Navistar Company’s Supply Management

While Trimco is QS 9000 certified, its quality control procedure varies. Please find online how QS9000 certification is conducted, and develop a plan for Navistar to audit the performance of Trimco by itself (hint: you may determine whether you want to audit an area which has already been audited by QS 9000).

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QS9000 is a quality standard system, which is specific to the automotive and truck industry (IOS, 1998). According to the International Organization for Standardization (IOS, 1998), “The quality system assessment process is used to determine if a supplier’s quality system meets the requirements of this document” (p. 80). The ISO (1998) outlines the procedure for supplier evaluation, which is divided into several steps. First, the customer (Navistar) requests the provider’s (Trimco’s) documentation for review, which may include quality manual, supporting procedures, results of the self-assessment using the QSA, internal audit results, and the document confirming the QS-9000 certification (ISO, 1998). As soon as the documents are received and reviewed, Navistar can hold an on-site audit to assess the main requirements of the system.

For instance, Navistar may decide to audit the Trimco’s internal quality controls (APQP) and the production part approval process (PPAP), or pay more attention to the measures that help to prevent product/process failures (FEMA). As Trimco already holds the QS9000 certification, but there are still failures to the kits it supplies, it might be best for Navistar to determine if there are any areas of production that were not part of the original certification and focus on them. If all stages of production were certified, the company should focus on failure controls and the production plan approval process, which are the factors that have the most significant influence in the case with defective of missing trim parts. If there are indeed issues with regards to the quality system, the next stage would be for Trimco to indicate the exact processes causing failures and to address them in a thorough change plan. The final step of the process would be for Navistar to continuously monitor the supplies quality and to introduce a reporting process to identify any problems in the future.

Trimco and Navistar use JIT between them. Do you think JIT is appropriate in this case, given the quality and delivery problem? Can you recommend some ways to improve the JIT delivery?

As identified in the case, the Just in Time (JIT) system was implemented “to complicate matters” (Schiele, 2010, p. 6). Indeed, given the frequent trim parts issues, applying this approach was a largely ineffective decision that may have an adverse effect on Navistar. JIT delivery leaves a lot less time for the assemblers to check the parts and make sure that they are appropriate, or to file a claim to Trimco if there are any defects or missing parts. Furthermore, in the latter case, additional time is needed for Trimco to make and ship the correct parts. In the JIT delivery method, barely any provisions are made for supply chain delays, which means that the provision of the finished product to the customer will be delayed.

As noted by Schiele (2010), “Customers were intolerant of delays, quality problems, or any other factor that failed to meet their expectations” (p. 3). Therefore, if the JIT delivery is used, any delays in the supply process will cause a decrease in customer satisfaction and may lead to the sales decrease. In order for the JIT system to work in this case, it would be necessary for Trimco to impose additional quality control measures, as well as to establish a quick communication channel between the two companies to notify of last-minute changes to design or other requirements. A fast communication system can also help to improve the replacement process as Navistar assemblers would be able to contact Trimco directly to request a replacement or additional delivery. These two measures would decrease the incidents when parts are unavailable and promote a faster problem-solving process in case of difficulties.

Trimco has labor related issue such as high turnover. What should the Navistar do to address this issue?

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High turnover in Trimco results in poor quality control and confusion during the production and shipment process. Being a different company, Navistar cannot address the issue directly (e.g. by motivating workers and increasing benefits). Nevertheless, there are ways to decrease the effect of Trimco’s high turnover on the supply chain performance. First, Navistar could send two of its employees to work on the Trimco’s site in order to monitor the packaging and dispatching process. These employees would be responsible for verifying the shipments to ensure that they contain the correct parts in the required colors. This would dramatically reduce the time for Navistar to receive the right product, while at the same time providing direct communication with Trimco.

Secondly, the companies could cooperate to share training and employment opportunities. For instance, employees leaving Navistar could be recruited by Trimco, which would provide the needed expertise and knowledge of the requirements. Navistar, on the other hand, could hold training opportunities for Trimco workers to educate them on the specific quality control processes and stages involved in the two companies’ cooperation. While the course itself is likely to give new employees more experience and knowledge required for improving the quality of product supplied, the provision of additional training opportunities may improve the workers’ involvement and motivations, thus reducing Trimco’s turnover in the long run. Implementing any of the two solutions would likely reduce the problems with parts supplied, thus boosting the effectiveness of Navistar’s supply chain.

Trimco may delivery incomplete kit to Navistar. Is there any way that the two parties can improve the procedure on either side to handle missing and defective parts, thereby reducing potential delay?

There are two main directions of actions to be taken in this case. First, the companies have to promote communication to be able to update on last-minute changes and to report any failures with the supplies delivered. In addition, Trimco has to ensure there are more pre-shipping controls, which would check if the package contains all of the required products and there are no defects. This process is time-consuming but placing several workers that are working exclusively with Navistar shipments will be time- and cost-effective, considering the prices of additional delivery. Even a large-volume shipment can be verified before dispatch, given that there are set procedures and designated employees to conduct the checks. Implementing additional checks would decrease the occurrence of missing and defective parts cases. Improving communications, on the other hand, could decrease the time required for Navistar to obtain the missing part. For instance, creating an emergency communication channel to report missing parts would give Trimco an opportunity to act immediately, thus reducing the van delivery time and facilitating the resolution of the issue.

Develop a plan for Trimco and Navistar to improve their communication. Be specific about what information should be exchanged and how they should be exchanged.

In order for the companies to devise an effective communications plan, it is crucial for them to identify the current communication issues that result in supply chain failures. For example, as mentioned in the study, one of the reasons for incorrectly punched parts is that ‘Last-minute design changes made to truck interiors by Navistar were not conveyed in time for Trimco to incorporate changes before parts were produced and shipped” (Schiele, 2010, p. 8). In this case, therefore, the responsibility lies on Navistar to ensure that design decisions are taken more promptly and that the information on the changes is delivered to Trimco in advance.

For instance, establishing an urgent communication system could help to convey changes to the production facility quickly. However, it is essential to ensure that the urgent communication system delivers the information to the Trimco’s employee who has a direct link to the production process and can convey information straight to the manufacturing section. Another way to improve communication is to set up an online system where both companies would have access to orders and to ensure that the program has features such as order adjustment, tracking, cancellation, etc. Introducing an IT-based shared system would promote better communication efficiency and reduce the time spend on information turnaround between the companies.

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How should Navistar improve its supply chain strategy?

Improving supply chain strategy for Navistar would include all of the procedures described in the previous sections. For instance, conducting an on-site performance audit of all suppliers would help to promote failure-free supply chain operations. The frequency of the audits should be determined separately for each supplier, depending on the number of failures during the delivery process. Improved communication, on the other hand, would reduce the confusion resulting from last-minute changes and ensure timely delivery of all orders. Adjusting the delivery system from JIT, however, may not be needed for all the suppliers. Interior trimming is one of the last stages of the process; moreover, the case did not indicate any issues with suppliers other than Trimco. This means that the JIT approach may be used for some other suppliers, as long as they are known for providing high-quality supplies on time. Therefore, one of the steps in improving supply chain strategy would be to review the delivery practices for different suppliers and adjust them, if required.

References

International Organization for Standartization. (IOS). (1998). Quality System Requirements QS-9000 (3rd ed.). Web.

Schiele, J. J. (2010). Navistar: Supply management. Richard Ivey School of Business, 9A98C020.

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