Navistar Case Study

NAVISTAR

     SUPPLY MANAGEMENT

Case Analysis Report

Final Exam

Instructor: Rick Deck                                                                 By: Arshad Ashraf

March 28, 2015                                                                 Student # 7002547

Navistar International – Case analysis report

Table of contents

Executive Summary                                                        3

Issue Identification                                                                4

Environment and Root Cause Analysis                                5

Alternatives and Options                                                        7

Recommendations                                                                9

Implementation                                                                9

Monitor and Control                                                        10

Exhibit – Production structure                                        11

References                                                                        12

EXECUTIVE SUMMARY

Navistar is a leading manufacturer of commercial trucks, buses, defense vehicles and engines. The Company determined to keep delivering smart, sustainable technologies since 1831. In 1922, The International Harvester Company which was the parent company of Navistar stated to build trucks in Chatham assembly plant along with range of farm machinery. After selling company’s agricultural division in 1985, The Company changed its name to Navistar and focused on developing building trucks.

In 1997, Navistar led the industry for 17 consecutive years in marketing medium and heavy duty trucks and its sale was $6.37 billion. Since 1983, Navistar’s premium conventional trucks were built at Chatham assembly plant. The Company forecasted increased demand for heavy trucks for the fiscal year 1998 particularly for United States and Canada compared with fiscal year 1997.

Customers spent a significant amount of time designing their own trucks and they were intolerant of delays, quality problems or factors that failed to reach their expectations. Andy Ramsz, the assembly supervisor in Chatham focused on resolving supply problem of interior trim parts delivery due to increased demand in 1998. Andy was trying to solve this issue by concerning to maintain Just in Time Delivery for the customers. This problem affected Navistar’s smooth delivery schedule of trucks, reduced efficiency of Supply Management and extra coast.

My main recommendations are: introduce “Just in time order system”, shifting to relational approach with suppliers, product segmentation, invest in IT project, create regional head offices, train employees to properly understand the production process and set up the improved procedure focused on problems identified and take plans to enhance efficiency and productiveness of trim supply chain to meet customers’ requirement accurately.

ISSUE IDENTIFICATION

Navistar’s Issues:

1. Long cycle time of truck design.

Nature: Tactical Timing: Long term Short Term

Navistar provided premium trucks ranged in design from no frill models to highly customized units. At any given time, customized units could represent 50-80 percent of production volumes, customers spent amount of time to design and months deciding on various options and accessories, which easily to cause the delay or quality problem or any other factors that failed to meet customer’s expectations due to the complication.

1. Interior trim quality and supply problem

Nature: Tactical and Strategic Timing: Long term and Short Term

Interior trim was provided for each truck in the form of”kits” that contained a specific group of sequenced interior trim parts necessary to complete each truck. When “kits” were delivered to Navistar assembly, problem arose when assemblers attempted to assemble the trim into truck, were not able to do so because of missing or inappropriate interior trim parts. therefore, the subsequent consequences of trim parts reordering, additional material handling, post-assembling resulted in the premium on direct materials, labor costs and the delivery delay of finished truck.

Trimco Industries Issues:

1. Quality Issues and Quality Control Procedures

Nature: Tactical and Strategic Timing: Long term and Short Term

Trimco provided 420,000 parts during the course of a year, out of these parts; approximately 3,100 were defective, missing or inappropriate for installation. Even because of a lack of centralization and limited computer system capability, Trimco had difficulty monitoring outgoing parts and sometimes send shipments with inappropriate component trim parts or insufficient quantities of the right part.

1. Training challenges with its employee / high level of employee turn over

Nature: Tactical Timing: Short Term

Lack of appropriate training to employees in various techniques resulted in the employees were not always familiar with the details associated with individual Trimco customer requirements.

1. Lack of sufficient communication

Nature: Tactical Timing: Long term and Short Term

Difficulty in responding to Navistar’s design changes arose when Navistar failed to communicated these changes to Trimco before production runs, so that parts were shipped with different specifications than those needed for proper fit during assembly.

ENVIRONMENTAL AND ROOT CAUSE ANALYSIS