Operations Management Analysis of Daimler AG Company

This report provides a comprehensive analysis of Daimler AG's operations management. It details the company's primary operations, including inputs, transformation processes, and outputs, and examines the four Vs of operations management (volume, variety, variation, and visibility) in relation to Daimler AG. The report identifies the key processes within the organization, particularly the jobbing process, and discusses how operations managers can contribute to meeting company objectives. Furthermore, it addresses the challenges faced by Daimler AG in their operations and proposes potential solutions, along with control and feedback mechanisms to enhance performance. The analysis covers Daimler's operations performance objectives, including quality, speed, dependability, flexibility, and cost, providing a holistic view of the company's operational strategies and their impact.

OPERATIONS MANAGEMENT ANALYSIS 1
Daimler AG operational management analysis
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Course Unit Title
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OPERATIONS MANAGEMENT ANALYSIS 2
Executive Summary
Operational management is a core part in the activities of any organization. It is important since
it defines the processes involved in the production of goods and services for the organization
clearly showing the input, transformation and output (ITO) activities of the business. The
following is a report highlighting the operations management at Daimler AG Company.

OPERATIONS MANAGEMENT ANALYSIS 3
Table of Contents
Introduction...............................................................................................................................................4
Primary operations of Daimler AG......................................................................................................5
The four vs. of operations management in relation to Daimler AG...................................................6
Volume.......................................................................................................................................................6
Variety........................................................................................................................................................7
Variation....................................................................................................................................................7
Visibility.....................................................................................................................................................8
Daimler’s Operations performance objectives....................................................................................9
The quality objective.................................................................................................................................9
Speed..........................................................................................................................................................9
Dependability...........................................................................................................................................10
Flexibility.................................................................................................................................................10
Cost...........................................................................................................................................................10
The Key process within Daimler AG..................................................................................................11
Daimler’s layout and flow...................................................................................................................11
Challenges experienced by Daimler AG in their operations and possible solutions.......................12
Control and feedback mechanisms that can be used to meet objectives of the organization.........12
Conclusion................................................................................................................................................13
References................................................................................................................................................14

OPERATIONS MANAGEMENT ANALYSIS 4
Introduction
Daimler AG is a multinational automotive corporation based in Germany. Its
headquarters are in Stuttgart, Baden-Wurttemberg. The company was created through the
merging of Daimler Motoren Gesellschaft and Benz & Cie in 1926. Currently, the company
owns and has shares in several car, truck, and bus and motorcycle brands such as Mercedes-
Benz, Mercedes-AMG, Mitsubishi Fuso, Detroit Diesel, Freightliner and Thomas Built buses. In
addition to this, the company also has shares in Beijing Automotive Group. The company
recorded a sale of 3.3 million cars in unit sales in 2017 and is the thirteenth largest manufacturer
of vehicles and the largest truck manufacture worldwide (Krajewski, 2010. ). Besides
manufacturing and selling vehicles, Daimler also offers financial services through its Daimler
Financial services arm. The company is listed in the Euro Sox 50 stock market index. The
following is a report that looks at the operations management activities of the company. It
describes the primary operations of the organization in terms of inputs, outputs and
transformation processes and an analysis of the four Vs in their operations management. In
addition to this, the main process within the organization has been identified which an operations
manager can be involved in to meet the objectives of the company. The report goes further by
identifying the problems within their operations and offers several alternatives that can be
applied to mitigate the challenges.

OPERATIONS MANAGEMENT ANALYSIS 5
Part one: Primary operations of Daimler AG
A transformation process is involved in the manufacturing of vehicles. The
transformation process can be described as a set of activities taking one or more inputs,
transforming them and adding value to them providing outputs for clients and customers.
Daimler AG which is involved in both the automotive and finance industry, has both raw
materials and information as inputs in their transformation processes. The following
transformation processes take place in the organization; modifications in physical characteristics
of materials, changes in the location of material, changes in customer information, alterations in
the form and purpose of information and storage of information and materials (Pilkington, 2009).
Daimler AG is the kind of company which is involved in transforming all three types of inputs,
materials, customers and information. Daimler key business is in producing automobiles, this
hence makes the key elements of their operations system to be that of a manufacturing company.
Their inputs therefore include raw materials components and things like time, skills, money and
employees. The second primary element in the operations of the company involves converting
the raw materials and components into finished products. In this case, a finished car or an
automobile. The final key element is the outputs which are the finished products awaiting sale.
For Daimler AG, this is an automobile on the showroom floor.
The following diagram shows the primary operations at Daimler AG Company
Inputs Output
Components
Equipment
Buildings
Labor
Energy
(Transformation
process)
Information
Skills
Alteration
Transportation
Storage
Vehicles
Buses
Trucks

OPERATIONS MANAGEMENT ANALYSIS 6
The four vs. of operations management in relation to Daimler AG
All companies operate in a somewhat similar fashion, but they are different when
analyzed in terms of the four Vs. The four vs. in operational management include; volume,
variety, visibility and variation.
Volume
Can be stated to be the amount of a specific product needed to meet its demand.
Operations that have low volume are likely to be less repetitive and the employees are likely to
carry out more than one task. On the other hand, operations that have a high volume involve
repeatable processes that can be automated. Higher volumes make it easier to meet higher
customer demand levels as the automation activities make the production processes faster. In the
case of Daimler AG, the volume of production is high since they manufacture automobiles that
have a high customer demand globally. Statistical records representing the company’s global
motor vehicle production indicate that Daimler produced close to 2.5 million vehicles worldwide
in 2016. The year that followed, the company sold 3.3 million cars (Daimler AG , 2017). The
operations activities at the company are mostly automated and professionals are assigned specific
tasks in regard to their expertise with minimal multitasking (Pilkington, 2009). This helps in
quick production of the automobiles to meet the high volume required.

OPERATIONS MANAGEMENT ANALYSIS 7
Variety
Refers to the variety of goods to be made and sold to customers. It relates to diversity of
the products offered by a company. The more variety of goods a company offers, the more
flexible they are in producing goods to match the customer’s preference (Jacobs, 2014). Variety
and volume are correlated as the more diverse goods a company produces, the lower the volume
of their production. Daimler AG is a diverse company not only in terms of the goods
(automobiles) it produces but also by diversifying into the finance field. The company has a
financial services arm making it a financial institution like any other bank. Also, they
manufacture a variety of automobiles ranging from trucks, buses to personal cars, all of which
have diverse models. The high variety of their vehicle manufacture gives consumers a wide
range to pick from based on their taste. An example of a common brand and its products under
the company’s automobile wing includes the Mercedes Benz brand. Various vehicle products
under this brand name include; the ML class, GL-class and the E-class (Daimler AG , 2017).
Variation
Is how much the level of demand deviates over a period of time caused by external
factors? Several factors however make it difficult to predict variation such as natural disasters
and political climate. For Daimler AG, their variation in demand is high. The company is known
as a fast automobile producer since it has the capability to supply an extensive number of
automobiles each season compared to their competitors (Terwiesch, 2012). A scenario that can

OPERATIONS MANAGEMENT ANALYSIS 8
describe the company’s variation in demand is the drop in sales recorded in the 2018 financial
report. The company saw a 13% drop in sales in Germany compared to the previous numbers
attained during the third quarter results of 2017 (Daimler AG , 2017).
Visibility
Refers to how much customers actually experience the activities undertaken by a company in the
production processes. A high level of visibility exists in the service industries compared to the
manufacturing industry which has little to no visibility to its customers (Terwiesch, 2012).
Daimler AG has a mixture of both. Its financial services sector offers a high level of visibility to
its customers while its automobile production wing has minimum visibility in the production
phases happening in its assembly lines. The company only offers information on its operations in
its annual reports and statements. The company however has a website whereby interested
parties on the company’s operations can ask questions and get a feedback. The site also has a
self-service platform whereby customers can access help on the company’s products by choosing
the specific service they require (Daimler AG, 2019).

OPERATIONS MANAGEMENT ANALYSIS 9
Daimler’s Operations performance objectives
The operations performance objectives involves strategic actions and decisions that
develop the role, activities and goals of the company’s operations. This makes the operational
objective a single component of the operations strategy which involves flexibility, delivery,
quality and cost (Jacobs, 2014). In certain cases, further types exist such as innovation,
environmental sustainability and safety. The five basic performance objectives analyzed in
accordance with Daimler AG are as follows.
The quality objective
Shows that the company manufactures goods through a certain approach that meets both
customer satisfaction and efficient internal operation activities. Quality is the primary objective
that is most crucial to customers especially for outbound products like Daimler’s automobiles.
Upholding quality standards allows the company to minimize mistakes and costs where quality
coordination is implemented in the ITO process. Daimler has a high performance in quality

OPERATIONS MANAGEMENT ANALYSIS 10
between all its operations attributed by the advanced supply chain system they apply (Pilkington,
2009).
Speed
Refers to the period between the customer order and the execution of operations. This
objective has a significant impact on the operational process with regard to decision-making plus
the movement of input resources within the ITO model. It allows for quicker response to
external customers’ requirements. Daimler AG takes a long time frame in coordinating all its
operations since designing and developing a new automobile is quite technical requiring
adequate time to meet quality (Krajewski, 2010. ).
Dependability
In the concept of operations means scheduling the whole company so as to deliver goods on time
as per the customers’ needs. With regard to dependability, the value of speed and cost have no
impact on performance since the only objective is satisfying the final consumer (Barratt, 2011).
Daimler AG has a high regard to dependability as it ensures the estimated time taken to complete
projects is accurate.
Flexibility
Explains the capability of a company to modify its operations with regard to the needs of
the customers. Implementing a flexible operation within the ITO model is an added benefit to the
whole system in terms of time optimization, response rate and high level of dependability.
Daimler AG is capable of setting flexible operations due to the competitive supply chain
performance that leads to creating competitive recycle of new automobiles in the showrooms
(Terwiesch, 2012).

OPERATIONS MANAGEMENT ANALYSIS 11
Cost
Is regarded as an important factor for all companies in any industry on the basis of price
competition. In the automobile industry, the cost driver is a prospective tool to be competitive
since reduced costs attract more customers. Daimler AG automobile products, which are mostly
composed of luxury vehicles are relatively expensive compared to competing brands.
Part two: The Key process within Daimler AG
A relationship exists between manufacturing and service process types in Daimler’s
operations processes. The company focuses its manufacturing design on jobbing processes type
attributed to the matching of low volume and more variety in producing their goods (Pilkington,
2009).This makes the jobbing process crucial in the operations of the company, a factor that the
operations manager should focus and be involved in so as to ensure the company’s objectives are
met. The jobbing process is the main process type as it involves the functional layout of the
company in the operational process design. The duty of the operations manager is to take
advantage of the in house facilities in terms of flexibility, speed and fast replacement. This
creates an efficient production process for the company.

OPERATIONS MANAGEMENT ANALYSIS 12
Daimler’s layout and flow
Daimler’s implements an operational process capable of covering its customers ever
changing needs. The company’s layout focuses on shipment requests from showroom managers
who develop the requests as per customer’s needs plus previous data of the sales to estimate the
demand. The two inputs are applied in the next step via an optimization model implementing
three important data; the estimated data, the inventory per articles plus the unsold products from
the warehouses and the showrooms. The company also receives its supplies from different
sources globally from Europe, Asia and even Africa. Material is shipped to the company as per
their request with regard to the orders from the show room managers to determine the raw
material needed to satisfy the customers’ orders (Krajewski, 2010. )
The primary objectives for Daimler applying this process design include; coming up with
innovative solutions by the people and for the people, developing new target groups for their
services and products, creating a work culture that enhances the motivation, performance and
satisfaction of their employees, ensuring efficient production of quality automobiles with
minimum waste of the resources and to improve the standard methodology of analysis. All these
objectives are being met by their applied process design (Krajewski, 2010. ).
Challenges experienced by Daimler AG in their operations and possible solutions
Daimler AG experiences a number of problems in conducting their operations and in the
implementation of their process design. One of the challenge is the change in economic
conditions. The state of the economy does not remain static and often changes in majority of
nations (Barratt, 2011). This is bound to affect the company in terms of sales made, acquiring
raw material and the entire supply chain. Also, Daimler is in crisis as it faces rivalry from
competing companies such as Tesla Inc and Uber Technologies who are producing electric and