Micro Compact Car

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The most influential method that I noticed how MCC was able to employ control and assure performance was by creating a strong mutual dependency among all the integrated suppliers by having each of them co-invested in the Smart-Ville facility in Hambach, France. By having each supplier mutually invested, MCC created a deeper commitment with them by tying in their performance and profitability together with all the other partners. Additionally, because MCC created long term contracts with their partners, it essentially guaranteed them a steady stream of income for several years into the future as long as they adhered to a high quality standard. That also meant that each partner was fundamentally responsible not only for their own financial success but also the success of their other supply chain partners. If one partner’s performance suffered, then ultimately it impacted the financial performance of all the other partners in the supply chain. Another example that can be seen in assuring performance and control was through the layout of the Smart-Ville facility production floor. MCC dedicated the central part of the facility as an area to conduct meetings, have open discussions on problems, and quality-management. It also served as kind of a “market place” to electronically view assembly-line performance indicators like stoppage time and on-time delivery. The central floor area doubled as a viewing platform where everyone was aware of quality problems because cars that needed to be fixed or had quality problems were ultimately parked in the “market place” for review and inspection. Lastly, MCC was able to coordinate, track, and evaluate each integrated suppliers performance by being involved in the assembly process and controlling the work flow and finished product.

Question 3

In regards to changes and uncertainty in the business environment such as the technical redesigning and alterations to the integral body of the Smart car, there is no reason to coerce or push suppliers into accepting changes that don’t benefit them. This would undermine the relationship in the supply chain by reducing the trust and commitment from individual suppliers and creating even more uncertainty surrounding the ethical behaviors and methods that MCC uses to address changes in the future. In other words, acting authoritarian and using coercive tactics would undercut or at least weaken the cooperation among suppliers with MCC and consequently harm the entire supply chain instead of benefiting it. Alternatively, MCC would want to carefully evaluate how the technical redesign changes would impact each individual supplier and also how it impacts the overall supply chain using meetings, teleconferencing, trial and error in their production, and other reasonable methods to discuss these changes with its supply chain. MCC should employ the same methods whenever there are changes to the business model and environment, since change is inevitable. Careful consideration should be taken to justify additional expenditures passed on to certain suppliers and an attempt at mitigating any negative impact on those suppliers should also be taken. For example, MCC had a stipulation with its suppliers that if a contract got terminated, then MCC would compensate the supplier all at once. This same approach should be taken when renegotiating contract terms and other changes in the supply chain. Everyone is ultimate affected by the redesign changes, so it should be addressed as a collaborative effort to improve or mitigate the impact on their overall profitability. MCC has no control over external impediments such as law and regulation changes, so it would be imperative for the longevity of their relationships that both MCC and its suppliers work constructively together to overcome these hurdles as they come up.

In the case of disturbances, there are bound to be many obstacles and issues along the way regarding efficiency, effectiveness, consistency, and viability of performance as well as many others. The same approach still applies here though, to carefully evaluate if the role that the supplier was filling is really a core competency of MCC or not, and is there another company that could do it better than them instead. Just because one of the suppliers of MCC couldn’t maintain consistent quality during the contract term doesn’t mean that MCC should take over the operations. This situation should bring MCC back to the first steps mentioned in chapter 2 and 3 of the text which is coordinating traditional business functions across the company and the supply chain, and collaborating with supply chain partners on noncore competencies. MCC should take at least a couple of approaches and that is 1)collaborate closely to identify issues and areas of improvement with the current supplier and 2)after efforts to improve the performance of the current supplier are exhausted, then seek another supplier to replace the current one. In the case of MCC, they chose to replace that particular supplier with another that could sustain their standard quality requirements with the modules being produced instead of taking over that part of the operations.

Question 4

When applying the concepts learned about R&D in the text we can see that MCC was successful in implementing the Cross-functional NPD (new product development) illustrated in chapter 10. This concept or process illustrates how integrating key segments of a company and a supply chain can lead to a competitive advantage. So by integrating R&D, Marketing, Manufacturing, and Logistics, the synergies among these different functions allow a company and a supply chain to achieve lower unit costs, lower product defects, effective and efficient manufacturing practices, and reduction in distribution and service costs. All these outcomes in integrating its key suppliers with its own functions allowed MCC to reap the rewards of a lower final price, higher quality, and incredibly shorter cycle times, which is evident by the fact that their lead times were 2-3 weeks when combined their customization as opposed to Volkswagen which at the time had up to six months of lead time for some of their models. MCC and its suppliers had created a vastly new and innovative supply chain that was highly collaborative and integrated. They were the only car manufacturer at that time to have attained this competitive advantage that none of the other dealers were capable of matching, imitating or even reproducing over the short term. So when the question is asked of “why doesn’t MCC strive for shorter lead times”, it doesn’t make sense because it is irrelevant considering that it was already competing in an environment where lead times were measured in several months instead of weeks. It already had the competitive