Business strategies

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This report is about guiding companies to become successful in managing their supply chain by firstly to set for their company aims and business strategies. Then, focus on effective ways of streamlining the products or services flow through the supply chain pipelines. There are many issues to be concerned of to smooth the process flow along the supply chain pipelines. A particular industry has been chosen to identify the steps made by companies to improve the synchronisation processes and activities across the supply chain. Some barriers of change have been considered based on the suggested new design of supply chain.

By referring to the automotive industry supply chain, late configuration of vehicle build for the 3 day car has been clearly specified. There will be changes that are likely to occur in the future. This report has identified the role that web-base technologies may play to make supply chain more efficient and effective. Company Aims Every company wants to become successful in business and be the best when compare with the competitors. Not surprisingly, many companies would have the similar aim which is to become a World Class Companies. There is no other ways that companies can straight achieving a success without a good plan.

Hence, company strategies need to be well produced and achieve accordingly. To remain competitive in the car manufacturing industry for example, it is important that company should focus on its process flows within the supply chain. The automotive industry is required to flow the product along the supply chain from raw material to finished product and ultimately to customer. But, it is rather important to focus on how orders are to be taken and the orders are being processed to reduce error, increase accuracy of information and speed in processing the information.

Normally, order processing stage would take about few weeks and remaining few days to produce the car. Today, customer can now place order over the Internet from the company web site and mass customise their orders by completing the web pages. The information obtained can be viewed by all parties connected to company’s supply chain. By doing this, it saves time in order processing and reduces it to only one day for customer to take the order, the next day to produce the car and last day to deliver the finished car to the customer.

This is known as the 3DayCar. On-line configuration could also speed the incorporation of innovative features and advanced technologies into new products, with automakers able to capture vast amounts of data on consumer preferences that could be fed directly into product development. These data could also trigger offerings of services customized to the needs of that individual. In effect, the customer becomes a co-designer of not only his/her current vehicles but of bundled services and future product offerings as well.

A successful “build to order” system will be designed to shape consumer demand by control-ling what choices are offered. Rather than large numbers of individual features, consumers are likely to be presented with configurations of features to choose. The use of Internet can reduce the operational cost and improve process flow through supply chain pipeline. Modularise Design Complexity Due to the complexity of design of a car and the systemic characteristics such as NVH (Noise, Voice and Harshness), many designers require an integral approach for the product architecture.

This can have standard modules designed to be usable in a wide array of products to compromise design quality with modules having to be designed to meet the highest requirements of the product range. There the integrality has been inbuilt to the functioning of a car. The idea is drawn from the safety system where computer makers are used to unite system functions and geography, e. g. to put all functions related to typing in the single physical unit of the keyboard.

The supplier could optimize the design of all the remote components, with the production and installation of those components distributed according to their physical placement in the vehicle. The “system” strategy has the advantage of making the safety system work smoothly, but requires the careful integration of particular parts by the automaker during final assembly. The “modular” strategy could potentially compromise functionality, but allows the car to be divided into large ‘chunks’ that can be designed and assembled independently and then easily combined in response to customized consumer demand.

In favour of modules are the prospects of design efficiencies from the combination of parts and functions that might lead to cost savings. According to Howard Mickey from the executive briefing that current emphasis on vehicle design is on module integration to make more specific models that increase sharing of parts and models standardization. He added that painted door modules, interior modules and roof modules will reduce production lead time. Other cost savings could come with the high volumes associated with modules that were sufficiently standardized to be usable across a wide array of vehicles.

Modular Production and Mass Customisation Approach In modular production, suppliers build up modules and deliver them in sequence to the OEM to simplify the final assembly process. The process sequence can potentially be organized so that customization steps are postponed until as late in production as possible, thus allowing for mass production economies at earlier stages. To build customized products will reduce finished goods inventories dramatically. This strategy may require suppliers hold higher levels of parts and work-in-process inventory.

OEM access to data on consumer preferences, expressed during order configuration, can potentially improve demand forecasting accuracy, thus mitigating the need for inventory buffers. Running a true “build-to-order” production system also differs greatly from either mass production or lean production. Lean production operates with very low levels of inventory and with quick setups to handle rapid product changeover that are predictable. Predictability is necessary because lean production emphasizes the extreme leveling of production to avoid the waste of idle capacity or of overproduction.

A production system based on 100% build-to-order might have too much volatility to allow for this degree of production leveling. Thus lean production could accommodate “build-to-order” only with production scheduling that combines “pull” and “push” derived demand. It is also important to combine with customers by steering customer at the customer front-end to support scheduling system that can be readily built, given production and parts supply constraints at any given point in time. E-procurement under “Build-to-Order”

Electronic, Internet-mediated procurement can achieve “build-to-order” by facilitating the rapid and low-cost dissemination of order information, production scheduling, engineering changes, and other crucial information. There is a variety of alternate methods of communication between OEMs and suppliers, such as proprietary electronic data interchange (EDI). Today, Internet can accomplish the task and offers the low cost, high speed, and universal connectivity necessary to make build-to-order economically feasible.

An integrated build to order system without infrastructure that can distribute large amounts of information simultaneously, at low cost to all upstream links in the value chain will not achieve a good supply chain. With e-procurement under build to order, it can also improve supplier relationships. It is manage supplier relationships by seeing them in 2 modes: “exit” and “voice”. For exit model, automakers solve problems with suppliers through price negotiation, quality enforcement and allocate responsibilities in the agreement by replacing them with another supplier.

For the ‘voice’ model, an automaker works with the original supplier to resolve problems. The Japanese industry has been characterized more by ‘voice. ‘ The advantage of the voice model has been a rich flow of information that can lead to improvements such as the elimination of unnecessary or expensive process steps. The disadvantage is that suppliers are still lack of trust for information exchange. Conversely, the advantage of ‘exit’ for the automaker is that it is not locked in to any supplier. Due to the barriers to entry, suppliers in ‘exit’ mode tend to have less bargaining power than do those in ‘voice’ relationships.

Under pressure from Japanese competition, the US industry has moved toward voice in the last 15 years. A key source of superior Japanese quality was held to be the proximity of design to production, so that defects could be ironed out quickly. This view has led many suppliers to invest heavily in design capabilities in order to take over design tasks from OEMs. Suppliers have hoped to persuade automakers of sourcing full modules (such as complete interiors) from one firm. Electronic procurement could end up reinforcing either the exit or the voice model depending on the nature of the product architecture’s moves towards modularity.

The idea of build-to-order may require modularization of the car into a few easy-to-assemble chunks. Standardisation Smaller assemblers wanted to keep parts standard, because it meant they had to design and produce fewer parts themselves. Early projects focused on standardizing large parts such as carburetors. Ford and GM had the scale to make carburetors in-house, and wanted to be able to compete on the basis of a superior design of these parts. So they narrowed the Society of Automotive Engineers (SAE)’s focus on standardization to parts like nuts and bolts, and grades of steel.

The result was that the barriers to entry in the auto assembly business went up dramatically, as independent suppliers of carburetors, bodies, and engines were bought up by firms that became the Big Three. The variance of profits in the supplier industry is likely to increase dramatically. Thus, it is possible that the industry would come to consist of a handful of multibillion-dollar global mega suppliers making returns similar to the automakers, meanwhile other smaller firms earning normal returns or small returns with low overhead.

In summary, the Internet by itself is not likely to alter make or buy decisions. As we have seen, it reduces the cost of sharing information, but does not by itself increase the trust and relational knowledge that will continue to be important in the design and production of complex components and modules. Electronics Streamline Processes According to Howard Mickey that by integrating software and assembling electronic components before the ‘3 day clock’ commences, the problems of complexity can be overcome.

Multiplex (MUX) is a key enabler to 3 Day Car where a single optional fibre with Controller Area Network technology (CAN) eliminates hundreds of variations of traditional wiring harnesses. He added that MUX allows electronic options to be added during production or at any stage of vehicle lifecycle. The use of X-by-Wire technology for braking and steering can reduce internal complexity through electronic control. The benefit is that less mechanical parts are required, such as hydraulic cylinders, brake lines and fluid.

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