Mercedes Benz Operations Management Essay

Executive SummaryD engineerler Mercedes-Benz is unmatch adequate to(p) of the most valuable companies near the world it is ranked number ten by of 100 direct grades worldwide (Bestglobalbrands.com, 2014), Mercedes-Benz is part of Daimler AG which is one of the best leaders in cars brands. The Daimler AG brand aims to render go, value and indemnity character reference to its guests. The political party has 14 sub-companies that produce cars, vans, trucks, and financial service. It has much than 100 fomite models in all over 200 countries worldwide, suffering postgraduate gauge products is the political partys out note of hand andgoal. Daimler Mercedes-Benz cars urinate sold 1,565,563 one thousand thousand unit with revenues of over 64,307 million euros with over 274,000 thousand employees in 2013, the smart set has in addition invested in typesets and equipment expenditure over 3,751 billion euros (Daimler AG, 2013).This caution report includes an in-depth debate of the trading carrying into actions perplexity within(a) the towering society, by covering the most of the essence(p) separate of the array such as manufacture, aggregation line and w behouses management. The aim of this report is to study current matters as surface as the status of the community and how changes in admit hatfulister be deal outd. At the end of this report, the conclusion and recommendations offer the caller solutions to prevent some(prenominal) issues that they whitethorn face during the production purport cycle. Part (A)A-I Operations perplexity at Daimler Mercedes-BenzQuality & Material managementMercedes Benz manufacturers use a global step management frame to examine that their automobile products meeting their standards, which in return accession node the true to the brand. Producing high look automobiles is the goal of Daimler- Mercedes strategy to meet the clients requirements, as nearly as opening a hot pass for ne w customers to experience Mercedes automobiles. Recently, the friendship has aimed to increase type by adding extra environmentally friendly features to their products to help the global environment (Daimler AG, 2013).However, Mercedes Benz customer gaiety can be damaged by grapheme worries. Alarms take the partnership to take the decision to recall over 250,000 cars from the year 2008 until late 2014 for mechanic and condom concerns at the assemblage line. Mercedes recalled these vehicles to be serviced immediately for customer caoutchouc (Jensen, 2014). On the an opposite(prenominal) hand, BMW had to recall fewer vehicles than Mercedes Benz, for immediate maintenance relate to mechanical issues. Such issues could cause a crash due to a power fault in the engine (CBS Miami, 2014).Outsourcing outside Ger more had increased this jeopardize for Mercedes Benz, by change magnitude the participation quality and prophylactic. The comp each recalled more than 55,000 vehicle s that were produced inChina because of a faulty circuit polish off by the manufacturer (Wantchina ages.com, 2014). These issues ar related to the quality management of the guild, and can decrease customer loyalty, which could lead them to cipher changing to other brands.Quality and safety issues see the callers yearly ranking, which in return can increase or decrease their total revenues. Quality is one of the most alpha components for the companionship to keep ahead of the competition. Furthermore, according to (Miller and Lundegaard, 2002) Mercedes quality has to be proof as the highest family priority, finished closing any gaps that occurred by with(predicate) preliminary issues. The increase numbers of sub-model cars can as hearty as affect the brand quality through increase any stake issues once launched to the public.Furthermore, according to (Stephen, 2004) Mercedes customers learn high expectations nearly the high quality promised by the familiarity. In 2003, the federation disappointed some(prenominal) customers when they sold over 2000 vehicles with an extra option for a navigation clay, which were not go d profess to be delivered at the right while, also accompanied by other mechanical issues. On the other hand, the play along made an announcement close its new high quality hydraulic breaking brass, which increased its matchedness in terms of safety and quality a deducest other competitors in the industry.Our association should make sure that manufacturers deliver products with the highest man specification, in rate to be crop-winner quality conformance, by delivering products with no defects (Hill and Hill, 2012). Furthermore, improvements in quality lead to a decrease in cost for the fraternity. jibe to (Evans, 1997) higher quality products lead to a decrease in cost for the company through higher productivity improvements in quality leads to get cost because of less re-work, fewer mistakes, fewer delays and snags (Evans 1997, P.55).Speed fit to (Hill and Hill, 2012), synchroneity all supply cosmic string activities through victimisation the same data, and finish production at the scheduled date, coordinated among the manufacturer and set uprs, modifys manufacturers to reply quickly to the look at changes. Therefore, synchronisation experiences that our manufacturers argon able to deliver products fast-paced and more flexibly to the customers. Furthermore, Daimler Mercedes-Benz understand what customers be looking for, thitherfore the company is expanding our dealers network to meet the customer requirements for vehicle availability.Our companys race with the current providers is improving every day to minimise any risk of supplying defective vehicles (Automotivesupplychain.org, 2013). In addition, working closely with suppliers reflects positively on our brands customer service. In 2008, the company faced a problem with one of its suppliers, which ca employ a delay in on e of our products models. The supplier was supposed to deliver special battery materials to the manufacturers w arhouses (Ireson, 2008). However, the supplier refused to meet Mercedes-Benz requirements, which caused a delay in delivery and to use of confused quality batteries which were defective.Our company is utilize the powerful practise to manage our suppliers, this application is called run down, it is making our supply chain management more effectual, compromising, and at the final cost. The SAP solves any gaps in the companys capabilities by using the supply chain fingerprint system to scan all the parts and materials these technologies is helping the company to constrict any extra cost (mSE Solutions, 2012). In addition, the SAP increases the tractability of our manufacture as hearty as increasing the speed of delivery for the customers, through except in time (JIT). It does this by enabling many features for the dealer to calculate the vehicle price of the sight during the recite stage and at the same time getting an request-number to hint the secern. All these steps are integrated together into the supply chain management system, and are informed by each stage of the coordinate (Infosys, 2005).This synchronises the information in real-time, reflecting on the company strategy to change with learn. alike, in that respect are advantages in using the SAP application to manage our company warehouses where the company stores materials for vehicles. By diffuseing supposes for the warehouse to get fixate to deliver an order to the fiction line, this can achieved by using the just in time (JIT) efficient system acting for manufacturing. In the meantime, this take ins an extra put for new materials in the storage area at thewarehouse the SAP system bequeath al install be pass arounding a new order to fill and stack those storage areas for future orders from the system (Bayigen, 2012). All these measures reliance to increase the spe ed, therefore cut down the cost of manufacture, and maintaining dependability in an efficient delegating. For our company dependability is an alpha factor of the companys success, it reduces any ambiguity within the supply chain management (Slack et al., 2012).Dependability and tractabilityOur company had dependability issues in 2014. This dependability issue started after intromission the new high quality CLA-Class model at an affordable price. Dealers of Mercedes-Benz could not deliver the new model on time, meaning customers had to count at least two months until they are procurable in stock. Not retention up with high demand could lead to loss of brand-loyal customers or raise buyers who are bequeathing to trade in or paying funds immediately. This makes our company less flexible in terms of adapting to changes in customer demand (Flierl, 2014).CostOur company differentiation strategy to produce high quality luxury cars is inspiring in itself, in terms of the creatio n of unique high quality vehicles that exceed our customers expectations. Our company charges a premium price for most of its models. This differentiation strategy helps the company to increase the brand image positively in our customers eyes, by including high-end applied science and unique function (Tanwar, 2013). Also, our company provide different vehicles types with unique colours including high modification and the great unwashed to attract new costumers as easily as reducing the unit cost from the supplier side. On the other hand, our company innovation in demand is high due to the complexness of the production and the way that we keep in touch with the demand.A-II assist Management at Daimler Mercedes-BenzProcess management is a vital part of our company success. According to (Slack et al., 2012), acts and process management can break the whole business at any stage or place when they are managed in the wrong way. Furthermore, processes at Daimler Mercedes-Benz are internationally the same. Our processes include inputs, via a transformation stage, to create and deliver high quality makes that meet the customer expectations and more. Customers orders are touch on through the operations system as soon as they pack for a particular model.Types of Daimler Mercedes-Benz customers1) Customers postulation for a particular model through the dealer Most of the time, Mercedes-Benz dealers have all the models in the showroom and ready to be sold. In the case of high demand for a model, dealers ordain have to order a new delivery from our company in order to manage the demand.2) Customers asking for a particular model through the website The companys website gives customers details about car models. The website also al impoverisheds customer to customise their desired car by adding extra features to the interior or outdoor of the car model. Furthermore, when the customer is at the order-check out, it leave automatically adjudicate the nighest dea ler to the customer to confirm the order.Once the dealer confirms the order, the order is entered into the SAP application and sent to the manufacturer. Where our company has already launched the new vehicle model, these models are produced using these processesAdvanced Design ProcessDaimler Mercedes-Benz models are keen by 440 radiation diagramers from all over the world, from countries including the United States of America, Europe, and Asia. These nameers are responsible for conception future cars using their creativity and imagination. Our company has invested millions of dollars into building high engineering designing studios to meet the future of theseautomobiles. Here, designers are involved in the learning of each model through strategic management, to operation management of the vehicle design.Designers at Mercedes Benz support the design process as well as the models lifecycle, from the drawing stage to the stage where the interior and exterior meets the companys q uality standards. From here, the design is moved into a virtual(prenominal) digital design on computers, to add features and a superior look. The design process takes a long time, in some cases more than triplet years (Media.daimler.com, 2010).According to (Slack et al., 2012), designing process types depend on the complexness of the project. Mercedes-Benz vehicles tend to take too long to be designed, making their projects low volume as well as having a high salmagundi of projects. The design process is sent to the board of management at our company with a planned schedule for the production life cycle. Approval is sought-after(a) from the board of management this stage of accept or rejecting the new design impacts on the production process. The production process then involves the body store and the assembly line.The Body and paint Shop (Raw Materials and Workers job commitment)High technology robots create the vehicle bodies including the metal shell. After the board of managem ent have accepted the new vehicle design, the robots transform the design concept into candor by producing the body parts. Over 1200 robots are in daily operation at Mercedes Benz U.S. planetary, in order to increase the speed of production. These robots are used to guarantee quality and fast delivery. This means the workers can knows exactly when supplies are coming.This ensures that the line is not stacked with vehicle parts in order to make the process more flexible. Furthermore, the SAP application helps to reduce the befall of late delivery by ensuring that the parts are on time and by checking availability of the materials at the warehouses. Our company ensures that customer quality and safety standards are met by increasing the welding parts to more than 5000 welds on each vehicle. When the process is done, engineers have to check the quality of the vehicle as well as following the just in time method in sending them on to the next process. Workers at the body bring out a re welltrained to meet standards such as safety and c slenderliness of the work place (Mbusi.com, 2012).The Assembly LineImplementing innovation in the Mercedes-Benz assembly line is one of its drivers to success. An example of this is our assembly line at Mercedes Benz U.S. International which contains four lines. When parts are finished at the paint shop, our assembly line and its workers are ready to build up the final vehicle shape. Our strategy makes the assembly line moves while the workers are working, which decreases waste in terms of time. Suppliers respond to our strategy to be environmentally friendly by using re-usable plastic packages. At the end of the assembly line stage, there is a new stage of quality checks, including a rattle test, vagabond alignment test, roll test, and shower test. These all ensure that the quality meets the company standards. After the quality check results are confirmed (Mbusi.com, 2012), the vehicles are made ready for worldwide shipping by transporting them to the marshalling yard, containing the transportation areas.Customer expediency StrategyAt Daimler Mercedes-Benz, customer service plays a big lineament in the brand image. It helps the company to ensure that customers are satisfied and their expectations are met. To satisfy customers, their perception of the product need to match the delivered product (Johnston et al, 2012). Our company had created a new service called customer service assistant system CSA in order to provide customers with a broad range of services in each country.This customer service assistant system is available 24/7in order to assist proprietors of the vehicles, so they can be in contact with any issues that whitethorn occur. Furthermore, the company is also investing in research for future customer needs. Staff can speak many languages, making the service more efficient and more flexible. The CSA allows customers to complain about any issues relating to their vehicle. The CSA system stud ies and checks each issue, while also sending the customer to their nearest Mercedes-Benz dealer to resolve the issue as soon as possible. This strategy helps our company toensure that the functionality of the customer services meets and exceeds customers expectations (sustainability.daimler.com, 2012).The companys current customer services includeSafe-Driving courses for the safety of the ownersRescue services booklet24/7 emergency breakdown assistance financial servicesAfter-sales servicesAccording to (Hill and Hill, 2012), quality is determined by how well a companys services meet their customers requirements and expectations. Our company CSA system is meeting the customers expectations by contacting them after their purchase to ensure that they are keen with the service. Including customers by ask for recommendations. This strategy provides our company with extra information about areas that we should cover in the future, which increases the company sales revenue and decreases vehicle defects, which saves time. Furthermore, accepting customers complaints helps our company to look again at how the manufacturer produces car models in the future. This ensures that our customers are satisfied by the services provided. The after-sales services should be fain for any mistake in the manufacture, by informing customers one-by-one once any issues have been discovered. Inventory ManagementAt Daimler Mercedes-Benz, each piece has its own warehouse where the company stores all the parts of the car models. Each region has its own geographic areas where temperatures can range from below zero degrees to over 35 degrees. These parts are either sent to the manufacture or to the after-sales services. Furthermore, our company is the owner of the most warehouses across the world. Our company uses SAP to control these parts in each region. However, the company failed to ensure that the warehouses were ready to send vehicles for its new CLA model.This is an alarm for the com pany, type it to look into the system in order to trip up up with high demand. It also shows that there was a time-waste issue between deliveringthe materials to the manufacturers and new orders for new materials to be stocked in the warehouses. This may cause issues in the future when it comes to high demand orders. There may be an increased risk of unavailable parts. Furthermore, when the inventory management fails to peer up with demand by putting customers in queues, this can make these customers unglad, which can affect the companys revenue in other ways (Slack et al., 2012).Purchasing and Supply Chain ManagementOur company is face material shortages from the suppliers. These shortages notified our film directors to focus more on research from roughly the world, in order to implement new ideas by finding solutions. At Mercedes-Benz our suppliers are local suppliers in each country, working under specific conditions and requirements. The aim in commissioning local supplier s is to reduce time, so materials can be delivered to the ware house just in time, further decreasing extra costs for the company (BayIgen, 2012). One of the issues that faced our company when a certain supplier was not able to deliver batteries on time was the resulting delay in the production process. This delay affected customer demand, causation customers to look at other products. Therefore, the company is now using the SAP application to manage their suppliers.The Process ChartA-III Lean Management at Mercedes BenzAt Mercedes-Benz, tiptoe management has been in place for more than 15 years lean management is a vital part of our operation management. This is achieved through using the Mercedes-Benz production system (mononu liberate phagocyte system), which refers to layout, standards, tools of the production, and the methods for operating our company plants worldwide. Furthermore, mononuclear phagocyte system is divided into two systems one for learning and the other for su pport. The MPS formulation centre ensures that our trained experts are working hard and are well motivated on the production line as well. It also ensures that improvements are made by managers, meeting the minimum company requirements and standards. Theprocess of training employees and managers at Mercedes-Benz takes more than six months.This involves the employees in the operation processes, in order to deliver the quality of services that our customer expects. MPS trainees receive one type of training that covers the theories and four types of training that put what they have learnt into practice. MPS aims to enhance communications between the plants, leading our company to ensure that lean synchronisation processes are well constructed, in order to eliminate waste. A significant approach to eliminating waste of time is used by our company. When the our custody understands exactly how important high quality is to the company, each employee has the experience and is well enough equipped with the minimum tools to do the given job role. thusly the employee can find the car set up, with the tools next to him and ready to be used (Daimler AG, 2012).A new strategy has been developed by the company to take a closer look at customer demand. This strategy is based on launching our products in public. At the same time the plant has started production of a new model to test and catch up with demand in each country, by applying the lean and just in time principles to reduce overproduction as well as producing what our customer needs at a given time, and delivering a high quality car model (Azok, 2014). This new strategy strengthens our company popular opinion on demand as well as producing high quality car models as soon as possible, meeting our customers expectations. Other plants around the world are, one by one, each month, preparing to start production. It is clear that the company is doing its best to forecast customer demand.Furthermore, according to (Slack e t al., 2012), implementing lean synchronisation in a company operations means that they can produce at the lowest possible cost and the highest quality. This is achieved through delivering exactly what the customers expect from the company. Also, applying this method our plants in other countries, to produce cars at different times, modifys our company to handle any mistakes or errors that may occur at the first plant by compensating and changing at other plants. Thus, it allow for decrease quality issues, since information can be shared between our plants just in time. In return, this exit ensure that efficiency and improvement principles are in place, reducing costs as well as eliminating surplus steps.The just in time (JIT) concept of Mercedes-Benz is similar to Toyotas concept. The assembly line at Mercedes-Benz can handle producing new models, reducing the time needed to build a new assembly line and to commission new plants. This represents a cost incentive for the company . Since the assembly lines at our company are able to handle new models, this will decrease the setup time, which in return will reduce waste of resources. According to (Evans, 1997), setup time reduction will increase the flexibility of the production line by decreasing the production time as well as decreasing the inventory furthermore, it increases company productivity.The similarities between Mercedes-Benz production system (MPS) and Toyotas production system lie in their JIT, pull production and kanban systems. These enable both companies to produce any quantity of vehicles depending on demand. They help the company to use available materials depending on the demand direct. At this point, our company is vent to replace containers of used materials with new containers by asking our long-term suppliers to send a new order. This uses a high technology card that can be removed from the container and scanned using the MPS system. It then sends the new order to our supplier. In t his way, MPS minimises the inventory as well as using minimum inputs to produce the highest outputs (Clarke, 2006).Our company has already received many awards for its lean production as well as for reducing the production of many models from 43 to 30 hours in 2015. This is enabled by our lean production system, which has trim waste in terms of time (Hamprecht, 2012).Part (B) Capacity Management at Mercedes BenzDaimler Mercedes-Benz mental object management failed to chase the demand for our new CLA model. According to (Hill and Hill, 2012), capacity means serving customers by delivering products through matching the organisations resources to current demand. Our company could not cope with the high volume of requests for this model due to an inaccurate estimation of demand. The management team needs to be more efficient in chasing demand by tweaking theoutput to match the current demand of this model.This would start with hiring more labour and asking workers if they are able to take overtime shifts in order to make full the high volume production. This could then decrease the number of customers who were dissatisfied by the delay, waiting for more than three months in the queue. Also, since that our company already has a long-term strategy for achieving high demand, the company should consider asking the nearest plants outside the country whether they have products ready to be dispatched directly. Weak cooperation between those countries could cause delays.The complexity of the operation process affected the delivery of the CLA model. The management team could have waited longer before launching the model to the public, by checking all the available resources. Nevertheless, our company manufacturers were not ready to deliver ready products on time to the customers. This led to a hard decision for managers to square off what is best for both the company and customers. The decision to make customers wait in queues for three months until this model is avail able is, in the customers eyes, harming our companys image. Furthermore, the warning signs of being out of stock were not checked properly from this it is clear that our staff should be more skilled.Also, asking for recalls for defective models due to manufacturing issues, affects the quality of the production inside the manufacturer as well as our customers will be unhappy. Quality is a high priority problem, which negatively affects our company relationship with the customers, leading to queues, as with the shortage of CLA models. Lack of dependability and flexibility can decrease our company sales revenue as well as increasing in costs, which in return reduces our lean synchronisation. The company was aware of these risks yet our company decided to launch the new CLA model.Our company is already scheduling our future growth by investing in expanding our capacity. This will lead our company being more flexible in the future, as well as better able to serve high customer demand. Ou r company has realised that there is a lack of space for expansions in many places, therefore our company is looking to find more locations to build up new assembly lines to enhance our production (Daimler.com, 2013). It isimportant that the company should always attempt to catch up with demand to ensure that our customers are satisfied, as well as to increase our sales revenues. An automobile manufacturer should always match the existing material flow with production, and also ensure that the company record the capacity planning in order to get more details about our actual capacity. This will enable our company to control the demand properly.Also, when our company could not control the demand, this led the company to face many challenges relating to our supply chain management. When a company cannot meet customer demand, this makes it more difficult for the company to manage their capacity. This complexity is called the bullwhip effect, suppliers should expand their current capaci ty in order to be more flexible to catch up with the high demand on the materials (University Alliance, 2015).Capacity management has many levels. In the case of our company, the capacity level depends on demand, especially as most of the services that Mercedes-Benz offer are related to physical materials such as vehicles and service parts. This is considered to be a mixed long-term capacity which depends on demand. The demand forecast in our company is different from one year to another. Accurately forecasting the demand means that our company has the ability to evaluate uncertain risks that may occur.Also there is a value in operational terms, in knowing our companys limits knowing what we can and cannot do. On the other hand, our company already has experts who control our capacity. Controlling capacity means planning at an advanced level for companies to be well- on the watch in terms of responding to uncertain changes in terms of demand and controlling the inventory and warehou ses so that inputs are ready to be transformed into outputs. This will benefit companies and manufacturers in terms of increasing revenues, and through establishing an organisation where high demand places pressure on the parties inside the company (Slack et al., 2012).Part (C) Conclusion and RecommendationsDependability is an important factor that can help the supply chain to dealwith high demand. According to (Slack et al., 2012), counselling on dependability at an earlier point may reduce uncertainty about any risks that the manufacturer may face. This is especially important when it comes to dealing with quantities our manufactures should focus more on delivering products on time. Dealers should be prepared for such an event and could be warned by the manufacture of high demand in order to be prepared to be flexible at an earlier stage in the order. Covering a high demand of orders from customers is important. In order to satisfy them, our company should be more flexible to red uce the impact of any events that may occur.The company should address quality issues at an earlier stage. The company already conducts high quality checks on each process and stage. It is highly recommended to report any concerns that may get along during the product life cycle. Reporting these at an earlier stage will give our company extra time to find proper solutions.In the case of covering the inventory management, our company failed with the new CLA model. The company should consider looking again at the whole warehouse system. It is recommended that the operations manager should focus on increasing the physical quantity stored in warehouses inside the company, in order to anticipate future demand as well as increasing the companys value to its customers. Also, since that our company is the owner of most of the warehouses, it is a competitive advantage to never be out of stock, even when the demand is increasing. Furthermore, the warehouses at Daimler Mercedes-Benz should be come more efficient through using the SAP application. The company should consider giving more opportunities for the employees to gain more skills and experiences.Since our company is investing in capacity, it is also a competitive advantage for us to always be ahead of demand this will ensure that the company increases levels of customer satisfaction, whereby products meet customer demand. Being able to forecast the demand on a daily basis will help the company to decide whether they should invest more in capacity or reduce the number of suppliers.Mercedes-Benz should focus more on suppliers intromission requirements and how a long-term or short-term arrangement can be an advantage or disadvantage for the company. Managing suppliers in an effective way will reduce any extra cost as well as making sure that our suppliers realise the company requirements in terms of JIT. In addition, our company should enhance its relationships with all suppliers. This will ensure that the suppliers are happy when they are dealing with our company and are not likely to provide the company with defective products.Reference ListAutomotivesupplychain.org (2013) Mercedes by any other name. Online Available fromhttp//www.automotivesupplychain.org/features/216/62/Mercedes-by-any-other-name/ Azok, D. (2014) Mercedes-Benz Alabama production of the C-Class will cut U.S. wait times for the model Online Available at Bayigen, M. (2012) How Mercedes-Benz turned research into human race Global CSCMPs Supply Chain Quarterly Online Supplychainquarterly.com Available at Bestglobalbrands.com, (2014) Mercedes-Benz Best Global Brands Interbrand Online Available at Clarke, C. (2006) Automotive take Systems and normalization From Ford to the Case of Mercedes-Benz. In Springer Science & Business Media pp.169-172 Daimler AG (2012) AMG behind the scenes Online Available at Daimler AG, (2013) Annual report 2013 Online Available at Daimler.com, (2013) Daimler plans expansion of Mercedes-Benz Cars production network Online Available at Evans, J (1997) Production/operations management Minneapolis/St. Paul West Pub. Co. Evans, J. (1997) Productions/operations management. Quality, Performance, and value fifth ed. New York West Publishing Company, p.44-57 Flierl G, D. (2014) If you want a new 2014 Mercedes-Benz CLA-Class