Navistar Case Study
Navistar was a worldwide leader in the manufacturing medium and heavy trucks for 17 consecutive years in the North American market. Navistar’s premium conventional trucks were produced at the Chatham assembly plant, which had almost 14 years experience in producing Navistar’s premium line since 1983. Navistar had forecasted increased industry demand for heavy and medium trucks in 1998. Especially, the Chatham assembly plant’s customers had strict requirements to the truck’s quality and delivery date. As the assembly supervisor in Chatham, Andy Ramsz encountered the interior trim quality and delivery problem for the truck. Andy had begun to gather data on the interior trim supply problem and he got the crucial reasons …show more content…
As a key supplier for Navistar, Trimco provided 420,000 parts annually to Navistar. Unfortunately, of these parts, approximately 3,100 were defective, missing or inappropriate for use. These 3,100 parts were another financial burden and jeopardized customer service. Due to the lack of centralization and limited computer systems capability, Trimco had difficulty monitoring outgoing parts for shipments sent to Navistar; inappropriate component of trim parts or insufficient quantities of the correct parts were supplied. Andy estimated that costs associated with the interior trim shortages were over $200,000 per year. The company was not being run efficiently and quality control was hindering the performance for Navistar. Furthermore, Trimco was QS9000 certified, but the quality control procedures varied throughout as the company lacked consistency. To make matters worse, Trimco also had high employee turnover, which meant that employees were not all properly trained and failed to understand the knowledge and specifications of customer requirements.
Alternatives and Options
1. Research and source another reputable supplier to manufacture 30% of the customized trim parts to improve financial situation and alleviate the shortage issue, Navistar can source out a portion of their customized parts to another supplier while maintaining the other 70% to Trimco. The new supplier will adhere to the specifications of Navistar’s customization requirements by going through