1) Skoda Background and HistorySkoda Auto or Skoda is renowned for its quality automobiles for more than a century now. Though part of the German auto giant Volkswagen Group today, Skoda was the brainwork of two Czechs: Vaclav Klement and Vaclav Laurin. Like most other automakers, Laurin & Klement started off their company by manufacturing bicycles, but the company grew into a big name, when it merged with Skoda Manufacturers, the leading automakers in Czechoslovakia, in the year 1924, after it ran into a financial mess. Since then it has been quite a ride for this auto company that ran into many highs and lows, as political events dictated time.
However, its decision to join hands with Volkswagen came as a surviving bet for Skoda that won the company an eminence that remains unchallenged to this day. Today, Skoda has to its name a successful line-up of cars like Yeti, Octavia, Fabia and the very recent Skoda Superb. A blend of elegance and safety, today Skoda ranks among one of the biggest auto car makers in the world.
Václav Laurin and Václav Klement are the two brains accredited with the conception of Skoda Auto. They started off with a small bicycle company of their own in the early 1890s that laid the foundation for Skoda. Although the duo initiated as bicycle makers, a successful stint with motorbike in the region inspired them to come out with their first car in Czech. Laurin & Klement Co. made their first big impression with their sports car and went on to win for themselves an unparalleled status as carmakers in the entire region.
However, things changed for the company when, after World War I, the Europeans revealed little interest in sports car, a change that compelled Laurin & Klement Co. to join hands with Skoda Works, which, in turn, resulted in the change of the fate of this company forever. Skoda Works was majorly into the manufacturing of steam engines, components, various machines and weaponry till then.
The company changed its name again in 1930 but retained Skoda, a name that stands as a hallmark of quality cars till date. Prior to the World War II, thousands of Skoda cars were produced annually, eventually making Skoda a major part of Czech export. With World War II, Skoda was forced to join Herman-Goring-Werke conglomerate and was left to the produce arms alone. After the war, with its name damaged and facilities ruined by Allied forces’ bombings, the company was soon nationalized.
This had a damaging impact on the company’s quality that became technologically poor than its Western counterparts. Nevertheless, Skoda cars held on to their popularity and found buyers in the Eastern block, simply because of their affordability, convenient built, and easy maintenance. In 1987, Skoda came out with its model Favorit, inspired by Western models, which was not only cost efficient, but also tastefully designed to suit contemporary tastes. Post Velvet Revolution, the reluctance of Skoda Auto to compete with the Western markets became evident and thus against the wishes of many, it joined hands with Volkswagen Group in 1991.
In December 1990, the Government gave thumbs up to their merger with German Volkswagen Group and the Skoda was regenerated in a new avatar. This proved to be a major milestone in the track history of Skoda Auto, as the company faced a major boom in car production in the years that followed. Volkswagen joint venture began to operate on April 16, 1991, under the name Skoda, thus becoming the fourth brand of the Volkswagen.
Under the ownership of the Volkswagen Group, Skoda improved tremendously in terms of both styling and engineering, which was noticed in the 1994 model Felicia. Though the car was based on the floorplan of the 1987 model Favorit, there had been a great improvement in terms of quality, as compared to the previous model. Felicia was an immediate hit in the Czech Republic, mainly due to its cost efficiency.
The next move was the introduction of models Octavia and Fabia to the European Union markets. The late 1990s and early 2000s saw Skoda taking up several campaigns to market their models throughout the UK. This proved beneficial for the company, as it started selling 30,000 cars per year by 2005. The company created history by developing a waiting list for the delivery of Skoda cars in UK.
In the present time, Skoda has opened up several manufacturing and assembly plants throughout the world including Sarajevo, Bosnia and Herzegovina. In 2001, an assembly plant was set up in Aurangabad, in the state of Maharashtra in India, as Skoda India Private Ltd. The company introduced a new model, Roomster with a unique design reflecting future trends.
Skoda re-entered Australia in October 2007, after their last models were sold in 1983. Octavia, Roomster and Superb are the three of the models available in Australia. Today, the brand Skoda is known for quality, reliability and design throughout the world. Since its inception, Skoda cars have won several awards, the latest being “Car of the Year 2010” (Skoda Yeti), “Best Sedan of the Year 2010” (Skoda Superb), “Midsize Car of the Year 2010” (Skoda Laura), “Best Price/Performance Rate” (Skoda Octavia Combi) and so on.
2) Real world philosophy of OM in skodaAs we all know “Operations management is the function in an organization that accomplishes the planning, coordinating, and controlling the resources needed to produce products and services or the design, operation, and improvement of the production systems that create the firm’s primary products or services.” As every other serious car manufacturing brands or company of any sort, Skoda like any of them obviously uses Operations management in their daily based activity as a firm.
They are car manufacturers so they obviously need a carefully set operations processes to succeed, whether it’s a production, financial or marketing process. Like most of the other companies Skoda has a set of employs with a different roles and under-roles.
The main, of course is the CEO of the company; Winfried Vahland. He is the person that curates all of the operations of the firm, setting the standards for how things should be running in a main idea. People who actually turn his ideas into the processes are the Operations manager(s) whom communicate through everyday activities and processes with the rest of the company, whether it’s the marketing wing, financial, or as low as a simple worker on the manufacturing plant.
Skoda positions itself in a world of car manufacturers as the producer of cars which are reliable, quality driven and cheap, basically the dream solution for the working or middle class of the world. Even though they started out in Czech republic, today Skoda is a worldwide brand, even if it’s a part of a Volkswagen group. So considering what kind of positioning Skoda has in the eyes of the world, it needs to carefully plan its manufacturing process to make at as efficient as possible, considering that one of its biggest values is affordable price, supported by the quality and reliability.
Once the operations management department creates a business plan to implement, whether it’s a new car model or simply the transforming course of the actions, they need to carefully communicate with the departments of Finance and marketing, to make the most profit out of the situation without losing in their key characteristics. Also operations management department implement its coordination on the engineering and manufacturing departments to make sure that the employs get the necessary materials and recourses to proceed with their work. Proper materials need to be shipped into the manufacturing plants to make sure that the process is as efficient as possible.
As for the technical parts of the OM of the Skoda organization, the headquarters of the company is located in Mlada Boleslav, Czech republic. All the manufacturing facilities are mainly situated in Czech Republic, although there are others around the world as said in the beginning of research. Every facility has its set of manufacturing recourses and employs, engineers and coordinators.
Every day the manufacturing process goes in a same structure, which includes Stamping (creating) car body parts, which means cutting the metal into the form of a cars body part, wielding them together, painting. On the other hand there are mechanics working on the engine and other parts responsible for movement of the actual car, after both lines are finished, it is all connected together and final assembly of the car is processed.
As for the TQM of the Skoda Company, it’s obvious that the manufacturer excels in this department also. Skoda has a good connection with the most of the population of its clients, because its clients are mostly middle class, and in the entire world, majority of the population is that class exactly. So there is a strong connection thanks to the company positioning itself as quality and affordable auto.
With the way it works and delivers its automobiles, Skoda satisfies most of their clients, because whatever they promise and offer, the cars surely fulfill. Let’s make an example by looking at the new Skoda Octavia Model. It looks very respectable and is very beautiful in design, has a great interior, very capable engine and technological characteristics, is high in quality and obviously very reliable and safe to drive.
All this comes with the price tag of 16K Euros in average. This is obviously a very tempting and good deal for the potential costumers; basically Skoda is a perfect car for the middle class citizens. If we also take a look inside the company and its manufacturing plants we can see that the safe environment and all around well equipped workplace is there to support the employs and make their job as easy as possible, so they transcend all their efforts into a quality work. The average salaries are acceptable, the coordinator worker gets average of 42000 Czech crowns in month, while technician worker gets average of 26000 CZK, so there is obviously room to improve in there, but it is acceptable.
And the last but not least topic we wanted to discuss in this section is the way company operates with its stores or the retailers; basically it chooses the JIT in most of its operations. As we found out, the Skoda Company has a lot of warehouse type of shops, Skoda centers where you can buy their product. Also it cooperates with the retail car shops. Its own shops work like this; they get a certain amount of cars that they keep in the storage, once the storage is sold out, they communicate to the manufacturing plants to transport new cars, which make the JIT for the manufacturing plants much easier.
Basically they manufacture whenever they need to, not do it and let the cars rot in the warehouses. There are some cars that are more demanded than others, so some models are simply always in need of manufacturing, that’s why the employs never run out of work to do. The manufacturing plant looks through the order for the specific shops about which cars to make and how many, and buys material specifically for the job at hand, thus making most of JIT method.