Site Loader

1.0
Introduction

Company
background

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!


order now

            Michelin
is created by Edouard Michelin and Andre Michelin that was founded in 1889.
They had a rubber industry business in Clermont-Ferrand, France. (Michelin
n.d.)

The owner of Michelin Tire Company is Michelin Group.
Michelin Tire Company as the global leader on tire modernization, providing
forward-looking solutions helping the road transportation industry in its
proposal for achieving competitive edge and to meet society’s pressing need for
safety, respect for environment and also fuel efficiency.      

Michelin operates facilities more than 170
countries, had employs 111,200 of workers and run 67 production plants in 17
countries. (Michelin n.d.)

            The mission of
Michelin is sustainably improving the mobility of goods and people by marketing
and manufacturing their tires for every type of vehicles such as automobiles,
bicycle or motorcycle, airplanes, farm equipment and trucks (Michelin n.d.).
Besides, Michelin would like to enhance mobility by putting into practice that’s
core values of respect for customers, people, shareholder and also environment.
Moreover, Michelin group has a technology center to do research, development
and also process engineering in Europe, North America and Asia.

            On the other
hand, the vision of Michelin is to develop tires capable of simultaneously
delivering superior levels of performance in the key areas of safety, fuel
efficiency, grip, durability and also longevity (Michelin n.d.)

 

 

 

 

 

 

 

 

2.0 Literature review

As the Chartered Institute of Procurement and Supply (2013,
p. 12), Supply Chain Management (SCM) is the outline and management of
consistent, value-added forms added to merchandise spill out of purpose of
source to purpose of consumption across organizational boundaries to meet the
genuine needs of purchasers. The target of SCM is to adjust Supply Chain (SC)
procedures with key SC process goals including the Customer Relationship
Management (CRM) (Janvier-James 2011, p. 195), demand management (Bernardes
2010, p. 50), order fulfillment (Xu 2011, p. 196), and returns management
(Boyson 2014, p. 345) in key SC business forms.

With the development of global competitive challenges, SCM
can help an organization as far as cost sparing and better coordination of
resources by diminishing expense of cost of goods sold (Ellram and Cooper 2014,
p. 12), value-added productivity (Xia and Tang 2011, p. 502), and abbreviate
cash-to-cash cycle time for greater assets return (Marra, Ho and Edwards 2012,
p. 3105). Moreover, there are other execution attributes contributed by SCM,
for example, demand and price stability, culminate order fulfillment and
reliable delivery performance which may help to diminished bullwhip impact.
Along these lines, this can prompts better client benefit, enhanced item
quality through Total Quality Management (TQM), better production strategy
which bolstered by KANBAN.

This research paper focused on the discussion of supply
chain strategies adopted by the selected company in the 4 elements of supply
chain management in detail. Contrast these strategies with its competitors. The supply management includes appraisal and supplier
management to exploit the partnerships of the strategies with the supplier
whose are in top-performance. Besides that, operation of the company was
tendency use the strategy which is called Just-In-Time (JIT) to make
improvement for the pull system which can decrease the levels of inventory by
supporting the demand management.

 

 

 

 

 

 

 

 

3.0
Content of 4 Supply Chain Elements (Michelin)

 3a. Supply Management

Successful Partnership

            Michelin
purchasing teams construct a purchasing strategy .with
suppliers focused on active and high quality working relationship. The main elements
of this strategy are communication, transparency, cooperation, develop mobility
together and responsible attitude in actions (Michelin 2014). Michelin’s SRM
approach is according to these factors. Michelin divide their suppliers into
four categories and develop different level of relationship with each. Level 1is
establish relationship base on innovation or partnership projects; level 2 is develop
business relationship for mutually beneficial advantage; level 3 is optimize
the current relationship and level 4 is seek for a commercial relationship
(Michelin 2014).

            Michelin
also established Supplier Award and the Michelin CEO had attended to appreciate
the supplier’s skill, passion for innovation and quality. Purchasing department
carried out a selection process to choose the award winner. The supplier’s
performance is judge base on innovation, sustainable development. In year 2015,
the quality award winners are General
Quimica, Herbert and Echemar,
recognition of their high standard performance. Cabot, a chemical company won the innovation award with the black
carbon product which help improve the tire performance. A German manufacturer, Evonik, won the Michelin Performance and
Social Responsibility Award and the Special Award won by Eiffage. (Michelin 2016)

             

Supplier Approval

            Michelin
use questionnaire to evaluate the potential supplier’s quality approach,
financial situation, sustainable development approach and ability to meet the
Michelin’s technical specification (Michelin 2012). The evaluation can be
supplemented by on-site visit to obtain more reliable information included test
at Michelin plant, suppliers audit and tours of supplier sites (Michelin 2012).
In order to be approved, supplier must have a quality management system that
match with current ISO 9001 requirement and allow Michelin team to visit and audit.
In addition, if the supplier’s manufacturing process, quality system or prorate
structure have any changes must inform Michelin early.

            In term of product quality approval,
supplier must comply with ISO TS 16949 which is technical specification shows supplier
have the standard of prevent defection and reduce waste in supply chain (NQA
2016). Comply with ISO 14001, an environmental management system certification
that shown business sustainable manner is also needed (Certification Europe
2012). Both parties must agree with the measurement methods used. Supplier must
provide the health and safety information in stipulated language required by
laws and regulations. Provided additional information if necessary such as
handling of disposal, supplier management, identification and traceability
system and so on (Michelin 2012). The results will determine the period of
approval process for supplier.

 

3b.
Operations Management

          Operation management is a management
for the business practices to establish the highest level of efficiency within
an organization. It is more concerned in converting labor and materials into
the service and goods with provide the highest level of efficiently to maximize
the profit in an organization (INVESTOPEDIA 2017). The operation management
teams also try to balance the costs with the revenue to achieve in the highest
operating profit.  There has activity for
operations management such as Just-in-time (JIT) and Total Quality Management (TQM).

Just-in-time (JIT)

              Just-in-time (JIT) is a strategy
of the inventory for companies to adopt for decrease the waste and increase the
efficiency by receiving the goods. It was the method that need by the producer
to predict the exactly demand (Maiga and Jacobs, 2009). There are many category of product for the Michelin
Company and it was hard for them to keep the finish goods in the warehouse. So
Michelin will only produces the product when the consumers are require for
which category of goods and direct deliver to the consumers after the goods was
be done produces. In year 2016, it was produce 187 million of tires for the 17
countries (Michelin 2017). It also sold their 80% of tires for the replacement
market. Therefore, they have 72 of facilities for production over the 19
countries in the world. 

 

Total Quality
Management (TQM)

             Total Quality Management (TQM) is
a type of management way to an organization with focus on the quality, based on
every member whose are take part and look for successful from the customer
satisfaction for the long-term period. It was an advantage for every member
those are in the organization. It was a strategy management that focuses on the
consciousness of quality which is produce in the organization processes
(IndustryWeek 2017).  TQM was a process
that help the organization to maintain their quality standard in the
business.  It was helping an organization
by ensure the organization is getting the things done with the right. Michelin
has manage to maintain their top class product been 120 years and guiding in
the business since brother of Michelin are start dominating the business in
France at year 1889. It has invested $27 billion to develop the business with
producing tires of bicycles. It was has demand for the high contribution in
quality for the production.

 

3c.
Distribution Management

Customer Relationship
Management

                 Distribution can easily to be
define as the movement of goods spread from supplier to the end users (John
2017). One of the strategy that Michelin is Customer Relationship Management (CRM)
strategy to carry out the distribution in supply chain management. Michelin is
known that they provide their customers high quality products and services but
at a high price as compared to other brands so that they can achieve high level
of customer’s satisfaction levels thus enhance their customer’s loyalty. On top
of that, Michelin has launched a worldwide CRM system called ‘ENGAGE’ that
developed entirely by SalesForce in late 2016 to allow 111,700 Michelin
employees that spawned globally to develop a deeper understanding of the
regional customers requirement through the use of internet so that they can
provide their customers with excellent experience (SaleForce 2017). Michelin
aim to provide their customers better quality customer service through the use
of internet platform (Bennet 2017). According to Yves Chapot an executive
member of distribution in Michelin that they had offer customers service worthy
of the MICHELIN brand promise throughout the life of the tire. The quality of
customer service provided to customer help to retain the brand’s reputation and
trust that help drives repeat business and growth in the market over the years.
Michelin are using the digital online platform that called Allopeus and
BlackCircles in 2015 to help distribute their goods and digitalized services to
their customer (Michelin 2015). The use of 
digitalized services help their customers perform better interaction
with Michelin online such as online enquiry and complaints regarding the
Michelin products so that they can understand the product better at the same
time allow Michelin to find better ways to serve them better. This strategy
contribute to the increase number of distribution in Michelin tires worldwide.

 

Network Design
Strategy

Another strategy that
Michelin used is distribution network expansion. Michelin is strengthening its
wide proprietary dealer networks that consists of the franchised, partner
networks, wholesaler through acquisition and investment of online retailers and
independent tires distributor such as (TCi), and online tire retailer such as
(Allopeus.com) and (BlackCircles.com) to further enhance their streamline of distribution
capabilities(Michelin 2015). Michelin purchased one of top independent tire
distributor in America known as TireCentre LLC or aka TCi in year 2012 to help
further enhance their distribution network in America (Fedchenko 2012). Michelin also bought over BlackCircles.com for
50millions Euro in the year 2015(Michelin 2015). Blackcircle is considered as
the top online retailer of tires in the United Kingdom. Through the acquisition
of BlackCircles, it help Michelin to enhance the performance of the mix
distribution channels in the United Kingdom. According to said Terry Chiche
Executive Member Committee of Michelin “The acquisition of Blackcircle.com
allow them to reach out to millions of potential customers”. Michelin also had
a nationwide distribution network in Malaysia that consists of authorized
distributors that included TYREPLUS,Michelin Services Centres and Michelin
Truck Services centers that help Michelin for their distribution of goods to
end users in Malaysia(TYREPLUS MALAYSIA 2017). Michelin Malaysia have more than
1000 of authorized outlet that spread across  Johor, Kedah, Pahang, Perak,
Pulau Pinang, Selangor, Terengganu and W.Persekutuan to help them distribute
their products(The Star 2010). Michelin believed that distribution through a
large network of channel enable them further increase sale volume. Michelin is
planning to continue to expand their distribution network in 2018 in order
capture more market share.

 

3d.
Integration

Electronic Data Interchange (EDI)

Michelin utilize EDI as supply chain integration to allow
other inventory network members to transmit business data electronically by
holding fast to standard EDI format (Nurmilaakso 2008, p.724). The information
is converted into a standardized EDI by trading partner and afterward
transmitted and imparted to Michelin Company (Angeles and Nath 2009, p.245).
The basic kinds of EDI transaction reports for vendors of Michelin Company are
purchase orders and invoices. Michelin Company places order from vendors in its
own sales framework and after that the administrator EDI made an interpretation
of the order into a standard informing through universal language, for example,
Extensible Markup Language (XML) (Lu et al. 2011, p.275). In this manner, the
data about order will consequently enter to Michelin Company sales framework
and the finished data in purchase order will be sent to vendors by email or
fax. The summary invoice will then issue by vendors to Michelin Company for
payment after the interpretation in standardized EDI. EDI additionally go about
as an intranet inside association and a advanced telecommunication technology
to trade information inside in-company (Lee and Lee 2010, p.53). For example,
production department sends data about the sourcing of item particular to procurement
division through EDI for setting request from vendors. The data about the
sourcing of item detail is sent from production faculty’s PC framework and
deciphered to a standard format (Encyclopedia 2012). Next, it will transmitted
to collector in the configuration utilized by it after deciphered once again
from the standard organization and will went into the procurement faculty’s PC
framework.

 

Electronic customer relationship management (e-CRM)

Michelin additionally embraced new
integrated digital strategy which is electronic customer relationship
management (e-CRM). Michelin dispatches e-CRM with a specific end goal to give
better client service to the customer(Nguyen et al. 2007, p.111). It incorporates all the CRM
capacities with the utilization of the net condition, for example, intranet,
extranet and web. Moreover, live chat with a client customer care agent is
likewise a piece of the e-CRM system (Kumar 2014,p.22). For instance, Michelin
Company made BIBNET (www.bibnet.com.br), a B2B portal to bring together and
accelerate the transmission of business data in its approved merchant network.
BIBNET introduces in real time the business development of the merchants and
the quick balance of the results. Michelin’s new business tool also binds
together the way orders are set and enables the clients themselves to post
personalized information, as indicated by the profile of every deal. The BIBNET
portal is the aftereffect of the mechanical upgrade of the first version of the
business electronic framework made by Michelin in July 2000. It takes in an
awesome deal about its dealers and attempts time saving by utilizing this
framework.

3e.
Contrast of 4 elements

 

3e
(i) Supply Management

Successful Partnership

           Goodyear
Tire have one of a successful partnership via communicates with their supplier
to create more opportunity and promote co-prosperity. The CEO of Goodyear will
supervision the Supplier Innovation Event that give their supplier with a context
about future of their company, this would encourage Goodyear and their supplier
cooperation to produce more productivity at the effectively and efficiently
environment and solve the problem together. (Imaginatik, n.d.)

Michelin and
Goodyear both have held events that improve relationship with their suppliers.
Both top management actively supporting the partnership by attending the event
and it is one of the key to successful partnership. Michelin can held bigger
event that promote bigger opportunity to have an informal interaction with all
suppliers.

 

Supplier Approval

            According to Goodyear global
supplier quality manual, new suppliers are required on-site audit, self-audit
or both. Self-audit not be needed for those suppliers that have third party
certified QS 9001, TS 16949, or ISO 9001. For continuing suppliers who does not
have those three certificates require to perform a periodic self- audit that
match will Goodyear standard; provides latest copy of those certificates if
have. Goodyear expects suppliers to maintain satisfactory performance with on-
time delivery and zero defects in the area of part per million, total impact
cost and corrective action request (Goodyear 2005). Suppliers who fail to
perform well remove from the approved list of suppliers.

            Both manufacturers have their own
supplier approval to ensure the quality products of suppliers. Michelin more
concern about the environmental friendliness as require suppliers comply with
ISO 4001 and Goodyear is more concern about the quality that have audit to test
the supplier and more emphasize in term of product defects.

 

3e (ii) Operation Management

Just-in-time (JIT)

            Goodyear produces their goods by
using the JIT strategy. It will only produce their goods when the consumers are
needed for the product.  It was the
largest manufacture for the truck tire in the world. Therefore, it is also
produce their production in 21 countries with the 47 amount of facilities (Anonymous, 2008). They would not keep their finish goods in the warehouse,
because the space needed for a tire is large. Therefore they will only produce
the goods when their consumers are needed, otherwise they will direct send out
their product when they get the goods done.

 

Total Quality
Management (TQM)

            Goodyear was perform well in the
TQM with the service called as Global Supplier Quality which are to be perform
the quality of the service which are present by Electronic Media Network
Service with the purpose which are to make the improvement for the quantity of
raw material (QUALITYDIGEST 2006). Goodyear was entering the information of
quality which is associated with the direct materials by using the Global
Supplier Quality Assurance (GSQA) system.

 

3e
(iii) Distribution Management

Customer Relationship
Management

GoodYear CRM strategy
is that they are providing their customer with more variety of affordable
products and services to their customers so that they satisfy the customer
needs at a more affordable price so that their customers. While Michelin carry
out CRM strategy by providing their customers high quality products and
services according the regional customer’s specific requirement with the help
of the digitalized platform but at a higher price so that they can maintain
high level of customers satisfaction level in their products and services.

Network Design
Strategy

GoodYear is one the
competitor of Michelin. Goodyear also applied the same expansion of
distribution network strategy to further enhance their distribution of
products. GoodYear today have form a partnership collaborate with Chinese
online retailer JD.com to further expand their distribution network channels in
China so that they can capture China’s booming auto aftermarket (Business
Insider 2017). The difference of Michelin is that they are more aggressive when
it comes to acquisition of other company to further expand their distribution
network channels in the world as compared to GoodYear who is considered as less
aggressive.

 

3e
(iv) Integration

Electronic Data Interchange (EDI)

Michelin is the
competitor for Goodyear Company. Both company are implemented EDI to coordinate
with its trading partners (Musawa and Wahab 2012, p.61). Michelin Company restricts their trading partners by just
working with others that has use EDI. This may confine little organizations can
work with Michelin Company. Nonetheless, Goodyear works with a wide number of
trading partners that don’t embrace EDI yet caused the extra channels for
correspondence between trading partners and Goodyear and may expand the
workload and procedures are prone to errors.

 

Electronic customer relationship management (e-CRM)

Michelin Company and Goodyear used E-CRM as its integration
strategy. Michelin utilize BIB NET to provide helpful and timely content to the
customer on the items. Implementation of an E-CRM framework empowers an
association to provide sales, streamline processes, marketing and benefit staff
with better, more complete customer information (Nguyen et al. 2007, p.109). The outcome is that E-CRM enables associations to assemble
more profitable client connections and abatement working expenses (Bhanu and Magiswary 2010
p.412).
Other than that, Goodyear deals with its inventory network administration
viably by drawing in its providers through on the web. Through compelling e-CRM
Goodyear can give better client service to satisfy consumer satisfaction.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5.0 Conclusion

In a nutshell, Michelin is one of the largest
manufacturer in the world that adopt and practices supply chain strategies in
the four major elements of the supply chain management. Michelin successful in
distribution because they own developed network design apps to all the
customers. They have improved their transportation management to help customers
and increase productivity of Michelin. Furthermore, integration is very
important to an organization because it can eliminate the waste and can help
organization get a higher profit margin. Michelin had done some effort to
maintain the good relationship with their supplier by recognise the quality
products and services of suppliers.

Post Author: admin

x

Hi!
I'm Sonya!

Would you like to get a custom essay? How about receiving a customized one?

Check it out