Smart case

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SMART (CAR) AND SMART LOGISTICS
ABSTRACT
This case study presents the situation of a new car introduced to the European market. The car design and the brand name (Smart, a two-seater smaller that Fiat 500), the company (MCC owned by Daimler-Benz) and the supply chain are completely new in the market and go beyond such existing practices as supplier involvement, outsourcing and modularproduction in the industry. Modules such as complete front or rear ends are pre-assembled on site and suppliers are involved in design and final assembly through co-ownership of the site, co-design and some major share in the manufacturing activities. Given the untraditional approach, MCC executives face some fundamental challenges including how to manage and control a supply chain in which MCC only addssome 15% of the operational value added. MCC can be seen as pilot for implementing mass-customization in an automotive supply chain. The case study is therefore of relevance to academics and (automotive) practitioners.
INTRODUCTION
At the beginning of October 1998 most of the parking places in downtown Amsterdam were filled with one or … two cars. The variety in colours and the remarkabledesign of the two-seater car attracted great attention. The message was clear: Smart has come to town and it is here to revolutionise the concept of car production, logistics and marketing.
Micro Compact Car AG (MCC), a wholly owned subsidiary of Daimler-Benz (formerly a joint venture of Daimler-Benz and Swatch), is the company behind Smart. Together these manufactures have developed what they call anew mobility concept that relieves the heavy environmental pressure caused by present traffic while still ensuring continuous individual mobility. Overlooking the period preceding the introduction of the car, MCC management could look back on many peaks: a completely new brand had been developed; pilot marketing of brand and product concept had raised high levels of customer awareness and interestin European markets; a production site of 68 ha. had been developed and constructed from scratch, a dealer and marketing organization had been developed and was ready for product launch. Moreover, the supply chain concept developed went beyond existing practices in the automotive industry on a number of points: Customer can contribute to the configuration of products; lead-times for cars arecounted in weeks; suppliers have co-invested in the production location and have taken over shares of primary assembly beyond existing levels; the added value of MCC during production is approximately only a remaining 10% of the production cost-price; and suppliers and MCC are integrated in a sense that the premises of the suppliers adjoin the assembly hall of MCC. Overlooking the development andinstallation of the supply chain, all of which had been done since the first feasibility study of Mercedes in 1993 and the foundation of MCC in 1994, the management team realized it was facing new set of challenges. How to manage co-ordinate control and further develop such a supply chain when operational? This question is not only of relevance to MCC but to the Daimler-Benz Corporation as a Whole,which has earmarked Smart as a strategic learning project. Moreover, the concept being brought to practice by MCC is generally accepted by leading car-manufacturers as of key importance to future industry developments. Manufacturers and suppliers therefore monitor the successes and failures of MCC, as the results will by and large mark the future organization of their companies and of the supplychain.
THE CAR

Reduce to the max: Size, environmental impact and product complexity
Increase to the max: Perceived customer choice.

The Smart City is a two-seater car measuring 2.5 metres in length, 1 metre 51 in width and 1 metre in height, mainly developed for in-city use. A safe and environment friendly car that despite its minimum size combines driver comfort safety and customer...
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