Global Supply Chain Management Practices - Essay Example

Global Supply Chain Management Table of Contents Introduction 4 Overview of Gripple Ltd 4 Managing Sustainable Supply Chain 5 Toyota Motor Corporation 5 Ford Motor Company 7 BMW Group 8 Supply Chain Sustainability Comparison 10 Gripple Ltd. 10 Global Supply Chain Network Design 10 Global Supply Chain Network Design of Toyota Motor Corporation 11 Global Supply Chain Network Design of Ford Motor Company 12 Global Supply Chain Network Design of BMW Group 13 Gripple Ltd. 13 Global Sourcing 13 Toyota Motor Corporation 14 Ford Motor Company 14 BMW Group 15 Gripple Ltd. 15 Global Logistics and Distribution 15 Toyota Motor Corporation 16 Ford Motor Company 16 BMW Group 17 Gripple Ltd. 17 Conclusions and Recommendations 17 Reference List 19 Introduction Supply chain management is referred to the cross-functional approach which incorporates managing the raw materials’ movement into the company, certain features of internal processing of the materials into the finished goods, as well as the movement of the finished goods to the ultimate customer (Waters and Rinsler, 2014). Global management of supply chain indicates the cross-border flow of products as well as emergence of the opportunities and global competitors across the competing supply chains inside an industry (Mentzer, Stank and Myers, 2006). Fast ongoing transformations in the global business surroundings have initiated new challenges and prospects to the manufacturing organisations. Large companies usually allocate their manufacturing assets or resources into international value chains. This facilitates organisation to access the new technology, markets, research and qualified labour (Bhagwat and Sharma, 2007). The paper will analyse the management of global supply chain of three manufacturing companies in the automobile industry. The three automobile which are taken for analysis are Toyota Motor Corp, Ford Motor Company and BMW Group. Based on the analysis of these three companies, suggestions will be given to Gripple Ltd about how to enhance their performance relating to the management of the supply chain. Ford Motor Company is an American international automaker as well as the 5th largest automaker around the world. It was founded in the year 1903 and is headquartered in Michigan, United States (Ford, 2015a). It products are automobiles, automotive parts, commercial vehicles and luxury vehicles (Ford, 2015b). BMW Group is an automobile company founded in the year 1916, headquartered in Bavaria, Germany (Bmwgroup, 2015). The product range includes bicycles, motorcycles and luxury vehicles. Toyota Motor Corporation is an automobile manufacturer founded in the year 1937 and is headquartered in Aichi, Japan. It includes variety of products such as automobiles, motorcycles, luxury vehicles, engines and commercial vehicles (Toyota, 2015a). Overview of Gripple Ltd Gripple Ltd. is leading the market of tensioners and wire joiners for the viticulture and agriculture market as well as wire rope suspension solutions for construction market. It was incorporated in the year 1990 and is headquartered in Sheffield (Gripple, 2015a). The company operates both in the construction and agriculture division. The products of the agriculture division includes stainless still hangers, Gripple express, standard hanger, design solution, trapeze range, catenary, pipe solutions, lighting solutions, seismic bracing and accessories. Their products are used in heating, mechanical services, air conditioning and earthquake bracing (Gripple, 2015b). Gripple Ltd. is located in USA, France, India and UK and exports to more than 80 countries. The company maintains a tight supply chain and make use of lean manufacturing system. Main threat for the company is the lack of reliability of buyers and suppliers within supply chain. They make more efforts to maintain long-term associations with the customers and seem to be dependent on the pre-existing users. Managing Sustainable Supply Chain Supply chain sustainability is referred to the holistic viewpoint of the supply chain technologies and processes that goes further than the focus of inventory, delivery and the traditional analyses of cost. It incorporate projects to decrease any type of waste, energy cost and use of the green technologies within logistics and transportation networks (Thomas, 2011). In most of the companies, the major focus of a sustainable supply chain is towards ascertaining compliance with global rules and laws and taking actions which will facilitate economical, societal and environmental developments (Leon, 2013). Toyota Motor Corporation To improve the sustainability of supply chain, Toyota Motor Corporation lays emphasis on some sustainable purchasing guidelines especially for their suppliers around the world (See Figure 1). Figure 1: Sustainability practices of Toyota Motor Corporation (Source: Toyota Sustainability Report, 2010) Toyota Motor Corporation is taking proper action to minimise further global warming considering it as a main management issue. The company is working towards minimising emissions of greenhouse gas at entire phases of its vehicle lifecycle, together with development, logistics, production, sales, design and other areas (Toyota, 2015b). Emphasizing on the requirements of suppliers in order to avoid environmental and social damages and ensure legal compliance would assist in their plan for the lessening of CO2 emission almost by 25% by the mid of 2015 (Toyota, 2014). The company’s vision is to make better cars which will exceed the expectations of customer and enrich the lives of the communities. This will lead to the steady base of their business operations and will also help to achieve sustainable growth (See Figure 2). Figure 2: Visionary management of Toyota Motor Corporation (Source: Toyota, 2014) The company has always encouraged healthy and close relationship with their suppliers, hence motivating them to take part in the designing of its spare parts as well as other innovation activities (Ludwig, 2013). Ford Motor Company Ford Motor Company has enormously reduced the total amount of energy required for the production of vehicles by almost 25% and is having further plans of reducing it by 25% more by the end of 2016. The company also plans to minimise the emission of CO2 by another 30% by the end of 2025 and also plans to minimise water consumption production per vehicle by 30% by 2013 (Ford, 2014a). Various suppliers are encouraged as well as assisted in the direction of capacity building which will facilitate them to handle the issues that are involved in the supply chain sustainability. Moreover, Ford Motor Company provides training to their suppliers about the management of the supply chain sustainability so that they can apply sustainability approaches in their practices (Ford, 2014a). The goal of the company is to encourage the production suppliers towards introducing certain codes of conduct which are aligned with Human Rights’ code, corporate responsibility and the international standards. The company develop vigorous management as well as compliance systems in order to support these standards (Ford, 2014b). BMW Group The long-term supply chain sustainability objectives of BMW Group are focused on value creation, services and products, corporate responsibilities and relationship building with employees. One of the main objectives of BMW Group is to integrate sustainability in its entire supply chain levels (Bloomberg, 2013). In terms of the CO2 emission reduction, which is a key global concern, the company has taken notable measures to reduce the CO2 emission and fuel consumption as a part of worldwide regulatory changes. BMW Group also plans to minimise the emissions of CO2 by 25% in order to bring the entire emission reduction to 50% by the end of 2020 (See figure 3 and 4) (Bmwgroup, 2013). Figure 3: BMW Group emission reduction plan (Source: Bmwgroup, 2013) Figure 4: BMW Group emission reduction plan (Source: Bmwgroup, 2013) Supply Chain Sustainability Comparison It has been analysed that all the three companies have equal concerns towards the environmental issues. All of them take into consideration the social and environmental factors for their vehicles but their methods slightly differ in terms of sustainability management within their different supply chains. All companies follow different approaches in terms of dealing with their suppliers. Ford Motor Company encourages the production suppliers towards introducing certain codes of conduct which are aligned with Human Rights’ code and they are also assisted in the direction of capacity building in order to handle the issues efficiently. BMW Group integrates sustainability in its entire supply chain levels. Toyota Motor Corporation focuses on some sustainable purchasing guidelines especially for their suppliers around the world. Moreover, all the three companies are among the global brands which have signed the principles that ask for complete compliance with business ethics, human rights and environmental concerns (Monczka et al, 2008). Gripple Ltd. Adoption of BMW Group’s sustainability objectives of value creation, services and products, corporate responsibilities and relationship building with employees will help Gripple Ltd. to integrate sustainability in its entire supply chain levels. Providing training to the suppliers will facilitate them to handle the issues that are involved in the supply chain sustainability. Gripple Ltd. needs to develop strong management as well as compliance systems in order to support the corporate responsibility and codes of Human Rights. This will help the company to become socially and environmentally responsible for the society. Global Supply Chain Network Design The network design of supply chain is considered as the powerful approach to deliver noteworthy reduction in the costs of supply chain as well as enhancement in the service levels by aligning the strategies of supply chain in a better way. It integrates end-to-end cost of supply chain, including production, inventory, purchase, transportation and warehousing. This is regarded as tactical supply chain initiative and therefore the companies can achieve competitive advantage through managing supply chain network settings. The network design of supply chain in the automotive industry is regarded as one of the multifaceted process because of its vast process (Heikkila, 2002). It involves various tiers of suppliers, who supplies different parts of the vehicle from around the globe (See Figure 5). Figure 5: Supply chain network structure of an automotive company (Source: Humphrey, 2003) This diagram illustrate that upstream from the OEM or the car manufacturer are Tier 1 suppliers. The automobile companies will normally supply sub-systems or some large components for the cars. Tier 2 suppliers provide elements such as bearing assemblies, electric motors, etc to Tier 1 suppliers. Tier N suppliers provide machined components to Tier 2 suppliers. Tier 1 suppliers are considered as most significant to the manufacturers of car because they have a plant which is in proximity to them to encourage just-in-time deliverance of products. The providers of raw material provide machined parts and sheet components directly to the manufacturers. Going downstream, the 3PLs (Third party logistics) providers will dispense finished vehicles from the OEMs to the vehicle distribution centres around the globe. Then these will be shipped to the regional branch and from there to the dealer. Finally, the dealer distributes the products to the end customer (Humphrey, 2003). Global Supply Chain Network Design of Toyota Motor Corporation In the Toyota Production System (TPS) an exceptional production control process is known as ‘kanban system’. It is also recognised as ‘supermarket method/system’ because the thought behind it was taken from the supermarkets. As Toyota Motor Corporation employed kanban symbols to apply it in the production system so, the method/process came to be recognised as ‘kanban system’ (Toyota, 2015c). Best practices for example lean manufacturing and JIT (just-in-time) were built up around the TPS. Lean manufacturing and JIT method plays significant role in the smooth management of the production lines of Toyota Motor Corporation as well as other businesses around the globe (Toyota, 2015d). The TPS fulfils the demand of customers promptly and efficiently by connecting all the activities of production to real demand. JIT production depends on delicately tuned practices by employing just the quantities of items needed (Toyota, 2015d). By developing JIT process, TPS has responded towards the truth of life as this process can deal with the challenges and difficulties in a cost-effective and efficient way. JIT offers an optimised, continuous and smooth workflow, with cautiously measured and planned work-cycle times and also minimises the cost of capacity, material and wasted time (Toyota, 2015d). It further helps the employees of Toyota Motor Corporation to focus on their works without any interruption, which result in time delivery, better quality as well as satisfaction from the products for the customers of Toyota Motor Corporation (Toyota, 2015d). Global Supply Chain Network Design of Ford Motor Company Ford Motor Company has one of the most intricate global supply chains with an inbound flow of shipments from vast number of suppliers around the world to its production plant globally. By making products and processes globally common, the company intended to eradicate process and organisational redundancies. Main reengineering projects were started such as FPS (Ford Production System) and OTD (Order to Delivery), with objectives of minimising the OTD time from 60 to 15 days. At Ford Motor Company, rather than encouraging price competition among the suppliers for particular components or elements, there was inclination of long-term links or relationships with subset of competent suppliers. Ford Motor Company made their expertise accessible to help suppliers in enhancing their operations by means of various techniques such as SPC (Statistical Process Control), TQM (Total Quality Management) and JIT inventory. The company has also worked with Penske on various Six Sigma programmes. The team of associates of Penske are well trained in the practices of Six Sigma and they work directly with Ford Motor Company to make their operations more efficient as well as to create a more centralised network of logistics. Global Supply Chain Network Design of BMW Group BMW Group applies flexibility in its supply chain network. This strategy entails high cost of production and with this strategy, the company tried to create a strategic supply chain which will facilitate it to minimise the cost of production while meeting their main objective of luxury cars production. Therefore, BMW Group develops their strategies at a worldwide level, which are applied to their regional manufacturing sites in order to assist their aim of becoming the top provider of the pre3mium services and products by 2025 (Ogle, 2013). The global network of supply chain of BMW Group makes a main contribution towards innovative strength, quality and value creation, and therefore to their success (Bmwgroup, 2015b). Gripple Ltd. The analysis revealed that all the three car manufacturers knows the significance of designing a strategic supply chain network. All of them focused separately on JIT process, quality management, lean manufacturing and OTD. These strategies help in the smooth management of the production lines with cautiously measured and planned work-cycle times and also help in minimising the cost of capacity, material and wasted time. Toyota Motor Corporation also applied the kanban system in its supply chain operation. So, Gripple Ltd. can improve its performance by applying lean manufacturing, JIT delivery, Kanban system, etc. However, it has been explored that the company have successfully integrated the lean manufacturing in their operations, which assists them to attain JIT delivery, minimises inventory and helps to eliminate waste. It also helps to minimise the unused time in the process of production through the utilisation of Kanban system. Use of kanban system by Gripple Ltd. facilitates them to achieve high quality level in their production process. The pull arrives from actual orders of customers from where the process of manufacturing is initiated. It allows the stocks to be handled or managed efficiently. Besides this the use of kanban system by Gripple Ltd. ensures them maintenance of least buffer stock levels. Global Sourcing Global sourcing is the procurement strategy of the businesses for setting up the cost efficient site or location for the manufactured product, which is usually, located abroad (Lawdictionary, 2015). For instance, if the automobile manufacturer discovers that manufacturing as well as delivery expenses are less in foreign nation because of the fewer wage of the foreign workers, the organisation might shut the domestic plant and employ a foreign manufacturer. The emergence of the borderless economy has made it possible to map out the best possible regions from where the parts and components can be acquired, based on their quality, cost effectiveness, delivery capabilities and engineering capabilities (Hugos, 2011). Toyota Motor Corporation Toyota Motor Corporation applied a global sourcing tactics for the vehicle components. The company was looking for long-term association for elements of their cars. In their exploration, Toyota Motor Corporation and Denso Corporation have developed a long-term association for the car components. The company manufactures cars in several countries such as Germany, Japan and US (Burke, Carrillo and Vakharia, 2007). All the production places were supplied by the Denso Corporation. This indicates that the company executed a strategy of global sourcing for various components, with Denso Corporation as the major supplier. This strategy helps Toyota Motor Corporation to achieve cost reduction and competitive price in their sourcing procedure of components. Though, they did not buy Denso Corporation outright, as Denso Corporation has also association with other manufacturers of cars. A benefit of this partnership is that it helped Toyota Motor Corporation to improve the innovative perceptions especially for the sourcing strategies (Kotabe and Murray, 2004). Ford Motor Company The global sourcing of Ford Motor Company is based on their program which is known as SDD (Supplier Diversity Development), aimed at sourcing about 10% of their overall purchasing budget of $50 billion in US. Currently, the SDD program has grown extensively to involve more than 400 suppliers and only 10% of them have been in operation with the company (Talluri and Narasimhan, 2004). Ford Motor Company has itself engaged in minimising the number of its providers in the US and Europe, where they have reduced over half of their providers or suppliers. They give main emphasis on their relationship with suppliers. The worldwide B-car program of the Ford Motor Company will make use of a large proportion of the shared components, because they attempt to influence their global scale in order to keep the costs down. By making use of the global sourcing strategy, the company is capable to ask for lower prices on their car parts. The company is also working on the C-car program which will lead to the focus on small car and it is expected that it will account for more than 2 million production units annually (Araz and Ozkarahan, 2007). BMW Group BMW Group is making investment in various manufacturing plants through their local market features and German production expertise to address the growing demand of their customers. The company depends mostly on the progress of their in-house technology for sourcing of the innovations, but their long-term Tier providers develops as well as delivers most of the individual items. In Europe, all the high volume components and parts are transported to a location of single supplier, which are then shifted to the port for the purpose of exports (Coe et al, 2004). For BMW Group, the location and the supplier relationship is considered as a crucial aspect of global sourcing. The company has adopted global as well as local sourcing strategies in China. The genuine supplier network consists of 100 suppliers which were expected to be enlarged considerably by 2012. The benefitting association with the providers or suppliers is regarded as the competitive advantage for BMW Group. It helped to attain unvarying level of quality (Bmwgroup, 2010). Gripple Ltd. It has been scrutinised that all the three car manufacturers give more emphasis on the supplier relationship and the location and view it as a vital aspect of the global sourcing. The assembly sites as well as manufacturing location of Gripple Ltd. will be challenging because of the lack of adequate infrastructural development. The manufacturing plant and the warehouse of the company should be located near the port to save the transportation cost and for quick delivery. This will also prevent the goods of Gripple Ltd. from minor damage and allow flexibility in their supply chain. Furthermore, the regional as well as local tier suppliers will also be motivated to put more efforts in producing and innovating world standard equipment which will facilitate Gripple Ltd. to compete with international suppliers. Global Logistics and Distribution International logistics and distribution have actually played a crucial role in the development and growth of the world trade as well as in the incorporation of manufacturing activities on a global scale. The utilisation of appropriate channels of distribution in global markets adds to the possibilities of success spectacularly. As companies start functioning on an international basis, the managers of logistics need to handle shipping of components, raw materials as well as supplies among several manufacturing locations at the most reliable and economical rates (Lambert and Cooper, 2000). Global or international logistics is described as the management and design of a system which controls and directs the materials’ flow inside, through as well as outside of the company across national/state boundaries to attain its corporate goals at minimum cost (See Figure 6). Moreover, the growth of electronic tracking expertise or technology has led to the great increase in the effectiveness of logistic processes employed by companies worldwide (Bowersox, Closs and Cooper, 2010). Figure 6: Global Logistics (Source: Bowersox, Closs and Cooper, 2010) Toyota Motor Corporation The inbound logistic system of Toyota Motor Corporation allows them to effectively manage suppliers as well as ordered parts and components. It has been observed that the transport system of the company, from a single operating centre pick up entire components or materials from each and every suppliers and then deliver them to the entire locations based on the proximity. This process is identified as ‘milk-route’ process. After receiving the materials, the same transport system returns back to the providers or suppliers and then the offloaded items are staged for ultimate deliveries to different factories or plants. The entire activity of the supply chain is traced by RFID (Radio Frequency Identification) technology to guarantee safety delivery (Christopher, 2012). Ford Motor Company At present, the global logistics of Ford Motor Company comprise of almost 300 logistics and trade experts who manages and controls the inbound flow of materials towards its assembly lines, finished products from manufacturing locations to the dealers and then to the international customers. A huge number of components and parts are shipped to transmission and engine power producing plants and also to the assembly plants. The vehicles which are completely made and ready to be delivered are funnelled from the plants and distributed to various dealers around the world. The execution of highly advanced technologies as well as adoption of accountability measures are the main reasons for the management of logistics of Ford Motor Company. BMW Group A sophisticated concept of transportation logistics is adopted by BMW Group which ensures finest utilisation of truck, rail and sea containers. The company also make use of reusable cases and packaging to make the transportation more environment-friendly. They select the transportation method which generates the lowest emissions. Therefore, BMW Group chooses to use the sea freight and avoid the sir freight. In the year 2007, the transportation via sea accounted for 76% of entire transportation capacity, whereas air freight only accounted for 0.2% (Bmwgroup, 2015c). The company make sure that accurate numbers of the components are in the correct place at the accurate time. They also ensure that these components comply with the requisite quality standards and it is considered as the main task of the logistics specialists of BMW Group (Bmwgroup, 2013). Gripple Ltd. The logistics and distribution system of Gripple Ltd. is not as broad as these three companies so, adopting some of their strategies will prove as advantageous for their supply chain network. A main threat to this company is that there is a need of consistency of buyers and suppliers within their supply chain. The distribution of components is done through road and sea freight and the manufacturing activities takes place in Sheffield, thus leading to elevated distribution costs. The company should diversify their manufacturing hubs and move from road shipment to rail shipment or freight (Simchi-Levi, 2005). Conclusions and Recommendations Throughout the essay, it has been analysed that the supply chain of Toyota Motor Corporation, Ford Motor Company and the BMW Group are related to one other or it can be said that they are very similar because all of them focuses on achieving their strategic objectives while maintaining their individual norms. All of them take into consideration the social and environmental factors for their vehicles but their methods slightly differ in terms of sustainability management within their supply chain. All the three car manufacturers give more emphasis on the supplier relationship and the location and view it as a vital aspect of the global sourcing. They focused separately on JIT process, quality management, lean manufacturing and OTD. Gripple Ltd. has also successfully integrated the lean manufacturing in their operations, which assists them to attain JIT delivery, minimises inventory and helps to eliminate waste. Use of kanban system by Gripple Ltd facilitates them to achieve high quality level in their production process. As Gripple Ltd. have to make more efforts to maintain long-term associations with the customers and seem to be dependent on the pre-existing users, so it is recommended that they should try to expand their customer base and should pay more emphasis on building connections with the new customers. Gripple Ltd. should expand its operation initially on the regional basis as low risk is involved in it and it will also help them to expand quickly. It is suggested that the company should adopt the approach of piggy backing which means that they should adopt the supply chain strategies of their partners and should do partnership with suitable partners in every region. It will help the company to attain competitive advantage. Reference List Araz, C. and Ozkarahan, I., 2007. 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