Advantages and Disadvantages of Production Systems - Research Paper Example

Global Supply Chain Contents INTRODUCTION 2 Research Objective 2 SUPPLY-CHAIN PRODUCTION SYSTEMS 2 Advantages and Disadvantages of Production Systems 3 METHODOLOGY 6 Qualitative and Quantitative Research Strategies 7 The Applied Research Strategy 8 Research Design 9 A Case Study-Mercedes Benz 11 QUESTIONNAIRE 14 FINDINGS 15 CONCLUSION 21 BIBLIOGRAPHY 22 INTRODUCTION This paper analyzes the Global Supply-Chain Production Systems. In Supply Chain Management, the technical support plays a vital role, however, it would not be only the support that is required in order to accelerate and enhance the operations and working conditions of any organization (Locke & Romis, 2007). There is a need, felt in all companies, of a perfect supply chain model or framework that could accelerate the performance and assist the manufacturing firm in adopting the perfect supply chain measurement and production systems (Beamon, 1999). At present, three types of control systems are found in global market of supply-chain. Such as the Push system, Pull System and a “hybrid” system. Hybrid System is also known as push-pull system. Hybrid system is the balanced system among all three. In this paper, the emphasis would be on the first two systems, push and pull. Research Objective Considering the field of Supply-Chain, its worldwide operations through the defined channels and networks, it has to be investigated that which of the two types of production systems is the relevant and useful for the purchasing organization? SUPPLY-CHAIN PRODUCTION SYSTEMS Efficient supply chain models control the operations including the flow of material, variables and information (Perea-López, Ydstie, Grossmann, 2003). Systems which are followed in the global supply chain of various companies include traditional and lean systems of manufacturing. Manufacturing is the basic stage where the product manufacturing is initiated or a product is manufactured and is passed on to the second phase of some internal procedures (if required) or then is pushed to the market for sales or marketing. Advantages and Disadvantages of Production Systems In Push System, manufacturing stage does not systematically analyze the actual statistical requirements of production. That could be the major issue in a number of ways. Here a problem associated to the validity and expiry could also be the big problem. Validity or expiry is basically subject to the product specifically and varies from product to product. Over production is the major flaw of this phase. In majority cases, it has been seen that products are manufactured and dumped in company’s warehouse with no one to buy. This creates a big challenge for sales and marketing department as in such cases, companies pressurize their sales department by assigning heavy sales targets. Marketing departments are also pressurized to come up with strategies to get the inventory sold by hook or crook. High budgets are being allocated to the promotions, advertisements, signboards and for other marketing tactics. Therefore, it is quite necessary for a company to synchronize its manufacturing or production side with the actual market requirements. Considering all above threats and disadvantages, companies have started taking interest in pull strategies. This strategy is efficient and effective and does not allow manufacturing without knowing the actual market requirements. This saves a lot of money. Companies following such strategies are seen saving a lot of money over useless marketing and promotions. After analyzing market demand and market sales trend, production plans are taken in to consideration and then the companies start manufacturing as per the market requirements. The concept behind is about pulling the products from manufacturing and it all depends on consumer demand. Pull is all about controlling the over production. The terms push and pull are due to the flow of information or preferences from inward to outward or from outward to inward. Controlling over production, manufacturing system gets efficient, responsive, effective, productive and flexible. Controlling production reduces pressure over the company as this way, company does not really have plenty of products in its warehouse, and it makes it easier for the marketing department to design new products or to make a few modifications in existing products to compete with their competitors. If production is controlled, company does not face fear of selling products in loss or in less profit. It also helps an organization to meet market challenges and to be flexible enough to face the market competition. Push System monitors the rate of release while Pull System monitors the WIP (Work In Progress) level. Push Production examines the WIP while the Pull System examines the throughput (Smith, 2004). Figure A: Customer Satisfaction (Stich & Meyer, 2009). As the Pull System not only controls the over production, quality also improves and enhances. This makes Customer Support confident about their product and reduces the complaint frequency, therefore, helps in improving the service quality level. METHODOLOGY It is of supreme significance to apply the best and known methods of research so that to obtain results which are not only authentic but are less time consuming. In Methodology part of this paper, the strategy to handle this paper will be discussed. Since this paper is all about Global Supply Chain, our strategy would aim to dig out more about the topic. To discuss a little more in detail and in order to understand our topic well, we would go for one of the research method. In this paper two phases are adopted to dig out more about the global supply chain. The first phases is referring the secondary sources, in which, journals, books, articles, info over the website, newspapers, blogs, videos, interviews and research papers of other researchers are reviewed and studied. Literature Review is the most important part of any paper. Literature Review helps a student to learn the basics of any topic. Referring to some relevant book, article, journal, blog, newspapers or any other source is equivalent to backing up your concern. Literature Review helps not only in understanding the pros and cons of one’s topic but it also sets a ground for the research. Repeated facts and concepts are tested in survey part to check its practical worthiness and implication. Basically, there could be two approaches or strategies for any research, the quantitative research and the qualitative research. Qualitative and Quantitative Research Strategies In this part of the paper, the quantitative research and the qualitative research, in relation with the methodology of any research, are to be discussed in detail. The quantitative research and the qualitative research are the two common schools of thought. Quantitative research is based on the deductive approach. This is all about following the standard and organized procedures. It illustrates the active assumption deductively from the available information and data. This type of approach is all about dealing with the facts and figures like weight, width, depth or height etc. Quantitative research is ideal for the research statements like; the average height of the students of Bachelors of Computer Science of academic year 1999 is greater than the average height of the students of all Bachelors programs of last seven years. In such types of research objectives, where number values, facts and figures are involved, it is suggested to execute the quantitative research strategy. Computation may engage gathering the heights of all the students enrolled in all bachelors programs since last seven academic years. Then it may involve processing the collected data with the help of defined formula of summing up all the heights of each academic year and dividing the obtained number by the total number of bachelor program students of that specific year. All years are to be computed separately so that it becomes easier to compare the average height of 1999 with the average heights of last seven years. In quantitative research, setting a hypotheses and then setting a null hypotheses is very important, conceptual and little technical. Once a hypothesis has been set, and a null hypothesis is tested, it becomes possible to either reject or accept the statement or hypothesis. With above explanation it has now become quite obvious that when data to be collected is numeric or absolute, the quantitative strategy is followed. Due to the static and rigid nature of absolute data, such data is considered as reliable and rigid. Manipulation is not possible and results, conclusion cannot be assessed on assumptions of researcher, but is bound to the findings. On the other hand, the qualitative research is quite different and flexible in nature. It is not deductive but is the inductive approach of research. In qualitative research, observation is important. Researcher concludes on assumptions and after thorough review of facts, etc. It is not wrong to say that the qualitative research is more about forming a theory rather than testing it (Charoenruk, n.d). The Applied Research Strategy For this paper, the qualitative research strategy has been followed due to its popularity these days. The core purpose for using this approach is the comprehensive nature of our research objective. As discussed above, the qualitative research is all inductive in nature and so as our research objective. Unlike quantitative research strategy, in which the flexibility equals to zero may not allow the researcher to assess and evaluate the facts to conclude with the human eye, the qualitative research methodology allows the researcher to evaluate and assess the findings in the light of all available information. This approach is effective, efficient and useful to understand more about the global supply chain and the usefulness of both of its systems, such as, the order based production systems and forecast based production systems. This paper has been assessed on the basis of qualitative research strategy; however, the readers might feel a little touch of quantitative research strategy in the illustration of findings. Research Design As far as the research plan is concerned, it is quite important for the researcher to exactly plan all his approaches, phases and steps of conducting his research to meet his research objectives. At the first place, research design involves setting a research statement or research objective. Then, the researcher needs to decide the methodology that involves the ways and steps of task execution. All stages and steps should be clear to the researcher before he begins to write. All steps need complete concentration and proper handling. Time management is another constraint that has to be taken care of. All efforts get wasted if the paper is not delivered within the deadline. For this paper, considering the field of Supply-Chain, its worldwide operations through the defined channels and networks, it has to be investigated that which of the two types of production systems is the relevant and useful for the purchasing organization? To investigate the above objective, Following steps are involved: The first step was to actually introduce the topic, a little background of the chosen field, i.e. the Global Supply Chain, Description of the two types of production systems, which are the push and pull systems. Differentiating the principles of both the systems Discussing the methodology and research strategies Choosing the best applicable research strategy Choosing the research method(s) Executing the research method(s) Discussing the results obtained Concluding the research In various types of the Research Design, the applicable methods for this paper are the literature review, survey and a case study. Since it is not a lengthy research, we would not go in deep literature review or survey, but will tend to have the essence of all these methods to illustrate our concern in the best possible manner. To describe the Supply-Chain and its production systems, literature review includes referring the websites, journal and balanced discussion. Books are not exactly used in this paper to be more practical and realistic throughout. To refer to the real example, a case study of Mercedes Benz is included in the paper. In the case study, the Supply-Chain approaches and activities, executed by the company, are discussed. The reason of choosing Mercedes Benz for the case study is its excellence in the industry of automobile and its huge Global Supply-Chain network that is operational in many countries. Mercedes Benz is the proactive operational body and executes with innovative channels, procedures and networks worldwide. A little Survey has also been executed for this paper that aims to support our findings and review. Participants of the survey are kept confidential due to the global privacy promise. Confidentiality helps a lot in any research in getting fair and unbiased feedbacks. Participants are chosen from different multinationals and they hold senior positions and reasonable experience in the field of Supply-Chain. A Case Study-Mercedes Benz Mercedes Benz is the well known name in the industry of automobile. Mercedes Benz has set a proper system for supply-chain operations. The Production system of Mercedes Benz is known as the Mercedes Production System (MPS). Their operations are aimed to maximize the organizational values. It has been for years now; Mercedes Benz has gradually built up proper and efficient worldwide chain of potential and regular suppliers from all over the world in order to meet global supply chain goals and to execute operations worldwide. The proper and effective network and system has played one of the most important roles in adding values to the brand Mercedes Benz. With the passage of time, Mercedes Benz has been working hard to compete well in the market, not only in terms of offering the best automobile products but also in coping up well with the operational advancement in terms of the innovations resulted by the Information Technology. Efficient innovations in the field of Global Supply Chain Management and Logistics have not only accelerated the operations but also have reduced the cost up to the great level. Time consuming procedures are made easier, efficient and effective. Fast communication is also a blessing of Information Technology, due to which, time consumption has been reduced to the minimum. There are numerous points which the marketing department considers in automobile industry including the influence of hybrid auto utilizing smart and powerful batteries (Gutmann, 1999). Mercedes Benz understands all these values and pays proper attention to advancements and innovations. Mercedes Benz believes in improving the procedures and operations and also believes that acquiring efficient systems can add certain value in synchronizing their operations and so as their performance and productivity. Mercedes Benz works hard in improving the quality of logistics that are linked to the global supply chain. When it comes to Procurement, the International Procurement Services unit (IPS) of Mercedes Benz secured award of being the best in its concept of globalization, presented by the (AMMPL) Association Materials Management, Purchasing and Logistics. Mercedes Benz has its production setup in a few countries including the United States of America, Germany, China, Vietnam, Malaysia, Brazil, France, Thailand, India and South Africa. The major manufacturing setup is at Germany. Mercedes Benz reputably has been doing well in a few markets of the Western Europe and the United States of America. Mercedes Benz is also doing well in the automobile industry of Japan (Palmen, 2007). The company has been doing well and holds respectable and reliable position in the industry of automobile. Suppliers do not hesitate in signing long term global deals, contracts and projects with Mercedes Benz due to its worthiness and values. Mercedes Benz uses smart techniques and innovations to deal well in supplying parts, tools globally to its worldwide plants and offices. With the growth of Information Technology, production methods and strategies also have improved (Kimberley, n.d). Considering the popularity of sport automobiles, Mercedes Benz being flexible due to its excellent Pull strategy, responded well to the market demand for sport utility cars. Due to its competitive and innovative manufacturing strategy along with effective global supply chain system, Mercedes Benz has always been coming up with best, competitive, innovative and cost effective automobiles (Britannica, 2009). The senior management including the Chief Executive Officer of Mercedes Benz disclosed their positive and innovative approach in 1997 by stating that they had been working and finally have invested a big sum of money in improving their plant, site, systems, strategies, product and almost everything. They claim to be the best and stated that they hired new and energetic people to lead their new production and supply-chain techniques. Mercedes Benz is quite confident about their new production techniques. Mercedes Benz has always concentrated on taping the market and their strategy has remained to continue with the cost edge. Competitors experience a tough time competing with Mercedes Benz (Hoffman, 1997). Mercedes Benz is one of the leading automobile companies that experienced good response from market as it is quite responsive, innovative and flexible due to its effective supply-chain system. QUESTIONNAIRE Questionnaire of this paper contains five options using a degree of 1-5 with 1st holding the most weight and 5th containing the least weight. The participants were being asked to tick the most appropriate option out of Totally Disagree, Disagree, No Comments, Agree and Strongly Agree. The questionnaire contains below statements to be tested on five participants taken from different companies. 1. These days, Pull System is proven to be better than the Push System 2. Mercedes Benz is known for its best Global Supply-Chain strategies 3. Information Technology has brought countless positive innovation to Supply-Chain and has caused a lot of improvements FINDINGS Results obtained from the respondents are graphically presented below to illustrate the findings in the best possible way. 1. These days, Pull System is proven to be better than the Push System The results of above statement are graphically presented below. Above graph indicates that out of five participants, majority of the respondents ticked the option of agree, one participant ticked the option of strongly agree while no one selected totally disagree, disagree or no comments. Above results are shown below in percentage. Above pie chart shows that 80% of the total participants agree with the statement that the Pull System is proven to be better than the Push System. 20% ticked the strongly agree option while no one selected any other option. 2. Mercedes Benz is known for its best Global Supply-Chain strategies. Above graph illustrate that one respondent selected the option of totally disagree, one selected disagree option, one respondent refused to comment anything. Two participants ticked the option of agree while none of them selected strongly agree options. These results are shown below in percentage. Above pie chart shows that it is not easy to illustrate the real picture of statement 2 as almost half agree and half do not agree that Mercedes Benz is known for its best Global Supply-Chain strategies. However, it might not be true; results can be biased due to the competition constraint. 3. Information Technology has brought countless positive innovation to Supply-Chain and has caused a lot of improvements Above graph shows that four participants agree to statement 3 while one ticked strongly agree option. None of the respondents ticked options of totally disagree, disagree and no comments. These results are shown below in percentage. Above pie chart illustrates that almost all participants agree to the fact that Information Technology has brought countless positive innovation to Supply-Chain and has caused a lot of improvements. CONCLUSION In past, when forecasting, research and analysis techniques were not quite competitive, challenging and innovative, companies had no other choice than the Push System where without the market requirements, companies had been producing and manufacturing goods. This was neither effective, nor responsive and was not efficient at all. At present, companies have found out that the Push Production is not appropriate and it could result in over production that may cause loss to the company. When over production takes place, marketing departments are being allocated with big promotion budgets and challenging targets are assigned to the Sales Department. At any cost, company tends to sell the over produced goods. This is not effective so is not suggested too. On the other hand, Pull strategy is based on forecasting, researching and producing as per the market requirements. This has proven to be the best strategy in terms of preventing a company from over production where probability to face losses is too high. With the help of literature review and a research, it has been concluded that with the passage of time, Information Technology has been bringing a lot of innovations and blessings that have impacted each and every sector of life. Just like other fields, Information Technology has also blessed the field of Supply-Chain with number of innovations. BIBLIOGRAPHY Beamon, B. M. (1999). Measuring supply chain performance. International Journal of Operations & Production Management. 19 (3), p275 - 292  Britannica. (2009). Bill Taylor Led Mercedes through a decade of Shifts in Alabama. Available: http://www.britannica.com/bps/additionalcontent/18/42870113/Bill-Taylor-led-Mercedes-through-a-decade-of-shifts-in-Alabama. Last accessed 2 June 2010. Charoenruk, D. Communication Research Methodologies: Qualitative and Quantitative Methodology; available from: assessed on 22.05.2010 Gutmann, G. (1999). Hybrid electric vehicles and electrochemical storage systems — a technology push–pull couple. Power Sources. 84 (2), p275-279. Locke, R & Romis, M. (2007). Improving Work Conditions in a Global Supply Chai. Global Business. 48 (2), p54-61. Palmen, N. (2007). Mercedes Benz – a classy partnership with suppliers . Available: http://www.ai-online.com/Adv/Previous/show_issue.php?id=1880. Last accessed 2 June 2010 Perea-López, E, Ydstie, B. E, Grossmann, I. E. (2003). A Model Predictive Control Strategy For Supply Chain Optimization. Computers & Chemical Engineering. 27 (8-9), 1201-1218. Smith, M. (2004). Pull System. Available: http://elsmar.com/Pull_Systems/. Last accessed 3 June 2010. Stich, V & Meyer, J. C. (2009). Applying hybrid system theory to supply chain design. Available: http://www.pomsmeetings.org/ConfProceedings/011/FullPapers/011-0268.pdf. Last accessed 2 June 2010. William Kimberley. (n.d). Introducing the Mercedes Production System. Available: http://www.autofieldguide.com/columns/0700euro.html. Last accessed 3 June 2010. Hoffman, K. C. (1997). Mercedes’ Finely-Tuned Supply Chain. Available: http://www.supplychainbrain.com/content/industry-verticals/automotive/single-article-page/article/mercedes-finely-tuned-supply-chain/. Last accessed 2 June 2010. Read More