The paper "Supply Chain and Competitive Advantage - Autoliv Company, Pepsi" is an outstanding example of a management case study. The bases of competition at Autoliv Company are; safety, price, schedule, prestige and superior cost position. These are bases of competition that give firms an upper hand or advantage over its competitors (Colins & Porter, 2003). To start with, before 1998, the airbags were regarded as a luxury item for high-end vehicles but with time the basis of competition changed safety to ‘ hygiene factor’ . By so doing, the airbags ceased to be speciality items and became commodities for the mass market.
Second, airbags experienced a sudden price reduction owing to the effect of big automotive makers. Third, the independent processes and systems at Autoliv could not keep up with the scheduled production and deliveries. Fourth, the superior cost position enjoyed by Autoliv was challenged by reduced levels of demand and price reductions. Due to increased competition from big automakers, the company realized that there was a need to cut costs without compromising on technical performance and quality of airbags. Finally, prestige was a selling feature to upmarket car buyers who saw safety as an additional element in a car purchase.
The business units took advantage of this aspect to make huge sales. However, Government regulations and change in marketing strategies of major car manufacturers such as Chrysler and Volvo changed safety as a basis of competition to a hygiene factor. But that is about to change. Change in tactics and actions of competitors led to a shift in the basis of competition in the company. After 1998, the basis of competition changed to continuous process improvement, collaboration with suppliers, standardization and investment in mergers.
On continuous improvement, Autoliv made a decision to innovate and established the Autoliv Production System (APS). Innovation and continuous improvement helped the company to reduce lead time, labor minutes per part, increase inventory turns and reduce defect rates. Collaboration with customers such as Toyota enabled the company to meet its requirements and also create efficiency in their systems. Collaboration with suppliers such as Greening Donald helped to reduce variability in products, quality and delivery times. This was aided by adopting the Autoliv Partner Portal that allowed suppliers to understand the material flows, terms and conditions, production forecasting, standards and purchasing requirements.
The small-batch system was created to reduce costs associated with producing for stock and instead developed clusters of manufacturing cells that were customer-oriented. This was derived from the kanban system from Japan so as to have a picture and flexibility of the assembly line and the product. Standardization of products became a major goal as the company pursued quick changeovers based on standard interfaces. The rationale was to reduce cycle time and take down costs.
This went well with collaboration with engineers and cross-functional teams to reduce rejects to landfills. Over investment is a possibility after the company purchased Enterprise Resource Planning (ERP) systems, $15 million worth of automated Autoliv equipment. Contribution of Harada-San to Autoliv Toyota deemed it critical to cooperate and collaborate with its suppliers to ensure Total Quality Management (TQM) of its supply chain. By sending Takashi Harada to Autoliv, it confirmed that the company was serious in improving the efficiency of its supply chain and quality of its products.
The objective was to share knowledge and information about best practices in lean manufacturing as seen in the Toyota Production Systems. While on assignment to align Autoliv production to those of Toyota, the latter continued paying him a salary for the two years. Indeed, Harada achieved his objective of helping Autoliv to adapt and adopt best practice in manufacturing, and also transforming the manufacturing process within three years. Some of the changes that Harada brought to Autoliv include;
Colins, J. & Porter, M.E. (2003). Strategy and competitive advantage. New York: Free Press.
Handfield, R. (2014). Leading change in supply chain management. Poole College of Management.
Leigh, R. (2013). How can an organization manage change and innovation in an optimal way? University of Phoenix: Demand Media.