Mercedes-Benz: Operational and Supply Chain Management Report

This report provides a comprehensive analysis of Mercedes-Benz's operations, logistics, and supply chain management. It begins with an executive summary outlining the key areas covered, including operational and supply chain issues such as logistics costs and product development challenges. The report identifies how Mercedes-Benz utilizes its operational functions to support the market, detailing the service delivery system and manufacturing processes, from design to final product delivery. It also examines the infrastructure used to manage these delivery systems, considering warehouses, transport mediums, and shipping lines, and how this infrastructure supports market needs. The report then offers recommendations for improvement, including establishing manufacturing centers in strategic locations, developing intelligent networking in the manufacturing process, automating delivery, and investing in research and development for new, eco-friendly products. Finally, it applies the triple bottom line model, evaluating economic, environmental, and social factors to assess the company's sustainability practices.

Running head: OPERATIONS, LOGISTIC AND SUPPLY CHAIN MANAGEMENT
Operations, Logistic and Supply Chain Management
Name of the Student
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Author Note

1OPERATIONS, LOGISTIC AND SUPPLY CHAIN MANAGEMENT
Executive Summary
This business report considers the organization Mercedes- Benz and highlights the current
operational and supply chain issues along with the discussion through which Mercedes utilizes
operation functions to support the market. The service delivery system and manufacturing
process will also be illustrated in this report followed by the discussion on which infrastructure
the concerned organization manage these delivery systems and supports the market that they
serves. This report also recommends effective strategies to improve the business performances
and sustainability in business practice incorporating economic, environmental and social factors
of the triple bottom line theory.

2OPERATIONS, LOGISTIC AND SUPPLY CHAIN MANAGEMENT
Table of Contents
1.0 Introduction......................................................................................................................................3
2.0 Discussion........................................................................................................................................4
2.1 Operational and supply chain issue in Mercedes- Benz..............................................................4
2.1.1 Identification of how the operation functions supports the market that it serves.................4
2.2 Service delivery system and manufacturing process...................................................................5
2.3 Infrastructure use to manage these delivery systems...................................................................6
2.3.1 How the infrastructure supports the market that it serves....................................................6
3.0 Recommendations............................................................................................................................7
3.1 Triple Bottom Line Model...........................................................................................................8
4.0 Conclusion.......................................................................................................................................9
5.0 Reference List................................................................................................................................10

3OPERATIONS, LOGISTIC AND SUPPLY CHAIN MANAGEMENT
1.0 Introduction
Bolles and Bolles (2008) depicted that efficient supply chain provide optimization of the
operation and enhance the speed and efficacy of the process in an organization. Supply chain
also reduces the operating cost through decrease in the purchasing cost, production cost and total
supply chain cost. Christopher (2016) furthermore stated that an organization can also improve
their financial position as the profit leverage increases, fixed asset decreases and cash flow gets
enhanced. However, Walker (2014) portrays that problem like inefficient innovation for product
development, location selection for the manufacturing plants, quality management, human
resources management in the supply chain, relationship establishment with the suppliers and
implementing JIT and lean management are the common problem in supply chain management.
Thus, these issue need to be overcome and in this assessment the new product/ service
development and process and location and layout areas in managing operations, logistics and
supply chain will be described for the business process improvement.
This business report considers the organization Mercedes- Benz and highlights the
current operational and supply chain issues along with the discussion through which Mercedes
utilizes operation functions to support the market. The service delivery system and
manufacturing process will also be illustrated in this report followed by the discussion on which
infrastructure the concerned organization manage these delivery systems and supports the market
that they serves. This report also recommends effective strategies to improve the business
performances and sustainability in business practice incorporating economic, environmental and
social factors of the triple bottom line theory.

4OPERATIONS, LOGISTIC AND SUPPLY CHAIN MANAGEMENT
2.0 Discussion
2.1 Operational and supply chain issue in Mercedes- Benz
In recent times, Mercedes- Benz faced the issue of logistics costs due to sourcing of the
car components that is liable for increasingly stretching of the supply chain. The main reason for
the starching of the supply chain is due to travelling of distant parts which put a bigger plan on to
the system resulted in not fulfillment of record demand (Automotive News 2018). Markus
Schaefer, production and supply chain head of Mercedes stated that in some of the division’s
lower-wage plants, supply chain costs exceeds manufacturing the costs (Automotive News
2018). Another issue is the product development of the vehicle by the Mercedes which can meet
the recent demand of the customer like- plug-in hybrid and electric vehicles, fuel and energy
efficient cars and implementing automotive operation in the cars (Automotive News 2018). The
major issue that is involved in this process is to revamp the production process by incorporating
all the necessary requirements and align the business functions with the newly developed
production line.
2.1.1 Identification of how the operation functions supports the market that it serves
Mercedes Benz has a manufacturing factory outside of its German home but many of the
automobile components are still sourced from Europe. The concerned automobile company, have
more than 30 vehicle derivatives and each of the derivatives is developed from several thousand
parts. This European factory consolidate and repack the components from European suppliers
which is then Shifted abroad to Mercedes plants that is in U.S., China and South Africa
(Financial Times 2018). This problem also enhanced another challenge that is delivering the
right part to the right factory within the destined time. The challenge for delivering products to

5OPERATIONS, LOGISTIC AND SUPPLY CHAIN MANAGEMENT
right place seems to be more crucial when an organization ensure that inventories are lean to
control costs.
Mercedes always target premium customers with high-end cars. These cars are well
equipped and have grace, style, safety, performance, efficiency and are a German engineering
marvel (MarsMediaSite 2018). The company provides proficient service and support, tasteful
and efficient innovation, unique artistry and advanced life saving technology. This is the reason
due to which Mercedes Benz maintained a market leadership in major markets like USA and
Germany for the year 2017 (MarsMediaSite 2018). 2.3 million Cars were sold worldwide which
shows 9.9% of increase in unit sales for the year 2017 and also attained All-time best unit sales
in three core regions NAFTA, Europe and Asia-Pacific for the same year (MarsMediaSite 2018).
2.2 Service delivery system and manufacturing process
Mercedes utilize the traditional process to deliver the cars that is the design team plan the
design of the car, release of the design, manufacturing of the component of cars, undergone the
body shop followed by painting and assembling (Harvey 2010). The assembled car then again
goes to the production house and then to the auto yards, from where the involvement of
outbound logistics is included which delivers the final product to the users.
The manufacturing process of Mercedes- Benz starts with robotic hands that cut the
components of the car like window and bonnets, these robots are liable for placing the screws
while assembling the cars to develop the framework of the car. The cars are then sending to other
department where the component of the cars gets attached with the car body using the robots.
The dashboard of the car is then placed which is followed by the process of placing the glasses
on the window (Hannagan and Bennett 2008). The interior of the cars that is making of the seat
spaces and putting all the screws to all the attachments are done manually. The headlights and

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the engine of the cars are then placed all together with the help of robotics hands. The completed
cars are then tested that includes water testing for leakage, scratching test to test the durability of
the car parts and quality testing through field test for the final time so that all its functionalities
can be tested prior selling the car to- the user.
2.3 Infrastructure use to manage these delivery systems
The infrastructure of the supply chain includes warehouses, transport mediums and
shipping lines (Slack et al. 2013). The concerned organization has its warehouses located in
many places across the world. The delivery system is designed to make the supply according to
the need of the customers according to their nation. Taken for instance, Mercedes-Benz does not
provide any rooftop cars for India due to the temperature factors; however, same manufacturing
unit prepares a portable rooftops for the people belong from UK (Heizer et al. 2016). The
transport medium is also based on the area where the cars are being sent to the showroom. Heizer
et al. (2016) highlighted that for cars that is manufactured in nation US and also for the people
residing in US, the delivery is made through trucks and trains utilizing the concept of
piggybacking. However, for the cars that are manufactured for distant nation, Mercedes utilizes
the shipping through containers in ships (Slack et al. 2013).
2.3.1 How the infrastructure supports the market that it serves
The supply chain system is based on the requirement of the people belong from different
nation. The manufacturing unit also contain different conveyor belt for the manufacturing of
same Mercedes model with little change in design of the car based on the nation in which the
final product gets delivered. Hill and T (2011) highlighted that process of delivery shipments
also evaluated based on the different requirement of the nation, where the final delivery has to be
made. In this way, the concerned organization makes delivery of their cars to the users.

7OPERATIONS, LOGISTIC AND SUPPLY CHAIN MANAGEMENT
3.0 Recommendations
Establishing of the manufacturing centre in suitable location
The problem of high cost of supply chain can be reduced by making the manufacturing
plant in the location near the delivery centre. Mercedes can establish similar centers in growth
regions like North America and China in order to diminish the cost of the delivery process.
Developing intelligent networking in the manufacturing process
Mercedes can utilize real-time and radio signal-based tools to save time in bringing the
components parts. Automated robots in the factory can also be utilized for bringing the pre-
sorted boxes of components to the desired position of the assembly line.
Make the delivery through automation
Mercedes Benz can initiate the approach to implement the automation in the delivery
process of the components of the car. Thus, a vehicle enabled with the automated cargo space
management should be developed in which the route mapping plan for the vehicle should be
incorporated. The driverless handling vehicles should be programmed in such a way that it can
load the racks through automated one-shot loading process. Thus, the issue of delivering of the
right components of the cars to the right cargo can be omitted as it is fully maintained
automatically by robots.
Developing new products through research and development
According to the recent demand of the users, people are now more concerned towards the
safety of the environment. Thus, Mercedes- Benz should develop technologies for greener supply
chain and developing energy efficient cars. Mercedes can aim for developing new models based
on plug-in hybrid, electric models and electric cars that can diminish the problem of fuel usage.

8OPERATIONS, LOGISTIC AND SUPPLY CHAIN MANAGEMENT
3.1 Triple Bottom Line Model
He et al. (2018) stated that the triple bottom line comprised of economic, environmental
and social factors. The economic factor comprised of employment, growth and revue;
environment factor comprised of consumption, use and management and lastly, the social factors
comprised of fair trade and employee welfare.
Economic- The development of more manufacturing plants will improve the employment
to thousands of the people. This will help the organization to contribute some effort in economic
growth of the host nation. Moreover, the cost saved from the transportation of the components
through the supply chain process contributes to the enhancement of the annual revenue for the
concerned organization- Mercedes Benz.
Environmental- Mercedes- Benz has taken the intuitive to plan for developing energy
efficient cars. The research and development team researched on the fuel through which less
carbon emission will be occurred and the approaches to develop electric cars with battery that
can make the car run longer compared to other industry in order to gain competitive advantage.
Process of recyclability and recoverability along with the development of process for reducing
the noise emission is also adopted by the concerned organization.
Social- Since, Mercedes Benz initiated to plant their manufacturing units in the nearby
places of the distribution centre and ship their plants to the distant location from ship. This
trading includes the process of custom clearance and effective supplier relationship that develop
the fair trade for the business. The employee, who works for the organization if asked to be
expatriate to the host location, the concerned organization that is Mercedes Benz should provide
effective benefits including the welfare need of the employees.

9OPERATIONS, LOGISTIC AND SUPPLY CHAIN MANAGEMENT
4.0 Conclusion
Thus, it can be stated that this report highlighted the current operational and supply chain
issues along with the discussion through which Mercedes utilizes operation functions to support
the market. The first issue that is found is regarding the logistics costs due to sourcing of the car
components that is liable for increasingly stretching of the supply chain. The second issue that is
illustrated in this business report is that the product development of the vehicle by the Mercedes
cannot meet the recent demand of the customer like- plug-in hybrid and electric vehicles, fuel
and energy efficient cars due to improper planning. Thus, these two problems highlight the
location and new product innovation for Mercedes Benz. It is furthermore reported in this
assessment the service delivery system and manufacturing process in Mercedes is obtained based
on the design demand in the nation, where the final car have to be submitted. This discussion of
the report is followed by the discussion on which infrastructure Mercedes Benz manages these
delivery systems and supports the market that they serve. Thus, it is found from the report that
the company utilizes the establishment of the different warehouse in different location for
fulfilling the need of the users. The shipment transports are also selected based on the location of
the distribution. Taken for instance, to deliver the vehicle in the nearby places, trains or trucks
are utilized; while, for delivering the completed vehicle to the distant places, ships and containers
are used. Lastly, this report also recommends effective strategies to improve the business
performances and sustainability in business practice incorporating economic, environmental and
social factors of the triple bottom line theory.

10OPERATIONS, LOGISTIC AND SUPPLY CHAIN MANAGEMENT
5.0 Reference List
Automotive News., 2018. Mercedes revamps supply chain, logistics to trim costs. [online]
Available at: http://www.autonews.com/article/20150719/COPY01/307209957/mercedes-
revamps-supply-chain-logistics-to-trim-costs [Accessed 3 May 2018].
Automotive News., 2018. Daimler revamps Mercedes product development. [online] Available
at: http://europe.autonews.com/article/20120521/COPY/305219862/daimler-revamps-mercedes-
product-development [Accessed 3 May 2018].
Bolles, M.E. and Bolles, R.N., 2008. Job Hunting Online: A Guide to Using Job Listings,
Message Boards, Research Sites, the Underweb, Counseling, Networking Self-Assessment Tools,
Niche Sties (Job Hunting on the Internet (Online)). Ten Speed Press.
Christopher, M., 2016. Logistics & supply chain management. Pearson UK.
Financial Times., 2018. Daimler vows “transparent” cobalt supply chain amid child labour
concerns. [online] Available at: https://www.ft.com/content/454e9558-4e14-11e8-a7a9-
37318e776bab [Accessed 3 May 2018].
Hannagan, T. and Bennett, R., 2008. Management: concepts & practices. Pearson Education.
Harvey, J., 2010. Complex Service Delivery Processes: Strategy to Operations. ASQ Quality
Press.
He, Q., Ghobadian, A., Ramanathan, R. and Gallear, D., 2018. Managing knowledge in supply
chains: a catalyst to triple bottom line sustainability. Production Planning and Control.
Heizer, J., Render, B., and Munson, Ch., 2016 Operations Management (12th Global Ed) New
Jersey, Pearson Education Inc.
Hill, A. and T. Hill., 2011 Essential Operations Management, Hampshire: Palgrave Macmillan

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MarsMediaSite., 2018. Mercedes-Benz in 2017: Number 1 in the premium segment |
marsMediaSite. [online] Available at:
http://media.daimler.com/marsMediaSite/en/instance/ko/Mercedes-Benz-in-2017-Number-1-in-
the-premium-segment.xhtml?oid=32692930 [Accessed 3 May 2018].
Slack, N. Brandon-Jones, A. Johnston, R., 2013 Operations Management (7th Ed). Harlow:
Pearson Education Ltd.
Walker, H., 2014 Sustainable Operations Management, Bradford, England, Emerald