Supply Chain Quality Management - Term Paper Example

SUPPLY CHAIN QUALITY MANAGEMENT Introduction Automobile industry is one of the largest industries in the manufacturing sectors in the present era. The industry includes designing, manufacturing, marketing and selling of motor vehicles. In this regard, supply chain management is a very decisive factor that takes major part in the automobile industry. This is largely because of the fact that the manufacturing of the motor vehicles takes place through the assembly line and the motor parts are taken from the various suppliers of the world1. Contextually, the objective of the assignment is to undertake the critical assessment of trends, problems and opportunities associated in improving the quality in supply chain management in the Automobile industry. Trend in the Automobile Industry The automobile industry has always been facing an uneven growth throughout the world, since the beginning of 18th century. Although, recently it has shown a growing demand in the countries like India, China and other parts of Eastern Europe, but the demand in the countries like the USA, Japan and more has shown a flat declining trend in this modern era. Moreover, as per the changing trend of the automobile industry the traditional form of motor vehicles was segmented as per the demand from the niche market2. Subsequently, with the passage of time the volatility of motor vehicle brands and models has highly taken place in the global platform. For instance, a model that had come 50 years back used to have a long life cycle as it stayed in the market for 20 to 30 years. However, at present the life cycle of a newly introduced model is only of 2 to 5 years due to the changing trend of people. Moreover, with the passage of time, the after sale service and marketing has also shown a decisive role in the success of an automobile company3. Trend in Supply Chain in Automobile Industry With the change in trend of the automobile industry, a simultaneous alteration in the method of supply chain in the same industry has also taken place. Most significantly, the change in the process of outsourcing is widely seen. The outsourcing at present has become more differentiated for this industry and has crossed the national borders and the continents. This differentiated outsourcing provides the scope of enhancing the quality of the motor parts and the vehicle. Moreover, the outsourcing has also let to the reduction of the cost of the manufacturing process. This reduction of cost takes place through outsourcing from a country where there is an availability of cheap raw materials and cheap labor. Further, supply chain management in the new era has also assisted to minimize the risks that are associated in the manufacturing process of the automobile industry. The risks includes the vulnerability in the political scenario that gives rise to terrorism, weak demographic conditions that includes lack of labor force, environmental factors like natural disasters and many more. Furthermore, there has also been a change in the transparency and the accountability of the supply chain in the automobile sector. There has been improvement in the communication procedure amid the suppliers and the manufacturers4. This improvement helped in augmenting the professional responsibility amid the suppliers and the manufacturers for greater productivity5. Problems in Automobile Industry There are several issues that the modern automobile industry faces. One of the most crucial factors is the growing competitive pressure throughout. The growing competition is largely due to the emergence of various new brands and companies in the global market with enhanced features. The increase in the brands and companies of automobile industry has also given rise in the bargaining power of the suppliers and the consumers to a considerable extent. Moreover, the increasing public and government pressure against the automobile industry for polluting the environment cannot be avoided for the long term sustainability of the companies6;7. Problems in Supply Chain in Automobile Industry As the industry is largely based on the supply chain management and the manufacturing process is completely based on the assembly line technique, therefore problems associated with the supply chain are legible. One of the most crucial issues that the automobile sector faces in regard to the supply chain management is the increasing bargaining power of the suppliers. As more number of companies has engaged in the production of motor vehicles, the demand from the supplier’s point of view has significantly increased. Moreover, companies desire to reduce the in the cost of production from the support of effective supply chain management. However, in reality the reduction of cost is not feasible after a certain limit. Furthermore, minimization of risk that is associated in the production of motor vehicles is not always met with the support from the supply chain. Therefore, the risks as stated above including the political, demographic and the environmental issues cannot be resolved at an optimum level. In reality, during certain conditions the risks cannot be minimized at all, wherein the political situation and the economical condition are highly adverse as per the requirement of the sector. It is evitable that dealers and retailers are more influential in determining the purchasing behavior of customers and enhancing the sales. Thus, there is also a bargaining power from the dealers and the retailers end. The dealers and retailers, who have higher possession of the customers would demand a greater margin of profit and hence, increases the pressure towards the manufacturer8;9. Opportunities for Automobile Industry There are vast opportunities for the automobile sector to grow by understanding and evaluating the trend of the market and resolving the issues that are encountered. One of the most worthy opportunity is to introduce the solar motor vehicles or the bio-fuel motor vehicles, which do not consume fossil fuel and provide cost benefit to the consumers. Owing to this, the public and government complaints regarding the environmental pollutions will also be resolved to a large extent. Moreover, there is also a growing demand for the long cars throughout the world. Some of the parts of the world like Texas in the USA are already having good market share of the longer cars. However, the other part of the world including the developing countries, the demand for longer cars is significantly potential as per the changing trend. There also lies a greater opportunity for the automobile manufacturers to utilize the used motor vehicles as a recycling unit. This would help to reduce the manufacturing cost and thereby, provide a competitive advantage to the organization. Moreover, there are certain supplementary activities that also act for growing demand in the respective regions. These supplementary activities include motor vehicle training centers, establishment of car parking centers in the congested towns10. Opportunities in Supply Chain for Automobile Industry The automobile industry has significant opportunities in the field of supply chain management. There are certain ways through which the improvement in the supply chain management may lead to the development of a company and the sector. These include the introduction of the outbound logistics i.e. dealership and retail outlets that may enhance the customer possession. Further, franchise based supply chain management may also lead to the development of the sector. The introduction of the inbound system of supply chain management also provides an opportunity for the greater margin of profit. Moreover, it also provides the scenario of bargaining power of the suppliers. Moreover, the mergers and the acquisitions with the suppliers and dealers would also reduce the power of both the suppliers and the dealers. It will also enable a superior quality of raw materials to be solely grasped by the manufacturer and similarly, it will enable the manufacturer to maximize its customer base. Hence, this would lead give rise to the competitive advantages over the markets. Further, the merger and the acquisition with the other companies of the same sector also eliminates the market competition. This will give rise to monopoly in the market with high profit. Furthermore, the opportunity also lies in the development of stronger networking, which would develop a sophisticated regular flow of products to reach the end consumers. To enhance the opportunity, it is important to identify the Special Economic Zone (SEZ). These regions not only have the potential demands for the products but also it facilitates the distribution of the motor vehicles at the most effective and efficient way to the consumers. Moreover, development of customized motor vehicles through the support of supply chain management would also attract the consumers. The supply chain management would enable an assembly line production method that would provide mass customization of the specific demanded features of the motor parts and vehicles for greater effectiveness11; 12. Conclusion Automobile industry has been one of the largest manufacturing sectors throughout the world. The automobile industry though has started from the 18th century, but there has been a significant change in the industry in regards to the supply chain management. Changes have taken place in the development of the business through outsourcing, risk management and transparency and accountability. However, there are certain problems that are also engaged in the supply chain management of the automobile sector. This includes the various supply chain risks that cannot be completely removed. The increasing bargaining power from the suppliers and the dealers is also a serious issue that is engaged to the automobile industry. Nonetheless, there are also some brighter opportunities that are required to be grasped in order to have a complete command over the market. These include the inbound and outbound logistics of the suppliers and the dealers respectively. Furthermore, seek the scope of mergers and acquisitions in order to reduce the market competition. Moreover, identifying the Special Economic Zones and providing mass customization would also enhance the business of the organization. Hence, it can be concluded that the automobile sector is a large sector and by proper utilization of the prospective opportunities, the sector would touch the rope of new heights. References Domansky, Leon R. Automobile Industry: Current Issues. New York: Nova Publishers, 2006. Franchise Help. “Automotive Industry Analysis 2014 - Cost & Trends.” Accessed September 16, 2014. https://www.franchisehelp.com/industry-reports/automotive-franchise-industry-report/. Harwit, Eric. Chinas Automobile Industry: Policies, Problems and Prospects. USA: M.E. Sharpe, 1994. Humphrey, John., and Olga Memedovic. “The Global Automotive Industry Value Chain.” Accessed September 16, 2014. https://unido.org/fileadmin/user_media/Publications/Pub_free/Global_automotive_industry_value_chain.pdf. 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