Automotive Supply Chain Management Analysis

This assignment delves into the intricacies of automotive supply chain management. It requires students to analyze various aspects, including supply chain integration strategies employed within the automobile industry, performance monitoring techniques used to evaluate supply chain effectiveness, and the prevailing challenges that impact operations within this sector. The analysis draws upon a range of academic sources and industry reports to provide a comprehensive understanding of the subject.

Operations Management
[DATE]
[Company name]
[Company address]

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Executive Summary
This report outlines the key challenges faced by the operational managers and how they are
contributing in the success of the automobile industry. This report focuses on the Toyota
automobile manufacturer to understand the concept of the operational management. However , in
this report, all the areas of operations are discussed with the perspective of the future. The main
findings of the report outline the customer, satisfaction, production efficiency and productivity of
the employees and how to gain the competitive advantages. The operations management areas
are applied in the company and the possible results are discussed. This report also focuses Ion
the different smart objectives and sustainable planning such as flexibility, adaptability,
measurable approaches, realistic and time bound.
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Contents
1. Introduction.........................................................................................................................................3
2. Key Challenges to Operations Managers.............................................................................................4
2.1. Changing Technologies...............................................................................................................4
2.2. Continued Globalization of Markets............................................................................................5
2.3. Changing Customer Expectations................................................................................................6
2.4. Changing Job Designs.................................................................................................................6
2.5. Quality Management...................................................................................................................6
2.6. Global Manufacturing..................................................................................................................8
3. Operations Management Areas of the Toyata......................................................................................8
3.1. Supply Chain Design...................................................................................................................8
Supply chain risk...............................................................................................................................10
3.2. Inventory management..............................................................................................................11
Critical Success factor...............................................................................................................................12
3.3. Work and facility design............................................................................................................13
Conclusion.................................................................................................................................................15
References.................................................................................................................................................17
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1. Introduction
Operational management is defined as the art and science of producing the goods and services
and deliver these goods and services to the customers. The operations management areas involve
the different operations such as quality management, supply chain management, production
processes and customer services. There are many challenges that are faced by the organizations
and various success factors in the businesses. This report carried out to analyze the automobile
industry by taking the company Toyota for the research. This report covers the impact of the
operational management or decisions on the performance of the Toyota company. There are
many factors that are explained such as change in technology, managerial methods and the
operational research on the basis of the automobile industry. This research also describes the
impact of the operations on the customer satisfaction and efficiency of the company. The main
purpose of the report is the deep analysis of the challenges faced by the Toyota company and
their critical success factors for the Toyota with respective to the future. There are two parts in
this report. First part demonstrates the challenges faced by the companies like changing
technologies, globalization, change in the expectations of the company, change in the job
designs, global manufacturing and quality management. The second part of the report covers the
different areas of the operational management for the better understanding of the success of the
automobile industry(Braese, 2003).
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2. Key Challenges to Operations Managers
The different key challenges from the different factors are going to be explained in order to
understand their effect on the success of the business in future. The challenges of the Toyota
company are :
2.1. Changing Technologies
In the modern world, the technologies are changing very rapidly and this change in the
technology is the opportunity as well as a threat to the automobile industry. The Toyota company
has gained the good position in the competitive world by offering innovative car designs also
competing with the various other companies like Honda, Maruti Sazuki, Volkeswagon, Nissan,
Audi and Scoda. The Toyota companies used the latest technologies in order to compete in the
automobile industry. Toyota is the UK based automobile company dealing with the
manufacturing of automobiles. The company is focused on continuous improvement through
these latest technologies for the long term. The Toyota company became the world’s largest top
ten manufacturers of the cars and other vehicles. The Toyota is focusing on the latest
technologies in order to gain the market share. There are many companies who are investing a
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large amount of the money on the research and development of the latest technologies in order to
bring that technology in the company for the future success. If the Toyota company will not
adopt the latest technology while manufacturing and designing the cars, then the company will
face the huge losses(IBM, 2007).
2.2. Continued Globalization of Markets
The businessmen are trying to find different ways to create a unique selling proposition over
other competitors to make the consumers prefer their services over other competitors in the
market. This change has been seen in all the top organizations and if we have a look at the stats,
the economy has been improved a lot due to growth of global markets. So, to stay in the market,
every day a new strategy is established by the financier to retain its position in the market.
Globalization provides a great opportunity to the companies for the expansion of the business in
the international markets(Leskova, 2012). The reason of the entering into the global markets is to
reduce the cost resource sharing and by grasping the more business opportunities in the future.
Toyota expanded its business in various countries and investing money to enter into those
markets who have the high market potential growth.The company already invested its money in
the Southern US, Ontario, Ottawa and Indian global markets just to gain the maximum profits.
The challenge connected with the globalization is that the competition for the Toyota company
become high because of the market are dominated by the other competitors too that affects the
profitability of the firm.
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2.3. Changing Customer Expectations
The changing customer expectations are also a challenging factor. Customer’s expectations are
always high because the Toyota already set a benchmark for the quality products. The customer
of Toyota expects fro the company more quality of the automobiles with more features, design ,
new technology and the reasonable prices. The Automobile industry tends to increase share in
the market, revenue growth, more customers and less number of complaints. The customers are
very peculiar about choosing the vehicle for the own satisfaction. The companies adopt various
strategies to meet the expectations and demands of the customers. The most difficult part of the
automobile industry is to understand the market needs of the customers as the Toyota company is
not focusing only on one customer, they are targeting the millions of customers. However, the
company needs to build strategies to meet the customer standards by introducing new car designs
and quality productivity(Leškova & Kováčova, 2012).
2.4. Changing Job Designs
The change in the job designs has the direct relation with the improvement of the employee
performance. The flexible working hours leads to improve the productivity of the employees. It
is very important to retain the employees in the automobile industries by designing the job
working hours in the organization. Job design could be obtained through job rotation,
simplification, enlargement, enrichment and flexible working hours. It is very important to meet
the employee expectations and needs too for the quality work and the strategies should be
implemented by the Toyota company in order to make their employees satisfied.
2.5. Quality Management
Toyota is the automobile company that is famous for its high quality of vehicles across all over
the world. The quality control is the main aim of the company because it is directly related to the
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customer satisfaction. The customer satisfaction in end is the main focus of the every company
and this will result in the building of the brand image and company earns maximum profits
because of its quality. The Toyota company is not producing the same products as there are
many models of the cars that introduced by the Toyota company such as Innova, Fortuner, Etios
etc. Toyota always follow the Kaizen, which stands for the continuous improvement by
understanding the needs and expectations of the customers for the future period of time. The
company mainly focuses on those strategies that aims at increasing the quality of the vehicles,
efficiency of the company and reducing the cost of the manufacturing. The strength of the
company is its brand name as the every person in this world is familiar with the Toyota and its
products. It is very significant to maintain the highest quality of the products and launch them in
the market by keeping in mind about the needs of the customers at the affordable prices.
However, the Toyota Company focuses on the quality theories and initiated manufacturing
keeping in mind all the factors of quality control. Total quality management is the collective
effort made by the top management and the employees who are responsible for formulating the
strategies to manufacture the highest quality automobiles, which meet the level of customer
satisfaction(OSAT, 2012).
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2.6. Global Manufacturing
Toyota has its manufacturing plants in various countries like US,Canada, India and China. It has
been analyzed the 50% of the cars are manufactured in the United states and 50% in the Ontario,
Canada. The company set up offices in the different areas in the UK airport free zone, in order of
which sales have been increased in double profits in the last few years. It is the only general
decision to open a regional office in the UK, which is experiencing instant economic growth
along with the London. The Canadian plants producing the millions of cars and introduce them
into the global markets. The Toyota company established its manufacturing plant in the
Melbourne too and other various places. The global manufacturing helps in improving the supply
chain of the organization. Global manufacturing challenges for the Toyota company are
innovation, education and training, manufacturing excellence, information technology, and clean
manufacturing. The manufacturing plants at the different places needs more resources, capital
that adds cost to the automobile company. The management of the huge number of the
manufacturing plants becomes difficult for the organizations.
3. Operations Management Areas of the Toyata
This is the second part of the report that focusing on the operational areas of the business that
influence the success of the organization. The different areas of the Toyota company are supply
chain, inventory management and work design that contribute to the success of the business.
3.1. Supply Chain Design
The Supply chain is the system that focuses on the process of the movement of the raw
materials to the production houses and then deliver the final products to the customers. There are
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many people involved in the supply chain, including, suppliers, distributors, manufacturers, and
retailers make that product available for the consumers. All these people come together with a
purpose to convert the raw material into the final products and delivery of these products to the
customers. The below given figure shows the supply chain process of the Toyota. The supply
chain of Toyota involves the collection of the parts of the automobiles from the different
suppliers and the consolidate those parts to deliver them to the different vendors(Cassivi, et al.,
2000).
This is the most challenging task to manage the supply chain in the organizations and these main
activities involved in the transformation of the goods from the raw materials to the final products
consumed by the customers. The process of the creation of the products and customer’s
consumption of these products. Looking into the previous years and the last 3 years industry
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reports, it has been observed that the globalization has a great impact on the supply chains. There
are no such restrictions on the trade of the products and services in certain areas. Talking about
the automobile industry,then the Toyota company in today’s world makes use of the latest
technologies inthe supply chains. In the past years, the activities like planning, manufacturing
and retailing etc. are done by the industries itself. But now the industries are using the different
kind of softwaresto manage the supply chain(Dinesh, 2015). Toyota company has more than the
3000 suppliers in the different countries in the world and the supply chain model of Toyota
company is greatly influenced by the fairness and win win situation. The Toyota company has
the clear and transparent policies of the supply chain management.
Supply chain risk
There are many risks involved in the supply chain management andthe industries build many
strategies to integrate all the activities and this is the best way tomanage the supply chain. The
automobile industry is chosen for the analysis and to understand thedifferent challenges faced by
the industry. The automobile industry is the sector which is growingrapidly and every country is
contributing to this automobile industry. The automobile industry has many companies like
Honda, Maruti Sazuki, Nissan, Ford, Volkswagon and Audi, etc.The role played by the supply
chain management is very significant for the success of the automobile industry(Deloitte, 2013).
In the developing economies, there are many other environmental factors that affect the
sustainable business like transportation of the stocks from one place to another and these factors
are like pollution, poverty, and natural resource depletion. As the automobile companies are
highly linked with the transportation sector. The population of the countries is increasing very
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fast and it will obviously create more pollution from the automobiles and also the increase in the
usage ofvehicles bring the road networks jams because of traffic. These traffic jams and
pollution affectthe business by the creating negativity in the customer mind and delay in the
stock delivery. Moving further, the other environmental factorslike weather during the season of
Monsoon that creates problems for the automotive industry todeliver the goods in a safe manner
and on time. As the automobile industry is very famous and withthe increase in the population,
more and more clients availed these services and products offered by the different companies
like Honda, Volkswagon, Audi, Nissan and Maruti sazuki. The Automobile industry is facing
challengesnow in building the strategies to deal with the increasing clientele, environmental
factors,diseases and expectations of the customers(Suthikarnnarunai, 2008).
3.2. Inventory management
The models of the inventory management are very helpful to find out the quantity ofthe stock
that is transported to the retail stores at least two times a week. As the stock of the cars, bikes and
other automobiles in the automobile industry is very limited and it is verysignificant to identify
that each retail store of the automobile is getting the stock as per their needs.The workers and the
staff members, who are responsible for the management of the stock andtheir quantity of their
automobile industries outlets.
The inventory management is important as the inventories are the assets of the company and
used by the firm. Inventories are acting as the resource for the company as well as cost to the
company. However, it is very important to have the economic orders of the quantity level. The
process of inventory management includes planning, coordinating and controlling, storing,
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handling , distribution and sale of the materials , tools and parts by keeping in mind all the needs
of the customers. Inventory involve the raw material, or we can say the essential parts of the
machinery, work in progress activities and the finishing by storing those inventories or goods for
the future case. The inventory is always stored in order to meet any future uncertainties and to
meet the demand of the customers in the case of the emergency. Managing the inventory is
playing the important role as in reducing the costs, improving the supply, and maintenance of the
production houses. The main purpose of the inventory management is to increase the level of
production by maintaining the sufficient level of the stock in order to increase the profitability of
the company. The main role played by the inventory management is to control the costs, to
manage the demand and supply chain and reduce the losses of insurance or any damage. There
are many areas on which the Toyota company is spending a lot of money to hold the huge stock
for future, and control the ordering cost and storage costs(Günther & Meyr, 2012).
Critical Success factor
The inventory management of the Toyota company is the critical success factor for the
automobile business. There are many questions comes in mind while storing the stock or
inventory for the future like what type of parts of the Toyota cars or vehicles should be stored
and what would be the turnover ratio of the Toyota company. It has been analyzed that there are
many companies who saves the 50% of the production costs. The different success factors of the
Toyota will be to maintain the inventory that is required on the daily basis for the business
transactions. Moreover, it is important to understand the concepts of the cost factors in order to
avoid the excessive inventory. Tracking of the inventory is also the success factors as the
company will get to know about the latest an outdated technology and to bring a change in the
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technology to gain the competitive advantage. However, it is very important to have the
economic orders of the quantity level.
The inbound and the outbound logistics need to be improved to resolve the issues faced by the
Automobile industries. The inbound logistics means to establish the strong relationship with the
suppliers and to make proper use of the resources as well as raw materials to avoid the waste and
to manage the supply chain in the Automobile industry. The outbound logistics is the term used
forthe delivery of the products like for the consumption of the consumers. All the products like
Cars, two wheelers, and other vehicles and equipments need to be stored and distribute in the
people by usingdifferent sales strategies. The procurement in the supply chain is very important
to avoid themain issues and it refers to the communication take place between the supplier,
retailers,wholesalers and the distributors via phone call or emails. This communication is very
significantfor the timely delivery of the ready products to the customers. Another important
factor in thesupply chain management is the use of the latest technology. There are many
technologies usedby the automobiles companies like, airbags, painting and denting of the cars,
automatic cars, sound systems and Cloudcomputing for the tracking of goods throughout its
business lifecycle(Golinska, 2006).
3.3. Work and facility design
The layout of the work and the facility is the arrangement of the resources used by the companies
that consume the space in relation to the physical facilities. It is very important to design the
working schedules and the facilities while adding some new things in the automobile industry.
For example, the change in the production line, adding of new workers and change in the
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delivery services, etc, all these demands the change in the design and facilities. The layout of the
facilities includes the following elements:
 Product layout
 Process layout
 Cellular layout
 Position layout.
The Toyota company first need to establish the objectives and goals of the services and then
develop the operational strategies to meet those goals for the company’s better future.
Talking about the design of the work, then it is very essential that assigning the duties and
responsibilities to the workers leads to achieve the company objectives. The job enlargement and
job rotation are the main elements of the job design. The change in the job designs has the direct
relation with the improvement of the employee performance. The flexible working hours leads to
improve the productivity of the employees. It is very important to retain the employees in the
automobile industries by designing the job working hours in the organization. Job design could
be obtained through job rotation, simplification, enlargement, enrichment and flexible working
hours. It is very important to meet the employee expectations and needs too for the quality work
and the strategies should be implemented by the Toyota company in order to make their
employees satisfied(Schmitz, 2012).
The Toyota company is focusing on its services provided to the customers as the customer
satisfaction is the most important factor of the success of the company and building the brand
image of the same. The car manufacturers have the responsibilities to provide the best customers
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facilities and to assign the task according to the skills and abilities of the employees. Following
is the figure, that depicts the flow of the information as well as he vehicle which has the main
motive to provide the best facilities to the customers for the purpose of increasing the sales and
profits. The Toyota company also established its various sevices centers to provide the
maintenance and the repair of the automobiles. The company is also focusing on the after sales
facilities to build the brand image and to satisfy their customers(Taylor, 2008).
Conclusion
In this report, all the operation management factors are discussed with respect to the automobile
industry and by taking an example of the Toyota company. The main findings of the report
outline the customer, satisfaction, production efficiency and productivity of the employees and
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how to gain the competitive advantages. The main purpose of the report is the deep analysis of
the challenges faced by the Toyota company and their critical success factors for the Toyota with
respective to the future. There are many challenges that are faced by the organizations and
various success factors in the businesses. This report carried out to analyze the automobile
industry by taking the company Toyota for the research. This report covers the impact of the
operational management or decisions on the performance of the Toyota company. There are
many factors that are explained such as change in technology, managerial methods and the
operational research on the basis of the automobile industry. In the past years, the activities like
planning, manufacturing and retailing etc. are done by the industries itself. But now the
industries are using the different kind of softwares to manage its all operations. Toyota company
has more than the 3000 suppliers in the different countries in the world and the operational
model of Toyota company is greatly influenced by the fairness and win win situation. The
Toyota company has the clear and transparent policies of the operational management. However,
it is concluded that the supply chain management, inventory management and the work and
facility management are the main operations that results in the success of the company for the
future period of time.
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References
Braese, N., 2003. The Dynamics of Supply Chains in the Automotive Industry, Available at:
https://dspace.mit.edu/bitstream/handle/1721.1/33312/62311802-MIT.pdf?sequence=2
Cassivi, L., Lefebvre, L. & Hen, G., 2000. Supply Chain Integration in the Automobile Industry:
The Case of ANX, Available at: http://citeseerx.ist.psu.edu/viewdoc/download?
doi=10.1.1.86.5808&rep=rep1&type=pdf
Deloitte, 2013. Fast Tracking the Indian Automotive Logistics: CII, Available at:
https://www2.deloitte.com/content/dam/Deloitte/in/Documents/manufacturing/auto-scm-
report.pdf
Dinesh, R., 2015. Building world class automotive supply chains, Available at:
https://www.atkearney.in/documents/10192/2659569/Building+World-
Class+Automotive+Supply+Chains+in+India.pdf/3b40aab5-765c-403e-bc51-bf16e7357cc7
Golinska, P., 2006. Monitoring the operations management performance in automotive industry,
Available at: http://www.wacong.org/wac2006/allpapers/isoma/isoma_228.pdf
Günther, H. & Meyr, H., 2012. Production and operations management in the automotive
industry (part 2), Available at: http://paperity.org/p/11161344/production-and-operations-
management-in-the-automotive-industry-part-2
IBM, 2007. The smarter supply chain of the future: global chief supply chain officer study,
Available at: https://www-07.ibm.com/sg/manufacturing/pdf/manufacturing/Auto-industry.pdf
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Leskova, A., 2012. Logistics concept of supply chain in automotive production, Available at:
http://web2.vslg.cz/fotogalerie/acta_logistica/2012/3-cislo/4_leskova.pdf
Leškova, A. & Kováčova, L., 2012. Automotive Supply Chain outline, Available at:
http://pernerscontacts.upce.cz/26_2012/Leskova.pdf
OSAT, 2012. Supply chain management: New competitive realities in the automotive value
chain, Available at:
https://deepblue.lib.umich.edu/bitstream/handle/2027.42/1552/98142.0001.001.pdf?sequence=2
Schmitz, A., 2012. Operations Management in Manufacturing and Service Industries, Available
at: https://2012books.lardbucket.org/pdfs/an-introduction-to-business-v1.0/s15-operations-
management-in-manuf.pdf
Suthikarnnarunai, N., 2008. Automotive Supply Chain and Logistics Management. Proceedings
of the International MultiConference of Engineers and Computer Scientists, Volume 2, pp. 1-7.
Taylor, M., 2008. Operations management research in the automotive sector: Some
contemporary issues and future directions. International Journal of Operations & Production
Management, 28(6), pp. 480-489.
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