Supply Chain Management at the Mexican Plant - Case Study Example

Executive Summary

The Mexican plants are affiliated with the US Companies a fact which has led to creation of a point by point supplier execution framework. Such type of framework works better under JIT and in turn helps the company to measure the supplier’s execution and additional time. JIT framework has helped the company to recognize high performing suppliers and shape the others who are upcoming in the industry. Once the high performing suppliers are allowed to apply for a qualified supplier endorsement, following a time of six months they give the best performce which ensures JIT manufacturing and performance. There are different issues linked to the JIT manufacturing and procedures. There are some shortcomings encountered while attempting to present in the JIT for universal suppliers. They are inclusive of; Increased transport expenses to send rapidly over such extensive separations, government tenets and directions like investigations. Evidently, JIT ensures that there is business process re-engineering and also uses the theory of constraints to guarantee quality production in the Mexican plants.

Introduction

The Mexican plant has a stronger influence linked to the relationship evident between JIT manufacturing and performance. For some business like the Mexican plants affiliated with the US companies, a significant amount of money is spent on inventory. Improper management in planning and control can cause the business to lose money. Therefore, it is important that the firm knows the basic models and approaches to inventory management to reduce the cost and improve the company's performances. In this case, an attempt to take a gander of the JIT manufacturing and production, network inventory activities are embraced by Mexican plants affiliated with US Companies in the course of recent years (Isabella, Jasimuddin, and Faulkner, 2014). The discussion will take a gander at the consequences of these activities and their significance, inside Mexican plants affiliated with US Companies' and the production network. Also, there is an attempt to think of the recommendations, on how Mexican plants affiliated with US Companies may enhance its production system. First, the Mexican plants affiliated with US Companies have built up a point by point supplier execution framework, which helps them measure supplier execution additional time (Alden, and Hughes, 2009). This JIT framework has permitted them to recognize high performing suppliers shape the others, by allowing high performing supplier to apply for a qualified supplier endorsement, following a time of six months. Again, the JIT framework has allowed Mexican plants affiliated with US Companies to give productive input to their suppliers and set particular objectives for underachieving suppliers. In general, this structure has helped Mexican plants affiliated with US Company's measure supplier execution viably. The second real activity attempted by Mexican plants affiliated with US Companies joins worldwide sourcing within the Just In Time (JIT).

Just-in-Time Inventory Management

Definition: Just-in-time inventory management is one of the strategies in monitoring the inventory process. This approach involves in reducing inventory cost and wastes in which the materials are bought, and the goods are produced only to meet the demand of the customers.

For example, the Mexican plants affiliated with US Companies are companies that implemented just-in-time systems. The benefits of this system are the reduction of waste within the company by increasing quality and work system and also improve profitability and return on investment by the reducing of the cost. The Mexican plants only need certain parts to manufacture the computer as the inventory (components) will become absolute due to technological advance in a period. In other words, it means that the Mexican plants only bought the component/stock for its immediate need to manufacture the goods and only begin production after the order was received (Booi, Chen, and Wilding, 2011). Evidently, a problem may arise if the Mexican plants affiliated with the US companies do not have a strong relationship with suppliers. It is due to such a reason that the Mexican plants have collaborated with suppliers to start its operation if the materials arrived in a fixed time manner and produced it to customers.

Under the use of JIT manufacturing and performance, the Mexican plants affiliated with US Companies has built up a framework in the organization with nationals to truckload bearer for its cargo developments. Working progressively, "the JIT framework empowers Mexican plants affiliated with US Companies to perform an investigation and appropriation channel displaying to accomplish solid least aggregate cost situations (Clegg and Wan, 2013)." Again, JIT framework has decreased sending expenses and process durations radically for Mexican plants affiliated with US Companies. The third real activity attempted by Mexican plants affiliated with US Companies is called JIT II. Under this framework, Mexican plants affiliated with US Companies goes on the obligation of overseeing supply inventories, inside the Mexican plants affiliated with US Company's plant to the supplier itself. This helps in the proficient administration of inventories, as suppliers have a tendency to have some expertise in crude material management. Such an act helps Mexican plants affiliated with US Companies to decrease its stock expenses.

Issues and Analysis

The whole procedure advancement process in Mexican plants affiliated with US Companies regularly starts with the recognizable proof of client needs. The clients need high caliber, innovative propelled items with short process durations. Consequently, I trust that the whole technique is centered on meeting these buyer needs (Dymond and Hart, 2008).

Under its supplier JIT execution administration procedures, Mexican plants affiliated with US Companies need to guarantee that exclusive suppliers will reasonably, have the capacity to satisfy the performance benchmarks put forward.

On the other side, the purchased quality is essential to the Mexican plants affiliated with the US companies. This is because the nature of the outputs relies upon the inputs. Consequently, as Mexican plants affiliated with US Companies have faith in giving quality items to the buyers, it is principal that they control their obtained quality (Ahmad, Mehra, and Pletcher, 2004).

Again, JIT framework cannot work without aggregate quality from suppliers. This is on account of JIT framework; no time is put aside for item testing as, and the lead times to the buyer are short. Therefore, the quality must be right on the money for the in the JIT framework to work.

Some parts can touch base at the Hillsdale, Michigan, plant with no approaching review required because the supplier, who supplies these plants are registered suppliers. This implies they have a decent reputation of giving a quality item. Subsequently, their segments do not need to be tried (Tewari, Singh, and Tewari, 2016).

The declaration of accomplishment system for recognizing qualified suppliers helps Mexican plants affiliated with US Companies know the quality suppliers from the others. Such an act decreases investigation and different incidental acquisition costs, connected with the items secured from these suppliers (White, Pearson, and Wilson, 1999).

Single sourcing is a successful procedure, while sourcing the most critical parts for your item (Banerjee, and Golhar, 1993). It constructs supplier relations additional time, which guarantees most final execution. The dangers to this methodology are an overreliance on one supplier and the loss of money-saving advantages, which can be retained by selling contracts for superfluous crude materials.

Some troubles that might be encountered while attempting to present in the JIT for universal suppliers are: Increased transport expenses to send rapidly over such extensive separations, government tenets and directions like investigations and other comparable exercises, which may hold the item on port for more than anticipated (Singh, and Singh Ahuja, 2014).

Mexican plants affiliated with US Companies sources a lot of its parts universally as there are cost efficiencies to be watched while sourcing globally. This is because of the nearness of less expensive variables of creation present in different nations.

I trust that Mexican plants affiliated with US Companies are benefiting work at dealing with its production network. It has thought of different creative thoughts to better its production network as well. I trust this advancement proceeds and helps Mexican plants affiliated with the US Companies Corporation ceaselessly enhance its reasonably aggressive edge as an innovative pioneer of acoustic science (Chen and Tan, 2013).

JIT advocates for Total Quality Management

Moreover, another strategy used in combination of JIT in its inventory management is total quality management. Evidently, this strategy is not only concerned with the quality of the products and services but is also concerned with the quality culture in the workplace to achieve the organization's goal (Zelbst et al., 2014).

Moreover, the Mexican plant affiliated to the US companies teamwork plays an important role for the employee to create better quality in manufacturing its products and solving the problem in removing any unnecessary process in the to increase the company productivity (Yasin, Wafa, and Small, 2004).

Through implementing this TQM under JIT manufacturing and performance, they have improved in the production process resulting high-quality goods produced (Salaheldin, 2005). They also meet the customer's satisfaction and also own competitive advantage such as in terms its design, convertible, car performance among others.

However, the weakness of this strategy is as a result of taste change of the customers and most advanced technology in the market. The company must adapt to these changes and produce products based on demand (Chen and Tan, 2011). Such an activity may result in the changing the company management process and also might stop the production, for example, need to buy a new machine for the manufacturing process and new stock. Such activity also can affect with company's sale.

To solve such a problem what the Mexican plant affiliated with US companies need to do is conducting more research and inspection on every aspect that might affect their production and reduce any excess stock that is not required in the production. The Mexican plant affiliated with US companies supply less on certain materials which are somehow outdated.

JIT Ensures Business Process Re-engineering

The business process re-engineering is about rethinking and redesigning the internal organization processes to achieve improvement in performance, quality, service, speed of production and reduction in cost (Pisuchpen, 2012).

For example, the Mexican plant affiliated to US companies' uses business process re-engineering method resulting from JIT instead of using the traditional method of controlling the inventory stuff (Clinton, and Ko-Cheng, 1997). Under such a case, they reconstruct the process of supplying and reorder stock by giving the information to suppliers through their internal IT system called inventory tracking system.

Through doing that the positive effect is that, the company can attain 2% of cost advantage (regarding cost reduction) as well as gain its competitive advantage by gaining 6% of market margins.

However, the drawback of this method is that the employees fear to lose their job after the implementation of the technology; since all the activities will be done by the technology system (Õzbayrak, Cagil, and Kubat, C. 2004).

To solve such a problem, the Mexican plant affiliated with US companies need to do is; since there was an improvement in the enterprise performances, employers or management can use this enhancement to generate more ideas and new type of businesses rather cut the workforce and also to educate them how to use the new technologies that have been implemented. So there will be no trouble for an employee for them to lose their jobs.

Theory of Constraints

Lastly, the theory of constraints is used under the Just In time manufacturing and performance to identify any constraint that prevents Mexican plants run its businesses. The use of the theory of constraints also ensures that the necessary steps are taking in JIT to improve them and also maintain the effectiveness in managing the constraint (Danese, Romano, and Bortolotti, 2012).

The benefits of the theory of constraints in JIT is to increase the ability to achieve the system's goal for manufacturers by means to increase profit and return on investment, reduce the number of chaos in operations and give staff the ability of analyzing and resolving day-to-day conflicts (Green, and Inman, 2007).

For example, the Mexican plant affiliated with US companies by using these approaches in the company proves that they able to improvements regarding distribution, thus, reducing cycle times and inventory levels which result in an increase in productivity. Before, the Mexican plant affiliated with US companies had difficulty in managing its inventory level heavily focuses on worker utilization (Germain, and Droge, 1998). Due to this level list work piled up due to lack of labor managing the inventory. However, when JIT method had been implemented, the immediate result was seen where one of the improvement is increased in the total output as the constrained packing area was more utilized by better buffer management (where to store and retrieve data).

Through focusing on how to solve the constraint, the Mexican plant affiliated with US companies can increase the company performance, profitability and gain to its competitive advantage.

Conclusion

In conclusion, based on the above, different approaches used in the Mexican plants in controlling the management of their inventory, it shows how the approaches have similar aims in terms of cost reduction in manufacturing process, production of goods and services in meeting the demands of the customers, increase of profitability and return on investment, reduce waste of inventory and also improve the company efficiency and performance. These approaches can be used for all types of business, but sometimes it depends on the firm nature, whether it is suitable to implement in the company. Additionally, all the above JIT manufacturing and performance strategies have its different method to solve problems that occur in the business and different solutions to address the problem from each approach. The above information indicates that JIT is associated with the high performance of companies in Mexico. The significant performance was found in JIT, which was linked to the Mexican plant which is affiliated with the US companies. The characteristics of the plant size in the industries where it operates and the type of manufacturing used influenced its ability to use JIT. Again, the top managers in Mexico plant also proved to have a higher impact on JIT manufacturing and performance. The size of the company also has an influence on the use of JIT performance and manufacturing. It is only a few Mexicans who, currently, have the ability to supply their customers with JIT fashion and plants, which are all geared towards the production of relatively large volumes to bring justification to international deliveries.