Key Category Products
Volkswagen Company procures general assembly lines and machines, software, scrap disposal, services, factory equipment, logistics (Processes and materials). The general assembly lines and machines entail equipment that is used in the assembling of the vehicles in the plants of the company. The services pertain to those that are used in marketing the products of the company. Logistics entail the transportation services for both land and air and material packaging. The scrap disposal requires services that involve the disposing of the unwanted components or the recycling of equipment (You, Y., Xu, Y. and Wang, L. 2016, p. 558).Lastly, the software comprises of factors such as the acquiring of licenses, service developments and establishing of network connections to necessitate communication. These key components are managed by the procurement department of the company so as to instigate smooth flow of operation.
The major supply market for the company is majorly Europe, North America and South America and Asia –pacific. The company is not dominant in some countries such as Africa. The suppliers of the company are Faurencia S.A, which is located in France; the supplier supplies automobile seats. The other supplier is Denso which is a corporation that is based in Japan (Jauhar, S.K., and Pant, M. 2017, p. 33). The company provides components and modernized technologies. The BLG LOGISTICS GROUP AG& Co.KG is also one of the major suppliers of the enterprise with the provision of the logistic services more so about the procurement services (Huang, Y.Y. and Handfield, R.B. 2015, p. 17). Also, it facilitates the disposal and the recycling of equipment. The company is located in Germany. An Arvato Bertelsmann solution that is found in the USA has been supplying Volkswagen with the after sales and the distribution of its products globally to the potential customers. The RYOBI LIMITED is based in China and majorly supplies automobiles in the form of die castings that are used in the manufacturing of vehicles.
The supply market of the company is widely distributed geographically. Most of the suppliers have been providing the company with the materials and the automobiles that it requires for years. Most of the suppliers not only supply to the company but other companies as well. It is imperative to identify that the corporation has more than one supplier providing the same materials in some key components (Liljestrand, K., Christopher, M. and Andersson, D. 2015, p. 308). In the view of ensuring that it does not incur shortages. The widely distributed suppliers indicate that the company is large and globally identified that is why its supply market is so large.
Sourcing of materials is necessary for it aids in the reducing of the costs that a company can be able to save. The other advantage is that it an opportunity for increased sales that is through the decreased expenses (Ivanov, D., Tsipoulanidis, A. and Schönberger, J. 2017, p. 101). Also, the company can reduce the likelihood of experiencing shortages this is through the sourcing of services or products from various suppliers who may have abundant resources at their disposal. Sourcing instigates integration where a company can be able to acquire new strategies from its suppliers that can make it obtain a comparative advantage in the market.
Research of the Supply Market
Sourcing has the merit of making a company come up with strategies that can aid in the curbing of shortages. The strategies explored lead to the unearthing of potential opportunities. The opportunities can range from the acquiring of expertise skills, the formation of joint ventures and mergers and being connected to other suppliers that have abundant resources.
The selection and assessment of the suppliers are majorly instigated by their outstanding performance in the market. The ability of the vendor to comply with the environmental standards that the company has kept in place is also a major consideration (Xu, L., Kumar, D.T., Shankar, K.M., Kannan, D., and Chen, G., 2013, p. 911). Furthermore, the company looks at the uniqueness of the product that the vendor wants to offer. If the product is of scarce supply or is owned by only the supplier or as a result of the utilization of high technological advancement; then the company selects the supplier so as to gain a competitive edge in the market through the use of the rare process or materials in its manufacturing process. The last factor is the breakeven point of the supplier. In the case that one supplier has a breakeven point that is of a smaller percentage to another’s; then the company will prefer a breakeven point that is the minimum amongst all the suppliers (Subramanian, N., Abdulrahman, M.D. and Rahman, S., 2014, p. 562).
The company has engaged in various initiatives in the bid to better its supply chain and its operations. It is imperative that the firm is more concerned about environmental development. The company has initiatives to ensure that it possess tools and raw materials that are free from pollutants (Kohler, W. and Smolka, M., 2014, p. 413). Also, the company has ensured that it is part of the technological progress and it contributes to the synthesizing of wealth for sustainable economies. The other initiative is to instigate ethical issues in all its operations. For instance, the company has engaged in the advancement of the lifestyle, training, and development of individuals and fostering structures that have promised democracy to all. It is significant to the organization in that it has fully integrated into the social development of people through the provision of jobs and career development.
Through the suppliers, the company can be able to acquire information about the other competitors and thus it can use the information in strategizing on the most strategic means of dominating the market through the use of unique methods (Chen, J., Huang, Q., Peng, H. and Zhong, H. 2015, p. 189). In this way, the company can also develop new markets thus increased sales. Through supplies, Volkswagen Company is in a position to access modern technology that can be used in the development of new products that will automatically increase the market share for the company.
The challenges that are faced can relate to delays in supply say due to shortages which affect the production process of the enterprise (Lee, K.H. and Vachon, S., 2016, p. 155). Also, in the case of scarce resources, the company will incur a lot of costs that may lead to inefficiencies which can translate to high prices to the customer. There is also the issue of being supplied to material or processing components that are faulty or those that are illegal in regards to the laws of the state. Such actions can lead to scandals that tarnish the name of the company and unbearable litigation costs.
Assess of the Supply market and the Importance of Sourcing
The sales market is imperative in the sense that it has promising sales. The large size of the market aids in offsetting the challenges that sometimes occur to the company (Ruan, X. 2016, p. 65). For instance, in the emissions scandal that the corporation was involved in cost it a decline in sales in USA and Canada. But due to the encroachment in the markets of the rapid developing economies, the company was able to offset the losses that were made with the tremendous increase in the sales from China.
The demand forecasting techniques that are being implemented by the company include assessing of the segment projections. For instance, the company looks at the emerging trends in the segments, and the competitor’s launches for it dictates the demand that will be in the market for the products of the company (Fan, Z.P., Che, Y.J. and Chen, Z.Y. 2017, p. 92). The other factor is pricing, the company looks at the pricing of the goods of the competitor, and if for instance, the products are cheaper than its products it is evident that the demand in its market will reduce, industry projections also determine the market share of the company. If the industry aims at expanding, then there is the likelihood that the sales that will be reported will be high.
Under the short-term forecasting techniques, the company can assess the web traffic in its site. If the company reports more site visits, then it is sure that the sales in that season will increase. The last factor would be the marketing strategies that are being embraced by the competitors (Fan, Z.P., Che, Y.J. and Chen, Z.Y. 2017, p. 94). The demand techniques that are used by the Volkswagen Company are not used by other companies in the market this is due to factors such as limited resources, stiff competition or barriers to entry by the dominant businesses that are the major market players.
The company utilizes a tailor-made computerized system as its part of its inventory management techniques. The automated systems aids in the procurement management. The systems also allow the management to identify a stock that has no prospects of being sold and decisions are made on how to deal with it. The other technique is the JIT system where the materials supplied correspond to the demand of the company (Ivanov, D., Tsipoulanidis, A. and Schönberger, J. 2017, p. 357). Lastly, the company is allowed by its suppliers to return a portion of the stock that was not sold. The policy aids in the reducing the unsold stock. The inventory techniques are not used by different products. For instance, in the food industry, the returning of the stock to the manufacturer is not applicable due to the nature of the product. It is imperative to identify that the other techniques such as the use of the computerized systems apply to different products.
The demand for the products is adequate that which can assure the company of a prosperous future in the competitive industry. Firstly, in the case that the system fails, it is evident that the whole process of the directorate will halt (Ivanov, D., Tsipoulanidis, A. and Schönberger, J. 2017, p. 353). Also, in the event of any error in the collection of data, inconsistent reporting will occur in all the files which will hinder the integrity of the management systems. The company also faces the challenge of being supplied with raw materials that are below standards and thus the company is unable to meet its objectives.
The selection, evaluation and the Development Practices
The bullwhip effect is majorly characterized by the imbalance between the materials demanded and those that are supplied due to the misuse of information. The primary causes are supply chain oriented. Firstly, lack of communication inhibits the correct provision of the products due to information inconsistencies in the supply chain. The return policies for customers can lead to the Bullwhip effect due to the excess demand and the returning of most of the materials that leave the company with excess inventories.
Inconsistencies due to disorganized ordering of materials can lead to the bullwhip effect as a result of disparities between supply and demand in the market (de Almeida, M.M.K., Marins, F.A.S., Salgado, A.M.P., Santos, F.C.A. and da Silva, S.L., 2015.. 2015, p. 502). The other factor could be a bad reputation for a company. The effect would be that customers may detest from the products. The remedies to the effects could be compensation to the affected parties in a case such as the Volkswagen emission scandal. The other solutions include the mitigation of unpredictability of supply chain events, use of the modernized technologies in the supply chain activities, reducing of fluctuations and shortening the lead time.
The tools that are utilized in the supply chain include; order processing tools. The IT order processing tool that is used aids in the identification of when the inventory will be delivered. The other tool would be inventory management tool that aids in the administration of the warehouse (Alam, S., Ata, M., Bailey, S., Beutler, F., Bizyaev, D., Blazek, J.A., Bolton, A.S., Brownstein, J.R., Burden, A., Chuang, C.H. and Comparat, J. 2016, p. 34). It records, monitors and disseminates information regarding inventory. The other tools include portals that bring together the company and its suppliers. It ensures that information is shared across once it emerges. Also, the IT tools entail security components. The security components aid in the safeguarding of information from unauthorized parties. It will ensure that the company does not lose its significant information to its competitors or malicious staff.
The collaborative practices that are embraced across the supply chain include the responsibility to ensure that the components or the materials that are being supplied meet the needs of the customers and that they are of high quality. Also, they have to ensure that the customer is always informed about the products that are available and their constituents. Also, the customers should also be supplied to the products in time and where they want them delivered (Allen, F. and Nowak, E. 2017, p. 43).The implementation will be through the integration of all the parties through a portal where customers, the company, and the suppliers can freely interact to necessitate the provision of quality services and to ensure that the company realizes it an ongoing concern.
The challenges that may emerge would be a significant number of customers and their diverse needs that can make it tough to process and implement their expectations also; it will be so costly for the organization to provide a platform that can accommodate all its stakeholders. The opportunities that will emerge are the ability to identify the needs of the customers and capacity to come up with new products that would meet the diverse requirements of the customers. The supply chain capability will be boosted in such a way that the suppliers will be more informed on what they have to supply, the requirements of the company, its objectives, mission, standards, and policies and thus it is effective is strongly established.
The first step would be to analyze the interactions of the company with the supplier. For instance, what are the lead times, the break-even points and the maximum and the minimum stock orders? The company will also include the misfortunes that were experienced by the company such as shortages, disorganization and delayed deliveries (Schaltegger, S. and Burritt, R. 2014, p. 235). The identification of all this factors aid in the identifying of the critical success factors of the supply chain and its future in the company.
The other step would be to have the right gadgets that will check the compliance of the inventory with the standards, for instance, the right deliveries have been made before signing the inventory. It would ensure that the goods that are delivered are always those that were desired (Schaltegger, S. and Burritt, R. 2014, p. 237). The last step would be to assess how the defective products are handled. The process will also involve the identification of how the finished goods are moved within the plant. It is imperative to the determination of this procedure to verify if there is any time wasted or any resources such as energy being misused.
The first step is the identification of the problem and the plan. At this juncture, the phase entails the identification of the problem in the supply chain and how to best deal with the problem. The next step is the coming up with a base model. The phase considers the numerous destinations of the suppliers, distribution locations, and the geographical locations of the customers (Shafiee, M., Lotfi, F.H. and Saleh, H. 2014, p. 5099). The mapped areas are then related to the transportation systems, the supply of material and the available inventories. After the synthesizing of the baseline, it is now an avenue of creating the necessity of the baseline model. The process involves two phases that are the first step which involves a comparison of the current information with that of the previous model. The second phase incorporates the validation of the present problems and the gaps that need to be filled. The fourth stage is the measuring of the key success drivers and how to succeed. The stage involves the optimization of the current model with limited or no changes. The fifth stage is all about the Synthesizing of scenarios (Shafiee, M., Lotfi, F.H. and Saleh, H. 2014, p. 5100). The stage includes the collection of information through interviews majorly involving the executives. The sixth step is the optimization of the scenarios. It requires identification of the factors that are stirring the problems in the supply chain. The seventh stage pertains to the consolidation of the core operations and the determination of the cause of the challenges that are occurring in the supply chain. The eighth stage involves the instigation of change into the organization by trying to remove the problem that is in the supply chain. The last stage is the constant review of the whole process in the case that changes occur in the organization appertaining to the supply chain.
The third stage consists of the validation of the baseline. It is imperative that the third stage relates to the triple-A supply chain which incorporates the agility, adaptability, and alignment. Agility refers to the ability of the supply chain to be dynamic that is the robustness to changes that are always occurring in the dynamic markets. Adaptability refers to the flexibility of the design where it can be modified once the need arises and thus this necessitates change. Lastly, the alignment relates to the consistency with the objectives of the organization.
The company sees itself as part of the society, and that is why it engages in sustainable environmental activities that ensure social and economic development. The company also ensures that it provides commodities that are of high quality and distributed as and when they are required (Pagell, M. and Wu, Z., 2017, p. 352).The company also collaborates in actualizing of environmentally sustainable activities that will make the society free from environmental degradation. The sustainability of the organization will trigger both the internal and the external factors in the company. For instance, the company will create value to the customer through the availing of quality goods and services. To the company, it will earn a good reputation and a competitive advantage. To the external environment, it will be an avenue for social, political and the economic integration.
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