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LEVERAGINGTHE POTENTIALVCG employs the Theory of Constraints’ philosophy to bring about quantumjump in performance of orga...
Nuggets on Auto Industry202, Orion Business Park, Kapurbawadi Naka,   Phone:   +91 22 2589 5896   Email:   vcg@vectorconsu...
Auto Industry ConstraintsDespite putting efforts of few decades into Lean and JIT, the factremains, that most auto supply ...
How to create a win-win supply chain that covers not just the suppliers supplier but also the OEM, distributer and        ...
Auto Industry Dilemma              #1        Current auto Industry                        reports suggest that the        ...
Evaluating Operation Performance                        Auto component manufacturers               #2       usually tend t...
Selecting the Right PartnersIt is high time Auto companies realize the fact that proximityis not just a matter of geograph...
Inventory ManagementAuto companies produce according to market forecasts and like anyforecast it isn’t exactly accurate.  ...
Inventory Management   #5   Most auto OEMs have very low component inventory where   there is maximum chances of aggregati...
Inventory Management    Auto manufacturers ignore the fact that if inventories are  pushed on to the dealers, it makes the...
Wrong Assumption of Implementing JIT & TPS PrinciplesBy asking the suppliers to keepthe excess and unwantedcomponent inven...
Wrong Assumption of Implementing JIT  Just by moving the component inventory Just in Time from the transporter warehouse t...
JIT Approach                                     Just-in-time means that, in a flow                                     pr...
:)   Thank You            ©2012 Vector Consulting Group. All Rights Reserved.                         ©2012 Vector Consult...
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Nuggets on Auto Industry

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Transcript of "Nuggets on Auto Industry"

  1. 1. LEVERAGINGTHE POTENTIALVCG employs the Theory of Constraints’ philosophy to bring about quantumjump in performance of organizations in its target industry clusters. Automobile & Consumer Retail Engineering Equipment Auto Components Goods & Construction Manufacturing www.vectorconsulting.in ©2012 Vector Consulting Group. All Rights Reserved.
  2. 2. Nuggets on Auto Industry202, Orion Business Park, Kapurbawadi Naka, Phone: +91 22 2589 5896 Email: vcg@vectorconsulting.inGhodbunder Road, Thane (West) – 400607 Fax: +91 22 2589 5897 Web: www.vectorconsulting.in ©2012 Vector Consulting Group. All Rights Reserved. 2
  3. 3. Auto Industry ConstraintsDespite putting efforts of few decades into Lean and JIT, the factremains, that most auto supply chains have months of excessinventory hidden in warehouses of the weaker partner in thesupply chain; while the stronger one manages the mess offrequent rescheduling and stock-outs. ©2012 Vector Consulting Group. All Rights Reserved. 3
  4. 4. How to create a win-win supply chain that covers not just the suppliers supplier but also the OEM, distributer and the retailer? ©2012 Vector Consulting Group. All Rights Reserved. 4
  5. 5. Auto Industry Dilemma #1 Current auto Industry reports suggest that the average inventory for car dealers has nearly doubled from 20 days to 40-50 days. On one hand we can blame the demand situation for this. But how is that the industry which claims to have implemented Just-in- Time is facing this situation? ©2012 Vector Consulting Group. All Rights Reserved. 5
  6. 6. Evaluating Operation Performance Auto component manufacturers #2 usually tend to evaluate their operation performance by analyzing the delivery as per the monthly/weekly schedules of OEM. When the schedules are highly erratic at a daily level, the KRA is not an indication of how well one has met the needs of OEM. The only right measure is the guarantee for availability, despite the erratic schedules. ©2012 Vector Consulting Group. All Rights Reserved. 6
  7. 7. Selecting the Right PartnersIt is high time Auto companies realize the fact that proximityis not just a matter of geography.The ability of a partner toreact to the changingrequirements is dependentnot on the geographicaldistance but on the level ofinventory between the twoentities. #3 ©2012 Vector Consulting Group. All Rights Reserved. 7
  8. 8. Inventory ManagementAuto companies produce according to market forecasts and like anyforecast it isn’t exactly accurate. But at the same time, they want JIT delivery of components. Resultant effect is high inventory at the component vendor’s warehouse. #4 ©2012 Vector Consulting Group. All Rights Reserved. 8
  9. 9. Inventory Management #5 Most auto OEMs have very low component inventory where there is maximum chances of aggregation, while they have much higher level of finished goods inventory. ©2012 Vector Consulting Group. All Rights Reserved. 9
  10. 10. Inventory Management Auto manufacturers ignore the fact that if inventories are pushed on to the dealers, it makes them incapable to respond to the market needs. #6 ©2012 Vector Consulting Group. All Rights Reserved. 10
  11. 11. Wrong Assumption of Implementing JIT & TPS PrinciplesBy asking the suppliers to keepthe excess and unwantedcomponent inventory at thetransporters godown, whilehaving lean inventory ofcomponents in their shop-floor,most auto OEMs tend to thinkthat they have implemented theprinciples of JIT and TPS. #7 ©2012 Vector Consulting Group. All Rights Reserved. 11
  12. 12. Wrong Assumption of Implementing JIT Just by moving the component inventory Just in Time from the transporter warehouse to assembly plants, OEMs can’t claim to have implemented JIT. #8 To get the real benefits the principle of pull has to be implemented in the entire supply chain. ©2012 Vector Consulting Group. All Rights Reserved. 12
  13. 13. JIT Approach Just-in-time means that, in a flow process, the right parts needed in assembly, reaching the assembly line at the same time they are needed and only in the amount needed. A company establishing this approach throughout can approach zero inventories. From the standpoint of production management, this is an ideal state. ~ T. Ohno #9Most Auto companies have taken the above statement literally andimplemented the pull system only between the vendor warehouse andtheir assembly point, while at the distribution side, it is a typical pushsystem. ©2012 Vector Consulting Group. All Rights Reserved. 13
  14. 14. :) Thank You ©2012 Vector Consulting Group. All Rights Reserved. ©2012 Vector Consulting Group. All Rights Reserved.
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