Renesas Electronics and the Automotive Microcontroller Supply Chain Harvard Case Solution & Analysis

Problem Statement

Renesas Electronics and Automotive has been facing certain issues which is harming their brand image. One of the most important problems which the company is facing is of inventory management that needs to be enhance as it plays a vital role in the overall supply chain.

The company has also been facing earthquakes at Naka, and the problem is that they only have one production facility for the Microcontroller of cars. This facility has been badly hurt due to earthquakes and therefore, the company needs to establish second facility to fulfill the needs of customer and reduce the dependency on one which is situated at Naka.

Alternatives

The company wants to build certain options and alternatives to overcome the problems.  The options will be generated on the basis of two major problems as discussed previously to enhance the company’s growth. This section includes the internal and external environment of the company and helps to decide that which possibility is best for company to maintain its loyalty of the customer and also the brand image.

There are four possible options that can be generated to reduce the uncertain situations. All the options are evaluated on the basis of its benefits and drawbacks and that alternative will be selected which will score the highest in the decision criteria. The proposed options are given as under:

  • Introduce or Establish new production facility in the different geographical regions
  • Reduce lead time of Inventory
  • Hold on more inventories
  • Apply and remain on the idea of original equipment manufacturing

Option 1: Introduce or Establish New Production Facility in the Different Geographical Regions

The first option is to introduce New Facility in different geographical regions as the company is facing earth quakes which damaged their manufacturing capacity. This option may allow the company to increase its presence in other parts of the country and also increase its production. It also helps to overcome the dependency on only one facility. The company should establish its manufacturing plant on those countries which provides low cost of material and labor (Engman, 2007).

This helps them to increase the overall capacity of the product and economies of scale. However, the company will have to determine the policies to facilitate their company and become competitive. By introducing plant in different countries, it may also help in building relationship with new customers. There are many advantages of this option as it helps the company to maintain its worth after facing such a disastrous earthquake as company will be still operating in different regions and fulfilling the needs of the customer (Saikalis, 2014).

The risk of facing losses will also be reduced and dependencies over one capacity will be finished. The company can establish its original facility easily with the help of production taking place in other regions. Even though it will take time, however, the company may still earn its profit and diminishing the chances of bankruptcy.

Secondly, the company can increase the efficiency of the labor and produce the same standard of Microcontrollers as producing within the original location. It also helps to carry out its production smoothly and fulfill the demands of the customer, which ultimately strengthens the supply chain of the company. No substitution will be required by implementing this option.

Renesas Electronics and the Automotive Microcontroller Supply Chain Case Solution

Hence, the company may also enhance and boost up its brand image in front of the customer and also sustain its importance by maintain its competitive edge. There are some disadvantages of this possibility as it requires large amount of funds to establish new facilities and company needs to have a very strong position in order to implement this strategy. It also requires a lot of investment in placing a new technology in almost all the countries. Secondly, the company needs to reduce the inventory however, by launching plants and facilities in different regions may increase the inventory but ultimately reduces the profit margin of the company.

Above all this, the strategy can be a bright side for the company as they only deals in Microcontroller. This strategy may also help the company in leading the entire microcontroller industry. Moreover, it is an important option to enhance the supply chain of the company. Initially it requires heavy investment, but later it will adjust with the increasing income...............

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