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Need and Challenges in Minimizing Wastes in a SME Automotive Firm: Case Study of Janus Auto*

CASE STUDY, OPERATIONS MANAGEMENT
ET Cases, 14 Pages

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Need and Challenges in Minimizing Wastes in a SME Automotive Firm: Case Study of Janus Auto

 

Efficient supply chain management and adoption of best practices as laid out by by well-known global companies like Toyota are integral for modern businesses to be competitive and profitable. Standardised procedures follow stipulated guidelines and large multinational companies can comfortably adopt these with ease as they have access to adequate resources for implementation.

However, for smaller companies resources are limited. The company is well aware that adoption of best practices will enhance efficiency in the long run and it is often forced to make choices related to optimizing initial resource deployment, incorporating new production processes and practices, establishing cost effective network of suppliers and agents, etc.

One such MNC ‘Janus Auto’ that faces problems faced by firms in similar segments. What are the tradeoffs made by them to make sure they are able to minimize the 7 wastes as defined by the Toyota Production System? For instance we observe in this case that the unavailability of a full automated production line in their facility results in ‘Motion’, with ‘Over-Processing’. However, they minimize the transportation costs by accepting larger batch size and store products at their own facility.

Successful supply chains can significantly benefit the competitiveness in firms. The automobile and the automotive sector have been two of those sectors which have benefited a lot from the advancements in supply chain management.............................

Teaching Note Preview

Need and Challenges in Minimizing Wastes in a SME Automotive Firm: Case Study of Janus Auto

 

Synopsis

Supply Chain Management (SCM) in today’s globalized world is a key to business efficiency. As logistics have become complex and networks grown across space, SCM became important for many industries, especially, for the automobile and related automotive industries. The well-known Toyota Production System is a bench mark in this area. It chalks out 7 major wastes called ‘Mudas’ which a company must focus on and try to minimize in order to have an efficient supply chain.

The concept focuses on eliminating non-value added activities or “waste” from the viewpoint of the customer and has been around in one form or another for many years, at least in manufacturing. It is only recently from 1990s that it is being identified as Lean and applied to the supply chain & logistics management area.

One of the key steps in Lean and TPS is the identification of which steps add value and which do not. The Toyota Production System talks about three types of deviation from optimal allocation of resources (Muda, Mura, Muri). They adopted these three words beginning with the prefix ‘mu’ as in Japan they are widely recognized as a campaign for waste improvement.

However, every company has its own priorities of which of these wastes will be considered as most important and be tackled with priority. All big companies are directed to make arrangements that make sure that all the wastes are being looked after. But a SME supplier, even to a big multinational company, may not always be capable enough to minimize all the wastes simultaneously due its limited resources. Owing to this, many affordable compromises have to be made by an SME, depending upon the sourcing company requirements and the nature and structure of the supplier firm. These compromises may mean that all the wastes are not minimized but it does not necessarily mean that it does not fulfill the profit function for the company.

This case study focuses on one such company ‘Janus Auto’ and finds out the problems faced by players in this segment. Janus Auto introduces itself as a Manufacturer and supplier of different types of Automotive Spare Parts, being in the automotive manufacturing business for about 40 years now................

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Abstract

A company’s success in the market is often due to its efficient management of Supply Chain practices and logistics. International best practices like Just in Time and Lean Manufacturing have become integral in achieving profitability; their adoption in the automobile and automotive sectors is common. Standard guidelines are stipulated and large multinational companies in these sectors have the required resources to easily adopt and implement these systems.

However, for many SMEs resources are limited. Thus, while MNCs are aware that adoption of best practices will enhance efficiency in the long run; they have to make a choice about initial resource deployment, incorporate new production processes and practices and evaluate the costs of accessing an efficient network of suppliers and agents.

This case study focuses on one such SME ‘Janus Auto’ and finds out the problems faced by players in this segment. What are the affordable tradeoffs made by the company to make sure they are able to minimize the 7 wastes mentioned by Toyota Production System? How does Janus Auto manage to prioritize between the two critical tradeoffs of Inventory and Transportation?

The unavailability of a full automated production line in its facility results in ‘Motion’ and ‘Over-Processing’ being at the bottom of its priority list.

Janus Auto is able to efficiently minimize the transportation costs by accepting larger batch sizes and store products at its own facility, thereby streamlining the inventory costs. It is observed that motion and over-processing does not create significant inefficiencies in its supply chain. However, there is obviously scope for further improvement in the systems to minimize costs and gain efficiency.



Pedagogical Objectives
The objectives of this case is to understand:

  • Whether small supplier companies in the automotive sector of India are able to focus on all the 7 wastes or Mudas which are mentioned in the well-known Toyota Production System.
  • How can these companies tackle the problem of tradeoffs between any two wastes or Mudas?
  • Can the tradeoff decisions by small supplier company maintain efficiency in the supply chain?
  • Will the compromises or tradeoffs made by these types of companies in their production systems be considered as unnecessary and ‘wastes’?
  • Does the presence of one or more of the ‘Mudas’ always imply lower profitability for a company?
  • What is the role of accurate demand forecasting in efficient supply chain management?

Case Positioning and Setting

  • For MBA teaching of courses on Supply Chain Management or Operations management
  • For BE Mechanical Engineering curriculum on Supply Chain Management


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