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Supply Chain and Production System: A Case of Automobile Industry


The Australian automotive industry was once a vibrant and big industry. However, the Australian automotive industry is at the verge of extinction due to the competitive pressure it faces from car makers from other countries, such as Japan and the U.S (Dowling par. 1). However, because Australian automotive industry is still promising and can be revamped, the automotive company that I work for was founded just recently in Melbourne, Australia and is engaged in the design and manufacture of passenger cars. The automaker also manufactures spare parts for automobiles that it sells to the entire world. However, in order for the automaker to succeed in the industry, it has to ensure that it has an efficient logistics and supply chain system, have an effective production system, consider mass customization, adopt suitable simulation software and ensure lean manufacturing. This report will begin by highlighting how the automaker’s logistics and supply chain system compares with other firms in the industry. The second part of the report compares Toyota’s production system as it was in the 80s and today and the lessons that the automaker can learn from Toyota’s production system. The third part of the report will examine the implications that mass customization might have on the automaker. The fourth part of the report will recommend the various software options that would suit the company. Lastly, the report will highlight the how lean manufacturing can be of benefit to the automaker.

Logistics & Supply

Having an effective and efficient logistics and supply chain system is critical to the success of automakers (Bennett and Klug 1281). Because of this, the automaker is committed to building an effective and efficient system to ensure that the company has the materials it needs for the production of its cars, as well as ensure that its final products are distributed on time to its customers. The first thing that has emerged from the automaker is that, like other car manufacturing firms, such as Ford, the automaker depends on thousands of suppliers that supplies it with the parts, materials and services required to make its final products. For instance, whereas Ford Motors has suppliers numbering 1,260 (Bennett and Klug 1282), the same applies to the automaker that relies on about 1000 suppliers for its parts, materials and services. However, the automaker ranks low in terms of sustainability of its supply chain management compared to the rest of the automakers in the automotive industry. Today, most automakers have adopted sustainable logistics and supply chain management by sourcing responsibly and reducing emissions linked with their processes and logistics. For instance, Toyota has been declared one of the most Green Brands in the automobile industry because it has been in the forefront in adopting sustainable processes and logistics that has seen the Japanese automaker reduce its carbon emissions significantly (Bennett and Klug 1284). The same applies to other giant automakers, such as Ford, General Motors, Honda and Rand Rover-Jaguar all of which country cuts their emission by adopting sustainable logistics and supply chain. Therefore, the automaker should consider adopting sustainable logistics and supply chain management system if it is to compete effectively with the rest of the automobile manufacturers in the world.

Toyota Production System

Toyota is one of the automakers with the arguably the best production system in the world. However, the production system adopted by the automaker has undergone significant changes since the 1980s. In the 1980s, the Japanese automaker used the just-in-time (JIT) production system (Lean Enterprise Institute par. 2). The JIT production system adopted by the automaker in the 1980s meant that vehicles were to be produced according to what vehicle was needed, how much and when the vehicle was needed. The JIT production system helped the Japanese automaker not only eliminate waste, but also reduce inventory and associated costs (Lean Enterprise Institute par. 4). However, beginning 1990s to date, Toyota has been using the lean production system. Toyota’s lean production system seeks to add customer value through waste elimination within the manufacturing system.

There are a lot of lessons that the automaker can learn from Toyota’s production systems that it has adopted over the years that the automaker can emulate to enhance its competitiveness. The lesson that can be learned from the TPS is that they aim at eliminating waste in the manufacturing process and this is critical as it results increased customer value and organizational success. Because motor vehicle manufacturing pass through many stages and processes, a lot of wastes are likely to occur if the production system is not effectively controlled. As a result, this might result in increased cost of production, which in turn affects the performance of an automaker (Lean Enterprise Institute par. 3). Therefore, by adopting either the just-in-time or the lean production system that is similar to that of Toyota, the automaker stands a huge chance on increasing customer value while eliminating waste in the manufacturing process and other related costs.

Mass Customisation

Mass customization has become an important business model that is adopted by most modern companies. Mass customization is particularly important for companies that are involved in the manufacturing operations, such as automakers. Moser defines mass customization as designing products that are specifically tailored to the specific needs of a customer (190). The objective of mass customization is to produce products of high quality at low cost and short delivery time.

Accordingly, mass customization will have implications on my automobile company considering that the modern day consumers are looking for vehicles that are designed according to their specification. As such, by adopting mass customization as a business model, the automaker would not only be able to manufacture products of high quality, but also at a lower cost and within the shortest delivery time. Through mass customization, my automaker would be able to deliver the dream cars of many of the customers in a very short time. For instance, through the use of highly sophisticated factory automation, the automaker will be able to mass customize by producing cars that are specifically configured according to the needs of customers in the market as did BMW (Moser 190). Such mass customization can be achieved by the automaker through the use of robotics, which are not only good at mass customization, but also ensures enhanced flexibility in the manufacturing process as has been done by Hyundai and Tesla.

Manufacturing Simulation Software

Simulation has become a very powerful analysis tool employed in manufacturing to address various problems. Simulation allows the manufacturers to test the strategies and analyze the processes and manufacturing systems, such as the lean or just-in-time production system (Hlupic 3). Accordingly, simulation helps a manufacturing company minimize the number of experiments and changes that have to be made in a system or process through simulated experiments. Because of this, there are varieties of manufacturing simulation software tools that are used in manufacturing process. The simulation software includes Plant Simulation, Flexsim, Visual Component, AnyLogic and Arena Software (Hlupic 17).

Although there are many simulation software that can be used in manufacturing, Arena software would be the most appropriate for the automaker. Arena software would be appropriate for use for the company because this simulation software will enable the automaker identify bottlenecks in the manufacturing processes, increase throughput, and enhance logistics, as well as analyze likely process changes. With the Arena software, the automobile manufacturer will be able to evaluate the process flow, job routing, warehousing, packaging system, inventory control, staffing requirements, as well as distribution system (Hlupic 37). With such information, the company will be able to understand where to make improvements to the processes so as to ensure efficiency in the manufacturing processes. Other than Arena software, the company should also consider using Flexsim software as this simulation tool will help the company in analyzing logistical operations, transportation and production assembly line (Hlupic 66). Additionally, it would be appropriate for the automaker to use AnyLogic software as this simulation tool will play a critical role in logistics and supply chain management.

Lean Manufacturing

Lean manufacturing has become a trend in the manufacturing industry. The increased adoption of lean manufacturing as a production system is because lean manufacturing ensures elimination of waste in the manufacturing process, thus improved customer value (Achari 6). Therefore, the principal of lean manufacturing should reach into the organization as it will help the automaker minimize the wastes that it incurs in the manufacturing process. Presently, the automaker incurs a lot of waste in the manufacturing process because the company has not yet embraced the concept of lean manufacturing. As such, the only way to minimize waste in the production process is to adopt a lean manufacturing as a production system. For instance, since Toyota began adopting lean manufacturing in the 1990s, the Japanese automaker has been able to eliminate wastes in its manufacturing process, thus resulting in increased customer value and the success of the firm (Achari 15). As such, by adopting lean manufacturing, the company will be able to identify and eliminate waste. As the company eliminates waste, this in turn results in quality improvement as manufacturing time and costs are reduced. However, the company should ensure that it does not become too lean as this would play to its disadvantage.


The automobile industry is undergoing many changes. As such, for an automobile to succeed and become competitive there is a need for an automaker to adopt an effective and efficient logistics and supply chain management system as well as manufacturing system. As indicated above, as much as my company share a lot in common with other automakers with regards of logistics and supply chain management system, the company needs to adopt sustainable supply chain management system to succeed. The company also needs to learn from TPS that includes just-in-time and lean production systems, consider adopting mass customization, Arena, AnyLogic and Flexsim simulation software, as well as lean manufacturing to ensure competitiveness and success.

Works Cited

Achari, Prakash. Lean Manufacturing & Its Effectiveness In Automobile Industry: Lean Manufacturing -SCM- Automobile Industry. New York: LAP Lambert Academic Publishing, 2012. Print.

Bennett, David and Florian Klug. Logistics Supplier Integration In The Automotive Industry. International Journal of Operations & Production Management, 32.11 (2012): 1281–1305. Print.

Dowling, Jason. “Who Killed The Car Industry?” The Sidney Morning Herald 13 November 2015: 1. Print. http://www.smh.com.au/business/the-economy/who-killed-the-car-industry-20151112-gkx1c8.html

Hlupic, Vlatka. Simulation Modelling Software Approaches to Manufacturing Problems: How to Effectively Evaluate and Select Simulation Software. Cambridge: Lap Lambert Academic Publishing GmbH KG, 2011. Print.

Lean Enterprise Institute. Toyota Production System. Web. 24 August 2016 http://www.lean.org/lexicon/toyota-production-system

Moser, Klaus. Mass Customization Strategies: Development of a Competence-based Framework for Identifying Different Mass Customization Strategies. London: Lulu.com, 2007. Print.