Rolls-Royce Essay

1185 WordsAug 29, 20115 Pages
Rolls-Royce Operations Drivers In this analysis of Rolls-Royce Annual Report 2006 I will have a closer look to the use of the supply chain drivers in Rolls-Royce operations strategy (Rolls-Royce, 2007, p. 29). Hereby, I will concentrate on five of the six supply chain drivers defined by Chopra and Meindl (2007, pp. 59-60); Facilities, Inventory, Information, Sourcing, and Pricing. The main questions are: How does Rolls-Royce used these supply chain drivers to increase the operations performance in the years 2006 and 2007? Which impact each driver had on the company’s financial performance in these two years? 1. Facilities In 2006 Rolls-Royce opened four new UK facilities at Derby, Hucknall, Barnoldswick and Bristol and started to close the old manufacturing plants during 2007. The strategy of new factories is clearly to implement modern technology and process in the operations with the result of an increased performance concerning efficiency (Chopra/Meindl, 2007, p.64; McFarlane, 2005). With modern facilities it is possible to extend the theoretically given efficient frontier of a supply chain (Chopra/Meindl, 2007, pp. 44-45) and to achieve additional “supply chain surplus”, which at the end is supporting strongly the company’s financial performance. 2. Inventory During 2006 Rolls-Royce raised its inventory with the clear intention to increase the responsiveness of its supply chain (growth in output; stock for aftermarket support; stocks of rare raw materials). A higher inventory always means to have some financial capital bounded. To compensate some part of this effect, Rolls-Royce’s operations sets the goal to improve its management of the financial working capital. In order to gain higher responsiveness, Rolls-Royce increased inventory, even this may have on an insulated view a negative impact to the financial performance. However, by increasing
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