Harvard Case - Mine Resistant Ambush Protected (MRAP) Vehicle
"Mine Resistant Ambush Protected (MRAP) Vehicle" Harvard business case study is written by Thomas Cross. It deals with the challenges in the field of Operations Management. The case study is 13 page(s) long and it was first published on : Jan 21, 2009
At Fern Fort University, we recommend a comprehensive strategic approach for Oshkosh Truck Corporation to capitalize on the MRAP market opportunity while mitigating risks and ensuring long-term sustainability. This strategy involves a multi-pronged approach focusing on:
- Optimizing the MRAP production and supply chain: Implementing lean manufacturing principles, robust inventory control, and advanced logistics management to enhance efficiency and reduce costs.
- Expanding into new markets: Leveraging existing expertise and adapting the MRAP platform for civilian applications, diversifying revenue streams, and mitigating dependence on military contracts.
- Investing in innovation and technology: Developing next-generation MRAP vehicles with advanced capabilities, incorporating cutting-edge technologies, and staying ahead of the competition.
- Strengthening operational excellence: Implementing robust quality management systems, enhancing production processes, and optimizing resource allocation to ensure consistent product quality and customer satisfaction.
2. Background
The case study focuses on Oshkosh Truck Corporation's (OTC) response to the urgent need for Mine Resistant Ambush Protected (MRAP) vehicles during the Iraq War. OTC, a leading manufacturer of heavy-duty trucks and specialized vehicles, faced a significant challenge in rapidly ramping up production to meet the overwhelming demand for MRAPs. The case highlights the complexities of managing a large-scale, government-driven project with tight deadlines, evolving requirements, and significant financial implications.
The main protagonists are:
- Oshkosh Truck Corporation: The manufacturer tasked with producing the MRAP vehicles.
- The US Department of Defense (DoD): The primary customer demanding the MRAP vehicles.
- The MRAP program managers: Individuals responsible for overseeing the production and delivery of the MRAP vehicles.
3. Analysis of the Case Study
This case study can be analyzed using a combination of frameworks:
1. Operations Strategy:
- Competitive Advantage: OTC's core competency lies in its expertise in heavy-duty vehicle manufacturing and its ability to quickly scale production. However, the MRAP program required a significant shift in production strategy, moving from a traditional, low-volume, customized approach to a high-volume, standardized production model.
- Operations Strategy: OTC's initial strategy focused on meeting immediate demand, leading to a reactive approach with limited emphasis on long-term sustainability. This resulted in high production costs and limited flexibility in adapting to changing requirements.
- Operations Performance: OTC faced challenges in managing production capacity, inventory, and logistics, leading to delays and cost overruns. The lack of a robust quality management system also resulted in quality issues and rework.
2. Supply Chain Management:
- Supply Chain Complexity: The MRAP program involved a complex supply chain with multiple suppliers and subcontractors. OTC faced challenges in coordinating and managing this complex network, leading to delays and disruptions.
- Inventory Management: OTC struggled to manage inventory levels effectively, leading to stockouts and excess inventory. The lack of a robust inventory management system resulted in inefficiencies and increased costs.
- Logistics: The transportation and delivery of MRAP vehicles posed significant logistical challenges, particularly due to the size and weight of the vehicles. OTC needed to develop efficient logistics solutions to ensure timely delivery to the battlefield.
3. Financial Analysis:
- Cost Overruns: OTC faced significant cost overruns due to the rapid ramp-up in production, evolving requirements, and supply chain challenges.
- Profitability: The high production costs and limited pricing power in the government-driven market impacted OTC's profitability.
- Financial Risk: OTC faced significant financial risk due to the dependence on a single customer (DoD) and the potential for contract cancellations.
4. Recommendations
To address the challenges and capitalize on the MRAP market opportunity, OTC should implement the following recommendations:
1. Optimize Operations and Supply Chain:
- Lean Manufacturing: Implement lean manufacturing principles to eliminate waste, optimize production processes, and reduce costs. This includes value stream mapping, bottleneck analysis, and continuous improvement initiatives like Kaizen.
- Inventory Control: Implement a robust inventory management system using tools like MRP and ERP to optimize inventory levels, reduce stockouts, and minimize waste.
- Logistics Management: Develop a comprehensive logistics strategy to ensure efficient transportation and delivery of MRAP vehicles, including optimized routing, warehousing, and transportation management systems.
- Capacity Planning: Develop a robust capacity planning model to anticipate demand fluctuations and ensure sufficient production capacity to meet future requirements.
- Process Design: Continuously analyze and improve production processes to enhance efficiency, reduce cycle time, and optimize resource utilization.
2. Expand into New Markets:
- Civilian Applications: Leverage existing expertise and adapt the MRAP platform for civilian applications, such as mining, construction, and disaster relief. This will diversify revenue streams and reduce dependence on military contracts.
- International Business: Explore opportunities in international markets where there is a demand for robust and protected vehicles. This will expand the customer base and mitigate risks associated with a single market.
3. Invest in Innovation and Technology:
- Next-Generation MRAPs: Develop next-generation MRAP vehicles with advanced capabilities, such as enhanced protection, improved mobility, and integrated technology systems. This will maintain a competitive edge and attract new customers.
- Technology Integration: Incorporate cutting-edge technologies, such as autonomous driving, advanced sensors, and data analytics, into MRAP vehicles to enhance performance, safety, and operational efficiency.
- R&D Investment: Allocate resources for research and development to continuously innovate and develop new technologies and products.
4. Strengthen Operational Excellence:
- Quality Management: Implement a robust quality management system based on TQM principles to ensure consistent product quality and customer satisfaction. This includes implementing Six Sigma methodologies for process improvement and statistical process control for quality monitoring.
- Production Processes: Continuously analyze and improve production processes to enhance efficiency, reduce defects, and minimize rework. This includes implementing JIT production techniques, flexible manufacturing systems, and cycle time reduction initiatives.
- Resource Allocation: Optimize resource allocation to ensure efficient utilization of manpower, equipment, and materials. This includes using scheduling techniques and bottleneck analysis to identify and address resource constraints.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core Competencies: OTC's core competency lies in its expertise in heavy-duty vehicle manufacturing and its ability to scale production. The recommendations leverage this expertise to enhance operational efficiency, expand into new markets, and develop innovative products.
- External Customers: The recommendations address the needs of both military and civilian customers by diversifying product offerings and expanding into new markets.
- Competitors: The recommendations focus on developing a competitive advantage through innovation, operational excellence, and market expansion.
- Attractiveness: The recommendations are expected to improve OTC's profitability by reducing costs, increasing revenue, and mitigating financial risks.
6. Conclusion
By implementing these recommendations, OTC can transform itself from a reactive, cost-driven manufacturer into a strategic, innovative, and customer-centric organization. This will enable OTC to capitalize on the growing market for protected vehicles while ensuring long-term sustainability and profitability.
7. Discussion
Other alternatives not selected include:
- Exiting the MRAP market: This option would have minimized financial risk but would have also resulted in lost market share and potential damage to OTC's reputation.
- Focusing solely on military contracts: This option would have provided a stable revenue stream but would have increased dependence on a single customer and limited growth potential.
The key assumptions of the recommendations include:
- Continued demand for MRAP vehicles: This assumption is based on the ongoing global conflicts and the increasing need for protected vehicles in various sectors.
- Ability to adapt the MRAP platform for civilian applications: This assumption is based on OTC's expertise in heavy-duty vehicle manufacturing and the potential for cross-sector applications.
- Availability of skilled labor and resources: This assumption is based on the availability of a skilled workforce and the ability to secure necessary resources for production and innovation.
8. Next Steps
To implement these recommendations, OTC should:
- Develop a comprehensive strategic plan: This plan should outline the specific objectives, strategies, and timelines for implementing the recommendations.
- Establish a dedicated team: This team should be responsible for overseeing the implementation of the recommendations and ensuring alignment with the strategic plan.
- Allocate resources: OTC should allocate sufficient resources for implementing the recommendations, including financial investments, personnel, and technology.
- Monitor progress and make adjustments: OTC should regularly monitor the progress of the implementation and make necessary adjustments to ensure the success of the strategy.
By taking these steps, OTC can position itself for long-term success in the evolving market for protected vehicles.
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Case Description
This case is about the strategic-sourcing process: leading a major acquisition program with an unprecedented schedule and an unprepared industrial base. Soldiers in Iraq are dying in increasing numbers from improvised explosive devices planted in roads by insurgents. Up-armored Humvees offer little to no protection. Specialty vehicles with v-shaped bottoms to deflect blasts had been developed in South Africa and Rhodesia in the 1970s. The MRAP Vehicle Joint Program Office's mission was to procure up to 20,000 of these commercial off-the-shelf vehicles and get them to Iraq within 30 months. Yet U.S. production is fewer than 10 vehicles per month because not enough tires, ballistics-grade steel, and other raw materials are available. The daunting task: to undertake the fastest vehicle procurement since the Jeep in World War II, ramping up the industrial base, and overcoming the bureaucratic logjam in Department of Defense procedures.
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