Introduction:
Operation management is an essential element of any organization. Every organization has to produce some products and services and therefore they have operation functions for the production of those services or products. Operation management of manufacturing sector differs from service. The automobile sector is a manufacturing sector in which production of the product (car) take place and all the activities that take place during the transformation process (from input to final product) come under the header of operation management.The automobile industry is amongst the biggest industries of Europe. The competition in this sector is exemplified by high market diffusion, fixed cost, innovation over capacity and continues product development.
Research aim:
The aim of this research is to extract the operation management practices that are used by the European automobile industry’s players to gain the sustainability advantage. It would be realized that how companies differ in these practices.
Research problem:
Operation management is a topic that includes wider knowledge of practices, and different research used different terms, therefore, to recognize the existence of a work that has been conducted is not possible. However, it has been realized that no research has been conducted in this domain through making the comparison of different automobile companies and their practices. Therefore, it has been decided that the cases of various businesses and their operation management practices will be used to gain the objective of the study and enhance the knowledge of operation management and sustainability practices. To gain the objective of the research and to clarify the concepts following questions will be answered.
What does it mean by operation management activities in the automobile industry?
How do companies use operation management to address sustainability trends?
What are the advantages organizations attain through effective operation management?
Scope of the study:
Few works have been conducted to realize the role of operation management in addressing the trends of sustainability. Therefore, it was mandatory to conduct the research in this field. This research is an effort to expand the understanding of operation administration in the automobile sector and to elaborate that how companies enhance their sustainability position through effectual operation management.
This study will contribute to the knowledge of students that how companies through the efficient management of production and supply chain activities can gain sustainability advantage.
Small automobile manufacturers can gain benefit from the research through realizing the practices of big automobile companies.
Researchers can take help in conducting further research and can improve their understanding.
Limitations:
The limitations of this research are that this research will be conducted by taken the European industry into consideration that limits the general application of the study. Further, primary research will not be considered; the research will be based on secondary data only.
Literature review:
Operation management is just about the process through which organizations produce products (Johnston et al., 1998). It is core in attaining the competitive advantage for the business, both in service organizations and manufacturing organizations. The major activities in operation management of automobile industry include the manufacturing of components for the assembling of the car line of the product. Therefore, all activities that take place during the transformation process would be considered as operation management activities (Jiang, 2009). In automobile industry operation management includes, management of production activities to gain low cost. It includes flexibility of mixed-model in the line of assembly to manufacture customized products in large quantity and coordination of logistics with supply chain activities. The introduction of novel scheduling and planning approaches to improve the consumption of capital concentrated resources is also recognized as operation management (Gunther &Meyr, 2012).
The importance of operation management can be recognized from the facts that the processes of OM helps in addressing the questions that have been faced by the organizations in their routine. Such as choices of manufacturing technology, sourcing and costing of material, maintenance of quality, customer handling policies, product choices (raw material and designing), and utilization of capacity. Operation management is a systematic approach, and the focus of successful operations management is on the development of techniques and tools used to analyze the operational system’s problems. It just not resolve the issues, but also supports in decision making. For instance, it would help in deciding what should be the building capacity of the system, and what sort of services and products offered to customers would require greater resources, time, and commitment.
In other words, it can be said that operation management is about addressing the designing, planning, and the control of operational activities. Here the question arises that why all these activities are done and the major purpose of OM behind all these activities. So the answer is that the major goal of operation management is to keep the cost minimum through controlling the operational activities and generating maximum revenue (Mahadevan, 2010). It is a part of sustainability because operation management ensures that the organization can meet the customers’ needs (Ferrer, 2008). Operation management is just not limited to the production processes, but through effective management of operations, companies can resolve different concerns. For example high labor cost, lower productivity, lack of new technologies, high fixed cost, overcapacity, and little market growth (Martinuzzi, Kudlak, Faber & Wiman, 2011). The decision can be regarding the production methods as well such as either company wants to produce products through the make-to-order, mass production or mass customization process. As it has been realized that operation management includes the effective and efficient utilization of resources. Therefore, numerous companies have been taking different activities into account to the meet the sustainability trends the effective management of operations.
Europe is recognized for its largest production of the vehicle in the world, and the automobile industry plays a major role in the economic success of the economy of Europe. Due to the financial crisis of 2008, the automobile sector of Europe had to face a significant decline in production capacity. It has become vital to invest in research and development activities and to enhance the operational productivity to enhance the capacity, respond to global crisis, rapidly changing innovative competition and operation environment (Martinuzzi, Kudlak, Faber & Wiman, 2011).
Where companies were moving towards adaptation manufacturing from standardization production processes, even most of the companies were replacing their push systems with pull system. Through the lean manufacturing process that is also recognized as a just-in-time system. European companies were focusing on agility features and performance features such as disc brakes, turbo diesel engines, steel belted radial tires, and fuel injections. Due to productivity in production practices, Europe has become the mass producer of cars (International Encyclopedia of Social Sciences, 2008). European automobile industry has made a significant contribution in organization, process, and products. Due to these innovations, the competitive shape of today’s European industry exists. Still the European automobile industry is experiencing the process of restructuring and adaptation (ACEA, 2012).
The importance of operation management in European automobile sector is at high notch and the adaptability of sustainable practices such as practices of inventory management and supply chain differ with the company to company. The aim of the production practices acquired by each company is to gain the world-class operations of production through the reduction of lead time and waste. For example, the production management system of Nissan a UK based company, is based on its synchronized philosophy of production. The idea behind the synchronized production way is to improve the effectiveness and productivity to gain the production system of a global standard. The concept of synchronization include management of quality, time (reduction in lead-time) and waste (eliminate waste) (Liker, n.d).
Many European motor companies in order gain their objective, manufactures according to the real orders of customers and consequently coordinate all materials and operations such as Nissan UK and Toyota UK. Several companies in Europe use modularization method to attain the cost efficiency. In a prior era, European car manufacturers were used to procuring the parts from several suppliers. As a result of this larger outsourcing, they have to build larger logistic centers to stock those parts. Because of this, inventory management cost increased and contributed to product cost. Moreover, the management of those parts became complicated as well. To reduce these complexities, European auto manufacturers started building up their developmental capabilities and new procurement system, and the module production system was introduced in the European market.
The modular assembly plants help European manufacturers in just-in-time production. Through this process, European auto manufacturers just not reduced the work complexity but also reduces the labor cost and logistics cost (Ikeda& Nakagawa, n.d; Schulz, 1997). European auto manufacturers recognize their operations to improve productivity, flexibility and reduce cost. For example, to reduce the cost Mercedes-Benz moved from individually owned manufacturing facilities to a learner system that is centered around the model lines and architecture of the vehicle.The previous production structure was based on the individual plant, but now the manufacturing will be independent of individual location (Hetzner, 2014).
In Europe, inbound logistics has been the area of major focus, but with the emergence of countries with low-cost manufacturing capabilities, the concept of outbound logistics came into consideration and got equal importance as inbound logistics. Through the deployment of advanced technologies, automobile manufacturers enhanced the efficiency of outbound logistics and gained the transportation sustainability and reduction in cost (Cognizant, 2013).
In th eautomobile industry, sustainability has been a tri-polar concept that includes social, economic, and environmental aspects. A sustainable automobile industry is the one that has the innovative business model and minimum utilization of resources. Sustainable car manufacturers are those have an ability to produce unpolluted products and ability to being consistently profitable with even short-term economic fluctuation. In the automobile industry, profitability and sustainability are closely related and cannot be separated (Well, 2013). European automobile manufacturers focus on the reduction of energy consumption and manage their operations in a way that allow them to reduces water consumption, waste reduction, and energy consumption.
Numbers of European motor manufacturers are making significant efforts in improving the performance of their supply chain. Through maintaining the sustainability manufacturers are constantly trying to offer responsible end product to customers from economic environmental and social point of view. The focus is on the human rights, labor conditions, environmental footprints, and business ethics all through the complete chain. Sustainability does not mean to share best practices and utilization of modern tools, but it includes compliance with the competition law, which is relevant (ACEA, 2014). If the production volume, employment, value added services, and market share of the industry are considered then Europe has been successful in maintaining its competitive advantage at global level in the last few years (Martinuzzi, Kudlak, Faber & Wiman, 2011). However, through the current researches, it has been determined that the European automobile sector is facing weak growth trends, sales are declining, and investment is limited. Even the introduction of new electric vehicles has put a significant challenge in front of the industry. Therefore, it has become pivotal to the car manufacturers to introduce the contemplate mixture of novel products.
European Auto manufacturers require flexibility in production processes (need to open both options such as make to order and bulk production) and supply chain processes to meet better the needs of customers. Motor manufacturers of Europe in the domain of electric cars require new technologies, innovative services, and particular design. However, in production chain they must introduce innovative processes and methods of production for being competitive as compared to rivals (European Commission, 2014).
Methodology:
This section aims to define the action plan that has been considered to conduct the research. This section will enable readers to have the understanding of the research efforts that have been performed to make a logical conclusion.
Research Approach:
The research approach is a proper procedure and plan that includes essential decision required to conduct research. This decision include the selection of research designs and methods need to utilize in the research. A selection of research approach is solely dependent upon the research questions. Qualitative, quantitative, and mixed are the very common research approaches. To analyze the research question of this study, qualitative research method will be used.
Research purpose:
Each research conducted has some purpose such as explanatory, exploratory and descriptive. The purpose of this research is descriptive because through the descriptive research an attempt will be taken to explain and explore the additional information regarding the topic. For example, different operation management models used by big giants will be discussed. It will be described that how companies analyze new sustainability trends and the practices they use to adopt. Description of the implementation of different models and practices will contribute to the knowledge and would fill the gap that existing studies.
Research design:
The research design is an investigation structure; the aim behind the adoption of research design is to answer the questions of the study. Descriptive research design, causal research design, correlational research design, and experimental research design are the most common and user research designs. Research designs are selected according to the research purpose and its requirements. The aim of this research is to discuss the characteristics of the topic that has been studies and, therefore, the best research design for this research is descriptive research design.
Data sources:
Importance of data sources cannot be avoided in obtaining accurate data. In order to gain precise results, it is pivotal to gain data from reliable resources. To draw a conclusion, data will be gathered from secondary sources. Cases of different companies will be analyzed, and production, supply chain, and logistics practices of various organizations will be analyzed.
References
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