Answer

Abstract

Supply chain management (SCM) continues to play a vital role in the running of organizations. From the procurement perspective, particularly with expansive business ventures such as automotive industry, there is a compelling paradigm shift towards augmentation of SCM with information technology (IT). This is variously referred to as supply chain information technology (SCIT). This paper subsequently evaluates and discusses the role of IT in relation to supply chain management at Mercedes Benz. An analysis of information technologies being implemented at Mercedes is also considered. Examples of such innovations include car-to-X communication, Intelligent Aerodynamic Automobile (IAA) concept, intelligent drive systems (IDS) and Vehicle Programming (VP) Technologies.

Key terminologies: Supply chain management, Supply chain information technology, information technology, intelligent aerodynamic automobile, intelligent drive systems and vehicle programming technologies.

Role of Information Technology in Supply Chain management at Mercedes Benz

Growing market share and increased competition among firms has practically shifted focus to supply chain management. Consequently, effective supply chain management remains a key ingredient of operational and financial success for firms. However, in contemporary business engagements, SCM has been increasingly augmented by information technology software. This paper evaluates and analyzes the role of information technology in relation to supply chain at Mercedes Benz. Additionally, various information technologies adopted at the firm are discussed. Whereas development of SCIT as a discipline is still work in progress, available evidence provides an innovative way of cascading SCM to meet growing markets. 

Role of IT in relation to Mercedes Benz supply Chain

Mercedes Benz has overseen an expanding market share beyond traditional markets in recent times. In order to meet growing demand for its products, particularly in new markets such as Africa, the company has increasingly applied IT in its supply chain management. First, as a leading manufacturer of luxury cars, automaker Mercedes-Benz, recently employed information technology to optimize and streamline its supply chain logistics. According to the Material Handling and Logistics Staff report (2015), the adjustments brought several benefits to the automaker. SCIT helped to lower production costs of each car by up to 20%. Accordingly this trend led to an increase in production by 1,754,000. Secondly, SCIT has helped to track the production processes in the giant automaker, as it grapples with a growing market for over 30 variants in its stable (Handling & Logistics Staff report, 2015). Third SCIT has increasingly “modularized and standardized” manufacturing procedures by use of modern digital systems in accordance to industry 4.0 protocols (Material Handling & Logistics Staff, 2015). To achieve this objective, Mercedes-Benz employs big data analytics to enhance continuous tracking of packaging and production materials. Fourth, the big data technology, essential for tracking sales, performance, and client responses in destination markets, is useful for monitoring and controlling the production processes (Material Handling & Logistics Staff, 2015). Fifth, Mercedes-Benz’s recently implemented an optimized process that would ensure that materials are recycled in the manufacturing process. Accordingly, Material Handling and Logistics Staff (2015) credits the automaker with implementation of the IT-based driverless transportation systems (DTSs) so as to reduce time wastage as it facilitates delivery of materials to workers on site. Additionally, the systems are also credited with promotion of quality assurance as it ensures that all elements of the production process meet predetermined minimum standards. Further, Mercedes supply chain has been greatly enhanced by installation of a reference calculation system in its new network hub in the Adriatic Sea (Material Handling & Logistics Staff, 2015). SCIT has also been the principal driver of improvements to the entire supply chain management process at Mercedes. According to Hetzner (2015), the overhaul is intended to achieve greater efficiency, remove logistical impediments, and reduce overall cost of production. Accordingly, Hetzner posits that the application of information technology offerings in the readjustment of the supply chain process was necessitated by growth in market share to regions outside Germany and Europe. As the automaker’s executives projected astronomical increase in supply chain costs to record levels, with the potential to outstrip manufacturing costs in smaller markets, there was need to mitigate risks (Hetzner, 2015). The sheer scale of operation, which involves optimization of operations at 26 different manufacturing sites across the globe, and a human resource of about 7500 people, necessitated the introduction of real-time and radio-technology software to achieve control over the entire production and distribution process. Finally, SCIT has infused flexibility into the supply chain management. According to Christopher Ludwig, content director, and editor of automotive logistics website, flexibility aids revitalization of the production process through an IT network which integrates operations among various plants. Flexibility is further necessitated by dynamics in the Mercedes product development plan (Ludwig, 2018). For instance, there are plans to shift from the less sophisticated mechanical plug-in type of cars to plug-in hybrid and further to the fully electric models in 5 years.

Analysis of Information Technologies adopted at Mercedes Benz

Mercedes Benz continues to incorporate a number of information technology software to improve overall customer experience. For instance, the most conspicuous tools are the intelligent networking technologies. According to Andrew Hard, contributor to the article on “5 Mercedes-Benz S-Class technologies that will blow you away,” this technology has been implemented through an intricate network of intelligent functionalities to confer comfort and performance. Such technologies include car-to-X communication to warn drivers of potential danger spots. Also included in the networking technology matrix are intelligent drive technologies for automatic transmission, the concept IAA (Intelligent Aerodynamic Automobile) for integration of different specialist departments, as well as various internet connectivities such as Mercedes me to enable connection to cloud and multimedia technologies (Hard, 2017). Secondly, Vehicle Programming (VP) technologies typically introduced at the product development stage have been integrated so as to entrench high standards in the production cycle. This is intended to maintain quality of current car models, improvement on drive systems for new cars, as well as power trains, interlinked by IT to facilitate production from the same manufacturing plant. Third, the automaker has included comfort control system in their products. Comfort control system that networks air conditioners, music system, seat warming, body massage, ambience, and air quality control. According to Hard (2017), the system enhances warmth, novelty, comfort, and vitality by assigning different sound tracks and cues for each attribute. Lastly, Mercedes continues to improve on its intelligent drive system (IDS) so as to automate its transmission. Intelligent drive system attained through installation of advanced radar systems, sophisticated cameras, and requisite technologies that activate semiautonomous drive capabilities (Hard, 2017). Additionally, these enhancements refine principal aspects of the cars’ operations, including steering, braking and acceleration without prompting from the driver. Other features such as automatic change of lanes by the help of sensors, as well as safe navigation of corners are also controlled by the intelligent drive system (Hard, 2017). Additionally, there is the Computer-Aided Race Start Program, have been credited with giving Mercedes Benz cars a head start as far as initial acceleration is concerned. Further, variable all-wheel drive system allows torque on each wheel to be adjusted according to the needs of the customer. Hard (2017) further avers that SCIT allows for smooth transition from 2-wheel drive mode of transmission to 4-wheel drive as well as the power to change from front wheel propulsion to hind wheel according to the drivers’ preference.

Impact of the systems on supply chain performance

Mercedes-Benz continues to automate and network its technologies to enhance efficiency and transparency so as to lower costs in the supply chain. Principally, Mercedes Benz allows third party logistics vendors (3PLs) and managers automate and manage data through wireless networks and cloud computing (Dupre Logistics, 2018). Digital systems, especially the money transfer frameworks, are capable of capturing, storing and retrieving important transactions over the web. Similarly, the customer relationship management (CRM) system is particularly useful for controlling operations and removal of barriers to business operations (Dupre Logistics, 2018). Further, the Radio-Frequency Identification (RFID) systems are becoming increasingly integral to identification and capture of data from employees, suppliers and customers. Correspondingly, IT also streamlines communication among employees and customers. Dupre Logistics further avers that players in the supply chain process such as distributors, managers, and customers can freely convey information among themselves much faster, with greater accuracy, and privacy (Dupre Logistics, 2018). Further still, IT has been credited with facilitation of compliance with regulatory requirements as governments prefer accountability and tax compliance. The advent of IT has changed altered the manner in which government agencies operate in their areas of jurisdiction (Dupre Logistics, 2018). For instance, in countries such as Germany, most of Europe and the United States, local laws demand for electronic logging of drivers and fleets.

Conclusion

From the preceding discussion, it has been observed that innovation in SCM, a necessary step toward meeting growing demand for products in global markets, can only be driven by infusion of requisite IT tools. As a rapidly growing producer of the world’s most luxurious cars with an expanding market, Mercedes Benz’s SCM innovation has been heavily driven by IT. As a result, supply chain information technology derivatives such as intelligent aerodynamic automobile systems, intelligent drive systems and vehicle programming technologies have been implemented. SCIT has had tremendous impact on supply chain as it has brought efficiency and transparency, controlling operations and removal of barriers, identification and capture of data, and promotion of compliance with regulatory requirements in areas of operation.

Recommendations

SCIT has become an indispensable characteristic of Mercedes Benz products. However, the company should effectively segment its customers so as to match sophistication with appropriate standards of living in destination markets. Further, as the company becomes more technology reliant, it should put adequate measures to curb cyber attacks on its production lines as well as products, and appropriate responses in the event of recall.