Problem: Lear Corporation
Lear Corporation, headquartered in Southfield, Michigan, is one of the world's 10 largest independent automotive suppliers and the leading player in the $45 billion global auto interiors market. This market consists of such items as seating systems, interior carpets, safety restraining systems, and interior paneling. By most measures of performance, Lear is a very successful company. It has experienced a compound annual growth rate of 33 percent over a 13-year period. One of the most successful plants within the Lear system is the Romulus I plant. This facility, located about 250 yards from the on- and off-ramps of I-275 (a major highway located in the Detroit area), was initially built to serve a GM plant that has now been shut down. The plant today provides seat assemblies for the Chrysler Warren Plant, which is located some 38 miles away. The Chrysler Warren Plant assembles the Dodge Ram and Dakota trucks. All seats are assembled at Lear on a just-in-time basis. Lear has a five-hour window between the time that Lear's Romulus plant receives notice of the specific types of seats that it must deliver and the time that the seats are needed at Chrysler Warren.
Thus, Lear must assemble, test, sequence (i.e., arrange them on the trucks so that the seats can be withdrawn in the exact order that they are needed), and deliver the seats within five hours. This plant has met these demands in a number of ways. First, the entire production line has been rethought. Operations have been extensively analyzed and simplified (thus reducing the need for highly skilled employees). All employees are cross-trained. The plant also is electronically linked to the Warren plant. The Romulus plant receives information about type of vehicles and their seating options as the trucks move through framing. This information ensures that the right types of seats are made in the right order. The material for seats comes off trailers parked near the assembly lines. These trailers bring material up from suppliers located in Mexico. All material is bundled (one bundle per seat) and sequenced by a daily schedule so that the material can be brought in as needed. When the seats are finished, they are temporarily stored on-site. This storage is used to consolidate loads and to ensure that the loads are correctly sequenced (i.e., the first seats needed are loaded last, the last seats are loaded first). When a load is completed, it is shipped by truck to the Warren plant. How successful is the Romulus plant? In recent years the plant has turned its inventory in excess of 200 times each year.
Questions
1. What elements define value for the customers of the Romulus plant?
2. What is the role of logistics and logistics considerations in the success of the Romulus plant? In your answer, focus on such issues as information processing, warehousing, mode of transportation, and network design.