Smart

SMART (car) and smart logistics
A case study in designing and managing an innovative de-integrated supply chain
Authors: Prof. dr. Remko I. van Hoek, Cranfield School of Management, UK. University of Ghent, Belgium, and Erasmus University Rotterdam, the Netherlands Drs. Harm A.M. Weken, Erasmus University Rotterdam, the Netherlands

SMART (car) and smart logistics
A case study in designingand managing an innovative de-integrated supply chain
Authors: Prof. dr. Remko I. van Hoek, Cranfield School of Management, UK. University of Ghent, Belgium, and Erasmus University Rotterdam, the Netherlands Drs. Harm A.M. Weken, Erasmus University Rotterdam, the Netherlands

This case study is based on research carried out by FIER since 1997. FIER is a research institute of the ErasmusUniversity Rotterdam. Both authors belong to the board of directors of this institute. By means of in-depth interviews with management of MCC (purchasing department, logistics department and sales organisations) and desk-research of company data as well as public information, the organisation and processes of MCC have been described. As the systems introduced by MCC are new to the automotive industry,the evolution of the Smart Supply Chain since the initial planning has been followed, as well as its limitations, its successes and the options for further improvement. It has been agreed with MCC, that FIER will continue this study with MCC on a long-term basis, in order to analyse the evolution of this highly interesting pilot-project on mass-customisation. The lessons that can be learned fromthis pilot will be relevant to automotive industry and beyond. Correspondence: E-mail: fier@holding.eur.nl

1

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 than FIAT 500), the company (MCC owned by DaimlerBenz) and the supply chain are completely new in the market and go beyondsuch existing practices as supplier involvement, outsourcing and modular production 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 coownership of the site, co-design and some major share in the manufacturing activities. Given the untraditional approach, MCC executives face some fundamentalchallenges including how to manage and control a supply chain in which MCC only adds some 15% of the operational value added. MCC can be seen as a pilot for implementing mass-customisation 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 Amsterdamwere filled with one or… two cars. The variety in colours and the remarkable design 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), isthe company behind Smart. Together these manufacturers have developed what they call a new 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

2

been developed; pilotmarketing of brand and product concept had raised high levels of customer awareness and interest in European markets; a production site of 68 ha. had been developed and constructed from scratch, a dealer and marketing organisation 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...