Mercedes Benz Operations Management Essay

Executive SummaryDaimler Mercedes-Benz is one of the most valuable companies around the world it is stratified number ten out of 100 take brands worldwide (Best orbicularbrands.com, 2014), Mercedes-Benz is part of Daimler AG which is one of the best leaders in automobiles brands. The Daimler AG brand aims to go to bed function, value and premium feel to its customers. The comp some(prenominal) has 14 sub-companies that produce cars, vans, trucks, and financial services. It has more than 100 vehicle shapes in over 200 countries worldwide, offering senior gritty school quality products is the connections strategy andgoal. Daimler Mercedes-Benz cars have sold 1,565,563 million unit with revenues of over 64,307 million euros with over 274,000 thousand employees in 2013, the familiarity has excessively invested in typesets and equipment worth over 3,751 billion euros (Daimler AG, 2013).This management report includes an in-depth study of the actions management inside the co nfederation, by covering the most important part of the attach to such as manufacture, concourse line and w arhouses management. The aim of this report is to study current passings as headspring as the status of the social club and how changes in admit enkindle be handled. At the end of this report, the conclusion and recommendations offer the federation solutions to prevent any(prenominal) issues that they may face during the end product life cycle. division (A)A-I Operations focal point at Daimler Mercedes-BenzQuality & Material ManagementMercedes Benz manufacturers use a global quality management dodge to en certain(predicate) that their automobile products see their standards, which in return increase customer loyalty to the brand. Producing high quality automobiles is the goal of Daimler- Mercedes strategy to recreate the customers requirements, as well as opening a brand- juvenile road for new customers to experience Mercedes automobiles. Recently, the follow has aimed to increase quality by adding extra environmentall(a)y friendly features to their products to help the global environment (Daimler AG, 2013).However, Mercedes Benz customer satisfaction can be damaged by quality worries. Alarms led the association to take the decision to recall over 250,000 cars from the division 2008 until late 2014 for mechanical and rubber concerns at the assembly line. Mercedes recalled these vehicles to be serviced immediately for customer safety (Jensen, 2014). On the different hand, BMW had to recall less vehicles than Mercedes Benz, for immediate support related to mechanical issues. Such issues could cause a crash delinquent to a power fault in the engine (CBS Miami, 2014).Outsourcing outside Germany had increased this peril for Mercedes Benz, by decreasing the company quality and safety. The company recalled more than 55,000 vehicles that were produced inChina because of a faulty circuit made by the manufacturer (Wantchina terms.com, 201 4). These issues argon related to the quality management of the company, and can decrease customer loyalty, which could lead them to consider changing to other brands.Quality and safety issues affect the companys yearly ranking, which in return can increase or decrease their total revenues. Quality is one of the most important components for the company to keep forward of the competition. Furthermore, according to (Miller and Lundegaard, 2002) Mercedes quality has to be bulletproof as the highest company priority, by closing any gaps that occurred done and through previous issues. The increasing numbers of sub-model cars can similarly affect the brand quality through increasing any risk issues once launched to the public.Furthermore, according to (Stephen, 2004) Mercedes customers have high transportations astir(predicate) the high quality promised by the company. In 2003, the company disappointed many customers when they sold over 2000 vehicles with an extra option for a navi gation establishment, which were not ready to be delivered at the business metre, excessively accompanied by other mechanical issues. On the other hand, the company made an announcement most its new high quality hydraulic breaking organization, which increased its competitiveness in terms of safety and quality against other competitors in the industry.Our company should make sure that manufacturers deliver products with the highest design specification, in severalise to be order-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 company. agree to (Evans, 1997) higher quality products lead to a decrease in costs for the company through higher productivity improvements in quality leads to lower cost because of less re-work, fewer mistakes, fewer delays and snags (Evans 1997, P.55).SpeedAccording to (Hill and Hill, 2012), synchronising all fork out chain activities thr ough using the same data, and completing production at the scheduled quantify, coordinate between the manufacturer and suppliers, modifys manufacturers to respond quickly to the demand changes. Therefore, synchronisation ensures that our manufacturers are able to deliver products faster and more flexibly to the customers. Furthermore, Daimler Mercedes-Benz understand what customers are expression for, in that locationfore the company is expanding our dealers network to endure the customer requirements for vehicle availability.Our companys relationship with the current suppliers is improving every day to minimise any risk of trying defective vehicles (Automotive contributechain.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 utilise a delay in one of our products models. The supplier was supposed to deliver special battery materials to the manufac turers warehouses (Ireson, 2008). However, the supplier refused to meet Mercedes-Benz requirements, which caused a delay in delivery and to use of low quality batteries which were defective.Our company is using the powerful application to manage our suppliers, this application is called SAP, it is making our supply chain management more efficient, conciliatory, and at the lowest cost. The SAP solves any gaps in the companys capabilities by using the supply chain reproduce system to scan all the move and materials these technologies is helping the company to reduce any extra cost (mSE Solutions, 2012). In addition, the SAP increases the flexibility of our manufacture as well as increasing the speed of delivery for the customers, through just in while (JIT). It does this by enabling many features for the dealer to calculate the vehicle price of the order during the order stage and at the same time getting an order-number to track the order. All these steps are integrated together into the supply chain management system, and are informed by severally stage of the order (Infosys, 2005).This synchronises the information in real-time, reflecting on the company strategy to change with demand. Also, there are reinforcements in using the SAP application to manage our company warehouses where the company stores materials for vehicles. By sending orders for the warehouse to get ready to deliver an order to the assembly line, this can achieved by using the just in time (JIT) efficient method for manufacturing. In the meantime, this creates an extra space for new materials in the depot area at thewarehouse the SAP system leave already be sending a new order to fill and stack those stock areas for coming(prenominal) orders from the system (Bayigen, 2012). All these measures combine to increase the speed, therefore reducing the cost of manufacture, and maintaining dependability in an efficient way. For our company dependability is an important ingredient of the c ompanys success, it reduces any ambiguity within the supply chain management (Slack et al., 2012).Dependability and FlexibilityOur company had dependability issues in 2014. This dependability issue started after launching 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 live at least two months until they are available in stock. Not keeping up with high demand could lead to loss of brand-loyal customers or elicit buyers who are willing to trade in or paying cash 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 creation 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 technology and unique services (Tanwar, 2013). Also, our company provide different vehicles types with unique colours including high variety and volume to attract new costumers as well as reducing the unit cost from the supplier side. On the other hand, our company variation in demand is high due to the complexity of the production and the way that we keep in touch with the demand.A-II Process Management at Daimler Mercedes-BenzProcess management is a vital part of our company success. According to (Slack et al., 2012), operations and butt management can break the whole business at any stage or place when they are managed in the ill-timed 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 outputs that meet the customer expectations and more. Customers orders are processed throu gh the operations system as soon as they ask for a particular model.Types of Daimler Mercedes-Benz customers1) Customers request for a particular model through the dealer virtually of the time, Mercedes-Benz dealers have all the models in the showroom and ready to be sold. In the campaign of high demand for a model, dealers will 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 allows customer to customise their desired car by adding extra features to the interior or exterior of the car model. Furthermore, when the customer is at the order-check out, it will automatically locate the nearest dealer 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 mode ls are produced using these processesAdvanced Design ProcessDaimler Mercedes-Benz models are designed by 440 designers from all over the world, from countries including the United States of America, Europe, and Asia. These designers are responsible for purpose future cars using their creativity and imagination. Our company has invested millions of dollars into building high technology designing studios to meet the future of theseautomobiles. Here, designers are involved in the development of each model through strategic management, to operation management of the vehicle design.Designers at Mercedes Benz control the design process as well as the models lifecycle, from the drawing stage to the stage where the interior and exterior meets the companys quality standards. From here, the design is moved into a virtual digital design on computers, to add features and a superior look. The design process takes a long time, in some cases more than three years (Media.daimler.com, 2010).Accordin g to (Slack et al., 2012), designing process types depend on the complexity 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 variety of projects. The design process is sent to the board of management at our company with a planned schedule for the production life cycle. eulogy is sought from the board of management this stage of accepting or rejecting the new design impacts on the production process. The production process then involves the body patronage and the assembly line.The Body and paint Shop (Raw Materials and Workers undertaking commitment)High technology robots create the vehicle bodies including the metal shell. After the board of management have reliable the new vehicle design, the robots transform the design concept into reality by producing the body part. Over 1200 robots are in daily operation at Mercedes Benz U.S. International, in order to increase the speed of production. The se 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 curvy with vehicle parts in order to make the process more flexible. Furthermore, the SAP application helps to reduce the chance 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 shop are welltrained to meet standards such as safety and c run forliness 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 a t Mercedes Benz U.S. International which contains tetrad 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, wheel 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 acid areas.Customer Service StrategyAt Daimler Mercedes-Benz, customer service plays a big role in the brand image. It helps the company to ensure that customers are fulfil and their expectations are met. To satisfy customers, their perception of the product needs 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 clownish.This customer service assistant system is available 24/7in order to assist owners of the vehicles, so they can be in contact with any issues that may 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 studies 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.da imler.com, 2012).The companys current customer services includeSafe-Driving courses for the safety of the ownersRescue services booklet24/7 emergency partitioning assistanceFinancial 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 happy 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 prepare d for any mistake in the manufacture, by informing customers one-by-one once any issues have been discovered. inventory ManagementAt Daimler Mercedes-Benz, each region 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 company, warning it to look into the system in order to image 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 fu ture when it comes to high demand orders. There may be an increased risk of unavailable parts. Furthermore, when the inventory management fails to catch up with demand by putting customers in queues, this can make these customers unhappy, which can affect the companys revenue in other ways (Slack et al., 2012).Purchasing and Supply Chain ManagementOur company is facing material shortages from the suppliers. These shortages notified our managers to focus more on research from around the world, in order to appliance new ideas by finding solutions. At Mercedes-Benz our suppliers are topical anesthetic suppliers in each country, working under specific conditions and requirements. The aim in commissioning local suppliers 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). iodin of the issues that faced our company when a certain supplier was not able to deliver batteries on time was the resul ting delay in the production process. This delay touch on customer demand, causing 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, lean 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 ( system of macrophages), which refers to layout, standards, tools of the production, and the methods for operating our company proves worldwide. Furthermore, MPS is divided into two systems one for training and the other for support. The MPS training snapper 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 workforce 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. Then 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 view 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 et 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 diffe rent times, enables our company to handle any mistakes or errors that may occur at the first plant by compensating and changing at other plants. Thus, it will decrease quality issues, since information can be shared between our plants just in time. In return, this will ensure that efficiency and improvement principles are in place, reducing costs as well as eliminating unnecessary 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 level. At this point, our company is going 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 this 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 reduced waste in terms of time (Hamprecht, 2012).Part (B) Capacity Management at Mercedes BenzDaimler Mercedes-Benz content 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 police squad 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 fulfil the high volume production. This could then decrease the number of customers who were dissatisfied by the delay, time lag 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 interminable 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 decide what is best for both the company and customers. The decision to make customers wait in queues for three months until this model is available 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 manu facturer 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 computer programming 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. Our 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 c ustomers are satisfied, as well as to increase our sales revenues. An automobile manufacturer should always match the existing material prevail 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 capacity 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 enigmatic 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-prepared in terms of responding to uncertain changes in terms of demand and controlling the inventory and warehouses 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 RecommendationsDependa bility is an important factor that can help the supply chain to dealwith high demand. According to (Slack et al., 2012), focusing 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 reduce the impact of any events that may occur.The company should allot 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 be 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 bend 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. macrocosm 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 entry 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 pr oduction 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 reality 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 end product Systems and Standardisation From Ford to the Case of Mercedes-Benz. 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