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Organization of Renault's supply chain

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  1. Introduction
  2. The automobile industry: Generalities
    1. A few chronological data
    2. A major change: Development of JIT and net working
    3. A market divided into strategic groups
  3. The case of Renault
    1. Presentation of the company
    2. The global supply chain of Renault
  4. Constraints
    1. Nature of the market
    2. New organization and trends among the suppliers
    3. Saturation of the markets
    4. The environment
  5. Challenges
    1. Modularization
    2. Parks of suppliers
    3. Maintaining and developing Just in Time (JIT)
    4. Late differentiation
    5. Technology of information
    6. Security
  6. Conclusion
  7. Bibliography

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. [...]

[...] Examples can be found very easily: at the beginning of December, the PSA factory called Svelnord, in Hordain near Valencienne, was paralyzed and stopped producing cars for several days because of a strike that was taking place in one of its suppliers' factory, Cadence Innovation. This meant 630 cars a day that were not produced. A few days later, Renault had also to shut down its plant in Douai, waiting for the supplier to deliver components again. This problem is also linked with ?just in if Renault or PSA had made a minimum stock of these parts, they may have been able to keep on making cars the time the strike lasted. [...]

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