Operations and Supply Chain Management Assignment #2 – Etratech Visit

By: Shannon Szabo-Pickering

1. Etratech manufactures product in both North America and China. They have chosen to run their Chinese operation as a wholly owned subsidiary. Briefly outline the benefits of this approach.

Operating as a wholly owned subsidiary provides Etratech with a competitive advantage, since many other organizations choose to outsource some or all of the manufacturing process. By operating as a wholly owned subsidiary, Etratech provides organizations with a way to mitigate the risks associated with outsourcing. Outsourcing the manufacturing of a product can lead to a loss of control over product quality, timelines and proprietary information. Furthermore, outsourcing can result in complex negotiation processes and difficulties in supplier communications. By fully owning its Chinese facility, Etratech can control product quality, and ensure product testing and quality assurance standards are fully adhered to. It also ensures consistency in product quality, regardless of the manufacturing location of the product. Operating a fully owned subsidiary also allows for transparency in the manufacturing process. Furthermore, it offers customers protection over their intellectual property and product designs, reduced costs and shorter lead times. Etratech has stated that its customers seek the benefits of Asian costing, and the flexibility of North American order management. By operating a wholly owned subsidiary in China while maintaining a North American location in Burlington, Etratech can accommodate these customer desires.

2. Etratech has developed a trademarked program that they call Total Acquisition Management (T.A.M.). Briefly describe who might take advantage of this program, what it involves and outline the Supply Chain related benefits associated with it.

Through its Total Acquisition Management program, Etratech provides its customers with services relating to the acquisition of products such as semi-conductors, commodities and mechanical components. Through the Total Acquisition Management system, facilities providing sourced components are subject to a strict supplier rating system to ensure that quality standards are upheld. Additionally, Etratech works with organizations to develop warehousing and delivery systems that accommodate their requirements, and uses bar codes and RF scanning to track products. Companies that order small to medium product quantities are likely to take advantage of this program to access economies of scale they may not otherwise not have access to, due to their low volume requirements. This service is especially advantageous in allowing small and medium sized organizations to compete effectively in the global marketplace. Through this value-added service, Etratech provides its customers with a convenient, efficient and cost effective way of addressing their product acquisition needs, thereby giving these organizations the ability to focus on their core competencies while obtaining the competitive advantages associated with the Total Acquisition Management program. These organizations will benefit from the cost savings, shorter lead times and efficient logistical processes

Etratech can provide through its established supplier relationships and global purchasing power. By implementing the Total Acquisition Management system, Etratech can meet customer demands for logistics solutions that meet their business needs.

3. What quality assurance measures does Etratech have in place? Identify and briefly describe each.

Dedication to high quality and continuous improvement is evident in Etratech’s quality assurance measures. Its manufacturing process utilizes the latest technological innovations and state of the art control systems. Its manufacturing process is fully automated, ensuring reliability and consistency in the products it manufactures. The technology implemented in its manufacturing process also utilizes mistake-proofing systems which only release good parts to the operator. Throughout the manufacturing process, inspections and tests are implemented at multiple points to ensure products meet Etratech’s rigorous quality standards. Similar inspections are conducted at facilities providing sourced parts.

Additionally, Etratech is ISO 14001, ISO 16949:2009 and Six-Sigma certified. ISO 14001 provides a framework and tools for an organization to implement effective environmental management systems in order to minimize the environmental impact of its operations. Although ISO 10041 certification does not require organizations to meet specific environmental standards, it indicates that an organization is dedicated to measuring and continuously improving the environmental impact of its operations, as well as adhering to any laws or regulations relating to environmental standards. ISO/TS 16949:2009 relates to the implementation of quality management systems related to error avoidance, defect prevention and waste reduction within supply chains for automotive related products. These quality management systems are applied throughout the supply chain. Like ISO 10041, it also emphasizes the continuous improvement of production processes. Six Sigma is a set of techniques and tools used for improving processes and increasing the quality of outputs by identifying and removing the causes of defects. The objective of six sigma is for 99.99966% of products to be defect free. These certifications illustrate Etratech’s dedication to implementing procedures to ensure high quality, defect free products, as well as a dedication to continuously improving its manufacturing processes.

Etratech also employs a corporate culture dedicated to upholding the highest standards of quality, and focuses on total customer satisfaction by meeting or exceeding customer needs. Etratech completes this objective by effectively communicating and collaborating with its customers to design a product that meets the organization’s unique requirements. Etratech is involved in every aspect of the manufacturing process, including product design, prototype creation and product manufacturing. Its design for manufacture process implements a whole product approach to manufacturing, which provides high quality, continuous improvement and cost savings. Once customers receive orders, Etratech offers additional product support, if required.

Employees are another important component of Etratech’s quality assurance measures. Etratech employs a full-time quality assurance manager, and implements regular management reviews and internal audits to ensure quality standards are adhered to, as well as to uncover new opportunities for improvement and cost savings. The quality management system it implements is additionally assessed to ensure its effectiveness. Etratech also provides its staff with extensive training to ensure they are able to meet the quality standards required of Etratech products and services.

4. During his presentation, Saha Chatterpaul spoke of the importance of adhering to certain basic program elements to achieve success in today’s global environment. Identify and briefly explain the key things that he defined as essential to a global business’s success.

Mr. Chatterpaul spoke of adhering to five basic program elements that are essential to the success of a global business:

1. As a global business, it is important to understand to develop an understanding of the global marketplace in which they operate. Globalization has been accelerated by the reduction of trade barriers through agreements such as NAFTA, or the creation of the Euro Zone. Organizations now compete with other organizations throughout the world in a rapidly changing and highly competitive business environment. In this environment, it is important to recognize the intricacies of different marketplaces throughout the world, and be able to adapt to the needs of these marketplaces. Etratech provides products and services to organizations in Canada, the United States, Europe, Japan, China and Australia. It has a comprehensive understanding of the global business environment, and is able to provide a level of service and quality that allows itself and its customers to compete effectively in the global marketplace.

2. Use of business computer applications is essential to function effectively in a global business environment. Computer applications allow ease in communication and knowledge sharing throughout the world. Etratech, for example, can easily communicate with its facility in China, commonize facility operations and provide customers throughout the world with products that adhere to the same level of quality, regardless of where the product was manufactured. Etratech also uses barcode tracking and RF to track products and create logistical efficiencies. Additionally, strategic use of enterprise resource planning can provide organizations with competitive advantages in a variety of ways, including ease in sharing pertinent information, achievement of operational and communication efficiencies and streamlined business processes.

3. As a global business, it is also important to focus on leadership building and technical competence. Technological advancements have the ability to provide organizations with a wealth of information to utilize in effective decision making. Additionally, when used effectively, technical advances can lead to the breakdown of organizational silos, leading to increased organizational collaboration and knowledge sharing. As an organization operating in a global business environment, it is important to have the competence and understanding of these technologies to utilize them in a manner that optimizes the competitive advantages they may provide.

Etratech capitalizes building leadership capabilities and technical competence in a variety of ways. It provides its employees with extensive training in a variety of areas, and promotes based on performance, rather than number of years worked. It also utilizes standard operating procedures, which helps reduce variances and ensures a high level of quality in its products.

4. Thinking and acting strategically is another important factor in succeeding in a global business environment. It is important to act in the best interests of the organization as a whole, and Etratech promotes a corporate culture that facilitates co-operation and collaboration in acting in the best

interests of the business. It focuses on developing long-term strategic relationships with its clients, providing them with high quality products that collaborating with customers to develop products that suit the unique needs of their businesses. Etratech adheres to the principles of providing the highest level of quality, integrating the latest technological advances and providing value-added services such as T.A.M. for its customers. It considers these elements critical to its success as a global business.

5. Etratech provides a variety of career paths for its employees in areas such as finance, supply chain and sales and marketing. When hiring, Etratech seeks qualified staff with appropriate experience educational requirements. It seeks dedicated individuals, who are interested in long-term careers at Etritech, and willing to assist in contributing to the company’s success as needed, even if it is in a manner outside their assigned duties. It considers the quality of its employees a key component in its global competitiveness, and is supportive of its staff, especially in providing additional training to assist them in furthering their careers.