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      01-24-2013, 02:23 PM   #321
bradleyland
TIM YOYO
 
Drives: 2011 135i - Silver 6MT M-sport
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So what happens when they're short on defect engines? Do they simply down-bin competent engines? They'd have to, because current automobile manufacturing strategies don't include stocking warehouses full of engines for no good reason. That means we should see '20i engines on the market that are fully capable of '28i output.

BMW isn't renowned for their super-short supply chains, but they're not sloppy either. The problem with binning is that it relies on a statistical distribution of yields in large runs. Microprocessors are manufactured in much larger lots than engines, so it works for them. Processors are also sold a lot like commodities. Fluctuations in pricing at at the low-end can occur independently of price changes at the high end. There are price constraints, but the defect rate in microprocessors follows a curve that is often similar to the pricing curve (until much later in production). This is not coincidence. All of this is an emergent (bottom-up) system based on the fact that microprocessor manufacturing pushes the boundaries of our best technology.

This model makes no sense with automobiles where customers dictate orders. BMW can't simply release engines to market in whatever quantities they want. They have orders to fill. BMW doesn't release a batch of cars on to the market; BMW dealers order their cars just like a customer can.

Imagine the difficulty in aligning the defect rate of engine design and manufacture to anticipated customer demand. If the defect rate turns out too high, BMW has to eat that loss. The price window for their car line up is too tight for them to treat their engines as commodities subject to internal supply side fluctuations. This is something they would *have* to control tightly or they'd be giving up a significant competitive advantage to every other manufacturer.

The short version is that, not only does it not make sense from an engineering perspective, it doesn't make sense from a supply chain and economic perspective either. Not buying it.
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