Jaguar Land Jaguar Land Rover Automotive PLC - Term Paper Example

Jaguar Land Rover Lecturer Table of Contents Table of Contents ii 0 Introduction 2.0 The Impacts of Outsourcing on the Jaguar Land Rover Business 2 The outsourcing helps the business achieve its objectives and targets (Bailey et al. 2010). As such, the Jaguar Land Rover approaches the future with enthusiasm and determination. The company has developed a culture of service to its customers and it has learnt how to connect with their customers especially to today’s digitalized world (Keytree, 2014). The company is realizing the cost reduction target it set first when decided to outsource some of its services (Reynolds, 2012). The company has cut the operational costs by £1 million. In addition to cutting costs, the costs of the parts it purchases reduced by £1.7 million. It has also been able to simplify stock holding and brought them down to £8.9 million from staggering £40 million. The overall net effect of the above savings is decrease in production costs of every component (vehicle) by £34 (Reynolds, 2012). It has been able to free up its real property for process of manufacturing vehicles. Therefore, Jaguar Land Rover has not only been capable of improving its supply chain but also to deliver fantastic savings on costs. Importantly, Jaguar Land Rover has been able to increase customer satisfaction (Reynolds, 2012). 5 3.0 Risks and Benefits 6 4.0 Outsourcing Plan 8 5.0 Suggestions and Recommendations 9 Jaguar Land Rover 1.0 Introduction The company trades as “Jaguar Land Jaguar Land Rover Automotive PLC”. It is a multinational company manufacturing and selling vehicles globally. Its headquarters are in Whitley, Coventry in the United Kingdom. The chief executive officer of Jaguar Land Jaguar Land Rover Company is Ralf Speth. Jaguar Land Jaguar Land Rover company is the largest automotive manufacturing business in the United Kingdom. The company manufactures the automotives around two iconic car brands from the United Kingdom. These iconic car brands are Land Rover and jaguar. Land over is a world’s top producer of finest all wheel drive automobiles. Jaguar is a world leading premier luxury sports car and sports saloon car Marques. Jaguar Land Jaguar Land Rover brings together these two highly prestigious and much loved brands of cars. Tata Motors acquired Land Rover and jaguar companies from Ford Company in 2008 and later merged them in to a single automotive manufacturing company. Jaguar Land Jaguar Land Rover has been successful and it has been flourishing with innovative technologies and memorable vehicles that add to the companys extensive enduring legacy of unique automotive manufacturer (Woolley & Grice 2013). Jaguar Company started in 1922 as a motorcycle sidecars manufacturer. Now, the company name was Swallow SideCar Company. It started to manufacturer automobiles and moved its base to Coventry, after moving to Coventry, Swallow SideCar altered its name and rebranded to Jaguar after 1945. It produced sports and saloon cars that included legendary XK120 premium car (Bibby 2011). Jaguar Land Jaguar Land Rover has worldwide expansion with extensive connection of dealers and experience centres. The company is experiencing growth in its global sales and therefore it is increasing expansion of global presence. The company has local assembly plants in Pakistan, Kenya, Malaysia, and Turkey. In addition, Jaguar Land Jaguar Land Rover has development and testing centres in Minnesota in US, Nurburgring in Germany and in Dubai. This is in addition to the well-established partnerships around the globe. Currently, Jaguar Land Rover wants to venture in to the Saudi Arabian market, it has signed an intent letter clearing the way for partnerships. Jaguar Land Rover is performing a study to determine the viability of the market in order to weigh up set an automotive facility. Jaguar Land Jaguar Land Rover company has several outsourcing agreements with different companies and organisations for supply of various services. Jaguar Land Jaguar Land Rover has an agreement with GXS Managed Services for supply of scalable and flexible infrastructure to facilitate the company to maintain its working relationship with its more than 850 EDI (electronic data interchange) suppliers around the globe. As such, GXS Managed Services provides business-to-business outsourcing services to Jaguar Land Jaguar Land Rover Company. The company also outsources its material stores to boost its savings. It outsources its materials that it uses for engineering at some of its well-established facility in the United Kingdom. The aim of outsourcing the engineering materials is to its management of stocks as well as makes more savings. The company also has an outsourcing agreement with IBM for supply of internal business information as well as external media supply for the executives. The company has many other outsourcing agreements with organisations.  2.0 The Impacts of Outsourcing on the Jaguar Land Rover Business The outsourcing services have enabled the company to maximize on cost saving (Tobin, 2014). The company has been able to harness supply chain infrastructures and information technology services (Laudon & Laudon 2011). Another impact is that Jaguar Land Rover has been able to tap in to new market opportunities. The evidence of this new market opportunities are in China market and the Saudi Arabia market where the company is setting up facilitates for manufacturing automotives for the respective market needs. After carrying out feasibility study, the company sets up manufacturing facilities in order to tap the new market opportunities. GXS business to business outsourcing services has enabled the Jaguar Land Rover Company to translate and validate messages with its suppliers. GXS has made it possible for Jaguar Land Rover to automate its movements. This is very important in not only getting feedback but also for relaying information. The outsourcing has enabled the company to move from cutting costs in some manufacturing facilities to streamlining and restructuring for the next phase of capital expenditure. As such, Jaguar Land Rover has is able to cope with shrinking capital expenditure because of outsourcing (Tobin, 2014). One very important impact of outsourcing on the companys business is worldwide supply chain visibility (Hittle & Leonard 2011). JLR has been capable of breaking through several and diverse markets around the world because of supply chain visibility. Another impact of outsourcing to this companys business is that jaguar land over company has been able to get innovative capabilities easily and quickly without too much capital investment in hardware, human resource and software (Zanarone 2009). This has ensured business continuity and the company remains focused on its vital expertise of producing luxury cars. Manufacture of automotives is a very complicated process and requires experience and technical knowhow in order to produce customer-based products to satisfy the customer needs (Bailey 2007). Many years of production and market experience position it as a leading maker of automotives in the United Kingdom and a major option for automotive customers worldwide alike (Tobin, 2014). It is through outsourcing that the company has been able to have a good application for customer relationship management globally (Keytree, 2014). It understands its customers better and integrates new customers in the application very well. As such, through the outsourcing services, the company knows what the customers want to purchase, how they use their vehicles and everything about their customers and their vehicles (Bailey et al. 2008). The chief executive officer admits that it is too expensive for the company to build a data centre for every region to host a system for customer relationship management (Keytree, 2014). In this context, the company has achieved the tremendous growth in customer management through outsourcing. This is the cornerstone of building customer loyalty and repeated buying from customers. They turn one-time customers to repeated customers. This is down to the outsourcing the customer relationship management Berkeley et al. 2005). Jaguar Land Rover outsources CRM to Keytree solution (Keytree, 2014). As a result, Jaguar Land Rover moved from their previous application to live manufacturing environment in a very short period. As such, the company now boosts of secure, reliable and scalable CRM application system (Bailey & Kobayashi 2008). This is valuable because the system unlocked more benefits. It is particularly attractive and beneficial in the current global expansion mission of the company. Another impact of this outsourcing is that that Jaguar Land Rover Company provides in house solutions to the requirements and reservation of their clientele (Keytree, 2014). They develop solutions based on their production processes and the make of their products. This enhances cooperation and provision of genuine products and stare parts to their customers in all their markets. The outsourcing helps the business achieve its objectives and targets (Bailey et al. 2010). As such, the Jaguar Land Rover approaches the future with enthusiasm and determination. The company has developed a culture of service to its customers and it has learnt how to connect with their customers especially to today’s digitalized world (Keytree, 2014). The company is realizing the cost reduction target it set first when decided to outsource some of its services (Reynolds, 2012). The company has cut the operational costs by £1 million. In addition to cutting costs, the costs of the parts it purchases reduced by £1.7 million. It has also been able to simplify stock holding and brought them down to £8.9 million from staggering £40 million. The overall net effect of the above savings is decrease in production costs of every component (vehicle) by £34 (Reynolds, 2012). It has been able to free up its real property for process of manufacturing vehicles. Therefore, Jaguar Land Rover has not only been capable of improving its supply chain but also to deliver fantastic savings on costs. Importantly, Jaguar Land Rover has been able to increase customer satisfaction (Reynolds, 2012). Outsourcing has initiated an inventive set of apparatus for analysing and visualizing complex data from numerous sources (Badalian & Krivorotov 2013). It has made a stride ahead in unlocking the value of data as well as harnessing its capability to drive faster and better executive decisions. Availability of information at disposal has also helped this course (Shore, 2012). Because of outsourcing, the company executives and top management get current, accurate and integrated information anywhere at any time they need the information (Shore, 2012). The company is boosting highly intuitive and innovative management information, which integrates with external sources such as the industry chat, and media content with manufacturing data and traditional business (MacNeill & Chanaron 2005). As such, the executives make well-informed business decisions thanks to available and reliable business metrics from outsourcing services. In addition, the company improved collaboration as well as greater efficiency due to availability of real-time industry intelligence (Shore, 2012). 3.0 Risks and Benefits Several risks and benefits affect Jaguar Land Rover because of outsourcing some of its services (Harland et al. 2005). One of the risks that the company is experiencing because of outsourcing is loss of control of some of its business processes that are outsourced. Outsourcing means that another firm or organization manages the services outsourced, as such, Jaguar Land Rover Company is unable to control processes such as customer relationship management, material and stock control and other outsourced services. Another risk is that the company not able to take hold of the service quality offered by outsourcing (Belcourt 2006). A good example is management of information both internal and external business information, since the company has outsourced this service to IBM, it does not have control over the quality of information especially from the external sources (Earl 2012). Another risk is that the company exposes its internal affairs to outsiders thereby violating intellectual and confidential issues of the company (Bailey 2007). The organisations carrying out the outsourced activities and functions relay confidential and intellectual information knowingly or unknowingly. This is because, the organisations performs the functions for several companies including JLR company competitors (Gonzalez et al. 2005). This is a serious risk because the competitors us the information against Jaguar Land Rover in the market. Furthermore, Jaguar Land Rover faces risks of shortcomings in the performance of its expectations. As the company embarks on global expansion and venturing in the emerging markets worldwide, it is forgetting the existing and established markets and therefore it is unable to manage expectations (Tafti 2005). The new markets offers different expectations from the existing ones and therefore the company should offer customized products specific for that particular market. In essence, the company is unable to manage expectations especially from the high-end market (Martinsons 2013). The organisations providing outsourcing functions do not operate in every market and region where the Jaguar Land Rover operates. As such, sit has difficulties in the functions because of lack of expertise. This is a major risk especially in the new and emerging markets. Consequently, it is essential for the corporation to have their own expertise in the outsourced functions (Hoecht & Trott 2006). Likewise, Jaguar Land Rover is experiencing scores of benefits from outsourcing some of its services. One of the benefits is that Jaguar Land Rover Company has better utilization of revenue as well as enhanced returns from the markets and investments (Quinn & Strategy 2013). Increase in profits to £1.25 billion is substantial evidence of the benefits of outsourcing. Although the revenue and profit growth is not purely from outsourcing, it has contributed significantly to the growth in profits. Another benefit that the company is experiencing is increase in speed and quality of delivery of the outsourced services (Kremic et al. 2006). This is because, the company outsources the services to specialist companies and organizations specializing in the particular course such as information technology, customer relationship management and inventory control and management (Harland et al. 2005). One of the impacts of outsourcing is cutting costs as explained above. Eventually, saving on costs reduces cash outflow as well as optimizes the utilization of resources. Another benefit is tapping knowledge base for quality and better innovation. The company benefits from advanced information technology provided by IBM and this has enabled it in innovation and integra3tion of this innovation to its products (vehicles) (Belcourt 2006). Adding to the benefits, the executives have free management time because of outsourcing some internal functions such as stock control and internal business processes (Hsuan & Mahnke 2011). As such, the management focuses on its core competencies, as it is not concerned with internal functions and other routine services outsourced. Outsourcing creates job indirectly, Jaguar Land Rover therefore does not need employees for services outsourced. The company therefore cuts on costs of labour and increases apprehension of the economies of scale. 4.0 Outsourcing Plan 5.0 Suggestions and Recommendations Jaguar Land Rover Company has been successful in outsourcing some of its functions and services. It has been able to make operational improvements in connection with the use of outsourcing (Minnick & Ireland 2005). Nevertheless, the company faces huge risks from using outsourcing services from vendors and other clients. These risks, as discussed above derails the operations of the company. As such, there is need for the company to make some adjustments and improvements in its operations as concerning use of outsourcing. One of the recommendations for further operational improvement is to have interval factory maintenance. This will help in keeping and maintaining the vehicles at their peak performances (Vissak 2008). It has the skills and capacity to execute this at their facilities thereby making the process simpler. This will not only prevent defaults but also will improve the performance of the vehicles. Eventually, this will improve operational performance (Marvin 2013). Another recommendation is to have regular evaluation of the outsourcing organizations. It is significant for the business to review the performance of the organisations so that it can examine the quality of the services provided by the outsourcing organization. The company should also check whether the organization is adhering to the outsourcing agreement and contract. As such, routine assessment is will increase operational improvement as to the use of outsourcing (Sen et al. 2012). To progress delivery of good services to its customers, it is recommendable that Jaguar Land Rover involves their own staff with the outsourcing organization staff. This will improve customer relationship and interaction by ensuring that the company addresses concerns and insights of the customers (Lemmens 2009). The company is outsourcing many functions and services. It is outsourcing some services and functions that it is should not outsource such as customer relationship management. As such, the researcher advices and suggests that the company develop their own expertise to handle the services and functions instead of outsourcing them. Although it is benefiting from the outsourcing, the company is losing control of its operations. It is then vital for the corporation to reduce the services and functions outsourced and instead perform the functions and the services (Epstein & Mages 2005). 6.0 References Badalian, L., & Krivorotov, V. 2013. 2 Globalization via local participation: implications of Object-Oriented Design (OOD), a new business model in China’s rise. Chinas Development and Harmonisation: Towards a Balance with Nature, Society and the International Community, 50, 21. Bailey, D. 2007. Globalization and restructuring in the auto industry: the impact on the West Midlands automobile cluster. Strategic change, 16(4), 137-144. Bailey, D., & Kobayashi, S. 2008. Life after Longbridge? 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