Critical Evaluation of Global Supply Chain Management in Automotive

This report provides a comprehensive analysis of global supply chain management within the automotive industry, focusing on Rolls-Royce Motor Cars Ltd and Jaguar. It begins with a critical evaluation of the positive and negative attributes of the field, highlighting the industry's economic impact, technological advancements, and challenges such as innovation gaps and Brexit influences. The report then delves into the gap between evaluation and implementation of supply chain improvements, examining areas like benchmarking, strategy implementation, outsourcing, sales and operations planning, and legal considerations. It also discusses the application of Supply Chain Management theories, such as the Just-In-Time (JIT) approach, to optimize production efficiency and minimize waste. The report concludes by offering recommendations for resolving multidimensional international supply chain issues. This analysis aims to provide a clear understanding of the complexities and opportunities in automotive supply chain management.

Global Supply Chain
Management-2

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
1. Critical evaluation of positive and negative attributes associated with the field...............1
2. Analysing gap between evaluation and implementation of improvement in supply chain
management............................................................................................................................4
3. Analysing multidimensional international supply chain issues and applying techniques to
resolve issues in supply chain management...........................................................................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Global Supply Chain Management is the most important component, which helps in
measuring both external and internal business environment factors. The report helps to
understand the importance of supply chain management in a business. The entire report deals
with Rolls- Royce Motor Cars Ltd that is an automobile maker and one of the leading carmaker
industries of UK.
The report shows how an effective supply chain management will help a business to
reach further level of success. Another firm in similar industry has been considered as Jaguar. It
is another luxurious car manufacturer and designer company. The report presents negative and
positive attributes of automotive industry and it also describes the gap between evaluation and
implementation of supply chain management.
The report also present issues related to multidimensional global supply chain and
recommend various ways in order to resolve those problems in the field of automotive sectors.
1. Critical evaluation of positive and negative attributes associated with the field
Business carries on operational activity to earn profits quite effectually. It is essentially
required that organisation should attain revenue so that it can survive the market. The automotive
industry is one of the largest sectors involving higher level of operational costs, higher
investment in equipments and more requirement of labour is it capital-intensive or labour-
intensive. On the other hand, it is required that raw materials are purchased in large quantum
suitable for manufacturing and further, cost of overheads also prevailed. By seeking this, it can
be said that funds are required to be raised by organisation so that it may garner desired finance
in the best possible manner (Hugos, 2018).
Automotive industry is one of the highest income generating sectors in UK. It is the
largest sector from which profits are attained and is also helps to increase overall growth of
country quite significantly. Furthermore, it is required that firms should perform well to induce
economic growth and thus, impact positively on GDP (Gross Domestic Product). Moreover, it is
essentially needed that companies particularly engaged in designing and manufacturing of cars
should initiate reduction on operational and non-operational costs in effectual manner. In relation
to this, sustaining in the market is quite difficult and to overcome this, proper budget planning is
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required by which company can effectively attain desired production and profits can be
accomplished with ease.
Automobile industry of UK is quite useful for elevating economic growth of nation as
turnover is more than 82 billion in GBP is garnered alone by this industry and value added was
around 20.2 billion turnover had been found (UK Automotive. 2018). This figure was attained by
employees of nearly 186,000 directly engaged in manufacturing and 856,000 of them are
engaged in overall industry. In addition to this, 12 % of exports account of automotive goods and
furthermore, 3.65 billion was spent on Research and Development (R&D).
The positive attributes of automotive industry are numerous, which are explained below-
 Today's generation expects the comfort zone while driving with fuel and operational cost
effectiveness. This is what an industry can offer them by introducing new design for cars
and other transportation facilities in order to meet customers’ demand.
 The use of IT technology is increasing fast in UK and it has been analysed that the
automotive industry manufactures 3D printing which become new faces for this field.
 Automobile industry contributed big amount in GDP of UK, which proved that there is a
big need of automotive industry. The sector is expected to grow in nearby times.
 As per the expert’s report, it has been analysed that attachment related to cars has been
increased and now people demand to connect IoT sparking in the cars that help drivers to
stay connected with internet directly.
 Trend of UK proves that people generally prefer multi terrain vehicle, which provides
more comfort for people. Its five-door utility, leather seats with extra facility attract many
new customers and proves that auto-mobile industry tries to introduce more new products
& services in order to fulfil requirements of people.
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Negative attributes of automotive industry are listed below-
 UK car industry lacks innovation, which has decreased manufacturing in the nation and
as such, it is relying more on the Japanese manufacturers for producing certain car
models.
 The above chart clearly shows that numbers of cars manufactured were being decreased.
In 2017, 3 % of passengers’ cars were decreased than the financial year of 2016. This
means that production got reduced. In relation to this, number of cars from production
lines is also rolled off and down to 2.3 % in recent years (Armstrong, 2018).
 Brexit influences is increasing and there is a threat of losing foreign investment as
industry heavily relies on it. Furthermore, it will lose such investment and exports of EU
that would increase and is already generating huge profits and has major market for
exports.
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Illustration 1: Number of Cars manufactured in the UK
(Source: SMMT)

2. Analysing gap between evaluation and implementation of improvement in supply chain
management
Supply chain management is one of the important parts of a company as it has a wide
range of activities, which are to be performed starting from receiving orders from customers to
timely delivering the goods to maximise satisfaction of customers up to a high extent. This
means that company must effectively manage inventory and supply chain so that maximum
satisfaction can be provided to its consumers. It is required that there should be streamlined
logistics, which will enhance overall production activities and as a result, orders received from
customers can be fulfilled in timely manner.
Rolls-Royce Motor Cars Ltd is one of the biggest automotive giants, which is engaged in
designing and manufacturing of cars. It has a well-mannered supply chain management, which
effectively helps to fulfil orders of customers in the best possible manner. It is required so that
firm may be able to garner sales by manufacturing car units as per the received order and thus, it
is fruitful for the organisation to provide timely delivery of luxurious cars to customers and
attains large quantum of revenue (Liu, Blome, Sanderson and Paulraj, 2018).
On the other hand, Jaguar is another automotive company engaged in manufacturing
vehicles and earns good profits. The automobile industry's major revenue generating sector for
UK economy, which helps to attain higher growth for the country and as a result, GDP enhances
in a better way. Automotive sector accounts for nearly 12 % of exports as discussed and are
beneficial for the economy to prosper in effective manner. Jaguar is helping UK’s economy as it
manufactures luxurious cars for customers leading to enhance profits. It is owned by Indian
Company, Tata Motors since 2008 financial year. The book profits and total revenue of firm has
been impressive since its inception. It shows organisation has not just efficient operations but
also supply chain management is strong enough.
The SCM (Supply Chain Management) is an integral part of an organisation as it
provides clarity on how efficient a firm completes its orders received from customers within
stipulated time. The process undergoes various steps starting from purchasing of raw materials to
manufacturing unit and then finally, delivering of finished products to consumers. The entire
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process needs to be streamlined in that manner, which will help firm to gain more customers and
leading to enhancement in customer base and garnering desired profits quite effectually.
The gap between evaluation and implementation of supply chain improvement can be critically
described below-
Supply chain benchmarking
The supply chain should be managed in accordance to the needs of underlying orders that
are to be fulfilled within time frame. The benchmarking is needed to be implemented to deliver
quality products by automotive industry of UK. Rolls-Royce Motors Cars Ltd has to make
efforts to analyse gap in its supply chain as when gap remains, improvement becomes
detrimental and it results in higher costs, which are actually not required due to such gaps. This
further includes making wrong comparisons with peer companies, setting not relevant goals and
objectives (Kumar and et.al, 2018).
By evaluating and implementing righteous benchmarking, management may easily come
to know about requirements of customers and how it can be enhanced, increasing financial
performance up to a high extent etc. However, gap continues in the same as due to certain
political and legal factors affects industry.
Strategy for implementation
Strategy needs to be implemented in a manner that is both fruitful for the company and
overall, its operations in many markets. It is particularly important in automobile industry to
provide greater emphasis on customer needs and wants and thereby, making strategy leading
towards goals accomplishment. This helps company to attain efficiency and smoothness in
streamlining manufacturing accordingly. It can be related to Rolls-Royce Motors Cars Ltd where
it talks about excessive long lead times that sometimes hinder its operational activities. It is
needed that distribution centres should be situated nearer to markets so that speedy delivery can
be initiated to effectively decrease lead-time. Jaguar's strategy is also to meet requirements
accordingly so that it can be achieved in timely manner. However, gaps prevail such as
inadequate changes in management during strategy formulation, poor communication that gets to
difficulty in smoothing implementation of strategies (Bag, Anand and Pandey, 2017).
Outsourcing
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Outsourcing is the process, which saves time of company by making parts of products to
be manufactured by other vendors by duly making a contract with them. It is essentially needed
so that business may be able to accomplish manufacturing in a better way. Here comes the main
problem of choosing appropriate vendors, which will be responsible for attaining terms and
conditions of products and delivery of the same (Fosso Wamba, Angappa, Papadopoulos and
Ngai, 2018). Poor execution of selection procedure of vendor could result into unproductive
partnerships. The objectives should be clear for why to outsource product, mainly because of
cost-effective tactics or enhancement in quality parameter or service improvement to name a
few. Rolls-Royce Motors Cars Ltd and Jaguar are required to outsource services with clear
objectives stated to minimise gaps for better execution. However, gap remains as costs of
logistics are not reduced hindering delivery of items.
Planning regarding sales and operations
Main element of supply chain is to manage inventory in effective manner. Investment in
inventory, obsolescence and deployment of stocks should be planned and forecasted so that firms
will be able to achieve efficiency. This would be beneficial in maintaining accuracy in supply
and demand so that future planning will be made accordingly that lead to efficient logistics.
However, it can be analysed that automotive industry needs to resolve such issues because at
several times, inventory costs are attained higher because firm not adequately manages inventory
and also handling expenses increases.
Legality
The legal principles are different in one's own country than other. Legal principles must
be followed for interrupted supply chains so that organisation may not find it difficult in
obtaining license for attaining operations effectively. It is needed to meet operational
requirements with ease. However, company has to meet several requirements of different
countries and as such, formalities are to be met by which equilibrium level between demand and
supply can be maintained in a better way (Tom K. 2017).
The theories of SCM can be explained below-
Just-In-Time (JIT) approach-
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JIT approach is useful in SCM as it helps to maintain and reduce flow times within
production system and also to clarify response rate between suppliers to customers. It was
originally developed by Toyota and also termed as Total Production System (TPS). The strategy
is implemented by company in order to maximise production efficiency and minimise waste by
using or receiving those raw materials only which are needed for production purpose and hence,
alleviating costs of inventory and handling costs up to a high extent.
Total Quality Management (TQM)-
TQM is another useful approach in SCM leading to focus on quality of products so that
total quality may be maintained in a better way. It aims to deliver good quality items to
customers by enhancing satisfaction level to great heights. Employee engagement is necessary
driving force in TQM so that they may work hard to achieve goals for increasing growth of
company in the best possible manner. It is also a process-centred approach as raw materials are
taken from suppliers which is the first step and then transforming the same into outputs that are
delivered to customers. In this whole series of steps, continuous monitoring is done so as to
detect variations which might come from uncertainty (Genovese, Acquaye, Figueroa and Koh,
2017).
3. Analysing multidimensional international supply chain issues and applying techniques to
resolve issues in supply chain management
There are various supply chain issues on international basis and as such, it hinders SCM
to discharge tasks in the best possible manner. These are listed below-
1. Long range logistics-
The raw materials can be purchased by comparing prices available and best economic
resources could be purchased by the company. Rolls-Royce Motors Car Ltd and Jaguar can
effectively buy the items needed for production and meeting out demands of customers in
effective manner. However, main problem arises when shipments are to be made in global
supply chain so that firm can adequately meet requirements. It is risky proposition for
automotive sector as delays could be made leading to decrease in overall logistics efficiency.
Moreover, SCM also hampered in bad manner because operational activities become less
efficient leading to affect overall company's operations.
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2. Compliance-
There are several countries where company's has its operations. It is required that
company should make out towards policies in effective manner. Most important of it is social
compliance which is needed for international sourcing in the best possible manner. Moreover, it
is essentially needed that organisation conducts due working practices, child labour practices and
fair compensation schemes. It is required that local staff members are employed otherwise,
company may face legal issues and risk comes in faces damage due to unfair practices which
might then arouse. Product quality should be enhanced and Rolls-Royce Motors Car Ltd and
Jaguar need to carry out and meet local standards of every country which they initiates
operations in it. This is important so that quality may be maintained. Cars which are produced
should met with several quality tests and compliance documents need to be formulated by
company (Dubey and et.al, 2017).
3. Costs-
As far as auto-mobile sector is considered, it is required that costs and location should be
available at least possible cost and efficiency may be attained. In global supply chain, company
come up with variety of obstacles which are to be removed up to a high extent. It is possible that
firm may incur more costs due to outsourcing and also because of international shipments. The
automotive parts are required to be assembled by the company which often leads to more
expenses. It affects supply chain and shipments may be delayed impacting on overall business
operations.
The above issues could be resolved by applying techniques in global supply chain. These are:
1. Geographic expansion-
Location and costs can be effectively scrutinised by getting into account various factors.
It is required that two giant automotive companies should look for logistics partner who
completely knows supply chain procedures in that manner which would be beneficial for
organisation to overcome issues as in each and every destination, logistic partner may provide
tactics of local standards and compliance of particular nation and execute the plan accordingly
(Gupta, Altay and Luo, 2017). It will require proper communication with the partner and
company so that it may be able to effectively attain efficiency in SCM.
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2. Logistics chain-
Chains of logistics should be enhanced in a better way as it will have direct impact on the
company. Changes in demand and strategies of competitors never remains stable and as such, it
would be able to achieve any modifications. In simple words, flexibility and reliability should be
there so that in every season be it high or low, firm may be able to initiate healthy operations
without any difficulty. It would be beneficial as adjusting with different situations, uninterrupted
profits and good return on investment may be accomplished in a better way. Moreover, with
trustworthy logistic partner, effective logistic chain may be maintained overcoming problem of
supply chain globally (Fahimnia, Sarkis, Gunasekaran and Farahani, 2017).
3. Inventory management-
Inventory is integral part of production department as it helps to effectively attain desired
production. In SCM, it is required that stocks should not be overstocked as it will be harmful for
company as it increases additional cost of handling. Automotive industry is growing at a rapid
rate but that does not mean to maintain overstocking. Logistics partner may be approached as it
maintains and properly tracks inventory in Management Information System and maintenance of
data helps to effectively track and manage inventory. Hence, company can manage inventory and
produces vehicles in accordance to it and minimise cost and maximise production. Thus, global
supply chain issues can be resolved quite effectually.
CONCLUSION
Hereby it can be concluded that SCM is crucial part in automotive sector as
manufacturing takes place in higher quantum which makes supply chain most important function
to performance thereof. It means that company is under duty to make out its production with
uninterrupted operations so as to inject efficiency in manufacturing and complete customer'
orders with ease. Positive and negative issues prevail in UK automobile industry and Rolls-
Royce Motors Car Ltd and other company Jaguar Organisation are performing well. On the other
hand, global supply chain issues should be resolved by implementing techniques so that
production may be done and customer orders may be delivered in a timely manner. Hence, it can
be said that SCM should be managed properly so that firm may accomplish profits by making
desired production.
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REFERENCES
Books and Journals
Bag, S., Anand, N. and Pandey, K. K., 2017. Green supply chain management model for
sustainable manufacturing practices. In Green Supply Chain Management for Sustainable
Business Practice (pp. 153-189). IGI Global.
Dubey, R and et.al, 2017. Sustainable supply chain management: framework and further research
directions. Journal of Cleaner Production, 142, pp.1119-1130.
Fahimnia, B., Sarkis, J., Gunasekaran, A. and Farahani, R., 2017. Decision models for
sustainable supply chain design and management. Annals of Operations Research, 250(2),
pp.277-278.
Fosso Wamba, S., Angappa, G., Papadopoulos, T. and Ngai, E., 2018. Big data analytics in
logistics and supply chain management. International Journal of Logistics Management,
The, (just-accepted), pp.00-00.
Genovese, A., Acquaye, A. A., Figueroa, A. and Koh, S. L., 2017. Sustainable supply chain
management and the transition towards a circular economy: Evidence and some
applications. Omega, 66, pp.344-357.
Gupta, S., Altay, N. and Luo, Z., 2017. Big data in humanitarian supply chain management: a
review and further research directions. Annals of Operations Research, pp.1-21.
Hugos, M. H., 2018. Essentials of supply chain management. John Wiley & Sons.
Kumar, V. and et.al, 2018. An empirical analysis of supply and manufacturing risk and business
performance: A Chinese manufacturing supply chain perspective. Supply Chain
Management.
Liu, Y., Blome, C., Sanderson, J. and Paulraj, A., 2018. Supply chain integration capabilities,
green design strategy and performance: a comparative study in the auto industry. Supply
Chain Management.
Online
Armstrong. 2018 [Online]. Exactly how screwed is the UK car industry? Here are the facts
Available Through: <https://inews.co.uk/essentials/lifestyle/cars/uk-car-industry-brexit-facts/>.
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