BYD China
BYD China
Student’s Name
University
BYD China is a Chinese automobile company founded in 1995 and based in Shenzhen. It primarily deals with the selling of vehicles under the BYD brand. The company initially began as a battery manufacturer then later joined the automobile industry in 2003. Currently, the company is known to be venturing into electric and plug-in hybrid vehicles which have gained a lot of momentum and market compared to the other Toyota manufactured hybrid cars. This article emphasizes the most suitable operations management to ensure the subject company tackles its challenges effectively and helps it thrive in its future business dealings.
The subject company uses various operations management functions to generate value for its customers. One of the functions is the designing and developing a relatively more effective battery thereby enabling it to be a step ahead of its main competitors in China and Japan. The company majors in innovation and technological advancements hence its ability to have better and effective designs in the subject product. BYD China gains a competitive advantage over its rivals by producing affordable products (Rangarajan et al., 2018). It is evident from the case study that the subject company uses innovative and creative methods to produce high-quality products which are cost-intensive compared to its immediate rivals in America and Japan.
The company’s manufacturing operations differ from service operations in that while manufacturing aims to achieve methods never applied before, their services are designed to solve old problems like reducing the carbon footprint of any of their vehicles through zero-emission by automobile principle. However, they are both similar in their approach where both manufacturing and services seek to provide solutions to existing problems.
The MRP processing starts with the determination of material requirements and then goes ahead to deduct the inventory at hand then finally add the back into the safety stock hence computing the intended net requirements. To realize a successful MRP, the subject company must put in place containing a bill of materials, a master schedule, and an inventory records file. The bill of materials consists of a list of all the required raw materials, sub-assemblies, parts, and assemblies needed to produce a single unit of a particular product. The MRP information would be effective in ensuring the company produces cost-effective, high-quality products that are capable to thrive in a competitive market. The MRP information will also be useful in ensuring the company does not incur unnecessary expenses during the manufacturing of the intended goods. Some of the key organizational factors that are likely to affect MRP input and outcomes include management support, organizational climate, manufacturing methods and marketing approaches, past experiences with automated information systems, and the size of the organization.
PERT and CPM both apply network-based project management techniques. Project Management and Review Technique (PERT) is more preferable in the company to projects with an unknown timeline for their different activities. Critical Path Method (CPM) is most applicable for recurrent projects. In BYD, CPM would be most applicable in operation functions such as recruitment, training, and manufacturing among others (Abdurrasyid et al., 2019). These are the functions expected to recur severally in a fiscal year. It has more control over resources such as cost and time as its critical path is well understood from historical experience. On the other hand, PERT applies more to research and development projects such as the optimization of the Lithium-Ion battery. The method barely has the accurate time or budget estimated and its activities are unpredictable and non-repetitive. Optimization falls in the category of invention and innovation meaning that the required tasks rely on testing and applying scientific principles fresh off the theoretical frameworks. This makes a PERT method of project management for such activities the most applicable.
The first rule of job sequencing is the earliest due date also known as due date assignment. The subject rule prioritizes the processing of jobs with early due dates in an attempt to have all jobs completed in time. The rule in discussion enhances the measurement of job shop quality performance through the evaluation of the late number of jobs, average tardiness across all jobs, and average tardiness across late jobs. The second rule is longest processing time which tasks the highest priority jobs with the longest processing time. The schedulers are thus capable of reducing a large number of time-consuming jobs at the end of every job schedule. The subject rule is advantageous in that it allows time for the completion of long jobs before their due date.
The third rule is the shortest processing time which focuses on high-priority jobs with the shortest processing time. It involves time estimation for each operation of the subject work. This rule is capable of minimizing the average flow time and the mean waiting time for various works. Finally, first come, first serve is the fourth rule which focuses on processing orders based on their arrival times at the production center. The subject rule is very critical since it is a vital sequencing rule thereby distinguishing it from the other rules. The above-mentioned rules have various disadvantages such as short processing goods which are at the back of the queue waiting for too long when the first come first serve rule is applied. Long processing time jobs are likely to get delayed when the shortest processing time rule is applied. Jobs with the shortest time will wait much longer in scenarios where the longest processing time rule is implemented. The earliest due date rule minimizes an optimum number of jobs past the due date without performing average flow time.
In a situation whereby a hybrid approach such as the earliest due date and first come first serve approaches are implemented, the organization will be able to minimize the number of goods that go past time and at the same time be able to accomplish the jobs irrespective of their due dates when using the first come first serve rule. This will help the organization save on time that would otherwise have been used when implementing each sequencing rule separately.
The theory of constraints comprises recognizing vital factors which prohibit the organization from achieving its intended targets. TOC enhances the system to improve on the constraint thereby eliminating the weakest and most vulnerable link in the chain. Implementation of the TOC will enable BYD China to improve on their production capacity hence able to solve the production constraint that might arise during their battery production. The contain theory will also enable the subject company to overcome the current subject challenge which arises from material and personnel deficiencies. Identification of the constraint will allow solving the production constraint of their products.
The exploitation of the constraint will enable BYD to increase their production by allowing them to hire more effective and experienced personnel thereby meeting their intended production targets. Synchronization and subordination of the non-constraint will enable BYD to focus on suitable resources which are intended to meet their production requirements by concentrating on creative and innovative methods to produce their primary products. Elevation of the constraint performance- will ensure the subject company efficiently runs its services hence increasing their production capacity; relatively their annual production capacity will also increase sequentially. Repeating the process will enable BOYD to adopt the process and make it a custom hence able to implement consistently when undertaking any production process. The process will then act as an improved technique for the company allowing it to maximize its production.
Forecasting has six major steps that include problem identification, information collection, preliminary analysis, selection of forecasting model which could either be qualitative or quantitative, data analysis, and lastly model performance verification (Sanders 1995). Each of these steps applies to BYD in forecasting where the problem identified is the optimization of batteries to make them last longer and cost less. Information collection involves identifying models already in the application. A preliminary analysis seeks to find out the allocation of resources required to sustain the project. In this case, both quantitative and qualitative forecasting models would be applied. Data analysis follows any research project to establish logic to the information gathered and lastly, the model performance verification involves application tests to collect more data on the next phase of research and development with regards to automobile batteries. BYD risks three major categories of supply chain risks that include natural, man-made and economic catastrophes. The only way established to mitigate these risks is the implementation of a business continuity plan which implies that businesses must have plans in place to continue manufacturing, production, and distribution after a disaster of any category strikes.
The Just in time is an inventory management system that emphasizes maximizing efficiency and minimizing inventory. The JIT system cuts the inventory costs since the company receives the materials and parts they require for production in time rather than paying for storage costs. This means that the company is not left with unwanted inventory if an order is not fulfilled or canceled. Ideally, for a car manufacturing company such as BYD China, JIT will enable the company to operate with low inventory levels and rely on its supply chain to deliver the required parts after an order is received (Pisch 2020). JIT is a problem-solving and improvement approach for companies. BYD China will use JIT to improve its quality and reduce the number of resources used in the inventory. However, the main limitation with this process is that the company might experience delays in manufacturing in case of delays in shipment, thus failing to deliver the order in time. The company may lose profit due to a general shortage of supplies, lack of shipment, and delays in shipment.
Total Quality Management entails a management technique that aims at long-term success through increased customer satisfaction. Ideally, in total quality management, an organization’s entire workforce works towards refining the products, processes, facilities, and values in which they work. Therefore, BYD can rely on total quality management principles to improve the time required to complete a production unit. Some of the total quality management principles and tools that can be applied include continuous improvement, benchmarking, total employee engagement, strategic approach, and fact-based decision making. For instance, continuous improvement will be essential in meeting the market demands by improving resources and manufacturing processes to reduce the production time for each unit. In addition, the empowerment of employees will boost their morale, thus increasing their performance which eventually improves the battery production capacity.
| BYD Supply Chain Partners Struggle to Implement New Materials |
| Inventory |
| Not tracking at all |
| Stock records not followed |
| No Empowerment |
| Not trained |
| No Integration of Data |
| Wrong documentation |
| No review of Order |
| Equipment |
| Method |
| Not well defined |
The above cause and effect diagram has indicated how the current supply chain which provides materials has influenced the process flow within BYD China. The diagram has highlighted some of the errors that might be happening since the supply needs have failed to meet the company’s production needs. Considerably, lack of materials, sufficient manpower, equipment, and production methods are probably the cause of errors in production. Availability of sufficient manpower, inventory, systematic approach, and equipment will facilitate effective supply chain management, which will lead to strong production capabilities.
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The Time function Map is a process that indicates time utilized in production in every section during the production process from the time the customer ordered the product up to the shipping of the product. BYD China can rely on the time function map to analyze the timeframe for every order. The process begins when the customer processes an order through the sales department. Next, the manufacturing department begins assembling the product’s packaging, which is carried out within the company plants. The product is taken through the finishing process and then moved into the warehouse for inspection. The warehouse team ensures that the product has met all the customer specifications, after which it’s shipped to the customer. The total time for processing an order at BYD China is 21 days. The Time function map will enable the company to examine some areas that need to be improved to reduce delays and production errors.
New Plant Location
| Factor | Weight | Mexico City | Columbia, SC | Weighted Score
Mexico City Columbia |
|
| Political Risk | .25 | 70 | 80 | 7.50 | 20.00 |
| Transport. Costs | .20 | 40 | 90 | 8.00 | 18.00 |
| Labor Productivity | .20 | 85 | 75 | 17.00 | 15.00 |
| Rental Costs | .15 | 90 | 55 | 13.50 | 8.25 |
| Labor Costs | .10 | 80 | 50 | 8.00 | 5.00 |
| Taxes | .10 | 90 | 50
|
9.00 | 5.00 |
| Totals | 1.00 | 73.00 | 71.25 | ||
The above chart indicates some of the key factors that BYD China should consider while planning for their new manufacturing plant location. The factors have been assigned a weight according to their capacity to fulfil the organization’s objectives through the factor rating technique. Based on the weighted score, Mexico has a higher score which means that BYD China should consider establishing its new manufacturing plant in Mexico.
| Item | Product Utility | Percentage | Category |
| G2 | 450000 | 41.9 | A |
| F3 | 250000 | 23.3 | A |
| A2 | 150000 | 13.9 | B |
| C7 | 67500 | 6.2 | B |
| D1 | 60000 | 5.6 | B |
| B8 | 48000 | 4.5 | C |
| E9 | 20000 | 1.9 | C |
| I5 | 17500 | 1.6 | C |
| H2 | 12000 | 1.1 | C |
Some of the approaches that can be recommended to improve inventory management include consideration of inventory optimization tools which will enable the company to evaluate its network and come up with the most suitable inventory policies for every product at a particular point in the supply chain. Employment of business solutions that applies real-time analytics within one platform; this approach collects a unified data design of demand, supply chain, and financial data. It then analyzes them at any step singularly and responds immediately (Singh & Verma 2018). Monitoring of suppliers is another key factor to improvement; this will ensure that all suppliers deliver o the agreed time adhere to the set business regulations are standards.
Monitoring of suppliers will also ensure that the number of goods delivered is of the right quantity as agreed between the supplier and the client. Tracking of essential attributes ensures that the company uses minimal costs and without increasing any labor. Tracking of attributes is a vital aspect of inventory management hence must be given the required attention. Leveraging mobile devices enhances accuracy and allowing of quick access to accurate information and data. Finally, ensuring slotting is not neglected since adequate and suitable slotting ensures the availability of the required space and identifies the fastest moving items closer to docks and reliable locations hence minimizing travel distance and optimizing output and productivity.
The three P’s of the triple bottom line can be utilized to enhance operations management through focusing on quality values, customer satisfaction, and product quality management system. The decisions of the organization influence planet, people, and profit (Shou et al., 2019). The triple bottom line is a framework that incorporates three performance dimensions; environmental, social, and financial. The triple bottom line has been one of the main strategies used by companies to assess their growth through corporate sustainability solutions. The social bottom line enables the business to strategize on human capital in the local society. BYD China increases its social bottom line through beneficial and fair labor practices and community involvement.
The environmental bottom line focuses on reducing the environmental impact of a business to increase success. Environmental bottom line control entails monitoring, managing, and reporting waste, consumption, and emissions. Sustainable business models communicate sustainability solutions and goals within the organization, facilitating the adoption of green corporate policies. The economic bottom line is concerned with the financial standing of the organization. This bottom line enables companies to generate wealth and stimulate economic growth through innovation, ethical practices, and supporting local suppliers.
Iso 14000 standards entail a set of guidelines developed by the International Organization for Standardization to be considered sustainable through their standards. BYD has met these guides through effective environmental management practices and thus is ISO 14000 certified. The environmental standards set by BYD have ensured that they comply with ISO 14000.
BYD has integrated principles of corporate responsibility in its operations by the societal, environmental, and financial impact that can be utilized in making decisions within the organization. BYD has a sustainable CSR management which includes social responsibility communication and stakeholder engagement. They have maintained responsible operations such as supply chain management and safety production management to protect investors, customers, and employees (Choi, 2014). BYD has focused on creating a more sustainable and better world by actively participating in public efforts such as education support, disaster relief, and social welfare contributions. Additionally, Green technologies and products have been implemented to facilitate environmental and social responsibility.
Conclusion
In summary, BYD China must be able to focus on the above-highlighted areas and ensure any challenges that might arise during production are thwarted to zero levels. Investment in technological advancement and emerging business trends will ensure they are always at the head of their competitors at all times. The hiring of experienced and qualifies staff in various sectors that require expertise will ensure their products are of high quality and stands a chance to compete with its primary competitors in Japan and the USA. Digital monitoring and tracking of supplies are key in ensuring fraud is minimized to the core thus ensuring a smooth and cost-effective supply chain.
References
Abdurrasyid, A., Luqman, L., Haris, A., & Indrianto, I. (2019). Implementasi Metode PERT dan CPM pada Sistem Informasi Manajemen Proyek Pembangunan Kapal. Khazanah Informatika: Jurnal Ilmu Komputer dan Informatika, 5(1), 28-36.
Chiarini, A., Baccarani, C., & Mascherpa, V. (2018). Lean production, Toyota production system and kaizen philosophy. The TQM Journal.
Pisch, F. (2020). Managing global production: Theory and evidence from just-in-time supply chains. SEPS Discussion Papers, (2020-08).
Rangarajan, D., Sharma, A., Paesbrugghe, B., & Boute, R. (2018). Aligning sales and operations management: an agenda for inquiry. Journal of Personal Selling & Sales Management, 38(2), 220-240.
Shou, Y., Shao, J., Lai, K. H., Kang, M., & Park, Y. (2019). The impact of sustainability and operations orientations on sustainable supply management and the triple bottom line. Journal of Cleaner Production, 240, 118280.
Singh, D., & Verma, A. (2018). Inventory management in supply chain. Materials Today: Proceedings, 5(2), 3867-3872.
