Detailed Analysis of Global Supply Chain Strategy for Magna Company

This report provides a detailed analysis of Magna's global supply chain strategy, focusing on various aspects of supply chain management within the automotive industry. The report begins by exploring the adoption of the CPFR (Collaborative Planning, Forecasting, and Replenishment) model and its advantages in working with OEM customers. It then examines the crucial role of a tier 1 supplier in ensuring the quality of final products, emphasizing the importance of direct relationships and adherence to quality standards like ISO/TS16949. Furthermore, the report investigates the application of the Staircase Model and value stream management concepts, along with strategies for increasing the recyclability of end-of-life cars through approaches like WRAP. The study highlights how auto parts suppliers and car manufacturers can collaborate to enhance sustainability. Overall, the report provides insights into supply chain management processes, emphasizing the benefits of effective collaboration and strategic planning for optimal performance within the automotive sector, specifically focusing on Magna's operations and strategies.

GLOBAL SUPPLY CHAIN STRATEGY

TABLE OF CONTENTS
INTRODUCTION......................................................................................................................1
TASK 1......................................................................................................................................1
Adoption of CPFR to work and OEM customers as well as its advantages..........................1
TASK 2......................................................................................................................................4
Role of a tier 1 supplier in safeguarding the quality of final products...................................4
TASK 3......................................................................................................................................6
The Staircase Model of IKEA................................................................................................6
Application of Stair Case Model in Magna Group................................................................7
TASK 4......................................................................................................................................8
How auto parts suppliers and car manufacturers can work together to increase the
recyclability of end of life cars by using the approach of WRAP to the retail industry in
UK..........................................................................................................................................8
Value stream management concept......................................................................................10
TASK 5....................................................................................................................................10
Solving quality related problems.........................................................................................10
CONCLUSION........................................................................................................................11
REFERENCES.........................................................................................................................13

LIST OF FIGURES
Figure 1CPFR Model.................................................................................................................2
Figure 2Manufactruing Supply Chain........................................................................................5

INTRODUCTION
Supply chain management can be defining as a flow of management among diverse
organization. In includes several activities for coordinating, integrating appropriate flow
between suppliers to manufacturer to wholesaler to retailer to consumer. All those
organizations which are highly focused with the uses of services from another business
organization of overseas market require focusing on their supply chain management (Shah,
2009). With the help of this, business firms can easily manage their business operations in a
more effective manner and overcome with all the existing issues.
Moreover, Logistics is one of the most critical sections of supply chain which mainly
provides high level of assistance in several management functions. In this regard, it can be
stated that global supply chain management is highly focused with the integrated work. At
the time of using this management companies can easily meet out the needs and demands of
their customers (Packowski, 2013). They can provide them easily accessibility to resources.
Further, global supply chain is a process which helps in managing all the resources globally.
The present study is based on the same concept and how it helps the firms in managing their
business process. All learning will focus on the various advantages of CPFR to work with
their OEM customers to achieve optimal performance.
Whole study will incorporated on the basis of Auto parts supplier Magna Company.
They are the leading automotive supplier with 285 manufacturing operations as well as various
other product development processes in 29 countries. Company is highly focused with providing
innovative services to their customers and wants to become world class manufacturer. The main
vision of company is to become customer’s preferred global supplier’s partners for the
automotive industry. As per this organization, the total report will give deep insights about the
role of a tier 1 supplier in safeguarding the quality of final products. Further, it will also
determine that staircase model can be used by company for better sustainability in competitive
market (Lowson, 2004). However, the whole study gives deep insights about the supply chain
management process.
TASK 1
Adoption of CPFR to work and OEM customers as well as its advantages
Magna is a global leading automotive supplier company which is currently serving
their business operations in almost 29 countries. They mainly strive to be the employer of
choice and long term investor firms all the shareholders. It is one of the main aims of
company to deliver original parts to their customers and maintaining better relations with
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them (Bowersox, Closs and Cooper, 2002). Moreover, they are highly focused with their core
values i.e. world class manufacturing, commitment to innovation, investment in our people,
customer satisfaction, integrity etc. (Lin and Ho, 2014).
In order to maintain their profit margin as well as current growth it is necessary for
Magna to have an effective supply chain management. In this whole process, they must have
to focus on the equipment delivery and it should be on the basis of original equipment’s. For
the delivery of original equipment’s at the time of manufacturing company can adopt CPFR
model (Karlsson and Voss, 2009). It is known as collaborating, planning, forecasting and
replenishment stages. This is the best model of boosting the supply chain process of company
by providing appropriate framework for information flow of goods and services.
Figure 1CPFR Model
Nowadays, most of the organizations are facing huge competition due to the
increasing globalization. It is the most common reason which provides number of benefits to
business organizations by improving their whole work conditions (Gadde and Hakansson,
2001). This is the best process through which Magna can develop its supply chain process
more effectively by concentrating on large number of customers. The major focus of this
model is on the consumers. It considers that buyer and sellers collaborate at every level and
exception management is systemized in the whole process.
In addition to this, Magna can use this model in order to increase the availability to
customers while reducing inventory, transportation and logistics costs (Bååth, 2008).
Collaboration is the major factors which enhance the collaborative working practices of
employees. In this regard, suppliers and client can perform all their business operations
together and enhance the performance of company as well. Further, appropriate order
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planning can be done in the management of Magna and it helps in reducing the number of
risks relates to supply chain as well (Waters, 2010). By reducing the existing risks company
is able to implement manufacture and produce and better automobile parts and go through its
proper distribution.
CPFR model is nowadays used by most of the companies so that they can work in
collaborative manner with their OEM (original equipment manufacturer) to make a
subsystem as well. It is the most effective way through which OEM can easily understand
about the requirements of all their customers and go with the effective production of
automobile parts (Varley, 2006). They can rebrand their products and sell it to their end
customer as well.
A customer of Magna demands for the delivery of original equipment’s within a
desired time. In order to fulfil all these needs it is essential for management team to adopt
CPFR model. It is the most effective process of improving relationship between supplier and
manufacturer. With the help of this activity company is able to achieve their objectives and
highly focused with providing innovative services to their customers as well (Petersen, Aase
and Heiser, 2011).
By effectively using this model, Magna is able to follow processes, technologies and
the supporting standards that allow continuous exchange of information between trading
partners. Moreover, with the help of commonly used 4 steps company can make effective
collaboration between supplier and manufacturer so that they can work together and fulfil
their customer’s needs. There are mainly CPFR model among which best suitable model can
be used by company such as:
Basic CPFR: As far as this mode is used, a limited of business processes are
integrated between a limited numbers of supply chain partners (Russell and Taylor,
2008).
Developed CPFR: This model involves the exchange of greater number of data
between two partners. By using this mode, suppliers can take full responsibility for
replenishment on behalf of their customers (Tang, 2011). It helps in fulfilling the
desired needs and demands of their customers.
Advanced CPFR: Under this model, synchronization can be done through appropriate
coordination and replenishment process as well.
However, by using this CPFR model value chain partners can coordinate different
plan in order to reduce the variance between supply and demand. It is the most effective way
through which they can share their benefits as well. Further, Magna’s OEM customers are
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able to share significant information with each other in order to achieve their objectives
(Meijboom and Vos, 2008). It provides several benefits to company as they are able to give
better response on the basis of their customer demands.
Effective distribution and accessibility of automobile parts highly helps to OEM
customers will provide effectiveness to final production of goods. There are various car
manufacturer companies in UK who are accessing the services of Magna. By using the CPFR
model Magna is able to manage its supply chain and make appropriate delivery on time to the
UK dealers (Chang and et.al, 2007). With the help of this fast and effective process total
production process of different UK car manufacturers can be boosted and it is highly
beneficial for Magna as well as its OEM customers.
Further, it can be stated that CPFR process is one of the most effective model used by
most of the companies in order to enhance their accuracy and market share (Carter and
Rogers, 2008). It also gives higher benefits to trading partners also and maintains this with
circular entries as well. For the better sales and advanced production of end goods and
services Magna need to put right product at right time in right place as well. The total
inventory system of also attain higher advantages by decreasing the safety stock in their
whole process.
In addition to this, it can be stated that OCM customers’ needs can be easily fulfilled
by the company by accurate forecasting and effective aligning of the production schedule.
Moreover, low cost acquisition of auto mobile parts helps the effective production of final
goods (Flynn, Morita and Machuca, 2010). As per this whole discussion, it has been founded
that CPFR model has proven to be so much beneficial for companies supply chain
management and also provide higher improvement in their product developments.
TASK 2
Role of a tier 1 supplier in safeguarding the quality of final products
One of the most essential tasks for every organization nowadays is to maintain high
quality of all their products and services. A 1 tier supplier plays a major role in maintaining
the quality of products and services. Here, 1 tier supplier is a manufacturer who directly
supplies the products to business without dealing with any type of middleman. Magna is
maintaining direct relationship with each other and they do not have any middle man in their
total dealing process (Choon Tan, Lyman and Wisner, 2002). For this whole process,
commitment is the major concern which is needed by international auto mobile manufacturer.
Further, it is the most effective way of developing better trust among all the partners in
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context of overall design. This one tier structure has proven to be very successful for firms as
it follows different quality standards such as ISO/TS16949. By following these quality
standards firm can allow having certified manufacturing of parts and maintain the quality of
products as well.
Figure 2Manufactruing Supply Chain
(Source: Supply Chain Analysis, 2014)
Within the automobile supply chain, tier one plays a major role in safeguarding the
quality of final products. This sector is technically most capable sector in the supply chain as
they supply critical components. They highly go through the established process for
managing suppliers in the tiers preceding them. In addition to this, Magna uses this concept
nowadays as it requires proper responsibility for the designing and manufacturing of various
modules such as interior lighting systems, fuel delivery as well as braking system. However,
it can be determine that by using this process company can redevelop their structure and
boost their supply chain process by providing quality services to end customers. It also helps
in maintaining direct interactions with OEMs and providing them appropriate and quality
services (Minis, 2011).
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It has created a huge number of values for all the customers and OEMs such as
increasing customer vehicle safety as well as delivery of better system performance. In
addition to this, Magna can easily go through the increases pace of innovation as well as
systematically improved costs. The total quality of the final products depends upon the
quality of auto parts supplied by tier one suppliers. By using tier one approach Magna can
easily satisfy the needs of customers through the more technologically developed products.
Magna is one of the largest tier one suppliers and they provide wide range of manufacturing
services by complying with the ISO/TS16949 standards.
Further, with the assistance of one tier supplier a direct relation can be maintained by
Magna and all the automotive suppliers can also have focus on manufacturing of diverse
models in better way. This model is highly focused with meeting all the quality standards as
well (International supply chain management). All the OEM traders can make direct contact
with the management team of Magna. With the help of this, they can ensure about the quality
of spare parts and retain their customers by gaining their trust level. This approach has helped
them towards attaining high quality and innovation has made Magna one of the world’s most
favourable choices as auto parts suppliers. By this approach they are able to directly
communicate with their OEM customers and understand their needs. Due to this, quality of
final product is reflected by the Tier 1 supplier approach and it helps in safeguarding the
quality of final products as well.
TASK 3
The Staircase Model of IKEA
The Stair Case Model of IKEA has proved to be very beneficial in maintaining long
term business relations with the suppliers. Taking this into consideration the organization has
established a specialized cell under which relation with the suppliers are managed according
to the norm sustainability. This department holds the responsibility related to managing and
monitoring the suppliers. It has developed various strategies to make sure that it meets all the
requirements of the business. Along with that management of IKEA has also established
compliance and monitoring group at global level to ensure various developments and
operations (Siler and Maidment, 2010). It plays an active role in managing all the business
activities with different suppliers.
With regard to sustainability, the management of the organization always keep the
right to examine suppliers by taking the support of independents firms. According to the
norms of sustainability, the approach has found to be very effective in selecting the best of
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suppliers for the business. It helps the managers in finding out the best quality material within
good price. Through the help of staircase model, company has able to make good selection of
appropriate suppliers who can provide wood (Chang and et.al, 2007). It offers safety and
protection to the environment and forestry. It contributes towards enhancing the goodwill of
the company. The Stair Case Model consists of four models which play an important role in
the selection of suppliers and maintaining a high quality supply chain management. The four
levels can be described as follows:
 Start-up level – At this stage, IKEA identifies the basic formalities which are
required to be fulfilled by the suppliers before starting the business with IKEA. For
instance suppliers must know about the origin of the wood and the region within a
country the wood originates. The high value tropical tree species are required to be
certified according to the Forest Stewardship Council (Lin and Ho, 2014). These
standards help the organization in maintaining ethical business practices with the
suppliers.
 Level 2 – Minimum Requirements – As per this level, IKEA performs trading with
only those suppliers of wood which are being produced with regard to national and
regional forest legislation. It helps in offering protection to the forest and also ignores
trading of such kind of wood which is produced from the protected areas. Therefore a
high amount of safety is ensured in the tropical and subtropical regions. The standard
is very effectual in choosing the best raw material for the business.
 Level 3 Wood to Ease Transition – This standard was developed by the organization
in the year 2005 for the suppliers so that transitions from Level 2 to Level 4 can be
made easy (Waters, 2010). It focuses on use of wood tracking procedures. In this
manner the company’s management succeeds in making proper gaining within
production. This ignores wastage of resources
 Level 4 Forests certified or responsibly managed - This section of the model helps
the organization in ensuring the forest management. The balance has been tried to
achieve between social, environmental and economic stakeholders. At present FSC is
the only level 4 certification determined by IKEA. It offers high amount of help in
handling of the business operations.
Application of Stair Case Model in Magna Group
The Stair Case Model is also applicable in Magna Group of companies. The group is
expertized in supplying of automotive parts and products. The management needs to collect
raw material from different suppliers. On the basis of sustainability, this model of IKEA
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provides assistance to the management of Magna so that they can identify the best of
suppliers for the business. This is because Magna is responsible for maintaining the
company’s entrepreneurial heritage (Delfmann, 2007). It is achieved through taking active
support of decision making at the operational level. These decisions are taken on the basis of
very coordinated strategies and processes. In this way company is able to maintain effective
relations with different suppliers. Organization takes wide range of raw materials such as
metal, plastic etc from different types of suppliers. The management of Magna group is able
to develop some basis criteria at the time of selection of suppliers according to the different
levels of Stair Case Model.
This technique offers the chance to the managers in selecting more valuable suppliers
for the company who are offering wide range of raw materials. This ensures safety of
environment along with the ethical business practices. The business group has identified
some standards which are taken into consideration by the company while the course of
selection of suppliers (Bowersox, Closs and Cooper, 2002). These are follows:
 Certification to the ISO/TS requirements
 Evaluation of successful financial and operational reviews on on-going basis
 Commitment of the supplier towards the Commodity Cost Models
It helps in managing the culture of regular enhancements and on-going innovation. In
this manner healthy business relations have been maintained between Magna Group and
suppliers.
TASK 4
How auto parts suppliers and car manufacturers can work together to increase the
recyclability of end of life cars by using the approach of WRAP to the retail industry in UK
WRAP is a Worldwide Responsible Accredited Production firm which is mainly
focused with the accelerating the move to a sustainable and resource efficient economy. They
mainly focus on the approach of re-inventing and related to any type of design. Moreover, it
helps in defining that company can go through the total recycling process where they are able
to develop more effective parts (Skjoett-Larsen, Thernøe and Andresen, 2003). Mainly there
are three approaches of WRAP i.e. re-inventing, re-thinking and re-defining.
These are the major elements which are used by different retail firms dealing with
clothing and food products. Moreover, it has been founded that this is the most effective
approach which helps in increasing the recyclability of end products.
With the help of using this approach suppliers and manufacturers can the work together. First
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