Strategic Quality Change Assignment Sample

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Strategic Quality Change Process at Chery Motor Company

In order to improve the aesthetic design, Chery had turned to Pininfarina and Bertone, the famous design consultants to both the auto giants Lamborghini and Ferrari. Chery had also contracted with AVL of Austria to help them in the production of eighteen new engine models to be integrated into new models. A century of research has indicated that the aesthetics aspect of a car has a significant impact on the amount that it can rake in to increase its top line. Simpler designs are more likeable and are seemingly more self relevant. A German study done in the period of January 2007 to June 2007 points to just that. Also the fact that the company also looked at improving the ergonomics by roping in AVL meant that it is taking a concurrent approach to change and development. The all around effort in improvement reaped rewards in terms of the higher sales managed by Chery (Jan R. Landwehr, 2009).

The company also undertook efforts aimed at improving the production quality and technology at their disposal by founding a research institute. This was a long term strategic plan that Chery had in their minds. Chery also went ahead and hired quite a few Japanese automotive consultants to help the auto company in order to achieve six sigma/ lean process standards that up until now were seen as the core competency of the Japanese automakers.

The timing of all this was just right for Chery Motor Co as it rode on the wave of a general growth seen across the Chinese auto industry. The total Chinese auto exports increased to 340,000, which was nearly twice the sales results compared to the last year. The aforementioned growth can be attributed to Beijing for formulating policies to stimulate industrial growth. It thus should not come as a surprise that the domestic auto and auto parts export industry grew from 0.7% of the GDP to nearly 10% of the GDP over the next ten year period. Chery timed its expansion efforts to perfection with the domestic consumption fuelling its sales in the initial period while concurrently setting up bases in the international markets as well. This had helped Chery to not only harness the exceptional growth potential of its domestic buyers but also set a new market for the company which had helped Chery meet and probably exceed the targets that it may have set for itself. So the future holds good for Chery with the Chinese growth rate supplementing its own expansion plans.

Chery in order to compete with the global auto giants also entered into a strategic partnership with Chrysler. This helped both the parties as Chrysler finding it hard to compete with the likes of Honda and Toyota in the low cost auto market which were gaining popularity by the day in the wake of the increasing fuel prices. Chery on the other hand now had an exposure in the US market and could now leverage upon the technical and design expertise of Chrysler which was one of the problems that Chery was facing. It was still some way away from the international standards. Also it could use the wide distribution network of Chrysler to increase its sales from the western countries. The move would thus benefit both the companies in increasing their global sales and was a strategic partnership that was aimed to benefit both the companies greatly. All this would definitely help Chery close the gap between where it needs to be and where it is at currently.

All this had helped Chery increase its sales from nearly 100000 units in 2004 to close to 400000 units in 2007, a growth rate of close to 60 percent CAGR. Compare this to the industrial growth rate of 10 percent or the countries overall growth rate of 8.9 percent in the aforementioned period and we can understand how much was Chery helped around by these strategic decisions undertaken by the hierarchy of the company. Chery was also able to rake in almost 7.2 percent market share making it the fourth largest passenger car brand across China. Chery also became the first Chinese car enterprise to export complete vehicles, CKD engines as well as vehicle manufacture technology and equipments to international markets. Chery was now exporting to more than 50 countries in the world which made it the largest auto exporter of China for four years in a row. Chery’s production capacity was now 650,000 vehicles to go with 400,000 engines and 300,000 set of gear boxes.

(Weber, 2008)

Implications of Strategic Quality Change of Chery

Chery had roped in Pininfarina and Bertone to improve the aesthetics of Chery’s cars. The same people with their experiences with Lamborghini and Ferrari would provide invaluable knowledge and expertise to the Chinese Auto maker when it comes to the demands and expectations of the western audience. The company also got itself into a partnership with the automobile giant Chrysler to increase its global footprint. Chrysler helped Chery by allowing it to leverage upon the vast distribution network of Chrysler and also its technical and design expertise. Chery in a bid to concurrently improve its ergonomics along with the aesthetics improvements already in place, hired a team of Japanese consultants to help them out in six sigma and lean manufacturing.

All this had helped Chery increase its sales from nearly 100000 units in 2004 to close to 400000 units in 2007, a growth rate of close to 60 percent CAGR. Compare this to the industrial growth rate of 10 percent or the countries overall growth rate of 8.9 percent in the aforementioned period and we can understand how much was Chery helped around by these strategic decisions undertaken by the hierarchy of the company. Chery was also able to rake in almost 7.2 percent market share making it the fourth largest passenger car brand across China. Chery also became the first Chinese car enterprise to export complete vehicles, CKD engines as well as vehicle manufacture technology and equipments to international markets. Chery was now exporting to more than 50 countries in the world which made it the largest auto exporter of China for four years in a row. The fact that Chery now owns a full set of R & D and manufacturing system which also includes two car plants, two engine plants, an automobile research institute and a gearbox plant to go with its automobile planning and design institute shows how much the company has grown in less than a decade.

Chery had established the need for maintaining customer satisfaction as one of its primary goals and it had set a target of offering a zero defect product to its customers as one of its targets. It also aimed at providing a considerate service to its customers as one of its targets. Chery was able to pass the ISO 9001International Quality Certification in February 2001. It also passed the ISO/TS 16949 Quality management certification of Germany in October 2002. Chery was also able to pass the surprise Chinese inspection by its State Bureau of Technical Supervision for the Chinese national standards.

All this helped Chery’s brand and corporate image and had enhanced the same to the level that Chery was acknowledged as one of the famous Chinese trademarks by the State Administration of Industry and Commerce of China. Chery was also acknowledged as the 11^th most favorable company of China by the Fortune Magazine.

Chery Motors Strategy Implementation Monitoring Techniques

Strengths

Strong quality control measures put in place by Chery.
Chery also has experienced and qualified professionals at its disposal with people like Pininfarina and Bertone, famous design consultants to both the auto giants Lamborghini and Ferrari there to help Chery improve the aesthetics of its cars. Chery had also contracted with AVL of Austria to help them in the production of eighteen new engine models to be integrated into new models. Chery also went ahead and hired quite a few Japanese automotive consultants to help the auto company in order to achieve six sigma/ lean process standards that up until now were seen as the core competency of the Japanese automakers.
Chery also had access to leverage upon the design and technical expertise of Chrysler.
Chery now owns a full set of R & D and manufacturing system which also includes two car plants, two engine plants, an automobile research institute and a gearbox plant to go with its automobile planning and design institute.

Weaknesses

Chery was still very much reliant on domestic sales to increase its revenue and was nowhere close to becoming an international auto giant.
Chery had to outsource technical skills and design expertise to Chrysler which was dependent on the partnership’s existence.

Opportunities

Partnership with Chrysler would help Chery penetrate the western markets better.
Strong Domestic growth rate would help Chery as it means that the domestic consumption will be high.
High demand for smaller cars in western nations on account of the increasing petrol prices also stands to benefit Chery.
Tax rebates from the Chinese government means that the net profit after tax for Chery would be higher giving it a chance to reinvest the capital in its own business at a cheaper cost.

Threats

Lack of an integrated dealership network could prove to a threat for Chery.
Logistics, servicing and reverse duties issues that plague Chinese imports to the western markets.
Demanding safety and emission laws prevalent in the western countries could also prove to be stumbling block for Chery.
Need to fulfill certain minimum capacity utilization can also peg Chery back.

Chery also became the first Chinese car enterprise to export complete vehicles, CKD engines as well as vehicle manufacture technology and equipments to international markets. Chery was now exporting to more than 50 countries in the world which made it the largest auto exporter of China for four years in a row. The fact that Chery now owns a full set of R & D and manufacturing system which also includes two car plants, two engine plants, an automobile research institute and a gearbox plant to go with its automobile planning and design institute shows how much the company has grown in less than a decade.

All this would definitely help Chery monitor its performance when it comes to delivering the highest quality products to its customers in a better way.

Harnessing of the knowledge of Poka Yoke and 5-S

Poka Yoke, a Japanese term that means “mistake proofing” is basically a mechanism followed in lean manufacturing processes that helps the employees employed in a certain process to avoid mistakes.

5 S is the name given to a technique aimed at workplace organization which uses a list of five Japanese words: seiton, seiso, seiketsu, seiri, and shitsuke.

Seiton – Set in order (workplace organization):

It includes arranging of materials and equipment so as to make them easy to find thereby helping save the time spent in searching for the same.

Seiso – Shine (Cleanup):

It includes cleaning of the workspace and all the equipments. Any oil spills for instance are cleaned before it becomes a problem. Keeping the place tidy, clean and organized by scheduling the cleaning, sweeping and wiping off activity is what is done in Seiso thereby ensuring that by the end of each shift, the working area is clean and all the tools/materials have been restored to their respective places. This ensures that the workstation is ready to use for the next user and that the required order is maintained.

Seiketsu – Standardize (Cleanliness):

It ensures that a uniform procedure and practices are followed to create consistency and ensure that all the steps are performed as per the requirement.

Seiri – Sort (housekeeping):

It means to ensure that each of the items in the workplace is in its respective place or if it is unnecessary then it has been removed. All the items are prioritized according to the frequency of their use/requirement and are kept accordingly. It thus helps to get rid of any unnecessary mess.

Shitsuke – sustain (Discipline):

It keeps the processes going through communication, training and organized structures. It ensures that time is committed for maintenance. It also ensures that awareness is created for improvements. It also ensures disciplined adherence to rules, systems and procedures of 5 S which prevents backsliding. Shitsuke also includes that the deserved efforts are rewarded.

Poka Yoke helps remove the need for people who use products or processes to consciously think about the ways to safely use them as they have been dsigned in such a way that they cannot go wrong with them. It obviously helps in the business scenario as it helps eliminate the error that may be caused by the lack of automation.

(Womack, 2013)

5S similarly helps in maintaining the workplace at an accepted pre defined level to ensure that there are no hindrances in working at the workplace.

Exercising all this had helped Chery increase its sales from nearly 100000 units in 2004 to close to 400000 units in 2007, a growth rate of close to 60 percent CAGR. Compare this to the industrial growth rate of 10 percent or the countries overall growth rate of 8.9 percent in the aforementioned period and we can understand how much was Chery helped around by these strategic decisions undertaken by the hierarchy of the company. Chery was also able to rake in almost 7.2 percent market share making it the fourth largest passenger car brand across China.

Chery vs. Volkswagen

Quality Assurance to support the development and production of the components such as transmissions, engines, suspension parts and seats can be exercised at Chery similar to the same followed at Volkswagen.
Technical Servicewhich acts as the interface between Volkswagen, the dealers, and the manufacturers and importers. This department is responsible for the technical product information, as well as the fault elimination process along with the warranty strategy as is done by Volkswagen can be emulated by Chery.
Quality Assurancefor small & compact product lines as well as midsize & full-size product lines can be maintained. The responsibility extends from the development through to the series support and applies throughout the world is another technique that Volkswagen follows and Chery will be wise to follow the same.

Chery can implement a 360 degree feedback from all the customer touch points as well as from its own employees to identify the shortcomings in the current process and ask for suggestions for improving the same.

(Anon., 2013)

Outcomes of the Strategic Quality Change

TQM is nothing but a management approach which propels companies to a long term success by ensuring a greater satisfaction level among its customers. This is brought about by ensuring that all members of the organization participate in improving the products, processes and services of the company as well as the very work culture of the organization.

(Anon., 2012)

All this would definitely help Chery monitor its performance when it comes to delivering the highest quality products to its customers in a better way. The key success factors could be taken as the end changes brought about to the revenues and the sales as also the increased market share for Chery.

Chery must look to enter into getting into more strategic alliances to extend its penetration across the western markets. It must try to emulate what other global giants have done when it comes to quality management and must not feel shy to take a leaf out of their books if it has a potential to positively impact Chery’s operations.

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