Managing Business Relation in Supply Chain for Aston Martin

This assignment discusses the importance of managing business relation in the supply chain for Aston Martin, a famous British manufacturer of luxury sports cars. It explores the use of supply chain management theories such as transaction cost analysis, channel coordination, and supply chain roadmap. The assignment also addresses the challenges faced by Aston Martin in supply management and quality control, and provides recommendations for improvement.

Individual Assignment

Table of Contents
INTRODUCTION...........................................................................................................................1
Main Body ......................................................................................................................................1
Supply chain management theory to manage business relation in supply chain ...................2
Managing quality....................................................................................................................3
Economic, social or environmental aspect.............................................................................6
Recommendation....................................................................................................................6
CONCLUSION ...............................................................................................................................7
REFERENCES ...............................................................................................................................8

INTRODUCTION
Key operations of an organisations are related with creation and manufacturing of a good
quality product which includes efficient planning, organising, coordinating and controlling all
the resources and people related with the functioning of organisation (Perkins, 2019). Logistics
and supply management system is mainly related with the planning of storage and flow of goods
and raw material from point of origin till point of consumption with an aim of ensuring smooth
flow of products and supply of items and products to meet customers requirements. For this
assignment the chosen automotive organisation is Aston martin which is a famous British
manufacturer of luxury sports cars. This organisation was formed in 1913 and its founder were
Lionel Martin and Robert Bamford. This assignment includes the a description about managing
business relation in supply chain and use of JIT and lean principles for improving efficiency of
production process.
Main Body
Aston martin is one of the most famous brands in automotive sector with high brand
equity and strong legacy from more than 102 years. It was founded in 1913 and having its
headquarter in England, UK. Aston martin is having a customer base of rich people but as the
ultra premium car market is becoming crowded and rivals with deeper pockets like Bentley,
Ferrari, Porsche, Audi, Jaguar, etc. thus, Aston martin is making loss (Tian, Poudyal and Lu,
2018). The sales forecast of Aston martin is also decreasing, one of the reason for this is issue in
its supply management. Aston martin is sourcing key parts of its cars and other raw material
from thousands of miles away from China without having any adequate quality control measures.
According to documents filed with the U.S. National Highway Traffic Safety Administration,
Aston Martin found that Shenzhen Kexiang Mould Tool Co Ltd, a southern China-based
subcontractor that moulds the affected accelerator pedal arms, was using counterfeit DuPont
(DD.N) plastic material (Aston Martin recall highlights risk of China parts supply, 2019). Thus,
it is affecting overall supply chain and quality of Aston martin which is big issue. Thus issue of
counterfeit products can only be managed through having better relationship with trustworthy
people in supply chain. For addressing this issue in its supply chain and for effective supply
chain management, Aston martin should adopt some effective supply chain management theories
which are explained below.
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Supply chain management theory to manage business relation in supply chain
Transaction cost analysis
Use of this supply management theory is made to calculate explicit and implicit costs that
are involved in a transaction. The explicit costs of transaction includes commissions amount,
taxes, etc. while in implicit costs include price changes, market moves and opportunities lost.
Thus, it provide the most efficient trading methods for making an valuable transactions (The
different types of supply chain management methods and theories, 2019). Use of this method
helps in determining whether the trades got executed at favourable prices with high ones for
sales and low prices for purchases or there any other supplier from whom the trade can be made
at better prices (Kunesh and Noltemeyer, 2019). This analysis consists a rating of the spread
between two or more possible prices. The first price is the price of the transaction at the time the
manager decided to execute the operation and the other is the actual price of the operation which
includes all operating costs. The resulting differential between these two prices is called
“slippage”. While making any contract with suppliers, Aston martin should check that the
difference in two prices i.e. Slippage should be minimum. Thus, use of this method by Aston
martin ensure its supply contract at minimum price and also reduce the chances of confusion and
conflicts with suppliers regarding cost of Transaction. Thus, use of this method can be made by
Aston martin to manage its business relation in supply chain.
Channel coordination
This method also known as supply chain coordination and aim at improving supply chain
performance of an organisation through aligning the plans and objectives of an enterprise.
Channel coordination mainly focused on inventory management and ordering decisions in
distributed inter company setting. Channel coordination models also involve multi-echelon
inventory theory, multiple decision makers, asymmetric information, as well as recent paradigms
of manufacturing, such as mass customization, short product life-cycles, outsourcing and delayed
differentiation for timely achieving the goals of organisations (Liu, and et. al., 2018). The
theoretical foundations of this channel coordination theory is on the contract theory which aim at
properly coordinating the different contracts made with various suppliers so that all the raw
material reach the production site on time to ensure the uninterrupted and smooth flow of
operation.
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Aston martin is currently having more than 200 suppliers which are spread across
Europe, China, North America, Asia pacific and many more locations thus, management of
logistics and timely procurement of raw material is a big challenge. Thus, use of channel
coordination method is helpful for Aston martin in properly coordinating and managing its
suppliers located at different region of world, thus, ensure timely procurement of raw material
from suppliers and also manage better relation in supply chain.
Supply chain Roadmap
It is an innovative theory which map out the entire system of supply. Supply chain
Roadmap is a systematic approach to map, evaluate and rethink the supply chain strategy of a
company which assure alignment is business strategy. "Supply Chain Roadmap" is basically a
three-step method for understanding, mapping and redesign supply chain strategy, assuring
linkage with business strategy by understanding market forces and company’s competitive
positioning (Cordonier, Nettles and Rochat, 2018). The first step of this method include supply
chain assessment which includes evaluation of business unit range that is geographical location,
product category, group of customers etc. The second stage of supply chain roadmap theory is
mapping. This stage pretends to support understanding of supply chain scenario through
providing a graphical single view of supply chain strategy. The third and final step of this theory
includes the gap analysis which pretends to find dominant behaviour of supply chain, and factors
that are out of the dominant behaviour. This is one of the most important steps of the Supply
Chain Roadmap method and should be focused in the understanding if the gaps are factors that
create value and competitive advantage.
Aston martin can make use of supply chain roadmap theory to properly assess the
requirement of raw material as per the needs and demand of customers. It should also assess the
location from where order is made thus, a proper calculation of time taken in delivery of raw
material can be made (Wong and Tang, 2018). The mapping step of this theory will provide a
better graphical presentation of all suppliers thus, helpful in coordinating all activities. At last
analysis of gap will disclose the flaws or issues in quality or any factor thus, provide an
opportunity for correction.
Managing quality
Aston martin is operating ion automotive sector which is a characterised with highly
competitive business environment. Thus, a huge amount of competition is also faced by Aston
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martin from the big automotive brands like BMW, jaguar, Bentley, etc. The threat of competition
is directly related with the quality of product offered as if the best quality is not offered by any
organisation than its consumers will shift to its competitor's product. Aston martin lacks in
product innovation and also have a limited product portfolio thus, a proper strategy is needed by
Aston martin for handling its issue of management of quality (Belle and Cantarelli, 2018).
Beside this, high cost of production as compared to its competitors is also a big issue. To manage
and handle the issue of quality use of TQM approach is suggested for Aston martin. Further to
reduce the wastage in production process and ton achieve the perfection level in quality of
product use of Lean principles can also be made.
Total quality management
TQM focuses on streamlining the entire supply chain which includes everything from
start to finish, including training employees and ensuring customer satisfaction through reverse
logistics. TQM theory looks beyond constraints and focuses on all area that could be improved
for better performance and efficiency. Total quality management (TQM) is a continuous process
of detecting and making efforts for reducing or eliminating errors in manufacturing through
streamlining supply chain management for improving the customer experience, and ensures that
employees are efficient and up to speed with training (Mangla, 2019). Total quality management
aims to hold all parties involved in the production process accountable for the overall quality of
the final product or service. Thus, ensures efficiency in production process. Use of TQM can be
made by Aston martin as it provide a structured approach for overall organisational and supply
chain management and focuses on improvement of quality of a company's output through
keeping a check and control all quality of all related things. Thus, use of TQM theory provide
best strategy for Aston martin to have a check on raw material provided by its supplier so that
best product can be delivered to its customers.
Apart from this, use of TQM model also creates an opportunity for Aston martin to
provide better training and enhance skills of its employees to produce best and most innovative
product for its customers. Thus, proper implementation of TQM at all stages of production
ensures better quality product and also maintain the effectiveness in all employees and
organisation through having better control and monitoring measures at each step.
Lean production
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It is a approach that focuses on cutting or reducing wastage while ensuring the best
quality of product (Darrah, Cohen and Castelli, 2018). Use of lean production can be made by
Aston martin to reduce its cost of production and at the same time to enhance and manage the
quality of its product. The important lean principle that can be implemented by Aston martin to
have and create continuous cycle of improvement in its organisation are explained below:
Identify Value
The first step for creation of a better product or for managing the quality of product is to
understand that what is actually required and desired by customers. This step of lean principal
will guide Aston martin in understanding the actual willing and latent needs of customers.
Map the value stream
The next step of lean production is identifying, determining and mapping of actual value
stream. This step will help Aston martin in identifying the activities that really add value and are
important to meet customer expectation and all these activities which do not add value to end
customers are considered as waste and should be avoided. Thus, this step is helpful min reducing
the wastage in production process of Aston martin.
Create flow
Once the wasteful activities are eliminated the next focus of lean production is one
ensuring the proper flow and coordination in the reaming steps to ensure the smooth function of
important activities.
Establish pull
This step is focused on reducing wastage of inventory in production process through
ensuring availability of material and information for smooth flow of work (Niu, 2018). This
principle will make the Aston martin able to satisfy the needs of customers through ensuring
value stream on the basis of customer needs.
Pursue perfection
Wastage of resources and achievement of objective of cost efficiency has been achieved
by Aston martin through properly adopting first four principal of lean production. This last step
is focused on pursuing perfection and managing quality through continuous process of
improvement. This principal aim at creating an encouragement in every employee to strive
towards perfection to deliver best quality product to customers.
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Economic, social or environmental aspect
Every organisation aim ait serving and providing beneficial outcomes and improvement
in tree bottom lines i.e. economic, social or environmental aspect. Improvement created by
Aston martin in terse three bottom line aspects is provided below:
Economic aspects- This aspect is related with reducing the cost of production and
achieving better economies of scale by an organisation (Perkins, 2019). To having improvement
in its economic aspects use of lean production is made by Aston martin which reduces the overall
wastage through focusing on important and need activities to meet the requirement of customers
and through eliminating all other unwanted and wasteful activity. Thus, improvement in its
economic aspects in achieved and created by Aston martin.
Social aspects- This is related with creating value for society through providing better
products and services. For achieving improvement in its social aspects use of TQM approach is
made by Aston martin which lead to overall improvement in all activities of Aston martin thus,
lead better value creation and advantages for society.
Environmental aspects- This factor is related with protection of natural resources and
conversation of environment. Aston martin needs to focus on its production activities to reduce
the damage to environment (Tian, Poudyal and Lu, 2018). Many efforts are created by Aston
martin for reducing carbon emission from its vehicles and also use of renewable energy like
electric vehicles etc., are made so that least effect and damage is created to atmosphere and
overall environment.
Recommendation
Aston martin is a well known brand in automotive sector and produce and manufacture
luxury cars for its customers. Certain issues are faced by Aston martin regarding supply chain
and management of quality. Thus, on the basis of evaluation of issues and challenges faced by
Aston martin following recommendation can be made:
 Use of supply chain coordination or channel coordination theory is recommended for
Aston martin as it is having more than 200 suppliers of raw material from different
locations and areas of world thus, it is necessary to properly coordinate all suppliers so
that production and manufacturing of automotive, vehicles and cars is possible on time.
This also facilitate check on quality of raw material thus, solve the issue of counter-feat
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products from suppliers. A better coordination in supply chain also facilitates better
relation thus, manage business relationship in supply chain for Aston martin.
 To handle the issue of managing quality, use of TQM ( total quality management)
approach is recommended for Aston martin as it ensure check of quality at each and
every step of production thus, lead to effectiveness and efficiency in work and also
maintain desired level of quality of product.
CONCLUSION
On the basis of above assignment, it can be summarised that every key operations of
every organisations is focused on creation and manufacturing of a quality product for satisfaction
of customers. It includes a proper coordination in logistic, production and supply management
department. Certain issues can be faced by any organisation related with its logistic and supply
chain management or also related with management of quality. A large number of theories and
methods are there for management of supply which includes Transaction cost analysis, channel
coordination and supply chain roadmap. Supply chin coordination is effective in managing a
balance among large number of suppliers. For handling the issue related with management of
quality use of TQM approach and lean production is made by organisations. TQM focuses on
continuous improvement through having control measures at each step.
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REFERENCES
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Kunesh, C. E. and Noltemeyer, A., 2019. Understanding disciplinary disproportionality:
Stereotypes shape pre-service teachers’ beliefs about black boys’ behavior. Urban
Education. 54(4). pp.471-498.
Liu, Y., Wu, J., Yu, D. and Hao, R., 2018. Understanding the patterns and drivers of air pollution
on multiple time scales: the case of northern China. Environmental management. 61(6).
pp.1048-1061.
Mangla, S. K., 2019. Green supply chains and environmental benchmarking–implications for
emerging economies. Management of Environmental Quality.
Niu, L., 2018. A review of the application of logistic regression in educational research: common
issues, implications, and suggestions. Educational Review, pp.1-27.
Perkins, T. C. N., 2019. Budgeting, target setting and variance analysis: the case of two logistic
companies (Doctoral dissertation).
Tian, N., Poudyal, N. C. and Lu, F., 2018. Understanding landowners’ interest and willingness to
participate in forest certification program in China. Land use policy, 71, pp.271-280.
Wong, W. P. and Tang, C. F., 2018. The major determinants of logistic performance in a global
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Online:
Aston Martin recall highlights risk of China parts supply. 2019. [Online]. Available
through<https://www.reuters.com/article/us-autos-aston-china-insight/aston-martin-
recall-highlights-risk-of-china-parts-supply-idUSBREA1A0SD20140211>
The different types of supply chain management methods and theories. 2019. [Online]. Available
through<https://www.hollingsworthllc.com/the-different-types-of-supply-chain-
management-methods-and-theories/>
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