JLR PRESENTATIONSuppliers selection and supplier base

• Luxury brand market• Jaguar Land Rover named Responsible Business of the Year by Business in the

Community(BITC)• Amongst UK's largest exporters by value (£8.2bn in 2011) • generates in the region of 85% of its revenue from exports.• 1. Porsche

2.Mercedes Benz3.Audi4. Aston Martin5.Bentley

RECENT ISSUES(I) In 2008,16 different suppliers across three factories to undertake

parts rework and containment, resulting in no clear quality definition

65% parts reject rate for certain suppliers

and some finished vehicles were being put into ‘containment’ due to faulty components.

delayed customer shipments, production line stoppages that cost £2,000 /minute and the risk that faulty parts could make their way into completed vehicles

differing quality regimes and an inability to share data across the company. Problem solved only after 3 years after appointment of a new quality director with savings of more than £1.25billion by reducing to supplier

Steele and Court (1996 p. 69)

ACADEMIC THEORY:SUPPLIER PREFERENCES MARKET SEGMENTATION BY THE SUPPLIER

Attractiveness ofaccount

Relative value ofbusiness or account

CNurture clientExpand businessSeek new opportunities

DCosset clientDefend rigorouslyHigh service &response

AGive low attentionLow interestLose without pain

BDrive premium priceSeek short-term advantageRisk losing customer

Development Core

Nuisance Exploitable

Low

Low

High

High

Supply risk

Leverage items• Alternative sources of supply available

• Substitution possible

Bottleneck items• Monopolistic market• Large entry barriers

Routine items• Large product variety• High logistics complexity

• Labour intensive

Strategic items• Critical for product’s cost price

• Dependence on supplier

Competitive bidding

System contracting + E-commerce solutions

Performance based partnership

Secure supply + search for alternatives

Buyer stre

ngth

Increasing supplier availability

ACADEMIC THEORY Supplier Selection Criteria

Moncza and Trent’’ Supply-base optimisation is the process of determining the number and most appropriate suppliers a buying firm….’’

Steele and Court

Categorical Cost-Ratio Linear Averaging

Ease of Implementation

Easiest Most Difficult Moderate

Clarity of result Least clear Moderate Clearest

Situations requested

Small firms Very large firms Medium firms

Cost Lowest Highest Middle

Cost/Benefit ratio Lowest Middle Highest

ACADEMIC THEORY Steele and Court

7 steps supplier selection model

Quality systems model implementation to improve

Kaizen

Continuous benchmarking and improvement

Integrate suppliers into operations

Negotiateand select competitive supplier(s)

RFP / ITT or Direct Action Plan

Generate supplier portfolio

Develop procurement strategies

Profile outsourcing requirement

RECENT ISSUES(II) DHL workers at Jaguar Land Rover walk out over pay in SEPT 2013

4 Midlands sites and two at Halewood, Merseyside, have been affected

JLR said it was "disappointed that DHL Unite members have decided to take industrial action".

ANALYSIS(BCG MATRIX)

ANALYSIS (SWOT) Strength

1. High product Quality, rich culture identity and strong global brand value2. Popular Image of luxury brand

ANALYSIS (SWOT) Weakness

1. Lack a variety product range as compared to competitors

2. Despite having high performance cars, car design is criticized

ANALYSIS (SWOT) Opportunity

1. Emerging economies like India, China, Russia apart from USA and Europe

2. Hybrid models of luxury cars is an untapped market(XJ_e)

ANALYSIS (SWOT) Threat

1. Strong competition from international automobile brands

2. Dependence on government policies and rising fuel prices

SUMMARY & RECOMMENDATION Apply Academic models discussed previously

Reconsider current sourcing strategy and maybe look for alternative suppliers