Introduction
Supply chain management is an essential part of many modern businesses. It involves the inputs and outputs that flow from the supplier to the end user. There are the manufacturer, the wholesaler, and the retailer between the two parties. Global sourcing, on the other hand, entails acquiring goods and commodities from the global market and transporting them across several borders. The objective of the procedure is to capitalize on global efficiency in the supply of products and services. Numerous businesses utilize global sourcing to support their supply chain networks. Some multinational corporations that manufacture products in huge quantities obtain a portion of their materials from the foreign market. The move is intended to ensure the excellent quality of their final products.
Subaru Car Manufacturer is an example of a company that employs worldwide outsourcing. Fuji Heavy Industries is Subaru's parent business. Its headquarters are in Japan (Beamon 15). This firm holds 16.5% of Toyota's partnership interests. Subaru has branches in other nations, including the United States, where it is renowned for producing high-quality sports cars. In 1992, the corporation began outsourcing the development of automobile-related software and hardware.
In this case study, several concerns pertaining to the outsourcing part of Subaru Company are examined. They consist of an examination of the organization, inefficiencies, and risk management, a SWOT analysis of the outsourcing choices, and a discussion of selected alternatives.
Case Study on Sourcing and Supply Chain Management at the Subaru Corporation
Subaru Company does not manufacture every component required to assemble its automobiles. It only relates to the production of the automobile's interior components. Such components include the engine and transmission. It is also responsible for the production of several bodily components. The fabrication of the remaining components is outsourced to various specialized companies. The vehicle's computerized system is an example of such components. The systems enhance vehicle handling and control (Jean-Jacques 133).
The company signed a deal with Unisys Government, Inc. in 1992. The latter was designed to provide Subaru Company with communication-enhancing software and hardware technologies. The automaker demanded that Unisys Company create a regional processing center within the existing Subaru Data Center. The objective was to improve communication between the two businesses (Beamon 16). Currently, more than thirty people operate at the data processing facility outsourced by the automobile manufacturer. It should also be mentioned that Subaru does not produce its own tires. The corporation outsources the process to other businesses, such as Goodyear. In 2014, Subaru selected Goodyear as the leading manufacturer of the component.
Subaru and the tire manufacturer reached an agreement after many years of production processes. Goodyear manufactures tires that meet the standards of Subaru. Subaru also outsources other product components, such as car alarms, automatic vehicle locators, and horns, in addition to the components. The components are outsourced to Taiwanese partners (Jean-Jacques 137). Taiwan is well-known for producing these components. Other automobile and motorcycle manufacturers in other regions of the world source these products from the nation.
Tires, tracking systems, and communication devices are examples of components that Subaru Company obtains from the global market, as previously said. The outsourcing process is authorized after a comprehensive examination of the external markets. The analysis reveals what features buyers desire in their automobiles (Christopher 56). Consequently, Subaru outsources the production of these components dependent on the automobile model. As a result, the automaker produces a variety of vehicles. Each has distinguishing characteristics that set it apart from the others (Beamon 12).
Changes in external factors may influence the introduction of a new product. To do this, Subaru Company employs a variety of customer monitoring tools. Evaluation of the consumers is essential since it provides information that can be utilized to assess their opinions about items and the enhancements they may desire for existing models (Tracey and Vonderembse 13).
On the global market, Subaru Company is not the only company involved in the production of automobiles. In light of this, it is evident that market rivalry is fierce. To preserve and extend its market share, the company must ensure that it defeats its opponents and rivals (Rassameethes, Kurokawa and LeBlanc 290). External causes, such as an increase in demand for a certain automobile feature, may result in the introduction of a new product. It may be necessary to outsource the production of a number of components to new or established enterprises on the worldwide market. The proper supply chain management procedures and procurement channels must be followed. Before making any choice, several subsidiary management teams are consulted. The objective is to identify the ideal supplier for the outsourcing program.
Over time, Subaru Company has modified its policies and laws regarding the acquisition of various products from the international market. For expansion goals requiring new suppliers, management takes the time to evaluate prospective stakeholders. Decisions are made with the aid of data regarding the suppliers' product quality and production capability (Tracey and Vonderembse 13). Such initiatives are vital. They ensure that the company does not enter into any illegal contracts or agreements that could be detrimental to its business.
In regard to the outsourcing activities of Subaru Company, one of the procedures related with supply chain management is the authentication of the provider. The quality of the stakeholder's products, their costs, and their dependability are also crucial factors in supply chain management. Subaru automobiles are renowned for their sturdiness. It is one of the reasons why they are so popular among sports car fans worldwide. To retain its market position and reputation, the company must use high-quality raw materials and other inputs (Tracey and Vonderembse 17).
The quality of the final product is determined by a variety of factors, including the manufacturing and storage processes. Therefore, Subaru Company is responsible for this aspect. This is accomplished through inventory management. It is one of the supply chain management components. It is for this reason that Subaru Company has established laws and regulations governing the production, storage, and distribution of automobiles. The objective is to ensure that the final product's quality is not compromised (Klier and Rubenstein 34).
Due to technology advances, Subaru Company has introduced new automobile models. The new items conform to the specifications of the new technology. Given that consumers demand technologically advanced items, it is crucial for the company to stay abreast of industry developments. Customers anticipate that the products will meet their varied demands and objectives (Christopher 56). Technology is one of the external reasons that influenced Subaru Company's decision to construct a communications center. The organization requires communication services at an inexpensive price. An outsourcing scenario witnessed in 1992 is a classic example. It is crucial to observe how the company's management teams from different regions of the globe have managed their supplies and productions to improve the supplier-to-consumer flow.
Concerns Raised by the Case Study
Every business has its flaws. The obstacles might disrupt the company's operations if they are not addressed appropriately. For instance, there may be inefficiencies in the outsourcing program. Failure to evaluate the quality of services and products provided by an outsourced company might result in the demise of a business. It is dangerous to outsource the creation of components without monitoring the manufacturing process and the materials utilized to construct the devices (Hassini, Surti and Searcy 77).
Subaru Company appears to have complete faith in the businesses it outsources to. Sturgeon and Florida argue that this should not be the case (62). The automobile manufacturer stands to lose in the event of any unforeseen occurrences. The outsourced company, for its part, may not suffer, as it may continue to fulfill orders for other organizations. If the corporation fails to identify that the devices are defective, it will be accountable to the consumers.
The products may not be durable. The market will not hold the outsourced company accountable. In contrast, the dissatisfaction will be aimed at Subaru Manufacturing Company. This condition may decrease the market worth of Subaru's products. As an illustration, consider a situation that developed in 2014. A lawsuit was filed against the corporation over a defect found in several of its products. It was discovered that 2011-2014 Subaru Forester and 2013 Subaru Legacy models exhibited engine oil consumption issues. According to court documents, the defect was dangerous since it may cause engine failure. Customers were unhappy with the automobiles. They spent a great deal of money on car maintenance and repair (Sturgeon and Richard 72). The issue caused the company to lose numerous clients.
Future problems of this nature should be avoided by taking safeguards when getting into agreements with vendors (Rassameethes et al. 300). A clause in the contract that holds the outsourced company accountable for losses incurred due to poor product quality might protect Subaru Company's interests. Additionally, the firm might implement measures to evaluate the quality and standards of the outsourced products and services.
Subaru Company's production capacity is expanding at a steady rate. The expansion is intended to ensure that the company satisfies customer requests. To do this, the firm has operations in several regions of the globe. The various establishments are designed to bring services and goods closer to the market (Ramberg 415). Nonetheless, several of these services do not offer users with feedback at the appropriate frequency and speed.
Chain management entails defining how consumer-level delivery of products and services is handled. The processing time for a number of internet orders is excessive. In addition, goods delivery takes longer than anticipated (Christopher 23).
According to a survey done by the company, a significant number of customers believe that Subaru has let them down by failing to meet their needs on time. Customers are the lifeblood of any company enterprise. Problems with these market participants may result in market losses. Therefore, Subaru should endeavor to address this issue. The administration should be more aggressive in responding to inquiries from customers (Klier and Rubenstein 67). Additionally, the organization must verify that its website is operational. Consequently, the consumers' trust in the company's products will increase.
The finances of Subaru Company provide an additional bottleneck that must be addressed by management. The organization generates annual earnings from the selling of its automobiles (Ming-Ji and Yi-Pei 287). Included among the expenses incurred by the company are staff pay and maintenance fees. The majority of shipping costs associated with individual orders are covered by the clients. The corporation may fail due to poor handling of its finances. These potential dangers should be closely evaluated. Accounting and auditing of tax returns must be performed accurately (Christopher 73). If funds are not allocated to the correct operations, supply chain management and outsourcing could be hampered.
Subaru should also provide products at reasonable prices. In several instances, clients have complained about the excessive costs the corporation charges for its automobiles. The parent company's prices should likewise be made public. The objective is to ensure that all clients are informed of the price for a certain product. Putting prices in the public domain could also prevent subsidiary companies from inflating data for their own profit. The automobile industry is marked by intense competition. Subaru should recognize that price is a factor in this competitive matrix. Associated financial risks can be managed by implementing sound management and accounting practices.
A SWOT Analysis of Subaru Manufacturing Company's Available Alternatives
Subaru Company has distinct strengths and limitations, as revealed through an examination of its strengths and shortcomings. It can also capitalize on a variety of worldwide market opportunities to improve its future success. Nonetheless, a number of external forces threaten its market share. The threats must be addressed to ensure the company's future (Sturgeon and Florida 65).
Strengths
Subaru is a global brand with widespread recognition. The characteristic is among its strengths. In light of this, one of the identified strategies for addressing the issues of supply chain management involves reaching out to its global consumers (Hassini et al. 72). This option's power is closely linked to the company's global reach. Subaru Company has also won multiple World Rally Championship titles. Moreover, the items' use of cutting-edge technology, which enhances performance, contributes to their wide appeal. Consequently, the features will increase the firm's performance on the global market through its financial management. Regarding auditing of suppliers, this action will improve the quality of the organization's products. The disclosure of prices will improve consumer loyalty and transparency.
Weaknesses
These stakeholders may not be happy with the close supervision, which is one of the drawbacks of the option of auditing the performance of suppliers. Consequently, the two parties' relationship may become strained. Moreover, suppliers may increase the prices of their components to meet the company's expectations (Ming-Ji and Yi-Pei 290). Some of the company's distributors may be negatively affected by the release of the car prices. The reason for this is that they may lack the ability to set prices to cover their costs. Expenses differ from country to country. As a result of improving customer interactions, the company's operational expenses may grow. It is possible that more personnel and equipment will be required. In addition to increasing costs, proper financial management may necessitate outsourcing to auditing organizations.
Opportunities
All four methods may assist the company in capitalizing on worldwide market prospects. For instance, auditing of suppliers, publishing of prices, and improvement of customer relations may expand the target market of the organization. The corporation will have access to big, untapped markets such as Brazil. Supply chain management includes the marketing function. Marketing is an opportunity for the organization to enhance its reputation across multiple platforms. In addition, it can assist the business in expanding its consumer base. Effective management of financial accounts will go a long way toward achieving this objective (Sturgeon and Florida 54).
Threats
Some of the alternatives may enhance the dangers the
