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Written By: Dr. Robert P Machera (PhD)
Introduction
In this competitive world, organisations aim to produce reasonable, high-quality products and services as compared to their competitors.
ABC is always in search of what customers really want and in turn what the company should offer to its customers.
In addition, organisations in the automobile industry should be up to date with the new developments such as the change in technology and the ongoing disruptions that impact on the organization’s products.
This blog discusses three unique strategies for ABC which contribute to the firms’ competitive advantage.
What is a competitive advantage?
Competitive advantage refers to a situation whereby an organization implements strategies that stimulate value and not existing to any current players or potential competitors in the market (Barney, 1991).
This definition resonates very well with the three unique strategies which were implemented in the ABC such as the Kaizen, Lean Assembly, and JUST -IN-TIME JIT). These three unique strategies are illustrated in figure 1,1 below.
Figure 1:1 Three Unique strategies in the automobile industry Source: Own Source: (2021)
The Kaizen System
The Kaizen system ensures that all procedures, policies, and processes are measurable in a repeatable and visible manner. According to Gupta & Jain (2014), Kaizen is a concept that was introduced in Japan in 1950 to solve efficacy and productivity problems.
A Kaizen system is a continuous improvement methodology that is applied across functional areas (Farris, 2006). Scholars, practitioners, and proponents such as (Farris, 2006: Gupta & Jain 2014) argue that Kaizen assists management in the identification of cause for improving, measuring, analyzing, and comparing the results to standardized systems.
The benefits of Kaizen to ABC Company results in high production and cost reduction which enhances organisational effectiveness and competitiveness.
The Lean assembly strategy
The lean management assembly eliminates waste through control of quality inventory to improve operational performance, in the production process (Wilson, 2010). The benefits of lean-to ABC Company are employee satisfaction and increased profits.
The Just – in – Time (JIT) strategy
According to Kros, Falasca & Nadler (2006), a JIT is an organization’s inventory management strategy that directly integrates stock and output in the production line.
The JIT inventory system focuses on the elimination of waste materials. The benefits which accrue to ABC Company for using JIT are cost-efficient production, continuous quality improvement, waste elimination, and an improvement in production hence, gaining a larger market share compared to competitors.
Understanding Tesla’s Unique Business Model
Recommendations
There are several strategies that organisations including the ABC Company should embrace to remain competitive in this COVID – 19 Era. In terms of the Just-in-Time (JIT) systems, organisations may be exposed to risk especially on the issue of stocking raw materials as shortages may be experienced during a catastrophe such as COVID-19 and any other natural disasters.
Therefore, organisations are recommended to have a Disaster Recovery Planning Strategy (DRPS), which addresses incidents and events related to a VUCA World (Volatility, Uncertainty, Complexity and Ambiguity World).
Organisations may implement the Just-in-Case (JIC) inventory strategy where the company maintains a buffer of inventories on hand.
This JIC inventory management strategy could minimize the probability that products / raw materials will not be out of stock, which may result in reputational risk and dilemma.
Furthermore, organisations should adopt an Enterprise Resource Planning Systems (ERP), a strategy that enhances effectiveness and efficiency. ERP system is a tool which may assist organisations in having the ability to integrate business applications and accounting systems, as a result, share common processes in real-time, which covers a broad spectrum of business functions, including finance, human resource, distribution, service, production, and the supply chain management.
The Kaizen, Lean Assembly, and Just in Time (JIT) are the three unique strategies that are being used in the automobile industry around the globe as well as in the motor industry landscape. Therefore, it is imperative for the automobile industry to explore these unique strategies in order to remain competitive in the market.
Conclusion
Finally, organisations should pay attention to the eco-system which embeds sustainability strategies that promote the firm’s carbon footprint. In the 21st century environment, competitive companies move towards addressing the challenges related to non-renewable natural resources.
Therefore, it is recommended that organisations should embrace strategies relating to renewable energies such as the use of solar, wind, and biogas. The significant strategies are vital to organisations as they may survive competition from Tesla, a competitor who is famous for accelerating electric cars and renewable energy.
The continuing COVID-19 outbreak has drastically changed the procurement and supply chain strategies for a lot of organisations throughout the world. However, organisations in the 21st century must be proactive to have full knowledge of the best strategies to use in order to remain competitive.
Written By: Dr. Robert P Machera (PhD) Dean Faculty of Business and Accounting Botho University: Botswana & Visiting Senior Faculty: Eaton Business School and Exeed School of Business & Finance LLC: Email: rmachera@gmail.com
References:
Barney, J., 1991. Competitive Advantage. Journal of management, 17(1), pp.99-120.
Farris, J.A., 2006. An empirical investigation of Kaizen event effectiveness: Outcomes and critical success factors (Doctoral dissertation, Virginia Tech).
Gupta, S. and Jain, S.K., 2014. The 5S and kaizen concept for overall improvement of the organisation: a case study. International Journal of Lean Enterprise Research, 1(1), pp.22-40.
Kros, J.F., Falasca, M. and Nadler, S.S., 2006. Impact of just‐in‐time inventory systems on OEM suppliers. Industrial Management & Data Systems.
Wilson, L., 2010. How to implement lean manufacturing. McGraw-Hill Education.
