Sustainable Supply Chains Assignment
Sustainable Supply Chains – Creating a more sustainable life cycle for products from Electronix Automotive PLC
Note: This is a fictitious company created for the purposes of study at ARU by Tom Stacey
Electronix PLC are a start up Electric Vehicle (EV) manufacturer based in the West Midlands in the United Kingdom. They were formed in 2015 by serial entrepreneur Simon Jones who, seeing the success of companies like Tesla decided that there was a potential market for high-end luxury vehicles made in the UK to rival the existing Automotive OEMs as well as start ups like Tesla and Lucid.
Their Electronix Pegasus 4S is their first product and is set to launch in Q1 2022 (having been pushed back by COVID19 delays). The car is built around a philosophy of sustainability and environmental consciousness and is a fully electric saloon car with a 400 mile range and 0-60 mph time of 2.8 seconds. Speed and range aside, Jones and his team are keen to point out the vehicle’s body panels are mostly produced from an innovative UK developed material called ‘Plastica’ which is 95% post-consumer plastic waste, coated in a special gel coat which can be painted in the usual manner, interior trim is made from a hemp material
which has been used for some years by the likes of BMW. Instead of leather seats, the Pegasus 4S uses Ultra Fabrics Inc. ‘Vegan’ Ultraleather and Alcantara materials further proving their environmental commitment.
Press reports initially were very positive and a number of pre-orders were placed on the £70,000 saloon bringing a welcome cash injection to the fledgling company. However, the initial launch date was Q1 2020, and now the 2022 date is making shareholders and preorder customers alike nervous.
The prototype vehicles have also been fraught with difficulties in their manufacturing. Production of the vehicles has been contracted to Prodrive Limited in Banbury, England but their production lines are actually not big enough to fit the finished vehicles down, so they are part assembled at Prodrive, whereby they are taken in three parts by lorry to Woodall Nicollson in the North-West for final assembly – images of part assembled vehicles being driven half way across the country hasn’t been great PR for a company producing environmentally focussed vehicles. In addition the Plastica panels have proven to not be as robust in testing as hoped and can crack at low temperatures, causing the vehicles to be named “The Plastic Pig” by the press.
Simon Jones and his production team are keen to launch the product to the best possible reception, time is running out and delays cannot happen any more. Therefore he needs a clear plan on how to best launch a highly sustainable product to a high-end market reliably and on time.
It seems clear that the contract manufacturing with Prodrive cannot continue, options such as using MagnaSteyr in Austria would deliver the product, but at higher cost and would nolonger be a made in UK product which Electronix believe to be one of their USPs – also, the large Plastica panels are made in the UK and would need shipping to the production plant. Figure 1 shows where most of the components are sourced.
Items sourced Outside UK:
- Tyres – France
- Driver Assistance systems – Germany
- Wheels – China
- Interior Seat coverings – USA
- Screens – China
- Computer components – China
- Lights – France
- Wiring Loom – Turkey
- Carpets – TBC either UK partner or Italy
- Alcantara trim – Italy
Another key part of the sustainable business plan is the battery ‘buy-back’ option with Electronix are offering. The vehicle is powered by a large 100 KWh Lithium battery, if an upgraded part is offered or the vehicle reaches the end of its serviceable life, the battery can be used as household or grid power storage and Electronix will pay a guaranteed £25,000 for the battery. However, these batteries must be sent to HQ in the UK for this process so it would be essential such a facility exists in the UK – Prodrive has already said they are happy to work with Electronix to offer such a service as part of a reverse manufacturing supply chain.
Assignment brief:
You are expected to write a 3000 word report for the board (with relevant academic references) on what the supply chain strategy should be for Electronix and their Pegasus 4S vehicle. It should include a clear statement of intent on how you think a sustainable supply chain should be setup.
The considerations include:
- Ensuring the environmentally conscious image of the company continues
- Providing cost-effectiveness in production and supply (you are expected to research production costs in different countries and areas and find a cost-effective solution)
- How could the ‘buy-back’ system best be facilitated?
- What SLAs and checks and balances will be put on suppliers?
- What relevant legislation should be adhered to?
- Should changes be made to the supplier base?
- What key sustainable concepts could be introduced/leveraged to ensure Electronix are world-leading?
- Consider the product lifecycle from concept to grave
- How can the company market the product to reduce the consumer carbon footprint?
The company are open to your suggestions of where to manufacture, but the currently contracted suppliers for Driver Assistance Systems, Lights, Screens, Computer Components and Powertrain cannot be changed as they are too close to production and orders have been placed at the factories. The Glass and Tyre manufacturer can produce the same part in their plants in most areas of the world. Any other parts not listed in the supplier map or list are generic and can be sourced in most locations in the world (fastenings, metal stock, paint etc).
Production partnerships have been explored with:
- Prodrive UK
- Wodall Nicollson (only final assembly and paint) UK
- Ziejiang Auto Co Ltd. China
- MagnaSteyr Austria
- Valmet Finland
- PininFarina – Italy
As lead Supply Chain consultant to Electronix, you will outline this report to the board with recommendations, timelines, best practice and risks. A realistic plan is expected, but it can equally be ambitious if you believe it can be argued. Any similar supporting case studies from other manufacturers (which can be in other industries) are welcomed.