Navistar Supply Management Essay

Executive SummaryNavistar was a worldwide loss flower in the manufacturing medium and heavy transports for 17 consecutive years in the North America food market. Navistars subvention constituted trucks were realized at the Chatham host launch, which had almost 14 years experience in producing Navistars gift line since 1983. Navistar had medical prognosised ontogenesisd industry demand for heavy and medium trucks in 1998. Especi each(prenominal)y, the Chatham lying whole kits clients had strict requirements to the trucks tone and deli rattling date. As the prevarication supervisor in Chatham, Andy Ramsz encountered the inner(a) clip lumber and lurch problem for the truck. Andy had begun to gather data on the upcountry trim supply problem and he got the crucial reasons for these problems occurred. These reasons absolutely change the Navistars internal supply eruptgrowth, add-ond the extra toll as well as sinkd the efficiency of the supply management. According to the reasons place for the trim supply problem, my decision is to hatful up the remediated surgical procedure focused on problems identified and take plans to enhance efficiency and productivity of trim supply chain so as to relieve the impediment of shortage problem and meet customers requirement accu regularizely.Issue IdentificationNavistar provides premium trucks that ranged in propose from no frill models to highly customized units. Customers atomic number 18 satisfactory to select from customized units which represented 50-80 percent of merchandise volumes. These customized units contained miscellaneous options that formed kits that include anywhere from 18-26 individual trim pieces.Andy Ramsz, the Assembly Supervisor at Navistars Chatham zeal has been experiencing an issue with interior trim shortages for Navistars premium conventional trucks. The shortage of separate and non compliance with preservation schedules did not allow plant assemblers to complete th e interior of a truck. The delay in completing the truck affected the bottom line as the interruption in hold for replacement part caused additional clock and money.environmental IssueNavistar considered forest and on-time delivery as a priority that came before lives therefore, various advancement initiatives to character courses were supported by top management as well as initiatives to improve bear ones and on-time delivery. Andy is an Assembly Supervisor however had very broad job responsibilities. Andys time was interpreted up in areas such as provider quality evaluations, internal process inscriptionation, process improvement, and much to a greater extent than. His focus was very widespread and his day was drawn apart from scheduled and unscheduled meetings this position required long hours and weekend civilise. In addition to the quality issues, truck interior trim shortages was just slightly other contend which resulted in range of trim split leading to additional visible handling, and post- congregation installation. These delayed move required overtime that increased price and delayed delivery of the finished truck to the customer. Issues came from both(prenominal) Navistar and their supplier Trimco.Navistar had name changes such as different sizes, repositioning of mechanisms and other various causality and material changes however, these changes to the truck interiors were not communicated to Trimco before intersection runs were completed. As a result, move were shipped with different specifications than those acquireed for proper fit during assembly. Due to the wishing of coordination and communication, this caused hurdles to Navistar and Trimcos just in time system where lead and delivery times were compressed. As a notice supplier for Navistar, Trimco provided 420,000 separate annually to Navistar. Unfortunately, of these parts, approximately 3,100 were defective, missing or inappropriate for use.These 3100 pa rts were another financial burden and jeopardized customer service. Due to the lack of centralisation and particular(a) computer systems capability, Trimco had difficulty monitoring surpass parts for shipments sent to Navistar inappropriate component of trim parts or insufficient quantities of the fabricate parts were supplied. Andy estimated that costs associated with the interior trim shortages were over $200,000 per year. The company was not macrocosm run efficaciously and quality control was hindering the performance for Navistar.Furthermore, Trimco was QS9000 certified, but the quality control procedures varied throughout as the company lacked consistency. To drag matters worse, Trimco also had high employee turnover which meant that employees were notall properly practised and failed to understand the knowledge and specifications of customer requirements.Alternatives Alternative 1Research and reference book another reputable supplier to manufacture 30% of the customize d trim parts To improve financial situation and alleviate the shortage issue, Navistar basis theme out a portion of their customized parts to another supplier term maintaining the other 70% to Trimco. The new supplier go away adhere to the specifications of Navistars customization requirements by going through gentility programs.ProsMeet on-time delivery and humiliate the number of shortagesCreates more inventory and resort stockCould be slight risky for Navistar as they dont have all their bollock in one basket some other supplier puts pressure on Trimco as they could possibly lose more business, so they would hopefully improve their shortage issueCons exalted cost to source, train and implement quality processes with new supplier Separating parts washstand confuse Accounts Payable and payment, additional paper take Purchasing power can diminution if inventory is split amidst multiple vendors No guarantee that delivery and quality lead without delay fit to conformi tyAlternative 2Navistar leave alone melt down with Trimco to give voice cross-organizational teams and partnerships to re-examine programs for product quality, preparedness, processes and logistics. Exchanging information with Trimco and having open and effective communication to work on areas of concern externally and internally result swear out improve operations and business for the plant, Navistar and Trimco.ProsWorking with one another by communion my resources bequeath help both companiesind solutions and work more efficiently By collaborating ideas and using cross-organizational teams, companies can increase efficiencies and disgrace costs Creates a satisfying and long relationship Potential to improve lead timesConsHigh cost implementing and initiating programsTakes a long time to make changesPotential for tons of changes leading to possibility of turnover if employees do not like changes If not properly executed, could be confusing to employeesAlternative 3Decrea se the customers invent options. Decreasing construct options and providing standard packages go away reduce the numerous trim parts for end product this can possibly increase the appropriate shortage and delivery issue. Navistar provided customized units to satisfy different customers requirements customers should change the design before the exertion runs, which often resulted in the failure of communication to the supplier for the change, and inappropriate trim provided, or delivery delay.ProsStandardize the kits form for the interior trim to increase the appropriate delivery and installation procedure. More efficient to organize production and procure trim parts. Convenient for supplier to produce trim parts and arrange the stock and inventory.ConsNavistar may lose the market shares without the specific feature and attracting styling.RecommendationAlternative 2 Navistar give work with Trimco to develop cross-organizational teams and partnerships to re-examine programs fo r product quality, training, processes and logistics.Working together with Trimco and reviewing internal processes will help Navistar rectify the trim shortage issue. Even though both companies have quality management systems and programs, a revised quality program should be cooperatively put together to increase efficiency. A graphic symbol Representative from each organization should be placed in the other company to check on conformity, quality and completion of kits. With the help of Trimco, Navistar can create a workbook for inspection procedures for incoming kits and Trimco will have a procedure to follow for kits going outbound. The inspection will have a review checklist that examines the kits as they come in/out if there are missing parts, they should be authenticated immediately. Incoming shipments with part shortages that are taken from another kit will be required to be documented and ordered. Trimco will also upgrade their computer system and enhance the centralizati on to monitor outgoing parts.Trimco had difficulty responding to Navistars design changes. Navistar will engage to implement a new process to allow increase in lead time for new design changes and communicate changes to the Trimcos design and manufacturing discussion section. Once Navistar receives confirmation from Trimco they can expect to receive the correct trims with the correct design changes.There has been high turnover at Trimco and training employees has not been up to par. Trimco will need to work with Navistar to create a program for product quality and control than develop a manual(a) for process and development. It will be beneficial for Navistar to help Trimco with a program and manual as this will help hold their employees to compliance standards. The manual will be a reference and include quality planning activities and controls that document the manufacture of Navistar products.Navistar has internal challenges that can be changed to help with the quality and logi stics. Andy was prone too many responsibilities and his focus was widespread, some of his responsibilities should be the responsibility of managers. Creating some time for Andy will allow him to focus on his core responsibilities and work out to programs on continuous improvement. Allowing Andy to have free time will help as he should figure out that providing aforecast to Trimco will more preparation for parts.The plant at Chatham should try and lean out duplicate processes and perhaps change the order in which the trim assembly took place. The trim was placed into the cab than the cab placed onto the chassis. The cab isnt dependent on whether the trim assembly is in place therefore, if trims were added get ahead down the line it would provide more lead time for orders.slaying PlanNavistar will need to assess internal process and to work with Trimcos manufacturing department to improve their quality control and process. 1-4 Months Navistar and Trimco will need to select a type Representative and train them on the requirements and specifications for the customized products. timberland representatives and the Manager of Manufacturing at Trimco will help develop a training process and combine that knowledge into Training Manuals to help train flow rate and future Trimco employees. Navistar will provide forecasting tools and reports and review with Trimco to determine plebeian understanding of the documents. Trimco will upgrade their computer systems so that monitoring of outgoing parts will be more accurate.5-6 Months Quality and consistency will be rigorously inspected and tested to ensure that they meet the quality standards. Navistar will set up KPI to the supplier to determine quality and performance and will be take stocked. Trimco will have the forecast so they should have recourse stock based on the Navistars forecastMonitor and promiseNavistar will need to examine the success of the implementation process the training of staff, and shortages o f trim parts will be assessed. The staff should be tested during the first month to see that they are comfortable and understand all the requirements for Navistar. Also, monitoring the Tricmo to see if they are using the forecast to meet production levels should be assessed monthly. Navistar will need to set KPIs and notified when quotas arent being met as this could be an indication of inefficiency. Areas in operations such as production level, turnaround time, disruptions, andflexibility for change would be taken as key performance measurements.Audit KPI Monthly nones Issues* go aroundage of trim parts to Navistarnotes EnvironmentalInterior cut back Quality and Delivery Problem* absentminded or Inappropriate trim parts. This resulted in* Reordering of parts* redundant Material Handling* Post aggregation Installation that needed overtime ($42 per hour) * Eventually decease to a delay in delivery * Typical truck contains 18-26 individualist trims costing $630-$770 * Andy estimat ed that trim part shortages cost the company $200,000 annually *Slowing down the line due to reordering of parts, extra time and money in material handling, post assembly installation and HR managementTrimco Industries* Supplied over 450 parts in 5 different colours and 3 different trim levels * Trimco sent about 420,000 units a course of which about 3100 were defective (0. Some processes within their facility were passing automated while some were manual * Used Quality visit Techniques Statistical Process Control (SPC), Manual Inspection and hot dog over Production. * Due to lack of centralisation and limited computer judicature capability * Difficulty in Monitoring Outgoing Parts * position shipments with contradictory parts or incorrect quantities * High Attrition rate leading to employees with poor level of training, hence some employees were insensible of customer requirements * The company had difficulty responding to certain design changes. * At times these design changes were not sent by Navistar forward production runs and hence parts Notes Alternatives 1 Source another vendor 30% of trim partsProsMeet on-time delivery and reduce the number of shortagesCreates more inventory and safety stockCould be less risky for Navistar as they dont have all their eggs in one basket Another supplier puts pressure on Trimco as they could possibly lose more business, so they would hopefully improve their shortage issueConsHigh cost to source, train and implement quality processes with new supplier Separating parts can confuse Accounts Payable and payment, additional paperwork Purchasing power can decrease if inventory is split between multiple vendors No guarantee that delivery and quality will immediately fit to conformity2 assemble with Trimco for improvementProsWorking with one another by sharing my resources will help both companies find solutions and work more efficiently By collaborating ideas and using cross-organizational teams, companies can increase efficiencies and reduce costs Creates a strong and long relationship ConsHigh cost implementing and initiating programsTakes a long time to make changesPotential for lots of changes leading to possibility of turnover if employees do not like changes If not properly executed, could be confusing to employees3 decrease customization optionProsStandardize the kits form for the interior trim to increase the appropriate delivery and installation procedure. More efficient to organize production and procure trim parts. Convenient for supplier to produce trim parts and arrange the stock and inventory.ConsNavistar may lose the market shares without the specific feature and attracting styling.Notes Recommendation*Monitor supplier performance*How to get the QA depts adjust between the companies?1. Navistar supply chain division restructuring on a strategic level b. Andys responsibilities to be shared between new subdivisions/departments victorious away some of his current functions (e.g. internal documentation and material management) c. Logistics study/review to be implemented by external company to set new procedures particularly for parts flow2. Chatham plant reorganization of assemblya. To review assembly process and plan production steps for muted and consistent move of the truck to decrease customization level and shorten production lead time b. Interior trim process flow reduce/eliminate NVA steps through c. Increase communication efficiency with Trimco to send proper and in time data for last minute changes/redesign3. Trimco tighter collaboration to help them produce quality a. Involve Trimco in logistics audit c. Eliminate double processes taking place both in Chatham plant and Trimco warehouse (e.g. trim kit assembly)Notes ImplementationNavistar implementationAction power point Type Term Responsible date Status Prepare the forecast for the trim part by month tactical pathetic school principal & marketing department & procurement departm ent 3 month Not started Take the liability for the safety stock with supplier Tactical Short enormous Procurement department 3 months 6 months Not started class up KPI to the supplier for the performance audit Tactical Short & Long Procurement Department & production Department 1 month Not started Trimco implementationAction Item Type Term Responsible Duration Status Upgradecomputer system and enhance the centralization Tactical & Strategic Long and short IT department 6 months or more Not started Arrange the appropriate training to the employee Tactical Long and Short Top management & HR department & production department 3 month Not started Have the safety stock based on the Navistars forecast Tactical Short & Middle Production department 3 months Not started Set up the quality traceability regulation for the quality control Tactical short Production department & QC department 1 month Not started Notes Monitor and ControlElement Eval uation verbal description Measure Success Failure 1. Recommend best- selling configuration Got the selling data Accurate and detailed Inaccurate and non-detailed 2. Forecast form and verity accuracy Accuracy =80% Accuracy =85% Accuracy =85% Accuracy