Type: Management
Pages: 8 | Words: 2335
Reading Time: 10 Minutes

Originally, Chevrolet has been established by William Durant and Louis Chevrolet in the form of General Motors’ subsidiary. The main goal of the company was to produce cars and trucks for people at the affordable price with high quality and safety standards. Over years, Chevrolet has remained to be one of the leading car producers in the United States. The product line of the company includes three major groups, such as cars, trucks, and crossovers. Nomenclature of Chevrolet cars contains Camaro, Corvette, Malibu, Impala, Sonic, Cruze, Volt, and Spark. At the same time, Chevrolet produces the following types of trucks and vans: Silverado, Avalanche, and Express. Finally, Chevrolet crossovers’ product line includes Suburban, Tahoe, Equinox, and Traverse.

Chevrolet offers products for people of different age groups, economic and social background. For example, Chevrolet Sonic is more oriented towards the youngest share of consumers, who are around 30 years old, socially and economically active. While on the other hand, Chevrolet Volt is targeted at older share of people, who are more concerned about the environment and want to have an environmentally safe car.

On the market of car manufacturers, the order qualifiers of Chevrolet include name recognition, image on the market, and product variety. It is clear that Chevrolet is a widely recognized car brand not only within the United States, but across numerous countries of the world. The image of the company’s brand has been sustainable while its extensive product line maintained attraction of new customers consistently. Regarding the quality winners of Chevrolet on the market, the balance of high quality at low price has made a substantial impact on the company’s success. A lot of customers have preferred Chevrolet’s cars to other brands as a result of the low price, high quality and safety of vehicles.

Current Problems in the Performance of Chevrolet

Chevrolet as part of General Motors Corporation has been experiencing considerable financial problems over the past years until 2008 when it was reorganized in the government sponsored bankruptcy. Around 2010, General Motors experienced the first positive shift in its sales and profits and earned approximately $4.7 billion compared to previous years when total debt reached $90 billion.

According to some estimates, in 2011, Chevrolet has delivered more than 1,775,812 vehicles, including more than 760,000 passenger cars.

Despite the positive shift in the performance of the company after years of loses and debts, Chevrolet still experiences financial and operational inefficiencies. In particular, according to Mataconis (2012), Chevrolet Company has been losing approximately $50,000 on every Chevrolet Volt that had been sold to customers. Substantially lower price of the car compared to its production costs was one of the marketing approaches that the company applied in the attempt to attract more customers in 2012. According to the Reuters’ experts in the automotive industry, some people in the United States pay a little more than $5,000 to drive for several years a car that costs about $90,000. This substantially undermines productivity and competitiveness of the company on the market.

Potential Threats to Chevrolet

As a result of the current problems that are experienced in the performance of Chevrolet, it is clear that the company is facing several distinct potential threats. More specifically, given the current intense competition on the automotive manufacturing market, it is essential for the company to consider lack of its product variety in terms of lack of the luxury items. At the same time, the current financial status of Chevrolet makes it vulnerable to the severe competition from Daimler, Fiat, Ford, Hyundai and Honda, Mazda, Nissan, and Toyota. In addition, general global weakness and downturn in the automotive industry can potentially harm Chevrolet. Cars’ sales on the Japanese markets were considerably reduced reaching about 4% in 2008. Finally, entry into the period of continuous global recession also substantially prohibits the development of the industry. In particular, a number of consumers lost the opportunity to finance their car purchases due to the limitations on crediting vehicles.

Literature Review on Lean Management

Entering the stage of economic downturn in the economy, a lot of companies are attempting to introduce new tools and approaches that would maintain their profitability, presence on the market, and improve their competitiveness. Recently, lean management has become one of these approaches that have been widely adopted by companies in various industries. According to some research findings, the extensive implementation of lean management has turned into a separate corporate culture that is currently followed by the top management of both service and manufacturing businesses.

The effective introduction and implementation of lean management at the enterprise depends on the understanding and distinguishing of eight kinds of wastes that are available at the company. Therefore, the determination and elimination of these wastes results in the improvement of internal capacity of the organization to expand time and establish routines. In general, the notion of wastes in lean management includes not only defective produced products or services, but it comprises all the manageable malfunctioning activities and performed work at the enterprise, as well as those factors that predispose basic management problems and poor quality management that cause availability of these wastes.

Typically, in the framework of lean management, wastes are classified into eight categories. The first is waste associated with motion, i.e. wasteful and unnecessary movements of people that do not create additional value to the product. The next are wastes related to extra waiting periods, i.e. time that is created when people, information or materials are not ready to be used in the direct production processes. The third group of wastes includes corrections, i.e. efforts that people spend on removing errors, defects, and reworks of the mistakes. The following group of wastes consists of over processing wastes, which encompass those efforts of workers according to the viewpoint of customers that do not produce additional value of the product. On the other hand, another group of wastes is associated with overproduction, which takes place when the company is producing more products and services than are currently demanded by customers. The sixth group of wastes is transportation wastes, which includes wastes of the company that are incurred in the movement of products and services that does not produce additional value to these products and services. The next group of wastes comprises inventory wastes, i.e. the presence of extra amount of parts of products or materials on hand, which are not currently demanded by consumers. Finally, the last group of wastes includes wastes associated with knowledge, i.e. in the situations when workers do not have enough knowledge or experience to perform the required tasks, time is spent inefficiently, and wastes are generated.

However, a number of research findings indicate that the implementation of lean management at different enterprises has different outcomes depending on the setting where it has been introduced. Scholars and practitioners point out that there are numerous inconsistencies in the theoretical framework of lean management. Therefore, the lean management approach has been modified over time and adjusted according to the shortcomings that have been observed in different industries where it was implemented. The key aspects of lean management critics include lack of the ability to cope with variability and contingency, narrow operational focus as well as lack of consideration of human aspects.

In particular, the range and lack of strategic perspective in lean management predisposes almost complete deficiency of thinking at the strategic level. On the contrary, it offers a number of tools and approaches and means of their implementation, thus generating one of the biggest shortcomings of lean management. At the same time, human aspects play a considerable role in the improvement of competitiveness and productivity. Therefore, the neglect of human aspects sets another disadvantage of the lean management approach. Moreover, lack of contingency and lack of variability are other weak but critical points of lean management.

Nevertheless, there is extensive evidence that the introduction of lean management has substantially improved their productivity and competitiveness, especially during the periods of economic downturns. The lean management approach has been implemented by companies in numerous industries, including electronic and automotive manufacturing. Even though there are certain inconsistencies in the research findings with respect to the relative efficiency of lean management at the enterprises, numerous examples indicate that a lot of companies have proved to be successful in the elimination of their waste production and improvement of their productivity and competitiveness.

Lean management has been initiated and widely adopted in the auto manufacturing industry. In the middle 1980’s, the auto industry in the United States has been experiencing a severe downturn. American car manufacturers have been rapidly losing their positions and market share to their competitors from Japan, who have been more effective during that time. Japanese car producers were able to make cars of better quality with considerably fewer defects. This has resulted in substantially higher customer satisfaction from Japanese cars compared to American, and, thus, Japanese car manufacturers have established the image of excellence in their car manufacturing industry all over the world. Despite the oil crisis in 1970’s, Toyota Motor Company has managed to increase its profits and further continued extension of its market share. Currently, Toyota is considered to be one of the most prosperous car manufacturers that have constantly outperformed their competitors in other countries of the world in terms of reliability of cars, their cost and quality balance, and delivery of the after sales service.

In the automotive industry, lean management is considered to be a process of evaluation and control of the wastes’ production with the aim to improve company’s competitive advantage on the market. The basic principles of lean management in the automotive manufacturing comprise constant improvement of different processes in order to concentrate on the wastes’ reduction or elimination of the processes and activities in the production process that do not add value to the organization’s products. Therefore, the main challenge that automotive companies face when they are implementing the lean management approach is to establish such corporate culture, which will create and preserve the long-term commitment of top management to workforce.

The success and effectiveness of lean management tools in the automotive industry are based on the fulfillment of fundamental principles. The first principle is the principle of value, according to which the stream of the product’s value is largely determined by customer’s willingness to pay for it. The second principle is the principle of value stream, which implies that the identification and display of all peculiar actions is essential in the course of the reduction of activities that do not produce additional value, starting from the process of its design until the customers’ usage of the product. The next is the principle of flow, i.e. there is a need to get rid of all the breaks and stops in the processes that prevent the productive process going smoothly without interruptions. Moreover, according to the pull principle, products in the automotive industry need to be streamlined starting from the concept until the customer’s usage. Finally, the principle of perfection states that whenever there is the opportunity to advocate doing things right from the first time, it should be achieved through the application of continuous improvement efforts.

The implementation of lean management at the automotive manufacturing company is associated with improved productivity and increased operational benefits. In particular, the operational benefits of lean management include reduced lead time, increased revenues from sales, improved delivery performance, increased profitability and lower operating costs, improved relations with suppliers and customers’ satisfaction, reduced space of the warehouse as well as other inventory, improved quality of products, and finally, the generation of additional working capital that can be used to finance other projects at the enterprise.

Wide utilization of the lean management approach in business in general and in the automotive industry in particular will result in the further applied research of this topic. It can be expected that more consistent results will be found with respect to the shortcomings and benefits of lean management implementation within every industry as well as means of eliminating these inefficiencies.

Project Plan for Changes at Chevrolet

Given numerous findings in the literature that the implementation of lean management at the car manufacturing companies is associated with the improvement of their competitiveness on the market and increased productivity, it is clear that Chevrolet can also adopt this managerial approach to its wastes’ production processes. In order to achieve success in the implementation process, it is essential to outline a clear vision of lean implementation and detailed plan of implementation activities. It has been proved that for avoiding failure of lean manufacturing implementation, management of the company should fully understand all the concepts of lean management.

The following project plan of lean management implementation suggests the necessary steps and changes that need to be introduced at Chevrolet in order to solve the selected problems. The engagement of company’s leadership into the lean implementation process would be the first step in the project plan. At this stage, the management of Chevrolet should fully commit to lean implementation at the enterprise. A separate full-time lean manager or leader can be selected or assigned, who would be responsible for the development of detailed five years plan of lean implementation.

Once the top management of Chevrolet gets entirely involved into the lean implementation process, there will be a need to provide special training to the team members and introduce the basic notions of lean management and potential changes that would take place at the company.

On the next stage of the lean implementation project, performance walkthroughs should be carried out on the daily basis followed by the value stream mapping processes. It is essential at this stage to analyze total productive maintenance, quality improvement and mistake proofing thoroughly.

At the final stage of the lean implementation project at Chevrolet, time periods between changeovers should be reduced while the lean management approach should be spread throughout the entire company.

Thus, the implementation of lean management at Chevrolet could substantially improve its operational performance, produce additional working capital and improve competitiveness on the market. At the same time, it is likely that the application of lean manufacturing at Chevrolet would help in the improvement of its financial operations and productivity.

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