Business Logistics of Jaguar Car Company - Essay Example

Business Logistics: Jaguar Car Company Insert Insert Grade Insert Business Logistics: Jaguar Car Company Introduction Rapid globalization agenda has made business logistics a more complex but essential component of daily operations of firms (Langford 2006). For efficient and effective production, delivery and storage companies have to adopt more pragmatic ways of process and material flows. This paper examines the logistical components of one of the most automobile brands in the United Kingdom and word over – Jaguar cars. Based on the establishment of two household brands; Jaguar and Land Rover, the company has been in operations for a period of more than 60 years. Its main specialization has been the manufacture of sport cars and high-end saloon cars (Jaguar Land Rover 2012). Among its many achievements, the company boasts of being the largest employer in the industry it operates in besides being a leader in the area of research and development judging by the nature of investment it has made in the recent past. Moreover, Jaguar is also one of the leading exporters of manufactured vehicles from the United Kingdom with the company claiming an 80% stake in the country. Some of the major world destinations its brands have been exported to include China, the United States, Germany, Russia and Italy. The company has seen many changes and since the year 2008, it has come to be owned by Tata Motors Limited. Its strategic approach has been based on a sustainable development policy, which has meant that the company has to integrate its strategic decision making with the goal of remaining responsible and ethical to all stakeholders and the society as well as the environment affected by its operations. On the financial front, the company’s overall results have remained impressive with the group announcing a pre-tax profit of £ 1,507 million in March 2012 (Jaguar Land Rover 2012). In the area of logistics, the company has been on a massive expansion and therefore the scope of its operations has diversified in the recent years. To sum up the extent of its operations, the automotive giant has three manufacturing plants in the United Kingdom in addition to its two product development sites. The company’s investment portfolio therefore requires that it is able to appropriately manage its process flows and integrate modern logistic concepts in its day-to-day operations so that it remains to be a leader in the industry. To begin, it is important that we examine the existing operational flows in the company. Existing Process Flows With competition and technological advancement the key drivers, most manufacturing firms in the United Kingdom and elsewhere in the world have been re-engineering its processes to be able to attain total quality management goals. Some of the efforts have been directed at waste elimination, defect free production, environmental sustainability and organizational performance excellence. In line with this, Jaguar has made concerted efforts to transform its production lines for greater performance and conformance to international standards and requirements. To be able to comprehend the extent of operations in the company, it is important to briefly examine the company’s main manufacturing site development history. Of the three manufacturing plants in the United Kingdom belonging to the organization, the 1390 hectare Halewood site is a major manufacturing hub. The site has been gradually upgraded to become one of the best in the world. The main motivation for the various facility overhauls and improvement has been to ensure that quality is rapidly enhanced and a lean manufacturing approach is integrated into the company’s operations and process flows. Lean manufacturing is a concept that is intended for increasing efficiency through standardization of processes and elimination of duplication and wastage in the company. The company’s main manufacturing plant has a capacity of a massive 100,000 vehicles per year. Some of the facilities that have made the Halewood plant an excellent manufacturing site include the press shop, paint shop, body construction line and the trim and final lines. In addition, the company’s supplier park is adjacent to the manufacturing site. Supplier parks are great logistical facilitators for automobile facilities world over (Czuchry et al 2009). This therefore indicates the intent of the company’s management to remain logistically competitive in an industry that is sensitive to timing and efficiency. Any organization that operates brands for the purposes of worldwide distribution must be able to take into consideration the various areas of business logistics that make it possible for sourcing of raw materials, processing and distribution in the value chain model. Jaguar Land Rover group is engaged in various processes as of any firm in the capital-intensive automobile industry. The company’s core processes in the manufacturing plant and in the external operations include transport planning, packaging design, project management, lean production and vehicle distribution. The company does not handle the processes alone but has been able to partner with other related or support organizations. Third party logistics providers are particularly contracted by this company to ensure that distribution and other value addition processes of the supply chain are enhanced (Voortman 2004). A good example is DHL that has been handling the company’s secondary processes mainly in the global supply chain. A characteristic feature of process flow in the company’s main manufacturing plant is modularity. This is the process by which complex or sophisticated products are made or developed as a result of build-up of other independent but closely functioning sub-systems (Fredriksson 2006). In other terms, the process flow in the company is a highly interconnected or multistage network whereby parts are gradually built and joined together in independently working automated systems that are constantly monitored and controlled by assembly operators for perfection. Generally, the assembly point through such systems are able to reduce lead times, lower the work-in process and decrease the walking distance for assembly workers. The flow in the assembly or manufacturing plant therefore ensures that parts and materials are systematically and promptly arranged to build complex bodies that result in a top of the range sports car or a luxury saloon car. The assembly will on either way depend on other factors that are internally or externally controlled. For instance, the plant will need a constant supply of materials for the various components that need to be sourced from far-flung destinations across the world (Bennett and Klug 2012). On the other hand, the finished product, say a Jaguar XF, will need to be delivered to a customer that may be in north America. All these are to take place with a close consideration of customer expectations and at the right time. Consequently, the company’s process flow is enjoined with inbound material supply chains as well as the outbound distribution process. On one hand, inbound materials are sourced from different locations through shipping and are also dependent on the company’s plant infrastructure. On the other hand, outbound logistics will involve packaging, storage, consolidation and international freight plans. All these three connecting processes must flow smoothly for the attainment of efficiency and high performance. Since competition is intense in the automobile industry, the process flow is therefore an important element of a company’s operations. As a result, the company’s internal and external process maps are subject to appropriate analysis as shall be done in the following section. Internal and External Process Maps The company follows a standard PPAP. It is divided into four stages namely: run-at-rate, quality verification, production verification and capacity verification (Jaguar Land Rover 2010). The first stage, also referred to as phase 0 is the stage where all requirements are confirmed to be available. This is done against the pre-launch control plan. The materials are checked against the pre launch control plan. The next stage is phase 1 that uses the materials verified in the previous phase 0 to ensure that the customer requirements and specifications have been met accordingly. Phase 2, which is the production verification stage, ensures that all the design specifications as well as other requirements are well comprehended by the supplier so that the final product is faultless or does not omit any detail. Finally, phase 3 which is the capacity verification stage assists the company to ensure that it has the resources and space to cater for the needs of the customer. This is a critical stage because it helps to eliminate the risks that are associated with underestimation of production plans. The process maps therefore are a subject of customer constraints because quality demands that customer requirements are constantly met and even surpassed for attainment of excellence in performance (Hertz et al 2011). In terms of logistical flow, the organization will have to receive orders, source for the required products in their right proportions and specifications (Jaguar Land Rover 2010). The next stage will be the process flow as described above and thereby delivery will be undertaken immediately. The company mostly uses contemporary logistical practices such as the JIT (Just in time) production for maximum revenue as a result of reduced wastes and operational efficiency. The following diagram illustrates the internal process flow map as utilized by the company. External process flow map Company’s Analysis This section explores the company’s operations through a SWOT matrix analysis to highlight the various advantages or disadvantages that it might hold in the industry currently and in the future. A SWOT analysis looks at the company’s strengths, weaknesses, opportunities and threats in the external and internal environmental orientation in which it conducts its business. Whereas the strengths are internally generated and may have influence on the opportunities presented by the external operational environment, the weaknesses if not closely examined and eliminated may directly contribute to the firm’s vulnerability to external threats. To begin, Jaguar Land Rover group (JGL), has been an industry giant especially in the United Kingdom and its dominance is unmatched given its long heritage in the country and in other European nations. The jaguar brand has been a leading household name in the region that is one of its greatest strength. Secondly, the company has received a lot of recognition in the automotive market. As a result, the company has in the process earned loads of awards including the Gear magazine awards and the 2009 fleet world honours. In addition, the company has advanced in technology and has been able to optimize its operations using a state of the art facility for assembling and new product development (Mortimer 2006). The company has also been lauded to have done well in the area of research and development as indicted by its massive investment in that area. These have been the key strengths of the company that have made it withstand competition in the United Kingdom and impose itself as a world leader. On the external environment, the company has continued to have opportunities that may be exploited for a competitive advantage. A good opportunity has arisen in the emerging markets of the Asian market that has been a revolutionary force in the world economy today. For example, the Chinese and the Indian market present a good customer base for the industry in which the company operates in and therefore the company should look into investing in that market. Technological innovations have also brought new opportunities for the industry. For instance, in line with the company’s vision of sustainability, there have been innovations geared at developing products that are more energy conserving and environmentally sustainable (Ganaway, Sammy and Smith 2003). With growing concerns and rapid consumer awareness on climate change issues, this technological shift should therefore be to the advantage of the company. The company should therefore take advantage of its prowess in research design to explore ways of best approaching the issues stated in the discussion above. Despite being a leader in the automotive industry in the United Kingdom, the company still has to deal with several weaknesses. First, the company is yet to fully penetrate the international market as its global competitors have done. As a result, it has been weak in terms of the way it is coping with global market competition from internationally acclaimed brands like Mercedes, BMW and Toyota among other brands. The company’s image has been tampered with because of the likely defaults as a result of the recall of its vehicles in the year 2003 because of a highly corrosive brake pipe. With these weaknesses come the threats from the external environment that the company will have to deal with. As have been mentioned earlier, good portions of the company’s products are meant for the export market. This provides a risk for the company in two dimensions. First, the global economic climate has been faced with a lot of turbulence that has raised operational and logistical costs. Second, currency fluctuations and differentials of the export destinations mean that the company may be at risk of missing revenue. Another area that has posed a threat to the company has been the area of legislation mostly dealing with emission of gases that may be harmful to the atmosphere. However, with the sustainability approach the company has taken, this threat remains at minimum levels. Way Forward The analysis and discussions above have highlighted the company’s operational shortcomings as well as the strengths of the company. One of the main areas than cannot be ignored by the company is that of internationalization. The company is highly dependent on export business even though it is yet to fully develop its international presence. This paper recommends that Jaguar Company develop its global presence through new market penetration as well as the development of the existing markets. This can be done through entry strategies like partnerships and strategic alliances as have been employed by the competing firms in the industry. The research and design of the company is highly developed and equipped to carry out this function. It is therefore essential that the company plans for a future internationalization strategy through allocation of resources needed. This may have legal and economic implications because of the size of investment to be used and different regulatory arrangements of the countries to be invested into. The company should also check on its production by diversifying into the lower middle class driven market segment. In this way, the company may develop relatively cheaper vehicles that target the middle class that have become a good market for cheaper vehicles. This will help in the diversification of markets which will go a long way in developing the company’s penetration into newer market segments. In terms of logistical issues, the company should strive at increasing its efficiency by getting involved with more third party logistic providers especially in the areas that are yet to be reached. This may involve a lot of research that may have to cost the company a lot of time and resources even though it is likely to benefit the firm in the long run. The company has done a lot in the United Kingdom and it is no wonder it has been a leading brand name. It should however replicate this good name in other countries starting with the Asian markets as well as the European markets. This can be made possible by a massive promotion campaign strategy that will take advantage of the company’s already established name in the market. Financial implications may be the main limitation of this plan but is easy to recognize that it will result in more sales and brand recognition, which is good for a competitive advantage for the company. Conclusion As a conclusion, the company as a leader in the automobile industry terms of manufacturing of luxury cars is a good position that any company may want to emulate. The expansion strategy adopted by the new owners- Tata industries is a good concept of ensuring that the company continues to impose its dominance as well as manufacture quality products for the benefit of consumers. The sustainability policy of the company is also another good initiative owing to the fact that consumer groups have in the recent past been more environmentally conscious. The company must however ensure that its sustainability efforts do not derail its overall performance in terms of building stable components. The logistical challenges faced by the company are because of its lower interests in the field of internationalization and therefore it should be able to review its stance on industrialization if this objective is to be achieved. The company should also be able to venture in mass car production to target lower end segments so that it is able to take advantage or the economies of scale presented by this arrangement. When the details of this report are closely examined, the company is likely to move forward as a main manufacturer and supplier of quality and affordable car. The industry in which it operates in has been characterized by high competition and rivalry, which will continue to be intense and therefore the need for a more concerted approach. Bibliography Bennett, D and Klug, F., 2012. Logistics Supplier Integration in the Automotive Industry. International Journal of Operations & Production Management, 32, (11), 1281-1305. Czuchry, A. et al. 2009. Enhancing Organizational Effectiveness through the Implementation of Supplier Parks: Case of the Automotive Industry. Journal of International Business Research, 8, (1), 45-61. Fredriksson, P. 2006. 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Assembly Automation, 26, (2), 115-120. Voortman, C., 2004. Global Logistics: Management. Lansdowne Cape Town: Juta and Co. publishers. Read More