Global Supply Chain Management: Magna International Analysis

This report provides a comprehensive analysis of global supply chain management, focusing on the automotive industry and the strategies employed by Magna International. It explores the advantages of Collaborative Planning, Forecasting, and Replenishment (CPFR) in optimizing supply chain efficiency and improving relationships with Original Equipment Manufacturer (OEM) customers. The report also examines the crucial role of tier one suppliers in safeguarding the quality of final products and discusses the application of technology to improve information sharing and address quality-related issues. Furthermore, it evaluates the application of the staircase model of IKEA for sustainability and its potential in the Magna Group and the wrap approach through auto parts suppliers and car manufacturers to increase the recyclability of cars. The report concludes by highlighting the importance of effective supply chain management in achieving business objectives, cost management, and production efficiency in a globalized market. The report also examines the role of Magna International in the automotive sector, emphasizing the significance of CPFR in building strong relationships with OEM customers and improving overall supply chain performance. The importance of ISO/TS16949 quality standards and their impact on supplier relationships and the final product quality is also addressed.

Global Supply Chain
Management
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TABLE OF CONTENTS
INTRODUCTION................................................................................................................................3
1. ADVANTAGES OF CPFR TO WORK AND OEM CUSTOMERS...............................................3
2. ROLE OF TIER ONE SUPPLIER IN SAFEGUARDING THE QUALITY OF FINAL PRODUCTS.
..............................................................................................................................................................5
3. EVALUATION OF THE STAIRCASE MODEL OF IKEA FOR SUSTAINABILITY AND
APPLICATION IN MAGNA GROUP ................................................................................................7
4. THE APPLICATION WRAP APPROACH THROGH AUTO PARTS SUPPLIERS AND CAR
MANUFACTURERS CAN WORK TOGETHER TO INCREASE THE RECYCLABILITY CARS9
5. SHARING OF INFORMATION USING TECHNOLOGY IN SUPPLY CHAINS AND SOLVING
QUALITY RELATED PROBLEMS .................................................................................................11
CONCLUSION..................................................................................................................................12
REFERENCES...................................................................................................................................13
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INTRODUCTION
Supply chain management is considered a network which is developed by different
companies for managing different business operations. An efficient supply chain management
system plays important role to order to carry out production management, inventory management
work management as well as distribution of different products and services as per the
predetermined schedule. The emergence of globalization has increased the importance of supply
chain management. This is because various companies outsource different products and services
for attainment production objectives so as supply chain management plays significant role for
cost management, production management etc (Kouvelis and et.al., 2011). By focusing on supply
chain management, the business firms can easily manage their work and overcome issues related
to delay in the production process and costing with an effective manner. Logistics management is
termed as most critical section of supply chain management that have direct impact on the cost of
final product along with its quality. It provides significant assistance for managing different
functions and activities associated with the production and delivery of product or service from
supplier to client (Wang and et.al, 2007). In addition to that it has been analysed that global
supply chain management is mainly paying extra attention on integrated work which can provide
easy accessibility to resources, processes, delivery system etc. as per the goals of company.
In this report, learning will focus on various aspects of CPFR to work with their OEM
customers in order to accomplish performance standards as per the current market trends. In this
process, this report considers different business operations of Megna International Inc. which is
considered as global automotive suppliers of Magna Powertrain, Magna Exteriors, Magna
Seating and various other parts of car (Panneerselvam, 2012). This investigation will also carry
out detail evaluation regarding role of a tier 1 supplier for the safeguarding the quality of final
products in the context of auto mobile sector. Furthermore, this report is going to discuss the role
of technologies for improving the effectiveness of supply chain management.
1. ADVANTAGES OF CPFR TO WORK AND OEM CUSTOMERS
Magna international Inc. is identified as one of the leading auto parts supplier firm which
is managing the business from Canada. As per the distinct requirement of consumers, the
management of Magna international Inc. supplies number of parts and automobile equipments to
various companies within auto mobile industry (DaÄŸlar, 2005). Therefore, it is essential for
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business entity to ensure about an effective supply chain management along with an efficient
delivery system through which company is able to deliver best product to partners or customers.
In this process, CPFR has found a great approach for Megna through which company is able to
enhance efficiency of its supply chain management.
As per the research of Minis (2011) it has evaluated that CPFR model has been adopted
by number of companies in all over the world for managing different business requirement.
Therefore, this approach has been found as a standard process model which helps companies in
order to resolve different issues related to supply chain management (Lambert, 2008). By
considering this approach, the management of Magna is able to formulate an efficient supply
chain management system by concentrating on customers. In this, supplier and client are
carrying out the collective working at every level supply chain management that plays important
role for improving in organisation's performance (Minis, 2011). Moreover, it also supports
management in order to carry out joint forecasting and order planning so as management of
Magna is able to control risk within supply chain that provides significant benefits in the form of
better production of auto-mobile parts and its distribution. By managing different operations, the
management of Megna can manager relationship with different suppliers.
CPFR will provide great opportunity to work in collective manner with its OEM
customers and make them understand about customers needs for effective production of auto
mobile parts in order to accomplish needs. Sehgal (2009) has argued that OEM customers of
Magna demands delivery of original equipments or parts in desired time so in order to have
effective distribution it is essential for management to focus on CPFR (McIvor, 2003). In the
support of this, it can be said that the collaborative planning, forecasting and replenishment are
key factors of CPFR process which improves the supplier/manufacturer relationship in order to
meet the objectives (Russell and Taylor, 2008).
By implementing the CPFR process, the administration of Manga can create strong
relations with its OEM customers that plays important role for long term sustainability of
company. In this process, grist of all management addresses different important factors by share
significant information between Magna's and OEM customers for carrying out effective planning
in order to meet the objectives. In this regard, it can be said that the CPFR has played important
role to integrated supply chain method (Sehgal, 2009). As per the CPFR system, involvement of
managers of both companies have found very effective in order to enhance efficiency of work. In
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addition to that collaborative actions among trading partners enhances efficiency of supply chain
management for accomplishment of ultimate needs of end customers.
Furthermore, it has been evaluated that management can improve focus on CPFR process
that increases the company's responsiveness to customer demand. This is because the approach
of CPFR has found very effective for development of high skilled functional staff so as
management can decrease the chances of out of stock and shorter cycle situations which are
beneficial for better reliability and responsive supply chain (Qrunfleh and Tarafdar, 2013). Apart
from that by offering high quality of auto mobile parts to several OEM customers, business
entity is able to increase the satisfaction level of end customers that improves goodwill of firm.
For example, the UK car manufacturer is acquiring wide range of auto part form Magna by using
CPFR. With the help of this approach, Magna can manage its supply chain and deliver auto-
mobile parts to UK car manufacturer by taking appropriate prediction about future demand of
auto parts (Tiwari, 2006). It will also help UK car manufacturing firm for increasing production
speed because Megna is supplying several parts as per the predetermined schedule.
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(Source: CPFR Model, 2006)
In this regard, Qrunfleh and Tarafdar (2013) have evaluated that the CPFR process also
offers accurate information through forecasting about future demand so as management can
improve the process. The sharing of forecasted information assists Magna in order to understand
the different views of trading partners and suppliers so as company can meet distinct
requirements of OEM consumers (Carter, 2008). Apart from that it also enhances the
coordination between planning and forecasting that could reduce the loss in order to amend the
sales. The CPFR also assists management in evaluation of safety stock which plays important
role for improving the efficiency of inventory system that will provide significant benefits in the
form of cost reduction. In this regard, Megna group has won the award from Toyota about
quality and technology. Therefore, it is identified as perfect example of benefit of CPFR system.
The Low cost production influences profitability OEM customers (Christopher, 2006).
Therefore, it can be said that the CPFR provides significant assistance in supply chain
management and capacity planning with reference to OEM consumers.
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2. ROLE OF TIER ONE SUPPLIER IN SAFEGUARDING THE QUALITY
OF FINAL PRODUCTS.
Every organization is paying extra focus on effective development of supply chain that
would enhance sustainability of business and increase sales of company. Therefore, the Magna
needs to pay extra attention on tier one supplier. In this management considers such
manufacturer who are selling different product directly to the OEM customers. In this process,
management is not considered the use of middle man for dealing with other manufacturers
(Green, 2006). As per the research of Christopher (2006) it is examined that this system is
mainly emphasizing on the credibility and commitments which are required by various
international auto-mobile manufacturer for managing quality and performance of final product.
This plays important role for establishment of trust among based on design, development and
validate factor.
By using the tire one suppliers, the administration of Magna is able to carry out the
advancement in quality of goods as per the distinct needs of consumers. In traditional supply
chain, the management of business organisations require to recruit number of middle man for
better delivery of goods as per the quality standard determined by care manufactures (Hervani,
2005). On the other hand, on tier supplier provides significant associated to company in order to
conduct deal directly with various auto-mobile manufacturing firms without any middle man.
Increased number of middle man develops requirement of high level of sub assemblies that have
direct effect on to the quality of parts (Kumar and et. al., 2006). However, Green (2006) has
criticized that tier one suppliers has found very effective for redeveloping supply chain structure
and boost the quality standards as per the requirement of end users. It also provides an
opportunity for establishment of direct interaction with OEM customers so as management of
Megna can easily understand specific needs of consumers.
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(Source: Managing Sub-Tier Risk in a Sustainable Supply Chain, 2015)
Apart from that management can pay extra attention on ISO/TS16949 which is
considered as a most important quality standard for auto-mobile sector. By using one tier
supplier with reference to above mentioned standard, the management of Magna is able to
develop new value creation model (Lambert, 2008). This model helps management for carrying
out detail evaluation previous quality conflicts. It assists management in order to redesign the
quality control system standardization. This kind of activity has played important role for
establishment of relationship with tire one supplies (Li and et. al., 2006). It provides an oriented
system that assists manager for carrying out a secure optimization without affecting the quality
of products.
In addition to that by improving the focus on one tier supplier, the management of Magna
is able enhance understanding about client operations. The increased information about client
operations assists company for designing the quality standards as per different requirement of
consumers (Storey, 2005). It helps auto-mobile company in order to organise different functions
in logical manner. In the support of this, it can be stated that assistance of one tier supplier
influences automotive suppliers or manufacturer for paying extra attention on manufacturing of
diverse models such as lighting system, fuel delivery, braking system.
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This system provides significant assistance for improving the quality of production within
low cost by increasing the focus on one tier supplier. On the basis of this system, the
management of Magna can establish direct partnership with OEM traders (Tiwari, 2013). This
system plays important role for establishment of better relation among all traders so as
management can improve collaboration with business partners for ensure about the quality of
spare parts. Therefore management is able to reduce wastage of resources and increase the
quality of production within low cost.
The efficiency of Sub-tier suppliers is having a tremendous impact on the quality of the
final component. This is because they provide wide range of raw materials, services or sub-
components their influence is so profound. Therefore, it is critical for each of MEI’s suppliers to
have an efficient supplier management system in place. As per the research of Hervani (2005) it
has evaluated that management performs a function that tracks and reports different component
on their supply base quality and delivery performance (Supplier Quality Requirements Manual,
n.d). In this regard, the management of Megna takes various corrective actions for handling
different aspects of business along with quality of final output and cars. For example: Megna is
expanding in Russia for increasing its capabilities associated with manufacturing of bumpers and
front-end modules and will assemble radiator grills and instrument-panel beams by assessing
various domestic suppliers of Russia (Canadian car parts company Magna expands further into
Russia, 2010).
3. EVALUATION OF THE STAIRCASE MODEL OF IKEA FOR
SUSTAINABILITY AND APPLICATION IN MAGNA GROUP
Evaluation of the staircase model of IKEA
In current market scenario the business organizations are facing number of key issues
regarding sustainability and relation with suppliers. In this respect the business organisation
named Ikea has adopted stair case model. It is one of most effective way which facilitates in
building better relationship with diversified suppliers. In the support of this, it can be said that
the management of IKEA has focused on effective development of various divisions which will
ensure about the balance ratio among firm and suppliers (Meijboom, 2008). Specialized divisions
have formed to ensure that business is having good relationship as per the consideration of
sustainability framework. Designed department have great accountability towards actions which
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can meet the standards in effective manner such as monitoring of activities, etc.
Other than this, the management of IKEA has also ensured that the supplier agreements
are also designed and signed in appropriate manner. Number of strategies has also introduced by
the specialised division to meet the standards of effective supply chain management. In this
respect, the management of IKEA has also focused on development of diverse global compliance
and monitoring actions which can facilitate the business firm to meet suppliers’ needs in
appropriate manner (Watson, 2012). As per the study of Meijboom (2008) it has found that these
kinds of developments in overall process have direct impact on the business operations at global
level. It is also beneficial for effective management of diverse business operations which can
amend the relationship with suppliers. In this respect, the management of IKEA is also focusing
on effective monitoring and checking of suppliers actions with an assistance of various
independent organisations. It is beneficial for effective accomplishment of sustainability
framework (Slack, 2007). In other aspect, it can be said that the business organization can also
improve the quality of goods at economical price by improved focus on staircase model of
IKEA.
(Source: IKEA's Stair case model, 2015)
In the support of above statement it can be said that the IKEA has classified its staircase
model in various levels. It facilitates in effective selection of suppliers in order to make sure
about quality and environment.
Start up level: It is considered as an initial stage in which IKEA mainly focuses on the
effective identification of key requirements which are essential for production of wood products.
In this determination of suppliers has also been considered in this phase by the management.
Moreover, number of standards is also established by management to ensure about the quality of
goods provided by suppliers (Rotchanakitumnuai, 2013). For example, proper information must
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be provided by the suppliers regarding origin of the wood and type of wood in raw material.
Certification by Forest Stewardship Council (FSC) is also essential in order to reduce some other
issues.
Minimum Requirements: In this, management ensure about the selection of suppliers as
per the reference to national and regional forest legislation. It is beneficial to avoid unethical
business practice and significant to avoid woods which relates with the prohibited areas. It
amends the quality as well as environmental standards within business practice and provides best
selection of raw material.
Wood to Ease Transition: In year 2005 the management of IKEA has developed some
standards regarding wood to ease the transformation (Petersen, 2011). Proper wood-tracking
operation has introduced which ensure about effective procurement process within operations.
Forests certified or responsibly managed: It provides management a great level of
assistance in determination of raw material as per the consideration of diverse stakeholders; such
as social, environmental, and economic stakeholders. It also provides goods as per standards of
forest management and enhances the production process in balanced form (Martella, 2010). It is
also considered as a phase where IKEA provides certification to the management and helps in
effective accomplishment of operations in sustainable manner.
Application of Stair case model in Magna group
As per the above study it can be stated that the management of Magna can also focus on
the stair case model to amend the business operations. It will also provide effective sustainability
within organisation and boost organisational effectiveness (Rotchanakitumnuai, 2013). Magna is
one of leading auto parts manufacturing company so management needs high level of supply
chain to boost organisational effectiveness. In this respect, Meijboom (2008) has argued that it is
essential for management of Magna to have collection of raw material from diverse numbers of
suppliers. With an assistance of Stair case model of IKEA the business organisation named
Magna can have effective outline and selection of suppliers in order to meet the framework of
sustainability. It will also assist the business firm to maintain entrepreneurial heritage and boost
process productivity (Slack, 2007). For example: Megna has used stair case model in
identification of appropriate suppliers for different business requirement that have positive
impact on the quality of automotive parts. It is also beneficial for effective decision making and
lead business to impressive supply chain management. It will also amend the coordination level
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among members and assist in effective design of strategies which will impact positively on the
relationship with diverse suppliers. Magna needs raw material like metal; plastic etc. so using
stair case model selection process of suppliers can be designed in proper manner.
Moreover, number of safety and raw material standards can also be designed by the
management of Magna to ensure that company is having ethical business practices. Number of
other framework can also be introduced as per consideration of environmental aspects (Watson,
2012). Determination of suppliers also need to be taken into account as per these standards as it
will boost production, supply chain and lead firm to successful financial and operational reviews.
4. THE APPLICATION WRAP APPROACH THROGH AUTO PARTS
SUPPLIERS AND CAR MANUFACTURERS CAN WORK TOGETHER
TO INCREASE THE RECYCLABILITY CARS
In current market scenario the business are looking forwards to meet the standards of
recycling and sustainability. In this respect, WRAP’s is business association which operates from
UK and assist business firms to accelerate sustainability in operations. In this organization
focuses on three steps such as re-inventing, re-thinking and re-defining. It is one of most efficient
activity to boost economical success and amend the production in order to meet the consumer
needs (Meijboom, 2008). In other aspect, it is all about re-defining product and uses it in recycle
manner to boost sustainability.
It has been spotted that the WRAP approach boosted the operations of retail sector and
provided number of benefits in form of success. It is also considered as a technique which
business provides business organisations an opportunity to reduce the wastage of resources and
amend the success ratio of firm by recycling end products.
As per the investigation of Lambert (2008) it can be said that the WRAP approach can
also be used by auto parts suppliers and car manufacturers in order to boost productivity and
sustainability. Business organisations can work in collective manner to amend the recycling of
cars to reduce the wastage of resources (Tiwari, 2013). In this respect, it can be said that the re-
inventing factor of WRAP approach will assist the management of Magna automotive to have
effective selection of a car design as well as quality of spare parts used in production. It will also
cut down the wastage of raw material which will impact positively on the overall cost of supply
chain and operations. It provides appropriate selection of raw material which will lead business
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