An Operations Management Analysis and Audit Case of

Mitsubishi Motors Philippines Corporation

Alvarado – Ang – Tinio - Pinpin

in the automotive industry

Only one picture comes to mind.

Logo of three diamonds

Quality and

Excellence

Mitsubishi motors

Philippines

corporation

Company Profile

SHORT HISTORY

• Established: February 20, 1963• Chrysler Philippines Corporation

State of the art

• technology in automotive manufacturing• painting technology

• Hikasaburo Shibata• Supplier of world class products and services

Today

Mitsubishi Motors Sojitz Corporation

L E =A 153,305 50,299 104,836

These are all In millions of dollars

857EMPLOYEES

Ortigas Avenue Extension,

Cainta, Rizal

Luzon, visayas, Mindanao

Sta. Rosa, Laguna, Naga, Davao

Industry Background

GDP31.5% of the GDP is the Industrial Sector

Output:P368 billion(3.8% of total gdp)

26% growth in sales!(July 2014)

* Major companies in the industry are independent

Development Trends

96,588

44,582

1,079

35,851

57,796

108,324

48,328

1,500

40,231

64,261

0

20,000

40,000

60,000

80,000

100,000

120,000

CommercialVehicle (CV)

PassengerVehicle

Trucks andBuses

Asian UtilityVehicle

Light Trucks

2011 Sales (in units) 2012 Sales (in units)

1. High demand of commercial vehicles and light trucks

2. Increasing every year

Toyota Motors Philippines

52%Mitsubishi Motors

Philippines Corporation

26%

Ford Motors Philippines

9%

Isuzu Philippines

Corporation7%

Honda Cars Philippines

Inc.6%

Value Share of Total Sales

Development Trends

Mitsubishi Motors capture 26% of the Total

Shares!

Core Strategies and Key Programs

1) 50, 000 units produced in the year 2014

2) 20% market share

3) PLANT expansion

4) Mirage

goals

Objectives

• Shoki hoko (corporate responsibility)

• Shoji Komei (Integrity)

• Ritsugo Boeki (Global Perspective)

• Driving pleasure and safety

Current Performance

Driving Pleasure and Safety for Customers

Financial

Customer InternalProcess

LearningAnd Growth

Balance

d

scorecar

d

Products

Cars

SUV and UV

mitsubishi

ProductsCustomer Friendly

Competitive

Handled Well

Process

Knock down and local parts warehouse

METAL FINISHING

Paint shop Finalassembly

Body Welding

Tester line

QualityAudit

Dealer

• Assembly process of L300

• Chassis,Trim, Final Line

• Main assembly of vehicle: 6

minutes per station

• Observation: 4 minutes, 18

seconds.

Note

Engine: assembled on the chassis on a separate line

(3 minutes, 3 seconds)

focus

Spray Bot

8-Dip Paint Process

Spot Welding Robot

Capacity Planning

Demand Forecasting

• Annual Management Plan Target

• 10-20% back up for allowances

• Production of vehicles done 3 months in advance

Proposed Methodology

L o n g r a n g e forecasting

EconomicSee how the economy will affect the

company

TechnologicalBeing updated can help speed up the processes

CapacityAnalysis

Total: 54, 000 units

L300 and Adventure Production

13, 500 vehicles per shift per vehicle

LancerProduction

4,000 vehicles per shift per vehicle

Total: 8, 000 units

CapacityAnalysis

• Produce 62,000 vehicles per year

• Design Capacity: 100, 000 vehicles

• Utilization: 62%

• Bottleneck: Vehicle Assembly of 70 units

(30 units of L300, 30 units of Adventure, 10 units of Lancer)

Facilities Layout

BU St ock

Ser vi ce

Tr a in ing

Center

Par t s

Total Land Area 190,295 sq.m.

Plant 1(Bldg Area: 40,013 sq.m.)

Plant 2(Bldg Area: 42,111 sq.m.)

BU

St ock

BU St ock

Ser vi ce

Tr a in ing

Ser vi ce

Tr a in ing

Center

Par t s

Center

Par t s

Center

Par t s

Total Land Area 190,295 sq.m.

Plant 1(Bldg Area: 40,013 sq.m.)

Plant 1Plant 1(Bldg Area: 40,013 sq.m.)

Plant 2(Bldg Area: 42,111 sq.m.)

BU

St ock

The Compound layout of the MMPC Plant

Floor Plan of the Vehicle assembly flow

Work Systems

mono

ZukuriHaving the state of mind in creating QUALITY PRODUCTS and HAVING THE

PASSION to improve it even more

Kaizen

new approach

Murairregularity of movement

Muridifficulty of task

MuDaidleness of the worker

Importance of MINIMAL body movements

utilize

movements

inventory

Rawmaterials

suppliers

• Wip inventory• Jit• FIFO

Bureau of Customs

Recommendations

KEY

FINDINGS

1 Plant

62% utilization

Inventory in Bureau

of Customs

Demand

forecasting based

on volume targetsBottleneck at Vehicle

Assembly with 70 units

Local suppliers in

Cavite and Laguna

Prioritization

Operations Management Areas:

(1) Utilization and Scheduling

(2) Layout Design

(3) Inventory

1Insufficient Raw Materials

2Capacity utilization and

demand forecasting

3One plant

4Longer delivery time

Final

Ranking

Pareto Analysis

Recommendations

SOLUTION #1

Find local suppliers

SOLUTION #2

Purchase raw

materials earlier than

usual

Find local

suppliers

Strengths

Less idle time,

shipping costs,

more cars

produced

Weaknesses

Difficult to find

local suppliers

with same quality

Opportunities

Increase

competitiveness

Threats

Relocation to

other ASEAN

countries

Purchase

Raw Materials

earlier

Strengths

Delay is

avoided

Weaknesses

Forecasting

and holding

costs

Opportunities

Raw materials

readily available;

higher

productivity

Threats

More vulnerable

to sudden

changes

Main recommendation

Purchase raw materials

in advance

Justifications

• No investment required

• May increase Holding Costs

• Raw Materials helD up at the bureau of customs

• Forecasting changes

• Costs can be handed by the company

Monitoring Plan

Effectiveness

Changes needed

Holding and inventory costs

Forecasting techniques