The objective of this study is to develop the international supply chain of Renault, the French car maker. Nevertheless, the diversity of the information and the great number of firms on the market made it difficult for us not to give examples and arguments based on other car makers. Therefore, we will analyze Renault's situation in relation to its competitors.
The automobile industry is one of the most competitive industries in the world and one of the highest export earners. With annual sales of around a trillion dollars, this industry accounts for around one job out of ten in the industrialized countries.
In a century, the automobile industry has evolved from craft work in the 19th century to a very complex industry. This tremendous development has had an impact on the structure and strategy of the dominant companies. Logistics and supply chain management have become key issues and have taken more and more importance as they have played a major role in the development and changes of the industry.
[...] In this new context, the former relationship between suppliers and the automobile company is reproduced between the suppliers of the first tiers and their own suppliers: they need the components to make their modules and buy them from the suppliers of the second Modularization and the creation of parks of suppliers is a very particular organization of Renault's supply chain among international car makers; nevertheless, it is now a frequently followed trend for most of European automobile makers (PSA Let's focus on the operations of the supply chain: To produce its cars, Renault follows a pull system: - it focuses on value chain - the manufacturer identifies needs and builds the product in order to satisfy that need - it produces to fulfill an order This system is not generalized since American car makers still use the push system: - Push system focuses primarily on the supply chain system - Manufacturer plans number and type of vehicles and orders required amount of parts - Current supply chain flawed and rigid - Manufacturer develops product and then finds a market Whether the company chooses a push or a pull system depends on the characteristics of its market. [...]
[...] Without precise deliveries it is impossible to fully benefit from lean manufacturing and the danger of stock out is huge because little or no inventory exists. JIT deliveries require parts to be delivered frequently in small batches. Because of this vehicle utilization can be poor in JIT systems. This is known as the substitution of transportation assets for inventory assets. Therefore overall logistics performance has to be considered. For example Ford has realized that penalizing suppliers for failing to send full truck loads of parts undermined lean manufacturing principles. [...]
[...] The number of suppliers in a traditional approach supply chain is about 250- 300 suppliers. According to Ekhard Kaltenbrunner, the logistics manager of MCC, Daimler Chrysler's subsidiary which builds the Smart, of the value of the car is assembled by equipment suppliers”. Modularization is a good way for car manufacturers to cope with the shortening of life cycle and the increase of investments in developing cars (declining profit per vehicle). Of course this action means a strong control of relationship with suppliers in order to keep advantages against the other competitors. [...]
[...] This created a network of suppliers which was hierarchical: The evolution initiated by Toyota was quickly adopted by global automobile industry which today applies these principles in their supply chain. A market divided into strategic groups The automobile market is well-known for its diversity. Each car maker has its own strategy and tries to gain market shares on a defined area. The graph below presents the different strategic groups among the world automobile industry: Therefore, we can see that automobile makers implement a strategy that is linked with several aspects of their international organization, their offer, the market they target We can divide those criteria according to: - Their geographic area they target: national, regional, global - The depth of their model range: narrow, large - The broadness of the line: intermediate, broad . [...]
[...] A growing demand that was more and more diversified and the greater availability of knowledge of car made it difficult for car producers to keep using the organization they were used to. General motors marked a new step in the organization of the automobile industry by introducing the concept of decentralized operations with coordinated control, but still vertically integrated. This organization was more flexible and focused on innovation. This new change made the network organization of the 1990s we know today possible. [...]
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