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Auto industry - Essay Example

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This is a very important aspect in the auto industry due to various reasons. It should be noted that various components are required in the manufacture…
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One economic aspect of the auto industry that I find most interesting or most significant is about managing the supply chain. This is a very important aspect in the auto industry due to various reasons. It should be noted that various components are required in the manufacture of an automobile. These components vary and they are often obtained from different suppliers. This means that managing the supply chain of the various components. It is important to ensure that the right components are delivered at the right time. It is imperative to establish if the supplier is capable of meeting the demand of the components required at a particular period. This is meant to ensure that there are no delays that can witnessed in the manufacture of the automobiles. Careful management of the supply chain entails that the automobile manufacturer will be in a better position to meet its target. Essentially, the aim of business is to make profits and this can be possible if an organization is capable of meeting its demand at a particular time. There should be no loopholes in the supply chain in order for the organization to operate effectively and efficiently.
The other reason for managing the supply chain is related to the aspect of maintaining quality. Different companies can supply the same component required in making automobiles. However, the likely challenge to be encountered is that the quality of the components supplied by different suppliers may differ. Some parts supplied may be substandard and this can compromise the quality of the final product manufactured. It is the duty of the automobile manufacturer to outline the standard expectations with regards to the quality of the components supplied by different suppliers. Ensuring high quality components supplied can be achieved through establishing a quality assurance department within the manufacturing plant that would be responsible for ensuring that the parts supplied meet the standards. Defective components can be rejected and if needs be, these can be replaced with quality products.
The other reason why managing the supply chain is important is about creating a good relationship with the suppliers. This is very important since this means that aspects such as pricing can be negotiated. A reputable car manufacturer can negotiate the prices of different components that are used in manufacturing automobiles. This is very important since the best deals can be achieved. Favorable prices of the components required for making cars mean that the final prices of the ultimate products are likely to be favorable to the targeted customers. The price of the final automobile offered in the market determines the success or failure of its performance in the market. Therefore, it is essential to create favorable conditions during the procurement process of the components required in manufacturing cars in order to be in a position to favorably influence the final prices that can be charged. This also plays a pivotal role in determining the viability of the organization in its operations given that the automobile industry is characterised by stiff competition.
Just like any other product, finished vehicles need to be distributed through different channels to the ultimate companies that will sell them to the customers. This also constitutes the supply chain of the auto industry. These groups need to be reliable and act in a professional manner in order to attract many customers to buy the cars offered in the market. Therefore, it is the duty of the automobile manufacturer to create a good working relationship with these suppliers in order to operate effectively. The suppliers also need to establish good customer relationships in order to attract many buyers. The customers are minly motivated by the valuable service they get from the suppliers which can influence them to purchase cars offered. Read More
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