DIGITAL ASSIGNMENT -1

TITLE: SUPPLY CHAIN DRIVERS AND METRICS FOR AN

AUTOMOBILE MANUFACTURING COMPANY
[SUPPLY CHAIN DRIVERS FOR GENERAL MOTORS COMPANY

NAME: RUTHVIK BHUPATHI

REGNO: 16MIS0239

INTRODUCTION:
In order to know how General Motors have improved its supply chain performance in terms of
responsiveness and potency we must examine four supply chain drivers:
 Inventory
 Transportation
 Facilities
 Information
These drivers additionally confirm whether strategic fit is achieved across the supply chain or not.
General Motors’s competitive strategy dictates that ideal supply chain for General Motors will
concentrate in responsiveness but also should be efficient. Its supply chain consists of
decentralized, but interlinked units that interact in local experimentation and actively pursue
learning and resource transfer across units. General Motors effectively uses four supply chain
drivers to show best performance.
DRIVERS OF SUPPLY CHAIN FOR AUTOMOBILE MANUFACTURING
OF GENERAL MOTORS COMPANY

INBOUND LOGISTICS
 Facility selection: Sourcing decisions are some of the most vital ones automotive
manufacturers face. This challenge is often referred to as the “off-shore vs. near-shore” or
“low-cost vs. local” question. By using modelling technology, companies can make
supplier and manufacturing location decisions that are optimized across the entire supply
chain, identifying the trade-offs across all the different cost elements. optimization can
recommend where and how many CCs may be needed larger shipments and reduced
transport costs. Flow path optimization can identify which products/suppliers

INVENTORY:
One of the key goals of General Motors is to scale back inventory at the line
Side of the plant and throughout the supply chain. It does it with the help of crossdocking in order
to increase delivery frequency and reduce inventory.
General Motors reduces in-process inventory through Just in Time set of techniques. The process
is driven by a series of signals, or Kanban that tell production processes to make the next part.
Kanban are usually simple visual signals such as the presence or absence of a part on a shelf. JIT
causes dramatic improvements in manufacturing organization’s return on investment, quality and
efficiency.
Role of inventory in General Motors’s supply chain is considerable, because company tries to keep
low stock using the techniques (JIT, Crossdocking). Not thinking globally, at this stage(inventory)
company is efficient-cost reduction. Moreover, the major inventory (end product) of General
Motors are cars, and for them, not like for some bestseller, demand cannot suddenly exceed
expectation.
Stable demands produce appropriate trade off: comparatively predicted inventory, therefore more
efficient; its availability- responsiveness.

TRANSPORTATION:
General Motors had avoided several long-distance transportation issues, just by creating different
manufacturing divisions in each major market (for example for North America, France, etc. It
builds plants manufacturing cars according native demand, and placing it closely to high-
developed infrastructure and suppliers).

In Japan, it uses rail and truck modes of transportation. Because of the fact that country is not very
big, it doesn’t take much time (and is not too costly) to transfer products between different stages,
and at the same time speed of product transportation is comparatively high. Outsource
transportation for end products by third-parties (dealers) somehow decrease transportation
function. Local infrastructure is extremely developed and it is easy to create route along which
product can be delivered. Due to these peculiarities, company uses middle balance between
efficiency and responsiveness.

Facility and Manufacturing

Transportation route optimization can be done alone or in conjunction with either supply chain
optimization or simulation. Using advanced algorithms, transportation routes are defined to
minimize the cost of inbound shipments, while considering realistic cost and Demand for different
automobiles shifts over time to new regions or different quantities, and suppliers and cost
structures change as well. Facility locations and inventory levels should also change to keep in-
sync.

 Production footprint: Modelling the production footprint and analysing varying

scenarios helps a company balance existing capacity with the investment required to
add additional production. This may mean investing in additional capacity in certain
locations or perhaps completely moving production capacity to other facilities within
the network
 Inventory optimization: Inventory is your insurance against variability in the supply
chain, but one of the biggest sources of variability is demand, and demand can be
highly unpredictable, or very slow-moving, as with service parts fulfillment.
LLamasoft inventory optimization recommends end-to-end stocking levels and
appropriate ordering behaviour after it thoroughly analyses and automatically
classifies the underlying demand patterns. This results in right-sized inventory levels.
 Network optimization is often a starting point for companies exploring supply chain
design, and can identify major improvements in cost, service and sustainability - often
leading to total supply chain savings of 10 percent or more.

Outbound Logistics
With endless combinations of mode, routes and carriers from which to choose, automotive
manufacturers are turning to supply chain and transportation network design to simplify
outbound logistics decision making. Here are a few examples:

 Evaluating new modes, lanes and strategies: Using modelling technology, companies
can identify optimal DC-to-customer assignments, determine the ideal mode mix and
LTL/FTL combination, create optimal multi-stop delivery or pick-up routes,
determine the best utilization of assets, evaluate driver work schedules and even
perform servicebased green field analysis.
  Backhaul optimization: When designing transportation networks, efficiency is the
name of the game. Many manufacturers are utilizing “milk runs” or backhaul
optimization in order to make the most of driver time, assets and fuel. Transportation
route planning technology enables companies to design optimal multi-stop routes.
 Considering new delivery options: Should we continue to ship our own products, or
consider shipping directly from foreign suppliers? For example, a domestic auto
manufacturer could analyse the costs and service times of utilizing the outbound
logistics network of Chinese suppliers to deliver direct instead of first shipping to the
U.S. constraint structures. This helps answer the questions, “What’s going to happen
to our transportation routes when the network design is changed?” or “Could there be
a more efficient way to get our product from the supplier to production?”
 Product flow-path optimization: The process of moving products from supply through
production and eventually distribution presents myriad choices. The collective set of
these choices make up a product’s flow-path through the supply chain. Modelling all
the alternative flow options and using smart algorithms to determine the best choices
takes the guesswork out of these decisions and provides a useful reference in boardroom
discussions.

 Consolidation centre selection and analysis: For a company with multiple suppliers
making different products in a relatively small area, a consolidation centre (CC) may
be used to combine smaller shipments for fewer should go to a CC, and network

OBSTACLES TO ACHIEVE STARTEGIC FIT:

Increase in Variety of Products:

The customers could demand custom-made or tailored products like sport/casual car, totally
different colors, numerous different choices, diesel/benzene.
All these will increase uncertainty, therefore cost for the company and low down of responsiveness.

Decrease in Product life cycles:

Environmental restrictions for amount or octane number of benzene, right-side cars will involve
prohibiting usage of cars that possess these features, and thus decrease opportunity window for
automaker.

Globalization:
Difficulties with coordination of business units, competition from KIA, GENERAL MOTORS,
DODGE.

New Strategies Execution difficulty:

Current strategy is ideal, on the other hand once the influence of various factors company will
face with the need of change, it shouldn’t only understand, however understand how to execute
something new.

Increase in demanding customers:

Matching customer’s expectations and perceptions, providing better quality for same price.

TOOLS AND TECHNIQUES USED BY GENERAL MOTORS:

General Motors uses the following IT infrastructure:

 Unix-based client server environment.
 SAO R/3 modules FL, CO, SD, MM and PS and solution for the automobile sector.
 Lotus Notes
 Intranet, which may be accessed through worldwide networks, like Sprint, UUNet,
Tymnet, CompuServe.

Techniques used by General Motors are:

 Crossdocking
 Just in Time technique

DIAGRAM

PARTS/SERVICE CUSTOMER
CENTRE DEALER

DISTRIBUTOR
WAREHOUSE
OVERSEAS
NETWORK ASSEMBLY PLANT

RAW MATERIAL
COMPONENTS AND SUPPLIER
SUUPLIERS