You are specifically tasked to:
1. Critically assess the lessons that have been learnt and influence that the Japanese car manufacturers have had on the organisational performance of UK/EU automotive manufacturers:
a. Lean thinking
b. Supply chain management
c. Quality leadership
2. Critically investigate the challenges and pressures faced by a carmaker of your choice to deal with supply chain vulnerability as a result of global sourcing (particularly risks associated with sourcing from low cost countries, e.g. BRIC countries) and continued trends to “leaning down”.
3. Make recommendations on the performance objectives that should be adopted to ensure that the chosen carmaker can remain competitive in the face of competition
The Impact of Lean Thinking on Organizational Performance
The recession posed numerous challenges for the automobile industry globally. In 2008, new automobile registrations indicated a11.3% decline. On the other hand, used vehicles registered a fall in their overall sales by a margin of 3.3%. Hence, the cars sold on a second-hand basis were estimated to be 7.24million in total (Holweg, Davies &Podpolny, 2009). The implication is that the company, as well as other car manufacturers, could not make the targeted profits. Among the factors that paved the way for deterioration in company, prospects include the limited availability of company credit and the confidence directed towards manufacturers by clients generally reduced (House of Commons, 2017). However, manufacturing remains a primary source through which the company and the industry can make its desired profits. Ford of Europe can implement various measures to ensure that the outcomes obtained are as anticipated. The objective of the report is to examine the lessons learnt and the influence exercised by Japanese manufacturers the operations carried out by Ford of Europe as well as those of other companies in the UK for appropriate recommendations to be made.
Critically assess the lessons that have been learnt and influence that the Japanese car manufacturers have had on the organizational performance of UK/EU automotive manufacturers:
Lean thinking relates to a methodology that is applied in business for an improved organization of the activities that humans are engaged in. The outcome is that increased benefits are bound to accrue to respective societies (Liker, 2004). Hence, clients can enjoy an increment in the overall value that is offered. For example, the application of lean thinking was initially evident in companies such as Toyota. Toyota Company developed the Toyota Production System which relied on various practices in addition to management philosophies. The social-technical system which was efficiently integrated ascertained that the interactions with clients or even suppliers were well organized. The outcome was that it became easy for the organization to compete against companies such as GM as well as Ford.
Lean thinking offers the impetus through which Japanese manufacturers in the automobile industry can exert their dominance over the UK as well as European operators (Oliver, Holweg & Carver, 2008). For companies such as Honda rely on lean thinking to ensure that they increase their overall productivity. According to Flanders (2012), British workers indicated a 20% decrease in productivity in comparison to the average which applied to G7 in 2011. On the other hand, American workers were considered to be 40% more productive as opposed to their British counterparts.
Supply Chain Strategies of Japanese Car Manufacturers
Japanese manufacturers rely on lean production for an increment in the outcomes attainable at the end of the processes undertaken while ensuring the minimization of the resources required. At Burnaston which is close to Derby, Toyota developed its plant used for the manufacture of motor vehicles whereas its engine factory is located in North Wales (Womack & Jones, 2003). The company directed more than £1.75 billion towards its respective investment accounting for a third of the manufacturing capacity established by Toyota in the European market. Regardless of the recession evident globally, the company would still ensure that 140000 units were released into the market for acquisition by clients. Moreover, operations were marked by great efficiency (Christopher & Peck, 2004).
Just-in-time operations are heavily practiced by Japanese manufacturers in the automobile industry. The systems offered an allowance through which inventory would be reduced while resulting in production lots which are relatively small (Katayama & Bennett, 1996). The outcome is that any challenges experienced in production-related processes can be underscored ensuring that instant feedback is provided. In addition, the manufacturers emphasize continuous improvements critical in ensuring that wastes are eliminated by analyzing the data obtained from production. Lean production also offers the impetus through which the capacity evident from individuals is increased. Furthermore, the enterprises can fit in the cultures practiced locally through the development of management philosophies which are unique (Kornegay, 2015).
Japanese manufacturers make use of a supply chain that is responsive to ensure that they can cater to the needs of their respective markets (Evans & Lindsay, 2014). The outcome is that the chain used to make supplies is characterized by flexibility such that product mixes can be effectively modified to suit market requirements. The schedules for Japanese supply chains are crafted to ensure that the wastage of resources or even time is eliminated. In addition, Japanese manufacturers make use of supply chains which feature great agility (Munro, Ramu & Zrymiak, 2015). Hence, the systems developed are driven by demand and the information available.
Car manufacturers make use of tools such as value stream mapping for the management of the chain they use for supply. As a major component of Toyota’s TPS, value stream mapping ascertains that activities can be categorized as being wasteful or necessary for value addition (Chang, 2016). Through VSM, Toyota avoids overproduction while identifying actual productions in addition to functions which are intangible for which clients are willing to spend. The principles that must be adhered to with regards to VSM relates to operations which must be standardized while ensuring that any changes which are to be made are not too frequent such that the data obtainable cannot be considered to be stable.
Standardization and Quality Control
Japanese automobile manufacturers such as Toyota that forks or loops which complicate how goods can flow are eliminated. Production in addition to non-processes must be appropriately aligned such that lead time is effectively reduced. Through the application of the Kanban system, Toyota ensures that the goods or even the information required can flow through paths which are not only simple but also specified (Woods, McMurtrey & Griffin, 2016). Among the reasons which have contributed to the success that Toyota has been able to attain include the provision that product lines should be able to accommodate various products. The approach differs from what is applied by other automobile manufacturers which pave the way for the difference evident in respect to the success amassed.
Japanese manufacturers ensure that their employees are well educated to resolve the challenges evident in the chain used for supply (Liker, 2016). For example, supervisors are required to act as enablers in Toyota Motor Corporation in the implementation of the solutions formulated by workers to resolve any of the problems encountered. Honda formulated groups primarily for problem-solving. The groups were referred to as NH Circles compromising of 5-10 associates. Through the discussion sessions, they voluntarily conducted, measures are developed to foster the desired organizational outcomes. Moreover, the teams formed defy the hierarchies already established at Honda.
Japanese manufacturers have gained recognition owing to the quality of the automobiles that they release in respective markets. The automobiles provided by companies originating from Japan rank highly where durability is involved and the value which can be attracted for resale. For example, it is estimated that 80% of the automobiles sold by Toyota considered to be more than 20 years are still road-worthy (Goffnett, Lepisto & Hayes, 2016). The outcome is that clients are assured that any items purchased from the enterprise count for the savings that they can make. Moreover, the vehicles feature a quality which is impressive at a price which is affordable. Clients are also guaranteed of reliability owing to the consistent performance anticipated from the cars purchased.
The provision of commodities which rank highly quality-wise arises from the utilization of processes which are standardized. In situations where relevant details are not properly highlighted, or even the content that constitutes work procedures which are to be performed are not appropriately underscored, the different tasks performed are likely to feature some huge variations concerning the outcomes attainable (Fonseca, 2015). Companies such as Honda ascertain that work procedures which are standardized are developed for tasks which are to be completed repetitively.
Challenges of Global Sourcing for Carmakers
Task specification with regards to the sequence in which they are to be performed, the allocated timing and the outcomes anticipated are among the factors essential for quality leadership. Operations which are standardized ensure that companies such as Toyota can rank highly where productivity is involved. Moreover, some appropriate balance can also be fostered for the lines utilized in production (Stamatis, 2016). Furthermore, enterprises experience great efficiency concerning employee learning. The implication is that exemplary performance can easily be obtained from newly recruited workers even where they might have only been in their respective companies for a limited duration.
There are different routine functions which can be standardized to ensure quality. They include the blueprints which are developed for designs, A3 forms and report utilized to collect the feedback required. The outcome is that the definitions developed for problems encountered by corporations can easily be located and the employees responsible for the segments of interest (Zokaei, Manikas & Lovins, 2017). Moreover, the standards are also used in the evaluation of the performance of the workers involved. The principles which relate to Six Sigma, as well as Total Quality Management, are relied on to ensure that the outcomes desired are attained. Improvements in quality are also characterized by extensive R&D investments. For example, the annual investments directed by Japanese automakers to research are estimated to be at more than $18 billion. The implication is that the manufacturers can retain their competitiveness on a scale that is global.
Critically investigate the challenges and pressures faced by a carmaker of your choice to deal with supply chain vulnerability as a result of global sourcing (particularly risks associated with sourcing from low-cost countries, e.g., BRIC countries) and continued trends to "leaning down.
The challenges facing the Ford of Europe are numerous. The plan made by the enterprise to restructure operations relates to the cessation of some of the models manufactured for clients to purchase. This accounts for the endeavors of the enterprise to curb overproduction as part of its measures to ensure that its operations are lean. The losses made by the Ford of Europe are estimated at a value of $73 million. This is regardless of the $11 billion that the company intends to direct towards ascertaining that the business it conducts in Europe is adequately restructured. Hence, the jobs of the company’s employees are under threat (Luo & Lee, 2015). The plans made by the enterprise are bound to affect 12 percent of its workers who are over 200000 in total. Moreover, the layoffs are more likely to be focused on the employees who are associated with the company’s European plant. Moreover, the problems faced by the company have resulted in its consideration of forming joint ventures with other operators.
The Ford of Europe is forced to contend with a decline in the sales which it can anticipate. The efforts made by the enterprise include sourcing markets from BRIC countries. The outcome is that R&D endeavors have become greatly localized in addition to being the location selected for activities which relate to manufacturing. Ford Motors is set to complete one of its factories which is set to attract an investment of $1bn in India (Dale, Bamford, Bamford & van der Wiele, 2016). However, among the challenges anticipated include a reduction in the confidence of consumers concerning the inputs which are directed towards production. The growth evident in BRIC nations economically is on a decline that is quite drastic.
Moreover, the raw materials attainable from BRIC nations for the Ford of Europe to use are attracting higher prices owing to an increase in the number of manufacturers who would like to utilize them. The outcome is that the margins expected in respect to organizational profits continue to decrease. Furthermore, the markets to be capitalized on are characterized by unique preferences which create the demand for new products (Holweg, Davies &Podpolny, 2009). The provisions sourced from BRIC countries only serve to intensify the competition evident among automobile manufacturers. In addition, competition also stems from other businesses affiliated with the countries where the Ford of Europe might decide to source its products. Albeit the raw materials available in nations such as Brazil, their acquisition often comprises heavy taxes which are embedded into overall prices.
The study indicates that the recession has affected many enterprises particularly those which are operational in the industry dealing with automobiles. Companies including the Ford of Kenya are forced to deal with a reduction in their overall sales. The implication is that the likelihood that the enterprises involved are likely to make some profit is greatly reduced. Among the measures adopted by Ford include employee layoffs whose scale is quite massive. Moreover, the company had resolved to ensure that its operations are appropriately restructured. Regardless of the raw materials available for automobile manufacturers, the expenses involved in their acquisition are quite extensive.
The Ford of Europe can adopt various measures to ascertain that its competitiveness is improved. The company can adapt principles relating to lean production. The value offered to clients should be effectively enhanced. The factors that must be considered include the time taken for units to be manufactured and the duration required for their delivery. The expectations prevalent among clients must also be effectively met.
The company must embark on ensuring that its value stream is effectively mapped. The outcome is that the processes necessary for products to be obtained from the acquired raw materials can be detailed. Hence, activities which might culminate in waste, as well as overproduction, can be identified and eliminated. Process re-engineering is essential in ensuring that the operations relating to an enterprise are adequately understood.
Lean production integrates processes to ascertain that they flow smoothly. Delays, as well as bottlenecks, are removed providing the impetus through which a tight sequence can result. Hence, the functions which accrue to various Ford departments should be transformed such that they become cross-functional. The result is that enterprise productivity will be effectively boosted and processes are bound to exhibit increased efficiency.
The chain used to supply the units manufactured must be responsive to the requirements evident among consumers. Responsiveness ensures that surplus units are eliminated while catering to consumer demand. The company must also engage in extensive R&D aimed at determining strategies applicable to increasing the reliability as well as the durability of the enterprise’s products.
The industry dealing with automobile production is a key player in the economies of many nations. However, occurrences such as the recession evident globally are bound to affect the enterprises involved such as the Ford of Europe. In the case of the Ford of Europe, operations are bound to improve through the application of lean thinking and when efforts are made to ensure that output quality is improved. In addition, the chain that is used concerning supplies must be improved to ensure that production accurately matches the demand evident from the company's clients.
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