Operations MANAGEMENT – CASE STUDY

PRESENTED TO: DR. Alexey Rasskazov

PRESENTED BY: ahmed kamal -INTERNATIONAL AUTOMOTIVE COMPANY-

International Automotive Company (IAC)- Introduction Fifth largest family-owned company in the automotive

suppliers.

14172 employees

Total turnover in 2009 was US$ 3.6 billion.

Company manufactured window regulators, door systems, seat systems and electric drives.

International Automotive Company (IAC)- Introduction

Main customers are: Ford, BMW, Chrysler, ACH, Nissan, Suzuki, Toyota, VW and Bosch.

The company have 46 plants in 21 countries.

IAC have reached to more than 100 customers.

Reynosa plant

There are 403 employees in the Reynosa plant.

The spread over a 10,000 square meters.

Paul Salinas has appointed to rebuild the entire supply chain in the Reynosa Mexico plant that IAC had just acquired from motor company II in 2009.

SCM elements

Transparency Standardization Optimization Flexibility Planning Innovation Problem solving Lean management Closeness of suppliers Cooperative orientation

Most important SCM Elements for IAC

Lean management Optimization By using Lean Management and optimization IAC

can remove and minimize wastes and non-value adding activities in warehouse management and transportation planning to keep the high standards of the quality of the whole processes and maximizing profits.

Cause of Overusing Premium Freight

Inefficient and ineffective warehouse Management

Inefficient and Ineffective Transportation Planning

They were not maintaining the inventory properly at times they have shortage of inventory to fulfil the customer demand on time, to overcome this they use ways which cost a lot to company eg premium freight.

Steps to over come the premium price

The other strategy which they have adopted is EX- Work strategy.

With the help of this strategy they reduce their transportation cost to more than 20 percent.

By adopting Milk run strategy they achieve higher utilization of trucks and the resulting reduction of transport costs and  reduction of stock.

Warehouse Management

Warehousing is a key element of supply chain. Its aim is to controlling the movement and storage of material within warehouse , involving the activities of receiving, shelving, loading and shipment.

Areas/Cause of wasted Resources

Main cause of wastage of resources is ineffective warehouse management.

IAC had a warehouse in Reynosa and also stored materials in another warehouse located in neighboring U.S city, McAllen, TX which has created a lots of problems.

Mistakes at the time of ordering Unscheduled overproduction No specific location

IAC Measures To  Improve the Ratios of Operator

Three operators to one office worker: The ratio was unbalanced before 3:1 and they

have changed it to 9:1 its means they are adding more employees in manufacturing

IAC Measures To  Improve the Ratios of

Operator

765 employees to $7 million in monthly sales:

on the second plant which is a way more better than this IAC, was making more profit than IAC Queretaro which is generating about US $2million more than Reynosa as Reynosa was making the sales of 7 million with 311 more employees than Queretaro.

Lean Management

Warehouse Management (minimum inventory)

Because of ineffectiveness in the warehouse management there was a high inventory cost due to high inventory level and all records were kept manually.

Manual functions was replaced by scanning bar codes .

Standardized packing size Standard bar codes label for optimal spacing.

Ground Transportation :

to get optimal order quantity for the plant IAC improved communication with its suppliers and transporters, this resulted in drastic decrease in the inventory level.

The milk run delivery Material from supplier in past was transported separately

which cause cost to increase. With the implementation of milk run strategy IAC got

increased efficiency and less transportation cost.

Three best routes were identify which collects the supplies one after the other thus result in efficient use of trucks and reduction in raw material trucks.

Ocean Freight Transportation

PREVIOUS SCENARIO:Total transit time: 30days Total cost: $6711

SCENARIO 1:Total transit time: 21days Total cost: $5011  SCENARIO 2:Total transit time: 23days Total cost: $5561

Difficult Challenge for Salinas Salinas’ difficult challenge centered on IAC’s

employees at the time in which SCM had been adopted at IAC Reynosa.

Cultural practices Lack of skills Resistance to change Lack of loyalty