Setting Up Operations For Zero Motorcycles In Australia

Manufacturing plant set-up and the need for Just-In-Time philosophy

Zero Motorcycle is an electrical manufacturer of electric motorcycles. Neal Saiki, a former NASA engineer started the company in 2006 in California. Zero Motorcycle plans to set up operations in Australia for which the operational plan is provided

1) Setting up of factory – Zero motorcycle has its manufacturing plant in the United States. The company has around 138 employees in Santa Cruz, California, and its small European office, and has a capacity to manufacture between 15 and 18 bikes per day. In order to start its operation in Australia the company needs to set up its manufacturing plant.  The company needs to implement Kanban-style in its manufacturing plant and Just- In-Time philosophy so that the production line is systematic and quality-focused (Stadtler 2015).

2) Supply chain management–In order to start its operation in Australia, Zero motorcycle needs to find suppliers who will not supply product off the shelf but the products should be tailor-made to the specifying manufacturing requirement of the company. Zero motorcycle can tie-up with suppliers like Pirelli tyres, Surteco Australia or Air Brake Corporation for its ABS System, J-Juan brakes or custom designed Showa suspension (Jafari et al. 2015).

3) Quality testers and engineers –Zero motorcycle would require to hire a set of skilled engineer in Australia from both motorcycle and high-tech industry

4) Requirement of dealers –Zero motorcycle would require dealers in Australia foe which a dealer subscription form should be available on company website .The dealers should organize demos and let customers have a demo ride before they make final purchase.

5) Sales support –The sales support model should be innovative and streamlined. Benefits to customers should be maximized .Zero motorcycle should have enough dealers in Australia so that the company can streamline customer’s buying experience by connecting them with authorized dealer (Zakariazadeh, Jadid and Siano 2014).

Different bikers have tailor-made bike requirements. Motorcycle zero should be able to develop a product line that caters to individual needs of bikers in Australia. In order to do so, the company should focus on robust innovation with the help of its motorcycling manufacturing and engineering team. Market intelligence system should be use fir consumer research.

 Resources in manufacturing plants in terms of technology and human resources should be enough to break even and produce larger volumes of bikes as the business grows in Australia.

Zero motorcycle should develop a robust supply chain management system by developing tie-ups with more local suppliers and dealers in Australia.

Supply chain management and customizing products for manufacturing requirements

Brutus V9, Lightning Motorcycles, Energica EGO, Brammo Empulse R, R Electric andMotorcycle (Margetts 2013).  

Key performance indicators are quantifiable measures used to determine the success of an organization. There has to be certain Key Performance Indicators which will determine the successful operation of Zero Motors in Australia (Parmenter 2015).

The KPIs of Zero Motors based upon competitor and industry research are depicted in the following table

1)Manufacturing	Manufacturing cycle time of zero motors will be one month from the reception of order. Manufacturing will increase by 30 % after first 6 months of inception of operation	Capacity utilization will be 80% of the total manufacturing output capacity is utilized at a given point of time	Overall Equipment Effectiveness(EEE) =(availability*performance*quality) This indicates quality ,speed and downtime of an entire production line or a particular production equipment	Schedule production attainment This metric measures actual production as a percentage of scheduled production, for Zero motors this value should be around 70 % in first year and 90% in second year.
2)Productivity and Efficiency	Cost of each unit of production of zero motors will be 70 Australian dollar.	Cost versus competitor’s cost should be matched	Inventory labor and overhead per Stock Keeping Unit Number	Production cost per employee will be 30 Australian dollar
3)Sales Volume and sales mix	Annual sale per customer is expected to be 3 bikes, average sale per customer is expected to be 2 bikes	Sale order  ($) Value, sales per unit of product line is expected to be 20 units	Growth rate for each product line is expected to be 20% ,customer revenue list	Percentage sales for each distribution channel is expected to be 70%
4)Customers existing and new	Average sales per repeat customer is expected to be 2 bikes, percentage of growth in average sales per repeat customer is 10%	Growth in number of new customers is 15%	Revenues of new customers/Total revenue Share of wallet(portion of purchase of customers that goes to Zero motors ) VS customers purchase from competitors	Number of new accounts opened is 30
5)Marketing and market penetration	Marketing cost as percentage of sales  is 20%	Marketing cost per new customer is 20 AUD	Number of ads placed, number of people exposed to the ads	Brand recognition (% of customers who recognize Zero brand)
6)Customer Satisfaction	Brand Value	Price ,product quality ,service quality	Customer intention to make a repurchase	Service attributes like timeliness, customer focus

Progress of operational activities of Zero Motorcycle in Australia can be measured using different tools like Gantt Charts. In Gann charts, the horizontal axis of bar graphs are used to represent time and vertical axis is used to represent scheduled activities (Belekoukias, Garza-Reyes and Kumar 2014). 

Gantt chart in planning stages of progress for setting up of manufacturing units of Zero Motors in Australia.
TIME IN MONTHS	1	2	3	4	5
A-Manufacturing
B-Productivity and efficiency
C- Sales Volume and sales mix
D-Customer Existing and New
E-Marketing and market penetration
F-Customer Satisfaction

The progress of the key performance indicators can be measured using the Gantt chart.

Manufacturing can increase by 30% with a robust supply chain management and Just in time supply chain management. This value is expected to be achieved within 6 months from beginning of operation

Productivity and efficiency can increase by 20% in second quarter of first year when cost of production is lowered.

Sales volume and sales mix can increase by 25 -30 % in second quarter of first year by acquiring new customers and by making repeat purchases.

Expected market share of Zero motors at the end of FIVE years against competitors is depicted   

 Progress can be measured using action plan, the operational plan can be broken down into separate components and a due date can be assigned for each component. 

Where is our business now (after 3 months)	6 Manufacturing units have been set up   each producing 20 Zero bikes per day, annual profit of $ 150,000 ,50 Dealers signed, staffs trained
Where is our business in 6 months time	Profitability is improving, Investment in technological research, all staffs are trained in service delivery
Where is our business in 1 year time	Annual profits of $300000,more than 100 dealers are signed, Innovation in technology which is producing tailor-made bikes as per customer requirement,200 team of engineers and workers recruited
Where is our business in 5 years time	59% of market share achieved with respect to competitors

Contingency Plan case of emergency in the manufacturing unit like fire, accident, continuous power supply (Schwab, Sandler and Brower 2016). 

Contingency Plan will enable Zero Motorcycles to deal with several emergency situation like 1) Fire 2) Accidents in manufacturing plant 3)Financial crisis 4)Contingency Planning in the Supply Chain

Fire	FIRE ALARMS should be installed ,marking of fire exit doors, training of staff to use extinguisher ,a layout plan should be developed for fire extinguishers so that they are properly placed	FIRE DRILLS frequency of fire drills and person responsible for it should be determined, all emergency contact details are noted in case of fire breaks, all emergency fire exit doors are properly illuminated
Accidents in manufacturing plant	Fist aid kits should be supplied in each plant ,all workers should be trained in first aid training	Should have tie-ups for emergency call with doctors of local hospital ,health hazards are minimized by safe practice in manufacturing plant
Other preventive measures	Steps should be taken to disrupt power supply, regular checks of electrical safety should be conducted	Location should be covered by emergency action plan. Emergency telephone numbers of doctors, police, ambulance, fire brigade should be noted.

2) In case of financial crisis, promotional campaigns should be delayed or variable costs should be cut down.

3) If there is a failure in pricing strategy, there should be detailed study of competitors pricing tactic, price should be skimmed as per customer’s perceived value of Zero Motorcycle.

4) Contingency plan in Supply chain to -Minimize Bull Whip Effect. The Bull Whip Effect will enable to implement the concept of Just in Time Approach in Zero Motorcycles. An order will be processed only after getting confirmation from customers. The parts of the motorcycle will be ordered from suppliers and assembled after the order is confirmed by customers so that the demand and supply is balanced

Stakeholders of Zero Motors are discussed (Weiss 2014).

1) Suppliers- In order to manufacture its electric bikes, Zero Motors should have a robust chain of suppliers like Zero motorcycle can tie-up with suppliers like Pirelli tires, Surteco Australia or Air Brake Corporation for its ABS System, J-Juan brakes or custom designed Showa suspension.

2) Dealers-To ensure availability of Zero motors, there should be ample of dealers in each geographical units

3) Investors- Zero Motors should develop a business plan and funding from angel investors and venture capitalists.

4) Consultants/ Subject Matter Experts should be consulted for guidance in setting up a business plan in Australia.

5) Employees –Skilled engineers for R&D, Sales and sales support personnel, employees of manufacturing unit

6) Customers –Detailed study of potential customers of electric motorbikes in Australia should be done

7) Government –The operational plan of Zero Motors should comply with all business policy of Government

8)The stakeholders of Zero Motor Cycles are its suppliers like Pirelli tyres, Surteco Australia or Air Brake Corporation for its ABS System, J-Juan brakes or custom designed Showa suspension

1) Supply chain Management

The manufacturing facility should determine the economic order quantity and Zero motorcycle should use Just-In-Time technology to reduce bull whip effect in supply chain. In order to do this Pull Strategy should be applied .As demand of Zero Motorcycle is unpredictable in initial phase of production ,therefore, assembling of a single unit of motorcycle should be started after  receiving orders from customers using JIT technology in manufacturing plants (Christopher 2016).

2)Technology

Research on design and development of vehicle core, a network of charging stations should be developed and customers of Zero Motors should pay to access charging stations.

Conclusion 

In order to start its operation in Australia, Zero Motorcycle should have an effective operational plan with detailed study of stakeholders and resource requirements. KPIs are indicated clearly in the plan and metrics for measuring of performance are important. A contingency planning is important because the company should always be ready with a plan B and should be able to manage risks in operation.  

References

Belekoukias, I., Garza-Reyes, J.A. and Kumar, V., 2014. The impact of lean methods and tools on the operational performance of manufacturing organisations. International Journal of Production Research, 52(18), pp.5346-5366.

Christopher, M., 2016. Logistics & supply chain management. Pearson UK.

Jafari, H., Nyberg, A., Osnes, T.L. and Schmitz, A., 2015. Customization in bicycle retailing. Journal of Retailing and Consumer Services, 23, pp.77-90.

Margetts, D.E., 2013. A Critique of Australia’s National Competition Policy: Assessing Its Outcomes in a Range of Major Sectors (Doctoral dissertation, University of Western Australia).

Parmenter, D., 2015. Key performance indicators: developing, implementing, and using winning KPIs. John Wiley & Sons.

Schwab, A.K., Sandler, D. and Brower, D.J., 2016. Hazard Mitigation and Preparedness: An Introductory Text for Emergency Management and Planning Professionals. CRC Press.

Stadtler, H., 2015. Supply chain management: An overview. In Supply chain management and advanced planning (pp. 3-28). Springer Berlin Heidelberg.

Weiss, J.W., 2014. Business ethics: A stakeholder and issues management approach. Berrett-Koehler Publishers.

Zakariazadeh, A., Jadid, S. and Siano, P., 2014. Multi-objective scheduling of electric vehicles in smart distribution system. Energy Conversion and Management, 79, pp.43-53.