Navistar Case Study

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Environment

The company’s recent decision on moving its quality improvement initiatives, Andy Ramsz, assembly supervisor start to analyse the interior trim parts supply problem with Trimco Industries. Navistar delivery delay of final product to customers happened due to following root cause analysis of shortage of trim supply. There was a one man show of Andy who was handling many responsibilities in his head which might lead him to poor communication with Trimco and might complicate his task to full fill to smooth order process.

There were a huge number of dealers, around 1000, where they were getting orders from customers. The Company need to introduce a Navistar centralized system of order taking, where they can verify all order requirements and easily transmit the data to Navistar production site. Due to lack of these system data were not properly sharing either side.

There weren’t any cross functional team to clearly communicate day to day activities to solve in daily manner. Therefore the problem of interior trim parts shortages prevails for a certain time.

Navistar Company needs to provide a limited time frame for their customers to design their own model, rather than taking more than 6 months which complicate the order process with Trimco. There were no strategic relationship with Trimco and any long term contact to verify the supplier in relation to the agreement.

Although Trimco gained the QS9000 certification for their services, due to lack of centralization and computer system capability, they couldn’t properly manage smooth supply of parts. On the other hand, high level of employee turnover led the production department to utilize new employees who didn’t properly understand the handling of machines and customers’ needs. As a result of these issues at Trimco, their supply chain process dramatically affected. Navistar interior trim parts shortage begun a very big issue in term of it’s just in time production capacity.

Trimco had a poor shipping system of parts within both companies. Some times Trimco parts will arrive Chatham assembly plant after arriving the missing parts, which largely interrupted the production. Further, Navistar not communicating timely manner with Trimco regarding any changes of design of interior trim as a result Navistar receive wrong products.

ALTERNATIVES AND OPTIONS

Along with the booming market outlook in 1998 as well as the potential material shortages further, it is time for Andy to take positive measures to maintain the whole supply chain more productive.

Alternative 1:

Decrease the customer’s design options

Navistar provided customized units to satisfy different customers’ requirements; customers should change the design before the production runs, which often resulted in the failure of communication to the supplier for the change, and inappropriate trim provided, or delivery delay. So decrease this specific design options and provided standard feasible packages will reduce the numerous trim parts and increase the appropriate delivery and installation.

Pros:

1) Standardize the “kits” form for the interior trim to increase the appropriate delivery and installation procedure.

2) It’s efficient to organize production and procure trim parts.

3) It’s convenient for supplier to produce trim parts and arrange the stock and inventory.

Cons:

- Navistar may lose the market shares without the specific feature and attracting styling.

Alternative 2

Establish Inter Organizational Information system (IOIS)

Alternative 3

Switch relationship approach with Trimco Industries

Alternative 4

Keep the customer design and recommend best-selling configurations

Continue the ways of customer design to keep the leader position of the truck industry. Navistar could recommend 20-30 best-selling configurations to its customers to choose to reduce the number of options and accessories. Provide Forecasts for the trim parts to supplier.

Trimco side, enhance the centralization and computer system capability in terms of the traceability of outgoing parts, quality control, accuracy of appropriate component trim parts, relative training for the employee, and on time delivery.

Pros:

1) Still keep the leader position in the truck industry.

2) Options and accessories should be decreased.

3) Supplier can coordinate well in quality control, on time delivery and accuracy for the components

Cons:

1) Supplier should increase the inventory for trim parts.

RECOMMENDATIONS

Based on the above analysis and the given facts of the case, I would recommend alternative 3, and create a strategic relationship with Trimco to receive all part without any interruption.

Further both parties’ needs to enhance their communication process more efficiently to transmit right product specification. On the other hand Trimco need to fulfill all it promises as per mutual agreement.

IMPLEMENTAION

Action plans are divided into Navistar side and Trimco side in terms of the interior trim shortage and improvement of supply management:

Navistar implementation:

Action

Type

Term

Responsibility

Duration

Identify top 20 best-selling configuration

Tactical and Strategic

Long and Short

Dealer and Marketing Team

1 to 6 Months