Chrysler Leverages Its Suppliers\u27 Improvement Suggestions

We examined Chrysler\u27s SCORE (supplier cost reduction effort) supplier-suggestion process from the perspectives of Chrysler and its suppliers. Chrysler used SCORE to save over $2 billion and to build collaborative relationships with its suppliers. In our study, we observed four elements in Chrysler and its suppliers\u27 organizations that contributed to SCORE\u27S success: (1) designating a process champion, (2) engaging suppliers in the process, (3) motivating em ployees, and (4) facilitating evaluation and implementation. Companies designing a supplier suggestion process should consider ways to reduce delays during evaluation, to minimize the number of low value suggestions, and to involve the entire supply chain

A Study of Espoused Corporate Cultural Factors and Their Relationship with Business Success

Reshoring of manufacturing companies is vital to the United States’ economy. Although one may assume that all of the business reshored will be large companies, statistics show that small businesses comprise the largest share of the U.S. economy. Small businesses make up 99.7% employer firms. Yet, 80% of entrepreneurs and small businesses who start will fail within the first 18 months. This study defines the key success variables of the espoused culture for selected Fortune 500 companies that could be used by entrepreneurs and small businesses to emulate their continued successes. The method to define the key success variables was to define the espoused culture of manufacturing companies with Standard Industrial Classification major group codes 29 (Petroleum Refining and Related Industries), 35 (Industrial and Commercial Machinery and Computer Equipment), and 37 (Transportation Equipment). Espoused culture is a company’s vision, mission, and values. Forty percent of the companies had a mission statement and 65% had a vision statement, 92.5% had values listed on their company’s website. Companies that have a published mission had an increase in revenue and profit by 5.5% and 11.8%, respectively. Companies that have published core values had an increase in revenue and profit by 37.9% and 48.8%, respectively. Companies that have a published vision had an increase in revenue and profit by 39.3 and 23.3%, respectively. The variables determine correlation of employee indicators and financial performance. The regression analysis showed variables that would be best at predicting profit and revenue. These five variables were Customer Focus; Benefits and People; External Focus and Shareholders; Value, Financial, and Profits; and lastly Innovations, Learning, and Technologies. From the espoused culture, culture types defined as Clan, Adhocracy, Market, or Hierarchy were identified. Any mix of culture can have success in revenue and profit. Yet, not all culture types lead to success in employee morale. From the culture analysis, companies that had a Market culture had the lowest leadership measurement and employee indicators. A Clan blend culture had the highest employee morale and leadership measurement. This research has discovered the impact of many variables and their correlation to company success

Changing dynamics of the Chinese automotive industry : the impact of foreign investment, technology transfer, and WTO membership

Thesis (S.M.M.O.T.)--Massachusetts Institute of Technology, Sloan School of Management, Management of Technology Program, 2003.Includes bibliographical references (leaves 79-82).This electronic version was submitted by the student author. The certified thesis is available in the Institute Archives and Special Collections.The Chinese automotive industry was established 50 years ago with the technology transfer of a truck production system from the Soviet Union. Since then, it developed into a decentralized and fragmented truck industry layout due to the self-reliant and defensive policies set forth by the central government. Over the past two decades, China has obtained substantial and modern passenger car production systems with a large sum of foreign direct investment (FDI) and comprehensive technology transfer from global carmakers in Europe, the U.S., and Japan. This research studies the 50- year development history of the Chinese automotive industry and seeks to understand the role of the Chinese protectionist automotive industry policies and the impact of FDI and technology transfer. China officially entered the World Trade Organization (WTO) in November 2001 and committed to end the 50 years of protectionism. The WTO membership is expected to inject fierce market competition into the Chinese automotive industry and ultimately propel the industry to a new level. My research attempts to forecast what might happen in the coming years. My research included site visits and personal interviews with seven senior executives from Chinese automotive firms located in Beijing, Shanghai, and Guangzhou, as well as three academic experts on the Chinese automotive industry at the Tsinghua University. This research finds that China has benefited significantly from foreign investment and technology transfers. China was able to leapfrog from 1950s-level automotive production systems into 1990s-level advanced technologies, and the gap with world standards continues to narrow. My research also indicates the protectionist automotive industry policies China had before the WTO accession have seriously hindered China's ability to achieve the full potential impact that FDI could have made. The lack of coherent policies between protection and competition has caused the Chinese automotive industry to remain fragmented and uncompetitive. The lack of competition and restrictions on foreign equity has delayed the speed of technology transfers and China's development of full automotive design and production capabilities. China will stride in the post-WTO era. However, the protectionism, particular from regional and local governments, is likely to continue and hinder the full impact of benefits from the WTO membership.by Michael Y. Lee.S.M.M.O.T

Supplier Integration in New Product Development - Procurement Approach

Involving suppliers in new product development of a company has been under study for almost 30 years. However, different opinions, on what makes it successful, exist. Key factors to success have been recognized in many different papers but not all of them agree with each other. This thesis tried to gather these key factors and summarize the theory of the subject. Purpose was to create a theoretical framework of the requirements and success factors of supplier integration, and find out how well suited the case company was for that framework. Supplier integration has been recognized as the “best practice” in new product development. It means involving a supplier in company’s new product development early in the development process in order to get competitive advantage from supplier’s expertise in its own technology area. Eventually, it is collaboration of two companies in a situation in which both can gain advantage. Succeeding in it is difficult due to diverging interests of the parties in the beginning. Well established supplier integration should improve quality and design lead time of a product, and reduce the costs of the product. This thesis created a theoretical framework of the key factors to success in supplier integration. Research part examined the current state of the case company’s new product development and compared it to the created framework. Research included a survey and an interview to the personnel of the case company. The state of the case company was not ideal when compared to the key factors of the theoretical framework. Outcome was that the case company should set up a clear new product development process for a single purchased item and implement strict process discipline to conform personnel to it. Also, departmental interface between purchasing and engineering needs persons to coordinate projects and improve communication. As a method for better supplier integration, the case company should learn to give a should cost calculation to engineering and supplier, and let them cooperate as long as the given should cost will not be exceeded

Using and extended enterprise model to increase responsiveness

Thesis (M.B.A.)--Massachusetts Institute of Technology, Sloan School of Management; and, (S.M.)--Massachusetts Institute of Technology, Dept. of Materials Science and Engineering; in conjunction with the Leaders for Manufacturing Program at MIT, 2006.Includes bibliographical references.OEMinc's new business model is a dramatic departure from that used in the past. The company has moved steadily upstream in the supply chain, leaving more and more of the manufacturing effort to suppliers. Literature shows that extraordinary productivity gains in the production network, or value chain, are possible when companies are willing to collaborate in unique ways, often achieving competitive advantage by sharing knowledge, research and assets. For its newest product, Excelsior, OEMinc has moved to an extended enterprise model involving dozens of Partners. Approximately half are Component Partners (CPs), who supply systems and components. The remainder are Assembly Partner's (APs), who integrate these components into sub-assemblies. Many components are purchased by OEMinc and drop-shipped by CPs to APs, then installed in subassemblies. For the purposes of this analysis, Critical Safety Inventory is defined as inventory held at a site that buffers against disruptions in quality or upstream delivery and is not needed for production at that time.(cont.) More specifically, the need for CSI is driven by the following: *variability in delivery time, resulting in late parts at the AP site or at OEMinc; *part non-conformances, which result in parts being unavailable for installation; and/or *part damage upon installation. The challenge OEMinc faces, which this project attempts to address, is: "How can OEMinc mitigate supply chain risk in the context of reduced information and control?" This project focuses on inventory management as a tool for mitigating risk. Therefore, the project definition has been further defined as follows: To develop an effective safety inventory policy for OEMinc-owned, drop-shipped components within the Excelsior Supply Chain, with the goal of supporting production, reducing inventory cost, and enabling continuous improvement. As outlined above, OEMinc's move to the extended enterprise business model is a significant step towards its vision of being a large-scale systems integrator. The success of this transition is important for OEMinc's long-term future, in addition to being an enabler for the Excelsior. The following approach was used: 1) Case Studies: Components were selected based on characteristics that bracketed the types of issues that might be seen in the supply chain at OEMinc.(cont.) It was expected that examination of these supply chains would reveal particular issues representative of a wider selection of components. 2) Simulation analysis: A generic simulation model was created for components under the Excelsior Business model. The simulation was used to determine how many shipsets of inventory should be held at the AP site for a varying lead times, expedite lead times and risks of non-conformance. 3) Benchmarking: Representatives of peer companies were interviewed and site visits were conducted to gather information on how they manage their relationships with partner suppliers, with special attention paid to inventory management, partner management, incentives and data exchange. 4) Metrics Analysis: OEMinc's existing metrics system was assessed to determine what changes might be made given the business model shift for the Excelsior program. 5) Implementation: Based on the results of the preceding steps, a set of guidelines was developed for Partners to reach the desired state with respect to CSI management. Using a Systems Dynamics framework, the supply chain was analyzed to determine what incentives should be applied to encourage the desired supplier behavior.by Ian A. MacDonald.S.M.M.B.A

Examining the anatomy of last-mile distribution in e-commerce omnichannel retailing: A supply network configuration approach

PurposeThe purpose of this paper is to investigate the interplay between configuration dimensions (network structure, network flow, relationship governance, and service architecture) of last-mile supply networks (LMSN) and the underlying mechanisms influencing omnichannel performance.Design/methodology/approachBased on mixed-method design incorporating a multiple embedded case study, mapping, survey, and archival records, this research involved undertaking in-depth within- and cross-case analyses to examine seven LMSNs, employing a configuration approach.FindingsThe existing literature in the operations management (OM) field was shown to provide limited understanding of LMSNs within the emerging omnichannel context. Case results suggest that particular configurations have intrinsic capabilities, and that these directly influence omnichannel performance. The study further proposes a taxonomy of LMSNs comprising six forms, with two hybrids, supporting the notion of equifinality in configuration theory. Propositions are developed to further explore interdependencies between configurational attributes, refining the relationship between LMSN types, and factors influencing omnichannel performance.Practical implicationsThe findings provide retailers with a set of design parameters for the (re)configuration of LMSNs and facilitate performance evaluation using the concept of fit between configurational attributes. The developed model sheds light on the consequential effects when certain configurational attributes are altered, preempting managerial attention. Given the global trend in urbanization, improved LMSN performance would have positive societal impacts in terms of service and resource efficiency.Originality/valueThis is one of the first studies in the OM field to critically analyze LMSNs and their behaviors in omnichannel retailing. Additionally, the paper offers several important avenues for future research.</jats:sec

Insights on innovation management practices at T-Systems. Analysis of a new business model for identity services on public computer network systems

Projecte final de carrera fet en col.laboració amb T-Systems International GmbHCatalà: Aquesta monografia identifica elements de gestió de la innovació en una coneguda companyia alemanya del sector TIC (T-Systems International GmbH) i exerceix un anàlisi crític sobre ells a partir de l'estudi d'una iniciativa de negoci denominada Projecte CifraH (Citizen Interoperability Folder for Relationships based on Avatar Hosting per les seves sigles en anglès) originada en T-Systems ITC Iberia SAU, una unitat internacional de la companyia.Castellà: Esta monografía identifica elementos de gestión de la innovación en una conocida compañía alemana del sector TIC (T-Systems International GmbH) y los somete a un análisis crítico a partir del estudio de una iniciativa de negocio denominada Proyecto CifraH (Citizen Interoperability Folder for Relationships based on Avatar Hosting por sus siglas en inglés) llevada a cabo en T-Systems ITC Iberia SAU, una unidad internacional de la compañía.English: This monographic identifies innovation management elements at a major German IT services firm (T-Systems International GmbH) and subjects them to critical analysis through the study of a corporate business initiative known as Project CifraH (Citizen Interoperability Folder for Relationships based on Avatar Hosting) undertaken at an international subsidiary of the company

Life cycle cost modeling of automotive paint systems

Thesis (M.B.A.)--Massachusetts Institute of Technology, Sloan School of Management; and, (S.M.)--Massachusetts Institute of Technology, Dept. of Electrical Engineering and Computer Science; in conjunction with the Leaders for Manufacturing Program at MIT, 2007.Includes bibliographical references (p. 88-89).Vehicle coating is an important component of automotive manufacturing. The paint shop constitutes the plurality of initial investment in an automotive assembly plant, consumes the majority of energy used in the plant's operation, and generates significant waste from paint overspray. The coating process also results in the emission of polluting volatile organic compounds (VOCs). New paint technologies based upon powder coatings offer reductions in VOC emissions along with potentially reduced energy usage and the ability to reuse paint overspray. However, quantification of these advantages requires clear understanding of the life cycle costs associated with each paint technology, modeled over the decades-long time horizons within which a paint shop operates. Life cycle cost models go beyond acquisition cost to consider all relevant cost drivers for a given system. This includes obvious candidates such as investment and operating costs, but also may include more subtle factors such as costs associated with variation, disruption, or flexibility, hereafter referred to as hidden costs.(cont.) In this thesis, methods for estimating these costs for a paint shop are explored. First, the development of a life cycle cost modeling tool, capable of quickly forecasting investment and operating costs and testing the sensitivity of life cycle cost to changes in input costs, is discussed. This tool is then used to compare the life cycle cost of three different primer surfacer application technologies. Next, the potential impact of hidden costs on life cycle cost for manufacturing systems are investigated, both through real-world examples and simulations. Finally, this thesis explores the wider implications of a shift to life cycle cost analysis for General Motors, in terms of both internal and external relationships for the Global Paint and Polymers Center at General Motors, and identifies situations in which a focus on life cycle cost can bolster managerial objectives.by Christopher W. Leitz.S.M.M.B.A

How CIOs Can Enable Governance of Value Nets

Value nets are the architecture of sourcing agreements and alliances that firms implement to gain complementary resources and capabilities from other firms. They are a source of innovation, growth, and competitive success. However, governing value nets is challenging, and the IT support needed to enable them depends on the governance mode a firm chooses. Based on case studies of three Fortune 100 firms, we define three governance modes—prescriptive, evaluative, and collaborative. Prescriptive governance specifies partners\u27 activities and retains decisions rights. It is effectively supported by dashboards that monitor the status of partners\u27 activities, alerts that surface exceptions and errors, business rules that automate activities and handling of errors, and extended enterprise architectures that protect intellectual property. Evaluative governance delegates decision rights to partners for operational execution and assesses their capabilities through periodic evaluations. It is effectively supported by loosely coupled processes that provide partners with limited autonomy, periodic reporting of performance on service level agreements, and data and process mining directed at improving partners\u27 capabilities. Collaborative governance promotes peer-to-peer collaboration with value net partners. It is supported by metadata architectures that control repositories of information and process resources, by consistent business rules to coordinate processes, by monitoring of the total costs of the relationship, and by business intelligence for predictive monitoring. CIOs and senior IT executives can apply these findings to choose an appropriate governance mode and enable it with appropriate IT applications and processes

Sustained value creation driven by digital connectivity: A multiple case study in the mechanical components industry

This paper investigates how digital connectivity drives new forms of sustained value creation in traditional in- dustries, where many firms still compete and strategize within a traditional industry structure and supply chain logic. We perform a multiple case study with four companies active in the vehicle component industry and implementing digital connectivity in a business-to-business (B2B) setting. Results show that digital connectivity enables greater transparency, trust, and collaboration with customers and creates new forms of value creation through companies’ strategizing actions – aimed at developing highly customized solutions – and critical capa- bilities – needed to configure a customer-centric value chain, integrate buyer-supplier digital resources, and improve the coherence between data-driven decision-making, lean management, and employees’ skills. We shed light on how manufacturers leveraged digital connectivity to successfully assimilate and scale up their digital- related capabilities across different dimensions, transforming their business models in a sustained way. This should also complement a change in the governance of customer transactions, fostering transparency and trust. Fine-tuning and expanding well-established B2B relationships through digital connectivity become a priority for traditional businesses to change to new and efficiently sustained value co-creation forms that can be com- plemented to a successful business model innovation or co-creation strictly linked to larger network connections