1. Operations MANAGEMENT –
CASE STUDY
PRESENTED TO: DR. Alexey
Rasskazov
PRESENTED BY: ahmed kamal
-INTERNATIONAL AUTOMOTIVE COMPANY-

2. International Automotive
Company (IAC)- Introduction
 Fifth largest family-owned company in the automotive suppliers.
 14172 employees
 Total turnover in 2009 was US$ 3.6 billion.
 Company manufactured window regulators, door systems, seat
systems and electric drives.

3. International Automotive
Company (IAC)- Introduction
 Main customers are: Ford, BMW, Chrysler, ACH, Nissan, Suzuki,
Toyota, VW and Bosch.
 The company have 46 plants in 21 countries.
 IAC have reached to more than 100 customers.

4. Reynosa plant
 There are 403 employees in the Reynosa plant.
 The spread over a 10,000 square meters.
 Paul Salinas has appointed to rebuild the entire supply
chain in the Reynosa Mexico plant that IAC had just
acquired from motor company II in 2009.

5. SCM elements
 Transparency
 Standardization
 Optimization
 Flexibility
 Planning
 Innovation
 Problem solving
 Lean management
 Closeness of suppliers
 Cooperative orientation

6. Most important SCM
Elements for IAC
 Lean management
 Optimization
By using Lean Management and optimization IAC can
remove and minimize wastes and non-value adding
activities in warehouse management and
transportation planning to keep the high standards of
the quality of the whole processes and maximizing
profits.

7. Cause of Overusing Premium
Freight
 Inefficient and ineffective warehouse Management
 Inefficient and Ineffective Transportation Planning
 They were not maintaining the inventory properly at
times they have shortage of inventory to fulfil the
customer demand on time, to overcome this they use
ways which cost a lot to company eg premium freight.

8. Steps to over come the
premium price
 The other strategy which they have adopted is EX-
Work strategy.
With the help of this strategy they reduce their
transportation cost to more than 20 percent.
 By adopting Milk run strategy they achieve higher
utilization of trucks and the resulting reduction of
transport costs and reduction of stock.

9. Warehouse Management
 Warehousing is a key element of supply chain. Its aim
is to controlling the movement and storage of material
within warehouse , involving the activities of receiving,
shelving, loading and shipment.

10. Areas/Cause of wasted Resources
 Main cause of wastage of resources is ineffective
warehouse management.
 IAC had a warehouse in Reynosa and also stored
materials in another warehouse located in neighboring
U.S city, McAllen, TX which has created a lots of
problems.
 Mistakes at the time of ordering
 Unscheduled overproduction
 No specific location

11. IAC Measures To
Improve the Ratios of Operator
 Three operators to one office worker:
The ratio was unbalanced before 3:1 and they have
changed it to 9:1 its means they are adding more
employees in manufacturing

12. IAC Measures To
Improve the Ratios of Operator
 765 employees to $7 million in monthly sales:
on the second plant which is a way more better than
this IAC, was making more profit than IAC Queretaro
which is generating about US $2million more than
Reynosa as Reynosa was making the sales of 7 million
with 311 more employees than Queretaro.

13. Lean Management
Warehouse Management (minimum
inventory)
Because of ineffectiveness in the warehouse
management there was a high inventory cost due to
high inventory level and all records were kept
manually.
 Manual functions was replaced by scanning bar codes .
 Standardized packing size
 Standard bar codes label for optimal spacing.

14. Ground Transportation :
 to get optimal order quantity for the plant IAC improved
communication with its suppliers and transporters, this resulted in
drastic decrease in the inventory level.

15. The milk run delivery
Material from supplier in past was transported separately which cause
cost to increase.
 With the implementation of milk run strategy IAC got increased
efficiency and less transportation cost.
 Three best routes were identify which collects the supplies one after
the other thus result in efficient use of trucks and reduction in raw
material trucks.

16. Ocean Freight Transportation
 PREVIOUS SCENARIO:
Total transit time: 30days Total cost: $6711
 SCENARIO 1:
Total transit time: 21days Total cost: $5011
 SCENARIO 2:
Total transit time: 23days Total cost: $5561

17. Difficult Challenge for Salinas
 Salinas’ difficult challenge centered on IAC’s
employees at the time in which SCM had been
adopted at IAC Reynosa.
 Cultural practices
 Lack of skills
 Resistance to change
 Lack of loyalty