Managing Operations And Supply Chain: A Case Study On Mercedes-Benz

By focusing on the operational and supply chain issues, you should seek to identify and clarify how the operation functions and supports the market that it serves. What service delivery system or manufacturing process does it use?

What infrastructure does it use to manage these delivery systems? Moreover, how, together, do these support the market that it serves?

A critical, detailed and relevant analysis should be made of the various components.

Based on your analysis, you are expected to make recommendations about how the business can improve its performance. Consider triple bottom line - described as the incorporation of economic, environmental and social factors as the three dimensions of sustainability in business practice - in your analysis.

Choose two of the following areas in managing operations, logistics and supply chain.

• New product/ service development and process
• Managing quality
• Location and Layout
• Managing people in operation and supply chains
• Logistics mix: Channels, networks, transportation, managing inventory and capacity
• Managing business relationships in supply chains
• JIT, Lean and Agility

Efficient supply chain in an organization

Bolles and Bolles (2008) depicted that efficient supply chain provide optimization of the operation and enhance the speed and efficacy of the process in an organization. Supply chain also reduces the operating cost through decrease in the purchasing cost, production cost and total supply chain cost. Christopher (2016) furthermore stated that an organization can also improve their financial position as the profit leverage increases, fixed asset decreases and cash flow gets enhanced. However, Walker (2014) portrays that problem like inefficient innovation for product development, location selection for the manufacturing plants, quality management, human resources management in the supply chain, relationship establishment with the suppliers and implementing JIT and lean management are the common problem in supply chain management. Thus, these issue need to be overcome and in this assessment the new product/ service development and process and location and layout areas in managing operations, logistics and supply chain will be described for the business process improvement. 

This business report considers the organization Mercedes- Benz and highlights the current operational and supply chain issues along with the discussion through which Mercedes utilizes operation functions to support the market. The service delivery system and manufacturing process will also be illustrated in this report followed by the discussion on which infrastructure the concerned organization manage these delivery systems and supports the market that they serves. This report also recommends effective strategies to improve the business performances and sustainability in business practice incorporating economic, environmental and social factors of the triple bottom line theory.     

Operational and supply chain issue in Mercedes- Benz

In recent times, Mercedes- Benz faced the issue of logistics costs due to sourcing of the car components that is liable for increasingly stretching of the supply chain. The main reason for the starching of the supply chain is due to travelling of distant parts which put a bigger plan on to the system resulted in not fulfillment of record demand (Automotive News 2018). Markus Schaefer, production and supply chain head of Mercedes stated that in some of the division’s lower-wage plants, supply chain costs exceeds manufacturing the costs (Automotive News 2018). Another issue is the product development of the vehicle by the Mercedes which can meet the recent demand of the customer like- plug-in hybrid and electric vehicles, fuel and energy efficient cars and implementing automotive operation in the cars (Automotive News 2018). The major issue that is involved in this process is to revamp the production process by incorporating all the necessary requirements and align the business functions with the newly developed production line.

Operational and supply chain issues faced by Mercedes-Benz

Identification of how the operation functions supports the market that it serves

Mercedes Benz has a manufacturing factory outside of its German home but many of the automobile components are still sourced from Europe. The concerned automobile company, have more than 30 vehicle derivatives and each of the derivatives is developed from several thousand parts. This European factory consolidate and repack the components from European suppliers which is then Shifted abroad to Mercedes plants that is in U.S., China and South Africa (Financial Times 2018). This problem also enhanced another challenge that is delivering the right part to the right factory within the destined time. The challenge for delivering products to right place seems to be more crucial when an organization ensure that inventories are lean to control costs.

Mercedes always target premium customers with high-end cars. These cars are well equipped and have grace, style, safety, performance, efficiency and are a German engineering marvel (MarsMediaSite 2018). The company provides proficient service and support, tasteful and efficient innovation, unique artistry and advanced life saving technology. This is the reason due to which Mercedes Benz maintained a market leadership in major markets like USA and Germany for the year 2017 (MarsMediaSite 2018). 2.3 million Cars were sold worldwide which shows 9.9% of increase in unit sales for the year 2017 and also attained All-time best unit sales in three core regions NAFTA, Europe and Asia-Pacific for the same year (MarsMediaSite 2018).

Service delivery system and manufacturing process

Mercedes utilize the traditional process to deliver the cars that is the design team plan the design of the car, release of the design, manufacturing of the component of cars, undergone the body shop followed by painting and assembling (Harvey 2010). The assembled car then again goes to the production house and then to the auto yards, from where the involvement of outbound logistics is included which delivers the final product to the users.

The manufacturing process of Mercedes- Benz starts with robotic hands that cut the components of the car like window and bonnets, these robots are liable for placing the screws while assembling the cars to develop the framework of the car. The cars are then sending to other department where the component of the cars gets attached with the car body using the robots. The dashboard of the car is then placed which is followed by the process of placing the glasses on the window (Hannagan and Bennett 2008). The interior of the cars that is making of the seat spaces and putting all the screws to all the attachments are done manually. The headlights and the engine of the cars are then placed all together with the help of robotics hands. The completed cars are then tested that includes water testing for leakage, scratching test to test the durability of the car parts and quality testing through field test for the final time so that all its functionalities can be tested prior selling the car to- the user.

The manufacturing process of Mercedes-Benz

Infrastructure use to manage these delivery systems

The infrastructure of the supply chain includes warehouses, transport mediums and shipping lines (Slack et al. 2013). The concerned organization has its warehouses located in many places across the world. The delivery system is designed to make the supply according to the need of the customers according to their nation. Taken for instance, Mercedes-Benz does not provide any rooftop cars for India due to the temperature factors; however, same manufacturing unit prepares a portable rooftops for the people belong from UK (Heizer et al. 2016). The transport medium is also based on the area where the cars are being sent to the showroom. Heizer et al. (2016) highlighted that for cars that is manufactured in nation US and also for the people residing in US, the delivery is made through trucks and trains utilizing the concept of piggybacking. However, for the cars that are manufactured for distant nation, Mercedes utilizes the shipping through containers in ships (Slack et al. 2013).

How the infrastructure supports the market that it serves

The supply chain system is based on the requirement of the people belong from different nation. The manufacturing unit also contain different conveyor belt for the manufacturing of same Mercedes model with little change in design of the car based on the nation in which the final product gets delivered. Hill and T (2011) highlighted that process of delivery shipments also evaluated based on the different requirement of the nation, where the final delivery has to be made. In this way, the concerned organization makes delivery of their cars to the users.

Establishing of the manufacturing centre in suitable location

The problem of high cost of supply chain can be reduced by making the manufacturing plant in the location near the delivery centre. Mercedes can establish similar centers in growth regions like North America and China in order to diminish the cost of the delivery process.

Developing intelligent networking in the manufacturing process

Mercedes can utilize real-time and radio signal-based tools to save time in bringing the components parts. Automated robots in the factory can also be utilized for bringing the pre-sorted boxes of components to the desired position of the assembly line.

Make the delivery through automation

Mercedes Benz can initiate the approach to implement the automation in the delivery process of the components of the car. Thus, a vehicle enabled with the automated cargo space management should be developed in which the route mapping plan for the vehicle should be incorporated. The driverless handling vehicles should be programmed in such a way that it can load the racks through automated one-shot loading process. Thus, the issue of delivering of the right components of the cars to the right cargo can be omitted as it is fully maintained automatically by robots.

The infrastructure of Mercedes-Benz's supply chain

Developing new products through research and development

According to the recent demand of the users, people are now more concerned towards the safety of the environment. Thus, Mercedes- Benz should develop technologies for greener supply chain and developing energy efficient cars. Mercedes can aim for developing new models based on plug-in hybrid, electric models and electric cars that can diminish the problem of fuel usage.

Triple Bottom Line Model

He et al. (2018) stated that the triple bottom line comprised of economic, environmental and social factors. The economic factor comprised of employment, growth and revue; environment factor comprised of consumption, use and management and lastly, the social factors comprised of fair trade and employee welfare.

Economic- The development of more manufacturing plants will improve the employment to thousands of the people. This will help the organization to contribute some effort in economic growth of the host nation. Moreover, the cost saved from the transportation of the components through the supply chain process contributes to the enhancement of the annual revenue for the concerned organization- Mercedes Benz.

Environmental- Mercedes- Benz has taken the intuitive to plan for developing energy efficient cars. The research and development team researched on the fuel through which less carbon emission will be occurred and the approaches to develop electric cars with battery that can make the car run longer compared to other industry in order to gain competitive advantage. Process of recyclability and recoverability along with the development of process for reducing the noise emission is also adopted by the concerned organization.

Social- Since, Mercedes Benz initiated to plant their manufacturing units in the nearby places of the distribution centre and ship their plants to the distant location from ship. This trading includes the process of custom clearance and effective supplier relationship that develop the fair trade for the business. The employee, who works for the organization if asked to be expatriate to the host location, the concerned organization that is Mercedes Benz should provide effective benefits including the welfare need of the employees.

Conclusion

Thus, it can be stated that this report highlighted the current operational and supply chain issues along with the discussion through which Mercedes utilizes operation functions to support the market. The first issue that is found is regarding the logistics costs due to sourcing of the car components that is liable for increasingly stretching of the supply chain. The second issue that is illustrated in this business report is that the product development of the vehicle by the Mercedes cannot meet the recent demand of the customer like- plug-in hybrid and electric vehicles, fuel and energy efficient cars due to improper planning. Thus, these two problems highlight the location and new product innovation for Mercedes Benz. It is furthermore reported in this assessment the service delivery system and manufacturing process in Mercedes is obtained based on the design demand in the nation, where the final car have to be submitted. This discussion of the report is followed by the discussion on which infrastructure Mercedes Benz manages these delivery systems and supports the market that they serve. Thus, it is found from the report that the company utilizes the establishment of the different warehouse in different location for fulfilling the need of the users. The shipment transports are also selected based on the location of the distribution. Taken for instance, to deliver the vehicle in the nearby places, trains or trucks are utilized; while, for delivering the completed vehicle to the distant places, ships and containers are used. Lastly, this report also recommends effective strategies to improve the business performances and sustainability in business practice incorporating economic, environmental and social factors of the triple bottom line theory.

References

Automotive News., 2018. Mercedes revamps supply chain, logistics to trim costs. [online] Available at: https://www.autonews.com/article/20150719/COPY01/307209957/mercedes-revamps-supply-chain-logistics-to-trim-costs [Accessed 3 May 2018].

Automotive News., 2018. Daimler revamps Mercedes product development. [online] Available at: https://europe.autonews.com/article/20120521/COPY/305219862/daimler-revamps-mercedes-product-development [Accessed 3 May 2018].

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Financial Times., 2018. Daimler vows “transparent” cobalt supply chain amid child labour concerns. [online] Available at: https://www.ft.com/content/454e9558-4e14-11e8-a7a9-37318e776bab [Accessed 3 May 2018].

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Heizer, J., Render, B., and Munson, Ch., 2016 Operations Management (12th Global Ed) New Jersey, Pearson Education Inc.

Hill, A. and T. Hill., 2011 Essential Operations Management, Hampshire: Palgrave Macmillan

MarsMediaSite., 2018. Mercedes-Benz in 2017: Number 1 in the premium segment | marsMediaSite. [online] Available at: https://media.daimler.com/marsMediaSite/en/instance/ko/Mercedes-Benz-in-2017-Number-1-in-the-premium-segment.xhtml?oid=32692930 [Accessed 3 May 2018].

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