International Automotive Company Harvard Case Solution & Analysis

1.      What lean management principles were applied to improve IAC operational capabilities?

Operational capability is the use of critical resources such technologies and aligning them with the demands of the customers and delivering according to the values propositions that are required by them. These propositions are then delivered effectively and efficiently which include process measurement and process management. Thus, in order to improve those in IAC, lean management must be implemented which will reduce the costs and improve overall efficiency. Lean management refers to a long term approach in eliminating any wastage and adopts a no frills policy and eliminating any steps or process that do not help in creating value. In order to achieve the lean management system it is important to define value from the view of a customer. They are combined through each step in order to view if they are creating value or not, if not then they should be eliminated. Once the unnecessary steps have been eliminated, a new sequence has to be made which includes all value creating steps. A thorough and periodic analysis of the steps needs to be carried out in order to ensure that all wastage has been eliminated.

Lean management principles have been applied on the warehouses which had a problem with using management systems which are outdated and ineffective. The warehousing activities centered on the shelving of material and storing it in the right places. The system of recording the incoming materials and storage items was done by manual means and this resulted in tracking a particular box or material later difficult as the recording was full of flaws and human error. There were a lot of storage items that were taking valuable space within the warehouse which were not needed to stay within the inventories and thus, congested the warehouse. Lack of proper information and misuse of valuable space meant higher costs were incurred and valuable time was lost.

The warehouse had also adopted SAP systems however, not all functions were used in and the warehouse stored the materials according to the most optimal empty space available which eliminated the amount of wasted storage space within the warehouse. The application of lean management has been further applied by the installation of standard zip bar code systems and a standard size of box containers for maximization of storage space. The manual data entry was promptly replaced by scanning the bar codes which enabled quick identification of the storage and also resulted in less errors being committed. With the help of lean management, application tracking of storage could be easily done with all the data being stored within the SPA central system and this also meant that inventory levels could be reduced to a lower level without the extra storage items being kept. The whole application allowed the elimination of the warehouse thus, reducing costs and increasing productivity,

Lean management was also applicable within the packaging strategy which was prior to lean management and was used to ship the materials using plastic containers and IAC incurred all the costs regarding the transportation of the shipping, sorting, cleaning and more. This was changed by realizing that these steps did not add value to the process and needed to be changed thus, change was done. The plastic containers were seen as more preferable when shipping items to Canada or when shipping large amounts of material. An alternative was seen in the form of cardboard boxes which although were more expensive but could be sold later to other companies to balance the expense. A milk run strategy was devised and used and cardboard boxes were seen as the most optimal solution for the warehouse which would be of a standard size and could be easily stacked within the warehouse to use optimal storage space.

Lean management was also used in the transportation for the prior activities within the ground transportation, this involved the transport of materials across three borders and being stored in three different warehouses which resulted in high costs and more time consuming, These steps were identified as being valueless and thus, had to be revised. Initially there had been no direct communication between IAC and the suppliers so that the independent contractors would over stock or under stock the material at times and then IAC would have to deal with the limited amount of materials or accommodate them in their warehouses. This changed with more direct communication being set with the suppliers so they were aware of the company behind the supplies and did not change its view as it was moving from point A to point B.............................

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