CASE STUDY

INTERACTIVE SESSION : TECHNOLOGY

RENAULT SPEEDS UP DELIVERY WITH A NEW DSS

1. How did this DSS improve decision making at Renault? Describe some of the decisions that were improved by using this system.

The new DSS software solution designed for overall operations of Renault Company has made a huge progress for entire value chain of the company. This software has managed to link the company directly with the customers through the dealers. Similarly, it has made the whole process of car manufacturing, customization and the sales of car highly efficient. To every successful project, it involves a lot of decision making process. Some of the improved decision making by this new DSS software can be discussed below:

A. Customer order handling : Since the DSS software was able to receive the order directly from the customers, through car dealers, they were able to optimize the mix of models, critical options like engine, gearbox, and secondary options like colour, in-car electronics etc. Similarly, they were able to analyse a large number of customer orders with a powerful computer processor capable of processing 140 millions  evaluations in 10 minutes. In contrast, previously the numbers of car orders were taken as per the order the dealers. If a car was left in a showroom for a long time, the dealer would ultimately need to reduce the price of a car making it unprofitable to sell a Renault car.

B. Efficient Assembly plant : With the new DSS software, there was significant improvement in order sequencing. Based on the customer orders, the numbers of cars to  be  manufactured  were sequenced  as  per their  critical  and  secondary requirement. Also, the company managed to reduce a lot of production cost by systematization of the whole process. The car sequence ensured the workload to be sequentially distributed and managed to reduce variable costs like painting which required painting tubes to be washed. With proper sequencing, it ensures lesser wastage in paintings.

C. Smooth cooperation among the various departments : The software also managed to give a clear picture of whole assembly line, which in return helped to define   clear   job   roles   of   each department. For example, they were able to allocate sales targets and work into manufacturing issues like planning problems, constraints, decision variable. The sales department was able to focus on ability to produce profitable mix of the car.

D. Future planning and software modification : The introduction of new DSS software   solution was simply a start to much more sophisticated planning process. The initial software had some drawbacks and needed to be modified accordingly for its international production houses in various countries. It led to healthy competition among research teams from Europe, Canada and Brazil for innovation solutions like car sequencing and increment in evaluations. Similarly, the company is now looking into speeding the delivery process through optimized routing of delivery vehicles from plants to dealers via intermediate dispatching centres, which requires extensive calculations of worldwide  transportation network of Renault.

Hence the company was able to make efficient decisions for over all supply chain and thus gaining a competitive advantage in the value chain management process.

2. How much of an impact did this DSS have on business performance? Explain your answer.

The newly introduced DSS software solution has had an outstanding impact on the overall business performance of the Renault company. It has helped the company to communicate with the customers effectively by taking orders quickly and processing the order in the assembly line and the delivering back to the customer. It has several business implications to the company.  

Initially the whole supply chain was time consuming and highly inefficient due to the legacy mainframe systems, which could not handle the ever expanding product line of the company and options available for the customers. Ever since the replacement of such system with DSS system, the company has reaped the benefit of technology advancement in terms of product development, production and sales. The impact of DSS can be further discussed in following points:

A. Sales :  with the advance order handling software, the company was able to provide customized cars to its customer with reduced lead time. Similarly, they were   able   to   order   more   varieties of cars to the customers through quicker product development and market penetration. Similarly, with quicker order handling, the company was able to increase the customer satisfaction and reliability.

B. Production cost control : One of the essential parts of manufacturing based industry is to reduce if not control its production costs. With the new DSS, the company was able to improve its product sequencing at manufacturing plant and reduce production cost of car painting process and other variable costs like electricity, chemicals etc. When the cost price of a car is reduced, it increases the profit in sales of the car. Hence it leads to increase business performance.

C. Planning   and   implementation : With centralized information system and database, each department  was  able  to  extract  required  information  from the central   server.   For example, the sales department focused on the ability to produce the right mix of models, engines, equipment levels, colours, and options every month while industrial planners focused on weekly production volumes for each plant. Similarly, this kind of planning provided a feasible sales targets and implementation of plans in each departments across the production houses of Renault Company across the globe.

D. Competitive Advantage : The smooth operation of the entire supply chain is able   to   give Renault   Company   a   competitive   advantage   compared   to   its competitors. Even if the decision to implement DSS was on the wake of intense competition,  it  will   ensure that   the company  has a competitive   advantage  on product delivery and thus increase in customer satisfaction.

Hence the new DSS system has huge implications on business performance of the company. It will ensure that the company will able to sustain in long run by creating a competitive advantage in supply chain management.

3. What   management,   organization,   and   technology   factors   had   to   be addressed in order to make this system successful?

To be able to implement the new DSS software system, the company had to go through various hurdles in the initial stages. Similarly, due to various manufacturing sites of the company worldwide, it required extensive planning and controlled execution of the plans. Some of the various factors that were addressed during the DSS system are as follows:

a. Management:  

The Renault Company has an extensive network of dealers, manufacturers   and customers across the  globe. To   be   able   to   manage   such extensive   network,   it   requires   a huge management   prowess   and   regional cooperation.   To   manage   a   centralized command, this company   needed   this software to report various information such as sales report, manufacturing plant report etc. The system was designed such that customer orders flow directly from dealers to assembly plants, bypassing corporate headquarters. This ensured that the   regional management   team   as   well   as   the   management   team   at   the headquarter was aware of the company’s day to day operations.

b. Organization:  

Since the Renault Company has a diverse organizational environment through out its regional corporate offices/manufacturing houses, it was important to incorporate such practice to make this system successful. Similarly depending upon the customer order and manufacturing limitations in each area, the plant operators requested for the modification of software as it was unable to handling the car sequencing at assembly line. To solve this issue, Renault research teams from Europe, Canada, and Brazil competed to provide a solution. The software now performs more than 140 million evaluations in ten minutes.

c. Technology: 

It is certainly the most important issue to be addressed in this renovation   process. In fact, the DSS software solution  itself  is a technology. However, the implication of this software is not limited to few computers only. It has touched every aspects of the supply chain which are computerized.  For example, the sequencing of assembly line. Depending upon the order of the customers, the software analyses the efficiency of production line. For example, if there are 14 red cars, 23 blue cars and 2 black cars, depending upon the delivery date and painting efficiency, the software will recommend the exact sequencing on which the cars can be painted. Similarly, this system has revamped information system of every department. Now each department can collect the required information from central server making their information need much more easier.

Hence proper planning and addressing of the above factors contributed to effective implementation of DSS system.