7 pages/≈1925 words
To Analyze The Supply Chain Of Various Automobile Companies (Research Paper Sample)
The client was required to analyze the supply chain of various automobile companies.source..
The Study of the Supply Chain of Automobiles
The Study of the Supply Chain of Automobiles
The automotive industry has continued to grow in most parts of the world due to the increasing demand of cars. The advancement in technology has played a vital role in the development of this industry. For example, the technology has enabled improvement of manual cars into electric ones. As a result, people are replacing old cars with new ones hence increasing quantity of cars demanded. Additionally, individuals and organizations are purchasing the modern cars which are fuel efficient hence reducing the cost of transport. According to In Nieuwenhuis (2015) the automotive manufacturing industry has a lot of moving parts making their supply chain more complex and in a continuous move as the world economy fluctuates.
The complexity in the automobile supply chain is brought about by the level of vertical integration (Dicken, 2017). In other words, the relationship between the providers of components and assembly complicates the supply chain of this industry. In fact, a typical car would require an average of 25,000 parts where each is manufactured by different companies. Thus, the production of cars tends to occur in clusters where the agglomeration of many small and medium sized companies supports the large assembly plants through provision of different parts. Examples of these clusters are present in major car manufacturing countries such as the US, china, Germany, Korea, Japan and Mexico.
The automobile industry has a high manufacturing capability as the assembly plants depends on the providers of components hence supporting multiplier effect between the small, medium sized and large assembly plants (Ruston, 2007). Besides, this sector is highly competitive forcing the automotive clusters to maintain their competitiveness to prevent a decline in the level of activity. Due to the vertical integration, the companies have to ensure that the supply chain is properly functioning. Just like other companies, the cash flows should be favorable. Also, most firms operation in this industry market their products in the global market hence the pressure of producing efficiently and effectively.
Major manufacturers in the automobile industry
There are many manufacturers of cars in the world that offer their products in the global market. However, this section of the paper will highlight the major producers. The automotive giants include Toyota motors, Volkswagen Group, General Motors, Renault, Hyundai, Ford Motors, Fiat, Honda, Peugeot and Suzuki.
Volkswagen is a Germany based automotive company with unit sales of 10.1 million in 2014. It is the second largest car manufacturer after Toyota. The company has 592,586 employees across the globe (Pai, 2017). The ability of the company to manage its supply chain effectively has played an essential role towards its success. The firm uses an internal system to ensure a sustainable supply chain management. Sustainability information of the supplier is considered and improvement measures agreed upon. In summary, suppliers provide parts to the production plant which produces the finished products that are stored in the warehouses. In the warehouses, the cars are available to the dealers who sell then the customers.
General Motors is a US based automotive giant with unit sales of 9.92 million in 2014. The major brands of the firm include Chevrolet, Buick, Holden, Vauxhall, Baojun and Opel. The company has a total of 216,000 employees across its global branches (Pai, 2017). General Motors benefits from the prevailing market condition as its profits are continuously rising despite of a declining global vehicle deliveries. The organization of the company’s supply chain is the factors that have made the firm to remain among the leaders in the automotive industry. The relationship with the suppliers regarding the control of costs, quality of products and innovation in the supply chain has been improved to favor the long-term goals of the company. General motors have continuously been improving its relationship with the suppliers. This process has been extremely important and transformative for the firm by building better relationships with the suppliers hence improving the overall quality of the vehicles manufactured (Cohen, 2015). In Nieuwenhuis (2015) also notes that the firm has also developed a strategic supplier engagement initiative that has helped the automaker to build consistent and clear internal processes that improve the communication between the suppliers and recognize suppliers that have driven more innovation through the General Motor’s product line.
Ford Motors has its headquarters in the USA and had 6.32 unit sales in the year 2014. The company has a total of 224,000 employees. In the year 2015, the automaker had a pre-tax profit of $4.27 which was a 7.3% rise from the previous year (Pai, 2017). Additionally, the company reported its record profit in North America due to high sales of its sport utility vehicles and trucks. However, the company is facing slowing sales in Europe, Latin America and China which pulls down the overall performance of the company. Ford Motors have worked over the years to improve its supply chain. For example, the company decreased its supplier base to have a long-term and closer relationship with fewer suppliers (Munson, 2013). Thus, acquisition of parts by the company has become easily manageable hence improving the efficiency and quality of its vehicles.
Hyundai Motor Group
Hyundai Motor Group is based South Korea and includes KIA. The firm sold 7.71 units in 2014 and has approximately 249,366 employees. As per 2014, the company was struggling in terms of revenue due the strong Korean currency. Despite the struggle, the firm’s sales rose by 4.8% increasing the sales revenue by 2.2% in 2014 (Pai, 2017). The company has a special network design, working with various suppliers and distributers. For instance, the company cooperates with Hankook Logitech Company in the North America. The automaker has a strong ability in the management of the supply chain to meet the needs of the customers. For instance, when the buyers choose a car from the company, they can also choose some dependent products such as different packages and accessories. Thus, the company has to have an excellent control over its inventory and cost. Besides, Hyundai Motors finds it easy to outsource its supply chain business to firms that are more efficient to meet the customer’s value as well as the company goals.
The company is a French-Japanese partnership that is among the key players in the motor vehicle manufacturing industry. The firm sold 8.47 cars in 2014 with 450,000 employees across the world. At the end of 2014, the combined global sales increased by 2.5% (Pai, 2017). The Nissan brand is majorly purchased in the US while the performance of Renault is on its recovery in Western Europe. Since 2009, the company has worked towards improving its supply chain management through the Renault Project Arinma. The Renault-Nissan consulting team collaborated with the purchasing department to integrate key personnel. The aim of the project was to identify the suppliers, identifying synergies and plans on how to rationalize the costs (In Nieuwenhuis, 2015). The improvements on the supply chain helped the company to reduce the ongoing costs, improve the level of service, rationalizing the supplier base as well as minimizing the business risk.
Toyota Motor is a Japanese automobile giant with 330,000 employees. In the year 2014, the company surpassed the milestone of 10 million unit of cars sold being the world’s largest car manufacturer (Pai, 2017). Toyota has remained immensely profitable with a strong global market share hence the rapid expansion and growth.
The supply chain of Toyota Motor
The ability of the company to control the supply chain effectively has enabled the company to remain at the top in the automobile industry. According to Liker (2005), there are various components of Toyota Supplier Partnering Hierarchy. The components includes a mutual understanding and trust, joint improvement activities, information sharing, interlocking structures, control systems, compatible capabilities as well as kaizen and learning.
Wiegel (2010) indicates that Toyota Motor chooses its suppliers on the basis of business considerations. Besides, the company evaluates the overall strengths of the prospective suppliers to ensure that quality and efficiency are not compromised (Iyer, 2009). In the provision of products and services, Toyota expects that the suppliers will supply safe products that will ensure safe environment for the people manufacturing (Shah, 2009). Quality is also a key concern for the company as the suppliers must be consistent in delivering high quality products. Also, the firm expects flexible and error-free execution during production and timely delivery (Valdez, 2017). Suppliers must also maintain a competitive cost through innovative production technology.
Referring to Valdez (2017) the domestic sales network of Toyota is made of around 280 dealers with approximately 5,500 sales outlets. Toyota Company supports the dealers to meet the needs and expectations of the customers. Additionally, Toyota has overseas dealers and distributers who play a vital role in achieving quality cars for customers in the global market. The company has 170 distributors and 10,000 dealers in the overseas market who interact with the local community by promoting and creating Toyota fan base (Valdez, 2017).
Source: Sabio bemard
The import export statistics to show major producers and major consumers
Major producers of cars in 2016
Major exporters of cars in 2016
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