International Automotive Company Harvard Case Solution & Analysis

Introduction

The case study is based on IAC International Automotive Company which produces window regulators, door systems, seat systems, closures systems and device systems. With a turnover of $2.9 billion and 14,172 employees the company was the fifth largest company in the list of 100 automotive suppliers. Paul Salinas has been appointed to rebuild the supply chain system of the new plant that IAC acquired and to make it as efficient as possible. The plant had numerous inefficiencies due to which it recorded a loss of $12million and his team was given the task to identify the inefficiencies and take appropriate measures for them. They used a cause and effect analysis, Pareto analysis, and a SWOT analysis to identify the inefficiencies and then used the principles of lean management to eliminate the steps which failed to add value to the processes to achieve operational efficiency. The case study describes each department which had been changed and the changes that were made within it to make it more effective and efficient. The departments included warehouses, transportation (ocean and ground) and packaging. Also the challenges of the changing the mindsets of the employees and the overall culture was greatly emphasized within the study. In all, the case study manages to outline the problems faced by the company and how they eliminated them through Salinas and the various methods he used to add value to each step.

1. Which capabilities were most important to improve at IAC by using SCM?

Supply chain management is an immensely important aspect, in any company and IAC is no exception in this case. In the case study, the company used three methods to analyze their capabilities which included the SWOT analysis which included finding the strengths, weaknesses, opportunities and threats, the second method was the Pareto analysis which identified the major causes of the weaknesses found within the company. Lastly , the third analysis used was the cause and effect analysis which identified why the problems exist within the company. All the three methods indicated that the supply chain management was the problematic area and was the reason why IAC was not performing well and incurring losses of approximately $1million. Supply chain management refers to efficiently managing suppliers, manufactures, warehouses, distributers, and more in the least amount of input but giving the highest amount of output. The ultimate process of raw material converting into a finished good and being delivered to the consumer falls under the management of supply chain and is considered by many as the heart of a business. IAC had to improve the losses it was incurring by using the premium which was 10 times the freight charges of the ordinary/regular freight transportation. This problem arose because planning was inefficient with no transparency with only one person having access to the data of freights and was therefore, filled with mistakes and irregularities causing under stocking of inventory or over stocking. Therefore, in order to meet the customer demands the premium freight charges had to be used. There is a need for more coordination between the buyers groups and the planning group within the logistics group to increase efficiency between them and make more efficient plans for the delivery of supplies. They also need to improve their HR activities as Salinas has compared the activities within the Reynosa plant and Queretaro plant. The Reynosa plant had only 3 employees which were adding direct value on the field whilst the other plant had 9 employees and one administrator. This factor needs to be changed and improved as more personnel management is needed to work on the ground.  Salinas has also detected that the employees are not displaying the right amount of attitude towards their work and the company. They need training to come up to par with the happenings of the company and develop a stronger work ethics that will help them become more productive and loyal towards IAC. He hoped to do so by implementing a continuous improvement system that will overall enhance the employee’s outlook.

Their capability of maintain transparency throughout the process chain is an important factor which needs improvement as this is not maintained and sustained over time which can be done by a open communication channel, as access to information will be provided to all...........................

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