JLR PRESENTATIONSuppliers selection and supplier base
• Luxury brand market• Jaguar Land Rover named Responsible Business of the Year by Business in the
Community(BITC)• Amongst UK's largest exporters by value (£8.2bn in 2011) • generates in the region of 85% of its revenue from exports.• 1. Porsche
2.Mercedes Benz3.Audi4. Aston Martin5.Bentley
RECENT ISSUES(I) In 2008,16 different suppliers across three factories to undertake
parts rework and containment, resulting in no clear quality definition
65% parts reject rate for certain suppliers
and some finished vehicles were being put into ‘containment’ due to faulty components.
delayed customer shipments, production line stoppages that cost £2,000 /minute and the risk that faulty parts could make their way into completed vehicles
differing quality regimes and an inability to share data across the company. Problem solved only after 3 years after appointment of a new quality director with savings of more than £1.25billion by reducing to supplier
Steele and Court (1996 p. 69)
ACADEMIC THEORY:SUPPLIER PREFERENCES MARKET SEGMENTATION BY THE SUPPLIER
Attractiveness ofaccount
Relative value ofbusiness or account
CNurture clientExpand businessSeek new opportunities
DCosset clientDefend rigorouslyHigh service &response
AGive low attentionLow interestLose without pain
BDrive premium priceSeek short-term advantageRisk losing customer
Development Core
Nuisance Exploitable
Low
Low
High
High
Supply risk
Leverage items• Alternative sources of supply available
• Substitution possible
Bottleneck items• Monopolistic market• Large entry barriers
Routine items• Large product variety• High logistics complexity
• Labour intensive
Strategic items• Critical for product’s cost price
• Dependence on supplier
Competitive bidding
System contracting + E-commerce solutions
Performance based partnership
Secure supply + search for alternatives
Buyer stre
ngth
Increasing supplier availability
ACADEMIC THEORY Supplier Selection Criteria
Moncza and Trent’’ Supply-base optimisation is the process of determining the number and most appropriate suppliers a buying firm….’’
Steele and Court
Categorical Cost-Ratio Linear Averaging
Ease of Implementation
Easiest Most Difficult Moderate
Clarity of result Least clear Moderate Clearest
Situations requested
Small firms Very large firms Medium firms
Cost Lowest Highest Middle
Cost/Benefit ratio Lowest Middle Highest
ACADEMIC THEORY Steele and Court
7 steps supplier selection model
Quality systems model implementation to improve
Kaizen
Continuous benchmarking and improvement
Integrate suppliers into operations
Negotiateand select competitive supplier(s)
RFP / ITT or Direct Action Plan
Generate supplier portfolio
Develop procurement strategies
Profile outsourcing requirement
RECENT ISSUES(II) DHL workers at Jaguar Land Rover walk out over pay in SEPT 2013
4 Midlands sites and two at Halewood, Merseyside, have been affected
JLR said it was "disappointed that DHL Unite members have decided to take industrial action".
ANALYSIS(BCG MATRIX)
ANALYSIS (SWOT) Strength
1. High product Quality, rich culture identity and strong global brand value2. Popular Image of luxury brand
ANALYSIS (SWOT) Weakness
1. Lack a variety product range as compared to competitors
2. Despite having high performance cars, car design is criticized
ANALYSIS (SWOT) Opportunity
1. Emerging economies like India, China, Russia apart from USA and Europe
2. Hybrid models of luxury cars is an untapped market(XJ_e)
ANALYSIS (SWOT) Threat
1. Strong competition from international automobile brands
2. Dependence on government policies and rising fuel prices
SUMMARY & RECOMMENDATION Apply Academic models discussed previously
Reconsider current sourcing strategy and maybe look for alternative suppliers