. It was not made easy for our procurement professionals,” noted Scholz.
These issues inhibited efficiency, transparency, and data-driven decision-making, impacting the BMW Group’s ability to manage its supply chain and collaborate with suppliers effectively.
To address these challenges, the BMW Group launched connectedProcurement to create more seamless, intuitive, and collaborative processes. The program is built upon three pillars: standardized workflows and unified data structures, a user-friendly interface, and enhanced external and internal collaboration.
Scholz highlighted the importance of the first pillar: “We need to have a seamless integration of our data. Our procurement operation and direct material are very much linked to the development process. You need the development data to do a tender because you have changes and technical changes throughout the tendering process. And, of course, you need that data automated in order to really have your supplier be informed.”
The BMW Group has applied an agile approach to project implementation to achieve this goal. Instead of starting with a set of fixed requirements, the company focused on rapid access to features and user-centric design that compares standard solutions with its actual needs. The company releases new functions every three months, leveraging the latest developments from SAP.
This approach has empowered the BMW Group to make significant strides in a short period of time. The journey to connectedProcurement began in 2022 with concept and exploration, followed by implementation, first rollouts, go-lives, and MVPs in 2024. Full rollout is slated for 2025.
SAP solutions like Ariba and S/4HANA enable the BMW Group’s procurement revolution. By adopting a clean core approach, the company aims to keep its SAP system as standardized as possible while leveraging low-code platforms for individual workflow components to ensure flexibility and scalability.
The BMW Group’s transformation initiative is not a solo endeavor. The company has partnered with technology implementation experts like Capgemini to bring the connectedProcurement program to life. These partners play a crucial role in the design, exploration, and smooth execution of the project.
The connectedProcurement program is expected to yield substantial benefits. By eliminating manual efforts and automating processes, procurement professionals will have more time to prioritize strategic imperatives. Scholz said this would “give them back time for tasks that really matter and to focus on value-add activities,” such as sourcing strategies, negotiations, and risk management.
After successfully delivering connectedProcurement, the BMW Group expects to have a completely rolled-out Procurement Workplace, a successfully implemented new application landscape, over 1,000 procurement professionals enabled and trained, suppliers utilizing the collaboration platform, and digital workflows integrated into their work routine.
Ultimately, this will culminate in a more resilient and reliable supply chain, where enhanced collaboration with suppliers and improved data transparency enable the BMW Group to manage risks proactively and respond to disruptions more expediently. In an industry where supply chain issues can make or break production, this is crucial.
Throughout this journey, the BMW Group has recognized the importance of change management and stakeholder involvement. Scholz encouraged other companies undergoing similar transformations to “focus on integrating your users in the sense of change management. Talk to them, make them part of the project, and listen to their feedback.” This approach fosters alignment between the initiative and the needs and expectations of the procurement professionals who will eventually use the new tools and processes.
Likewise, supplier engagement is a critical aspect of the BMW Group’s initiative that drives mutually beneficial results. “Our suppliers are very interested in a win-win situation. If you open up your systems, they can type in data directly, which is beneficial for them as well because they have an increase in efficiency and can use it for things that are more important and need to be done,” said Scholz.
While the BMW Group’s procurement transformation journey is still in progress, the company remains committed to continuous improvement and learning from others in the industry.
“If you start with an as-is process, you will never get to a to-be process.”
Scholz offered advice for other companies embarking on this journey: “Always start quickly with an MVP. Don’t get lost in huge requirement and exploration phases; don’t stop with the current solution in mind. If you start with an as-is process, you will never get to a to-be process. You will just have a slightly improved process, not a leapfrog.”
With connectedProcurement, the BMW Group offers a clear vision for the future of procurement. The company envisions an intelligent and intuitive procurement workplace where digital workflows are integral to the work routine. Procurement professionals will be empowered and trained to leverage the new application landscape, while suppliers will actively participate through the collaboration platform. This transformation not only streamlines processes but also fosters a culture of innovation and alignment.
The connectedProcurement program is emblematic of the power of digital solutions and collaborative partnerships. By leveraging SAP’s solutions, taking an agile approach, and focusing on user-centricity and supplier engagement, the BMW Group is poised to drive efficiency, resilience, and innovation within its supplier network.
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