Mount Royal University

• ACCT 4382

• Introduction Domestic Auto Parts or DAP is an auto-parts manufacturing company. DAP is struggling to compete with its competitors Western Auto and Just in Time Automotive and maintain its place in the industry. DAP is well-known to be a product differentiator and wants to maintain their reputation of providing high quality, reliable auto parts. The company was able to stay profitable by making sure costs are as low as possible however, this means old machines and equipment that are used in production are not well maintained causing the company’s inventory costs to rise, increase in machine down time and no improvement in the company’s manufacturing capability. DAP’s goal is to achiever a goal of 12% ROCE. In order to maximize profits, the company wants to utilize 90% of all capital assets and lower costs. Industry Analysis By looking at the automotive manufacturing industry we can identify threats and opportunities that DAP can look into to exploit and/or avoid. There are trends in regards to what customers want from their auto parts suppliers and that it that they are technologically-sophisticated, high quality, on-time and on spec. For socio-cultural trends, buyers want companies to be more energy efficient and implement CSR or corporate social responsibility within their business model, ensuring that sustainability is promoted in the company. Strategy Analysis Just-in-Time The executive team of DAP is looking into implement Just-in-Time(JIT) manufacturing and delivery to replace the current processes of the company. JIT means the company will only be producing auto parts as requested by their customers, either direct or wholesale. This also implies that the company will ensure all sources of failure in the system are eliminated. If the company wants to implement this, DAP will have to invest more time and money into better and improved machines and equipment used for production. Implementing this also means the company will need to vigorously train its employees to develop new skills that allow them to identify and fix any problems that are brought into attention. Using JIT also means that all the products DAP produces and delivers to its customers have to be 100% defect-free and exactly what they want. Supply-chain Although DAP is a manufacturing company, no company can produce all auto parts by themselves, therefore DAP is still relying on third-party suppliers to provide them raw materials This study source was downloaded by 100000873896308 from CourseHero.com on 10-15-2023 15:49:36 GMT -05:00 https://www.coursehero.com/file/33218692/essay-1-adv-mngdocx/ they use to produce the parts. Michael Milton identified that managing the supplier pipeline will allow the company to incur lower expenses. This is closely related to JIT delivery, if the company chooses to implement this they can save costs by only ordering enough parts for each order placed by DAP’s customer. Improve Controls As Ellen Bright mentioned, employees are only aware of what goes on in their area of work are are unskilled of how to do other sections or areas in the manufacturing processes. If the company wants to implement JIT, all the employees need to be trained to know how all the areas operate. With this, the company needs to decentralize, allowing employees to contribute and make decisions that will benefit the organization as a whole. Customer Intimate Another strategy the team came up with is to build better, long lasting relationships with their customers. If DAP wants to maintain its business strategy of being a product differentiator, how its customers see or perceive the company is very important because it justifies the price that are being asked from them. Therefore, DAP needs to make sure customers are happy and are provided the best quality product for the price they pay. Recommendation Our recommendation is to continue on with the strategy that the executive team has identified however, with some additions. JIT is implemented the company will not have to worry about producing too much inventory and having to pay for storage and maintenance. This will allow DAP to lower costs and at the same time be profitable, however using JIT puts more responsibility on management because in order for JIT to work effectively, management needs to monitor, identify issues and communicate effective to the employees what the company objective is and how they can contribute in regards to growing the company as a whole. With more responsibility placed not only the employees but the management teams as well, DAP has to maintain employee motivation an