Operations Strategy for Maintaining Competitiveness in a European Automotive Company

The automotive industry is mostly known for its large concentration on a few global players. However the industry also encompasses a series of small and medium-sized enterprises, either as suppliers or as value adders, focused on smaller submarkets. This paper focuses on the specific situation in the automotive industry of a medium-sized manufacturer of tankers for trucks in the road transport industry. The company delivers design, manufacturing and service of high quality products to its customers within an engineer-to-order and manufacture-to-order market. The company faces a range of conflicting demands. The company operates in Northern Europe and benefits from proximity to its customers, yet experiences pressure from low cost, volume manufacturer competitors. Its operations strategy focuses on improving efficiency while maintaining the high value adding element to meet the needs of its identified market. The paper provides a case analysis aimed at evaluating the company’s operation strategy, and more specifically its efforts to improve layout, and synchronizing material flows and bills of materials, where the use of kits, bundles of materials and location of stocks, are prominent aspects of production. An operations management theoretical framework is adopted including material handling and layout concepts. The contribution builds on interviews with key informants within the company as well as document analysis and the presence of one author within the company over a longer period. The paper evaluates the development of the company’s operations strategy. It describes the analysis made of internal logistics and the bills of material as well as the role of business strategy, market and fluctuations in personnel numbers, together with the operations strategy steps taken subsequently.