Shanghai Baolong automotive corporation Case Solution
Baolong is an auto-part manufacturing and sellingcompany that operates inShanghai into the US. The company manufactures quality Tires, exhaust vault,and other auto-parts and since it has developed a strong market demand forquality offering, it is receiving a lot of orders to complete.
The company follows traditional manufacturing and production system that results in delaying the delivery of the order along with a lot of material struck in work-in-process. Also due to the delays, thecompany has to deliver the ordersthrough air transport to expeditethe delivery which incurs anadditionaldelivery cost to the enterprise. Not only this, since the order capacity hasincreased, the company tries to catch up with the pace of orders by overtime production, which has yet again failed because of the traditional production system.
In addition to this, the Chinese government has shifted the exchangerates which have directlyaffected the profitability return of the company along with increased cost of raw material. Under such scenario, Zhang-the president of Baolong, has decided to implement the lean process into its plants that are located in Shanghai and Anhui (which company opened to mitigate the high operational cost) to improve and expedite the process of production with less wastage and efficiency in delivery.
However, the results of lean manufacturing process failed to improve the situation of the company. The major factors pertaining to the results were the inadequate knowledge andskill of the labor to utilize the capacity, the difference in viewpoint of the management and the employees regarding the lean process, the resentment of labor in implementation of the process, resistance to changeand inability of the top management to decide between quality and efficiency as the standing stone of the company.
These factorsaltogether failed the completeimplementation of the process. However, the managementbelieves the system is fruitful and hence look for tactics and techniques to overcome the pertaining issue to implement the process fully and to meet the expectation of internal and external players through operationalefficacy and organizational structure and culture.
The primary problem is the implementation of the lean process effectively, throughout the company to improve the order completion rate and to reduce the backlog.
However, there are also secondary problems that are causing operational inefficiencies and resistance in the implementation of the process
- The misalignment of vision and objectives between the management and the employees leading to resistance or low productivity.
- The difference in viewpoint inweighting the factors like quality efficiency
- The internal resistance from employees in implementing the new process causing inefficiency in wok done and quality produced.
- Lack of teamwork, leading to “blame game” which is reducing the effectiveness of the operationsanddriving the attention away from identifying the key loopholes in the process.
1- Why there is a need to implement or adopt a new process?
The company has increased its target segments by getting into the markets of US. The company produces quality autopartswhich have become the competitive edge and thus becomes the factor for theincreased orders over the period of time. Since the company from thestart used the traditional method of operations, which utilizes the intuition technique to forecast the sales, utilizes additional raw material and holds theraw material in work-in-process phase. Thesefactorsaltogether delayed the operational efficiency of the company leading to order backlogs, low profitability, increased freight cost and dissatisfaction of the customers.
In addition to this, the traditional process incurred anadditionalcost of raw material which became expensive due to Chinesegovernment revision of exchange policy. Under such circumstance and increased pressure to fulfill the order, the company has to shift toward the lean process which includes Just in time (JIT) and optimal production forecast feature that could help the company overcome the issues of excessive use of raw material, efficient production and delivery of orders on time.
This will also allow the company to overcome the additional freight cost which is incurred due to fast delivery of orders to the end user to save time that has been consumeddue to delay in order processing.Also, the process will enable the company to reduce the operating cost by controlling the working hours which are long and extensive under the traditional method to meet the demand on time. Hence will increase the profitability and efficiency of the company. It will also allow the business to fulfill more order in time, increasing the market share and thus sales...................................................................