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Compact case
Case
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Reference no. IMD-7-1907
Published by: Institute for Management Development (IMD)
Originally published in: 2018
Version: 16.03.2018
Revision date: 17-May-2018

Abstract

This two-part case series makes a deep-dive into the Sales and Operational Planning (S&OP) process of Chinese carmaker Suntu Motors. They could not have wished for a better market response when it launched its first car in the fast-growing midsize SUV market. It predicted selling 240,000 cars in the first year; but, three months after opening its order books, it had to raise its forecast by almost 40% to 330,000 cars. It was now up to the already overstretched supply chain, production and purchasing teams to increase supply at short notice. This was not an easy task considering that Suntu was dependent on the cooperation of 150 external suppliers, while its main production facility in Chongqing was already running at 95% of total capacity. In CASE B Suntu had increased production capacity for this new SUV, but this came at a cost. Short-term and costly supply solutions had to be implemented to overcome shortages at sub-suppliers; lead-times for lower-priority models increased; planned launches in low-priority markets and launches of new models had to be postponed. With its ambition to increase profitability and become a larger global player in the premium car market, Suntu now needed to turn its attention to its internal processes, and in particular the S&OP process as a platform for keeping the entire organization aligned on the key priorities.
Locations:
Size:
2016: USD80 Billion revenues, 4.5 million vehicles sold, 250,000 employees
Other setting(s):
2014 - 2017

About

Abstract

This two-part case series makes a deep-dive into the Sales and Operational Planning (S&OP) process of Chinese carmaker Suntu Motors. They could not have wished for a better market response when it launched its first car in the fast-growing midsize SUV market. It predicted selling 240,000 cars in the first year; but, three months after opening its order books, it had to raise its forecast by almost 40% to 330,000 cars. It was now up to the already overstretched supply chain, production and purchasing teams to increase supply at short notice. This was not an easy task considering that Suntu was dependent on the cooperation of 150 external suppliers, while its main production facility in Chongqing was already running at 95% of total capacity. In CASE B Suntu had increased production capacity for this new SUV, but this came at a cost. Short-term and costly supply solutions had to be implemented to overcome shortages at sub-suppliers; lead-times for lower-priority models increased; planned launches in low-priority markets and launches of new models had to be postponed. With its ambition to increase profitability and become a larger global player in the premium car market, Suntu now needed to turn its attention to its internal processes, and in particular the S&OP process as a platform for keeping the entire organization aligned on the key priorities.

Settings

Locations:
Size:
2016: USD80 Billion revenues, 4.5 million vehicles sold, 250,000 employees
Other setting(s):
2014 - 2017

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