Interior JV-Teething Problems of a Manufacturing Operation in China Case Solution

2. Construct a root-cause analysis for each of the issues encountered by Interior JV.

The first problem of internal quality had three broad causes, first of which was the lack of control over the quality of the raw materials due to low bargaining power with suppliers. Being a new business, Interior JV’s volume requirement of the raw material (yarn) was quite low in the industry, for which suppliers were very limited as they usually catered to large volumes. Secondly, pool of skilled workers was very small in this market; this lead to delayed detection of defective products and further poor quality work. Interior JV itself had no evaluation system to evaluate, train, and motivates its workers. Thirdly, while the parent company had many quality systems in place, the Chinese operations had only 40% of these systems implemented, which lead to poor quality check and control.

The second problem, of a long development time was caused by lack of internal coordination and no dyeing equipment of its own. Its sales teams and manufacturing plants were far apart, and each order needed to be placed individually but due to lack of market knowledge and expertise there was no system of prioritization and improving efficiency of responsiveness. Furthermore, having no dyeing equipment meant relying on external suppliers who were usually unwilling to re-dye many small samples a number of times for small companies like Interior JV. 

The third problem of timely delivery was also due to external causes. China’s logistics industry was unreliable as it was immature, did not have proper order-tracking systems, delayed orders until the trucks were full, and was not resourceful in responding to troubled situations. Furthermore, the country’s automotive industry was unable to develop and provide reliable market forecasts which made it more difficult for a small-volume company like Interior JV to plan, prepare and respond to market needs effectively.

3. Develop a scorecard with performance metrics and a strategy map for improving Interior JV operation.

In order to proceed with better results after learning from the previous experiences, following balance scorecard and Strategy Map for Interior JV are given to give an idea of how the company may proceed further and what tactics or strategies it may look into. Interior JV can set industry performances as benchmarks for its own performance. It needs to develop its own evaluation systems as well as research systems to gain a better knowledge of the market and industry practices even in other places of the world, such as its own parent company so that the Chinese venture can benefit. Furthermore, as the company faces many external factors which have caused problems in its internal processes and are hence, not under control, the strategy needs to be such that internal problems are kept under control so that losses are minimized. This would require a complete internal analysis and hence improvement of weaknesses and leverage of strengths such as the strong backup of Interior group and its funds and experience pool. The Balance scorecard and strategy map below are a guideline to how the company can proceed and starting from the following areas it can then develop further evaluative measures and keep monitoring and improving.

Balance Scorecard

Strategy Map