Consulted Magna with Recommendations

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Executive Summary

Magna International Inc. (Magna) is a Canadian car and light trucks parts maker, who design, develop and manufacture automotive systems, assemblies, modules and components, as well as engineers and assembles complete vehicles, primarily for sale to original equipment manufacturers (OEMs).  Magna operates in three geographical regions: North America, Europe, and the rest of the world (mainly Asia, South America and Africa), making Magna an international company.

We have investigated Magna and identified two key issues they are currently facing. Firstly, Magna is suffering Quality Control problems in their divisions, such as Magna Powertrain, Magna Steyr, Magna Closures, Magna Car Top Systems, etc.  The current method of dealing with problems is a weak matrix structure. However, we recommend two alternatives that will increase Magna’s efficiency. Our first recommendation is to create a Dedicated Team. Our second recommendation is to enhance the existing Matrix Structure, by making it stronger. We illustrate numerous strengths and weaknesses for each recommendation. The second issue Magna is dealing with is the increased pressure to unionize their employees. To a degree, this matter seems unavoidable. We simply recommend Magana create a Management’s Rights Clause and/or Management Prerogatives Rights in order to protect their rights and clarify various aspects of employment rights from the beginning.

        Therefore, Magna needs to assess these alternatives from their internal perspective. As a consulting agency, we can only suggest alternatives that would suit the organization and improve their current drawbacks.

Introduction

Magna International Inc. (Magna) is a Canadian car parts maker and supplier to a wide variety of automakers throughout the world. The systems Magna provides are major components in the final assembly of cars, for GM, Ford, Chrysler, Mercedes, BMW, Toyota, Honda, Porsche, Volkswagen, along with others. We have identified two issues with Magna, for which we have derived several alternatives. One issue is Quality Control (QC) in Magna’s systems, which is due to organizational structure when dealing with QC. Another issue that Magna is currently experiencing is the increasing pressures to unionize their employees. Magna’s current QC procedure will be discussed, followed by an analysis of Magna’s two key issues we have identified including alternatives that we propose.

Current Quality Control Process

In order to properly asses the current situation with the QC processes an employee of Magna directly involved with such issues was interviewed.

The company is organized in a number of independent divisions that are system/product oriented, for example Vision System, Powertrain System, Electronic System, etc. Each of these divisions is involved in a final system assembly stage and supplying systems to the car and light truck manufacturers. Each division has its own chain of suppliers and sub-contractors to supply parts, to make adjustments or process them, and to perform primary assembly. The final assembly of the system is performed at one of the Magna division plants (Appendix A).

These QC problems within Magna are growing due to a number of factors, one being the growing number of suppliers, contractors and subcontractors. In addition, the geographical (time difference), cultural and linguistic barriers also play a role. The cost of fixing the problem is dependent on where in the supply chain the problem is discovered.  If the QC problem is discovered at the End User or OEM level, the costs of warranties, recalls and just-in-time delivery production line stoppages grow into tens or even hundreds of millions of dollars and Magna is normally liable as the main supplier of the systems/parts. However, in the circumstances where problems with the parts/components are discovered before they reach any of the Magna’s plants, any costs associated with the problem and a potential solution is the responsibility of the suppliers. Currently, if the problem is discovered by the QC inspections at Magna the following procedure takes place:

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  • The product is found as Non-Conforming Material (NCM)
  • The P/N, Lot #, Date and the problem is noted
  • The Lot is quarantined
  • Supplier is contacted to figure out the depth of the problem
  • Cross-Functional Team (CFT) is established to investigate the issue
  • Further engineering input is produced to find the source of the problem (QC and Materials)
  • Costs are assessed (Production, Accounting, Purchasing and Logistics)
  • Courses of action are presented
  • Options are chosen and presented to the team and the supplier
  • Decision made and implemented

The cross functional team (CFT) is comprised of representatives from the ...

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