Question:
Discuss about the Automotive Supply Chain and Logistics Management.
Operational management is defined as the art and science of producing the goods and services and deliver these goods and services to the customers. The operations management areas involve the different operations such as quality management, supply chain management, production processes and customer services. There are many challenges that are faced by the organizations and various success factors in the businesses. This report carried out to analyze the automobile industry by taking the company Toyota for the research. This report covers the impact of the operational management or decisions on the performance of the Toyota company. There are many factors that are explained such as change in technology, managerial methods and the operational research on the basis of the automobile industry. This research also describes the impact of the operations on the customer satisfaction and efficiency of the company. The main purpose of the report is the deep analysis of the challenges faced by the Toyota company and their critical success factors for the Toyota with respective to the future. There are two parts in this report. First part demonstrates the challenges faced by the companies like changing technologies, globalization, change in the expectations of the company, change in the job designs, global manufacturing and quality management. The second part of the report covers the different areas of the operational management for the better understanding of the success of the automobile industry(Braese, 2003).
The different key challenges from the different factors are going to be explained in order to understand their effect on the success of the business in future. The challenges of the Toyota company are :
In the modern world, the technologies are changing very rapidly and this change in the technology is the opportunity as well as a threat to the automobile industry. The Toyota company has gained the good position in the competitive world by offering innovative car designs also competing with the various other companies like Honda, Maruti Sazuki, Volkeswagon, Nissan, Audi and Scoda. The Toyota companies used the latest technologies in order to compete in the automobile industry. Toyota is the UK based automobile company dealing with the manufacturing of automobiles. The company is focused on continuous improvement through these latest technologies for the long term. The Toyota company became the world’s largest top ten manufacturers of the cars and other vehicles. The Toyota is focusing on the latest technologies in order to gain the market share. There are many companies who are investing a large amount of the money on the research and development of the latest technologies in order to bring that technology in the company for the future success. If the Toyota company will not adopt the latest technology while manufacturing and designing the cars, then the company will face the huge losses(IBM, 2007).
The businessmen are trying to find different ways to create a unique selling proposition over other competitors to make the consumers prefer their services over other competitors in the market. This change has been seen in all the top organizations and if we have a look at the stats, the economy has been improved a lot due to growth of global markets. So, to stay in the market, every day a new strategy is established by the financier to retain its position in the market.
Globalization provides a great opportunity to the companies for the expansion of the business in the international markets(Leskova, 2012). The reason of the entering into the global markets is to reduce the cost resource sharing and by grasping the more business opportunities in the future. Toyota expanded its business in various countries and investing money to enter into those markets who have the high market potential growth.The company already invested its money in the Southern US, Ontario, Ottawa and Indian global markets just to gain the maximum profits. The challenge connected with the globalization is that the competition for the Toyota company become high because of the market are dominated by the other competitors too that affects the profitability of the firm.
The changing customer expectations are also a challenging factor. Customer’s expectations are always high because the Toyota already set a benchmark for the quality products. The customer of Toyota expects fro the company more quality of the automobiles with more features, design , new technology and the reasonable prices. The Automobile industry tends to increase share in the market, revenue growth, more customers and less number of complaints. The customers are very peculiar about choosing the vehicle for the own satisfaction. The companies adopt various strategies to meet the expectations and demands of the customers. The most difficult part of the automobile industry is to understand the market needs of the customers as the Toyota company is not focusing only on one customer, they are targeting the millions of customers. However, the company needs to build strategies to meet the customer standards by introducing new car designs and quality productivity(Leškova & Ková?ova, 2012).
The change in the job designs has the direct relation with the improvement of the employee performance. The flexible working hours leads to improve the productivity of the employees. It is very important to retain the employees in the automobile industries by designing the job working hours in the organization. Job design could be obtained through job rotation, simplification, enlargement, enrichment and flexible working hours. It is very important to meet the employee expectations and needs too for the quality work and the strategies should be implemented by the Toyota company in order to make their employees satisfied.
Toyota is the automobile company that is famous for its high quality of vehicles across all over the world. The quality control is the main aim of the company because it is directly related to the customer satisfaction. The customer satisfaction in end is the main focus of the every company and this will result in the building of the brand image and company earns maximum profits because of its quality. The Toyota company is not producing the same products as there are many models of the cars that introduced by the Toyota company such as Innova, Fortuner, Etios etc. Toyota always follow the Kaizen, which stands for the continuous improvement by understanding the needs and expectations of the customers for the future period of time. The company mainly focuses on those strategies that aims at increasing the quality of the vehicles, efficiency of the company and reducing the cost of the manufacturing. The strength of the company is its brand name as the every person in this world is familiar with the Toyota and its products. It is very significant to maintain the highest quality of the products and launch them in the market by keeping in mind about the needs of the customers at the affordable prices. However, the Toyota Company focuses on the quality theories and initiated manufacturing keeping in mind all the factors of quality control. Total quality management is the collective effort made by the top management and the employees who are responsible for formulating the strategies to manufacture the highest quality automobiles, which meet the level of customer satisfaction(OSAT, 2012).
Toyota has its manufacturing plants in various countries like US,Canada, India and China. It has been analyzed the 50% of the cars are manufactured in the United states and 50% in the Ontario, Canada. The company set up offices in the different areas in the UK airport free zone, in order of which sales have been increased in double profits in the last few years. It is the only general decision to open a regional office in the UK, which is experiencing instant economic growth along with the London. The Canadian plants producing the millions of cars and introduce them into the global markets. The Toyota company established its manufacturing plant in the Melbourne too and other various places. The global manufacturing helps in improving the supply chain of the organization. Global manufacturing challenges for the Toyota company are innovation, education and training, manufacturing excellence, information technology, and clean manufacturing. The manufacturing plants at the different places needs more resources, capital that adds cost to the automobile company. The management of the huge number of the manufacturing plants becomes difficult for the organizations.
This is the second part of the report that focusing on the operational areas of the business that influence the success of the organization. The different areas of the Toyota company are supply chain, inventory management and work design that contribute to the success of the business.
The Supply chain is the system that focuses on the process of the movement of the raw materials to the production houses and then deliver the final products to the customers. There are many people involved in the supply chain, including, suppliers, distributors, manufacturers, and retailers make that product available for the consumers. All these people come together with a purpose to convert the raw material into the final products and delivery of these products to the customers. The below given figure shows the supply chain process of the Toyota. The supply chain of Toyota involves the collection of the parts of the automobiles from the different suppliers and the consolidate those parts to deliver them to the different vendors(Cassivi, et al., 2000).
This is the most challenging task to manage the supply chain in the organizations and these main activities involved in the transformation of the goods from the raw materials to the final products consumed by the customers. The process of the creation of the products and customer’s consumption of these products. Looking into the previous years and the last 3 years industry reports, it has been observed that the globalization has a great impact on the supply chains. There are no such restrictions on the trade of the products and services in certain areas. Talking about the automobile industry,then the Toyota company in today’s world makes use of the latest technologies inthe supply chains. In the past years, the activities like planning, manufacturing and retailing etc. are done by the industries itself. But now the industries are using the different kind of softwaresto manage the supply chain(Dinesh, 2015). Toyota company has more than the 3000 suppliers in the different countries in the world and the supply chain model of Toyota company is greatly influenced by the fairness and win win situation. The Toyota company has the clear and transparent policies of the supply chain management.
There are many risks involved in the supply chain management andthe industries build many strategies to integrate all the activities and this is the best way tomanage the supply chain. The automobile industry is chosen for the analysis and to understand thedifferent challenges faced by the industry. The automobile industry is the sector which is growingrapidly and every country is contributing to this automobile industry. The automobile industry has many companies like Honda, Maruti Sazuki, Nissan, Ford, Volkswagon and Audi, etc.The role played by the supply chain management is very significant for the success of the automobile industry(Deloitte, 2013).
In the developing economies, there are many other environmental factors that affect the sustainable business like transportation of the stocks from one place to another and these factors are like pollution, poverty, and natural resource depletion. As the automobile companies are highly linked with the transportation sector. The population of the countries is increasing very fast and it will obviously create more pollution from the automobiles and also the increase in the usage ofvehicles bring the road networks jams because of traffic. These traffic jams and pollution affectthe business by the creating negativity in the customer mind and delay in the stock delivery. Moving further, the other environmental factorslike weather during the season of Monsoon that creates problems for the automotive industry todeliver the goods in a safe manner and on time. As the automobile industry is very famous and withthe increase in the population, more and more clients availed these services and products offered by the different companies like Honda, Volkswagon, Audi, Nissan and Maruti sazuki. The Automobile industry is facing challengesnow in building the strategies to deal with the increasing clientele, environmental factors,diseases and expectations of the customers(Suthikarnnarunai, 2008).
The models of the inventory management are very helpful to find out the quantity ofthe stock that is transported to the retail stores at least two times a week. As the stock of the cars, bikes and other automobiles in the automobile industry is very limited and it is verysignificant to identify that each retail store of the automobile is getting the stock as per their needs.The workers and the staff members, who are responsible for the management of the stock andtheir quantity of their automobile industries outlets.
The inventory management is important as the inventories are the assets of the company and used by the firm. Inventories are acting as the resource for the company as well as cost to the company. However, it is very important to have the economic orders of the quantity level. The process of inventory management includes planning, coordinating and controlling, storing, handling , distribution and sale of the materials , tools and parts by keeping in mind all the needs of the customers. Inventory involve the raw material, or we can say the essential parts of the machinery, work in progress activities and the finishing by storing those inventories or goods for the future case. The inventory is always stored in order to meet any future uncertainties and to meet the demand of the customers in the case of the emergency. Managing the inventory is playing the important role as in reducing the costs, improving the supply, and maintenance of the production houses. The main purpose of the inventory management is to increase the level of production by maintaining the sufficient level of the stock in order to increase the profitability of the company. The main role played by the inventory management is to control the costs, to manage the demand and supply chain and reduce the losses of insurance or any damage. There are many areas on which the Toyota company is spending a lot of money to hold the huge stock for future, and control the ordering cost and storage costs(Günther & Meyr, 2012).
The inventory management of the Toyota company is the critical success factor for the automobile business. There are many questions comes in mind while storing the stock or inventory for the future like what type of parts of the Toyota cars or vehicles should be stored and what would be the turnover ratio of the Toyota company. It has been analyzed that there are many companies who saves the 50% of the production costs. The different success factors of the Toyota will be to maintain the inventory that is required on the daily basis for the business transactions. Moreover, it is important to understand the concepts of the cost factors in order to avoid the excessive inventory. Tracking of the inventory is also the success factors as the company will get to know about the latest an outdated technology and to bring a change in the technology to gain the competitive advantage. However, it is very important to have the economic orders of the quantity level.
The inbound and the outbound logistics need to be improved to resolve the issues faced by the Automobile industries. The inbound logistics means to establish the strong relationship with the suppliers and to make proper use of the resources as well as raw materials to avoid the waste and to manage the supply chain in the Automobile industry. The outbound logistics is the term used forthe delivery of the products like for the consumption of the consumers. All the products like Cars, two wheelers, and other vehicles and equipments need to be stored and distribute in the people by usingdifferent sales strategies. The procurement in the supply chain is very important to avoid themain issues and it refers to the communication take place between the supplier, retailers,wholesalers and the distributors via phone call or emails. This communication is very significantfor the timely delivery of the ready products to the customers. Another important factor in thesupply chain management is the use of the latest technology. There are many technologies usedby the automobiles companies like, airbags, painting and denting of the cars, automatic cars, sound systems and Cloudcomputing for the tracking of goods throughout its business lifecycle(Golinska, 2006).
The layout of the work and the facility is the arrangement of the resources used by the companies that consume the space in relation to the physical facilities. It is very important to design the working schedules and the facilities while adding some new things in the automobile industry. For example, the change in the production line, adding of new workers and change in the delivery services, etc, all these demands the change in the design and facilities. The layout of the facilities includes the following elements:
The Toyota company first need to establish the objectives and goals of the services and then develop the operational strategies to meet those goals for the company’s better future.
Talking about the design of the work, then it is very essential that assigning the duties and responsibilities to the workers leads to achieve the company objectives. The job enlargement and job rotation are the main elements of the job design. The change in the job designs has the direct relation with the improvement of the employee performance. The flexible working hours leads to improve the productivity of the employees. It is very important to retain the employees in the automobile industries by designing the job working hours in the organization. Job design could be obtained through job rotation, simplification, enlargement, enrichment and flexible working hours. It is very important to meet the employee expectations and needs too for the quality work and the strategies should be implemented by the Toyota company in order to make their employees satisfied(Schmitz, 2012).
The Toyota company is focusing on its services provided to the customers as the customer satisfaction is the most important factor of the success of the company and building the brand image of the same. The car manufacturers have the responsibilities to provide the best customers facilities and to assign the task according to the skills and abilities of the employees. Following is the figure, that depicts the flow of the information as well as he vehicle which has the main motive to provide the best facilities to the customers for the purpose of increasing the sales and profits. The Toyota company also established its various sevices centers to provide the maintenance and the repair of the automobiles. The company is also focusing on the after sales facilities to build the brand image and to satisfy their customers(Taylor, 2008).
Conclusion
In this report, all the operation management factors are discussed with respect to the automobile industry and by taking an example of the Toyota company. The main findings of the report outline the customer, satisfaction, production efficiency and productivity of the employees and how to gain the competitive advantages. The main purpose of the report is the deep analysis of the challenges faced by the Toyota company and their critical success factors for the Toyota with respective to the future. There are many challenges that are faced by the organizations and various success factors in the businesses. This report carried out to analyze the automobile industry by taking the company Toyota for the research. This report covers the impact of the operational management or decisions on the performance of the Toyota company. There are many factors that are explained such as change in technology, managerial methods and the operational research on the basis of the automobile industry. In the past years, the activities like planning, manufacturing and retailing etc. are done by the industries itself. But now the industries are using the different kind of softwares to manage its all operations. Toyota company has more than the 3000 suppliers in the different countries in the world and the operational model of Toyota company is greatly influenced by the fairness and win win situation. The Toyota company has the clear and transparent policies of the operational management. However, it is concluded that the supply chain management, inventory management and the work and facility management are the main operations that results in the success of the company for the future period of time.
References
Braese, N., 2003. The Dynamics of Supply Chains in the Automotive Industry, Available at: https://dspace.mit.edu/bitstream/handle/1721.1/33312/62311802-MIT.pdf?sequence=2
Cassivi, L., Lefebvre, L. & Hen, G., 2000. Supply Chain Integration in the Automobile Industry: The Case of ANX, Available at: https://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.86.5808&rep=rep1&type=pdf
Deloitte, 2013. Fast Tracking the Indian Automotive Logistics: CII, Available at: https://www2.deloitte.com/content/dam/Deloitte/in/Documents/manufacturing/auto-scm-report.pdf
Dinesh, R., 2015. Building world class automotive supply chains, Available at: https://www.atkearney.in/documents/10192/2659569/Building+World-Class+Automotive+Supply+Chains+in+India.pdf/3b40aab5-765c-403e-bc51-bf16e7357cc7
Golinska, P., 2006. Monitoring the operations management performance in automotive industry, Available at: https://www.wacong.org/wac2006/allpapers/isoma/isoma_228.pdf
Günther, H. & Meyr, H., 2012. Production and operations management in the automotive industry (part 2), Available at: https://paperity.org/p/11161344/production-and-operations-management-in-the-automotive-industry-part-2
IBM, 2007. The smarter supply chain of the future: global chief supply chain officer study, Available at: https://www-07.ibm.com/sg/manufacturing/pdf/manufacturing/Auto-industry.pdf
Leskova, A., 2012. Logistics concept of supply chain in automotive production, Available at: https://web2.vslg.cz/fotogalerie/acta_logistica/2012/3-cislo/4_leskova.pdf
Leškova, A. & Ková?ova, L., 2012. Automotive Supply Chain outline, Available at: https://pernerscontacts.upce.cz/26_2012/Leskova.pdf
OSAT, 2012. Supply chain management: New competitive realities in the automotive value chain, Available at: https://deepblue.lib.umich.edu/bitstream/handle/2027.42/1552/98142.0001.001.pdf?sequence=2
Schmitz, A., 2012. Operations Management in Manufacturing and Service Industries, Available at: https://2012books.lardbucket.org/pdfs/an-introduction-to-business-v1.0/s15-operations-management-in-manuf.pdf
Suthikarnnarunai, N., 2008. Automotive Supply Chain and Logistics Management. Proceedings of the International MultiConference of Engineers and Computer Scientists, Volume 2, pp. 1-7.
Taylor, M., 2008. Operations management research in the automotive sector: Some contemporary issues and future directions. International Journal of Operations & Production Management, 28(6), pp. 480-489.
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