Introduction
Logistics and the compilation of the supply chain are as important stages in the business process as the creation of a product or service and its advertising. The wrong choice of suppliers or logistics strategy affects the quality and speed of receipt of goods by customers. In a modern competitive environment, this forces them to switch to another company providing the same services. At the same time, adjustment and flexibility of the strategy make it possible to obtain significant profits even due to small changes that turn into global in scale. Effective communication with all participants in the supply chain is also a critical component in the creation of logistics since the availability of accurate data eliminates the possibility of errors and delays. ALTRASU Cars remains successful due to the flexibility of its logistics strategy. The goal of this case study is to make recommendations on how to adapt this strategy to make a profit in changing conditions.
Main body
ALTRASU is a Japanese automobile company that successfully operates in the American market along with local brands. Its Japanese origin, as well as the location of the factories, gives it advantages for fast and high-quality car production. The first strength is a manifestation of the Japanese organizational culture, since traditionally Japanese products are of high quality, and the organization of work is clear and well structured. This feature means customer liability to the company’s products, ease of cooperation for suppliers and dealers, and high-quality car service, which manifested in the production of individual spare parts. Another advantage is the presence of small but more flexible and technologically advanced factories, as well as the location of suppliers in the same industrial park (ALTRASU park). This feature allows the company to reduce the cost of transporting materials and spare parts, as well as reduce delivery time. In addition, since payments occur after the manufacture of cars, such a system facilitates acquiring the agility of the factory by suppliers. Therefore, ALTRASU Cars has a reliable and efficient supply chain.
However, at the same time, the weakness of ALTRASU Cars is the insufficient production capacities that cannot cope with high demand and consequently delay delivery of the cars to the market. This feature of the company harms its relationship with dealers since delays in production slow down sales at high demand and increase customer dissatisfaction. Consequently, it is more profitable for dealers to cooperate with other car manufacturers to get more profit from sales. Therefore, the company can lose profits due to insufficient supply and dealerships’ dissatisfaction.
The first drawback also turns into another disadvantage, since the return to the supply system of order’s request has many disadvantages for ALTRASU Cars. While the company can provide various models to the market because of the flexibility of its factories and logistic system, it is forced to produce only the cars of the configuration that the dealers order. Consequently, such a system can cause even more significant delays in production because of the need for obtaining parts for a specific model of the car instead of creating a product with available materials. In addition, although a decrease in demand is beneficial for ALTRASU Cars in a certain period, in general, expansion of production is a more profitable solution. However, a decline in demand due to the system of order’s request will only slow down this process.
Speaking about the information that I as an adviser of Aris would be interested to share, it includes the above-described facts presented in short. In my opinion, the company needs drastic changes, and the process of reorganization requires involving all the participants of the chain to consider different viewpoints about the problem. In view of the foregoing, it might be stated that the model of strategic operation of logistics previously used in the company is more beneficial than the supply system of order’s request. In spite of the fact that, at the time of the operation of the system in ALTRASU Cars, the organization sometimes lacked industrial capacity, it ensured the agility in the chain. In fact, the quick and reliable cooperation of ALTRASU Cars with its suppliers and dealers proved to be one of the major factors of its success at the market. Therefore, the automobile manufacturer should go back to the flexible system and eliminate its only disadvantage which is the insufficient industrial capacities.
In this respect, the question arises, what measures ALTRASU Cars can take to be able to produce more cars and satisfy the demands of the dealers at peak periods. The goal might be achieved either by increasing the industrial capacities of the operating factories or obtaining new manufacturing sites (Wu & Onari, 2016). The steps aimed at advancing the plants allow optimization at lower costs but might take more time and be less effective (Wu & Onari, 2016). The measures of this kind include purchasing new, more powerful equipment, improving the utilization of space, introducing additional shifts, hiring new employees, implementing deeper specialization, and others.
Furthermore, ALTRASU Cars can decide how many cars they will be able to produce at peak periods and develop appropriate plans to complete the orders without delays. However, to gain profit, the company will have to increase prices for their products and work on the promotion of ALTRASU Cars brand. The organization should make the quality of their cars its distinctive feature and acquire more loyalty in possible customers. This will allow ALTRASU Cars to choose among dealers and achieve economic success without the reorganization of the manufacturing process. However, this scheme will work only with the great effort taken to promote the brand; otherwise, no dealer would want to place orders in the company at higher prices.
Speaking about obtaining new manufacturing sites, ALTRASU Cars will probably need a large sum of money to organize additional manufacturing sites and make them work efficiently and sustainably. If the company will not manage to expand the territory of ALTRASU Park, it will have to build a new factory in another place. This will lead to a serious increase in transportation costs that the company under analyses has successfully avoided by placing all the factories in the same industrial park. Therefore, cooperating with another car manufacturer and thus, increasing the industrial capacities through the usage of its factory might be a wise decision. In order to save its brand, ALTRASU Cars can take over a smaller company so that possible customers would stay loyal to the organization.
Conclusion
To sum up, it is significant to press the point that at present, ALTRASU Cars has both advantages and disadvantages. The positive aspects of the company’s work are high-quality products, efficient supply chains, and a flexible manufacturing system. As for the drawbacks, the main one is the insufficient production capacities which has led to the organization’s switching back to the system of order’s request which is less effective. To solve its problems, ALTRASU Cars should go back to the flexible system and increase production capacities which can be achieved through several methods.
Reference
Wu, S., & Onari, H. (2016). Production capacity planning with market share expansion under different procurement strategies. International Journal of Economic Management Science, 5, 345-349.