Renesas Electronics and the Automotive Microcontroller Supply Chain (A) Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Renesas Electronics and the Automotive Microcontroller Supply Chain (A) Case Solution

CASE OVERVIEW

The case is about the supply chain at the Industrial business unit at Renesas Electronics. The company was dealing in the electronics industry of Japan. In 2003, Hitachi and Mitsubishi Electronic merged their non dynamic random access memories (DRAMs), semiconductor business to establish Renesas Technology Corporation. However, due to the economic downturn in 2008, NEC Electronics merged with Renesas Technology in 2010 and formed Renesas Electronics. The company became the fourth largest semiconductor maker in the world. The merger allowed Renesas to broad its product line in microcontrollers. Renesas had specialty in microcontrollers. The major customers of the company were consuming industries such as industrial controls, automotive and consumer’s goods.

However, in 2011 Japan hit by the severe earthquake due to which the company has to bear losses. The vice president Takahasi was concerned about the business and the plant of the business. The Fabrication Facilities (fab) was the major plant of the company which produced semiconductors components that was widely used in the automotive, industrial and consumer’s electronics industries. The fab was build in order to ensure the continuity of the business and to duplicate the production of chips.

The management of the company expected that the plant had substantial damages however, there were no any employee got injured. Furthermore, the company was required substantial efforts to resume the production at Naka facility as it was a critical aspect in supplying products to the Japanese automakers. In addition, the global manufacturers were largely depended on the Naka’s products thus; the management of the company was concerned about the restoration of the production. The company’s two major Japanese automaker customers Company A and Company B was considered to suffer the most due to this disaster as they heavily rely on the Renesas microcontrollers for their car models.

PROBLEM STATEMENT

Due to the earthquake, the company had faced severe challenges. The damages on the Naka facility were severe. Due to which the management of the company was concerned about the impacts on the two auto companies (company A and Company B) as the depended on the Naka for the microcontroller and thus, affected inadequately due to the disaster in the Naka facility. The Naka facility was unable to produce large volume of parts thus, was only producing small handful of the parts. Therefore, the loss in the components that were using by the two companies forced these automakers to shut down the production.

The management of the company had an immense pressure to fulfill the needs of their customers otherwise have face immense challenges to survive. The Renesas had to make sure that in the future the supply chain should be built strong for such companies. Furthermore, the company A and B were using different microcontrollers due to this volume fragmentation; the duplication of lines became difficult. In addition, the company was in a difficult situation as it needs to decide whether to hold more inventories or to move some other location where the chances of such disruption were low. Moreover, the most challenging situation for the company was to sustain its market position.

ANALYSIS

The company was located in Japan where the occurrence of natural disasters was high. Therefore, Renesas had to face the challenging scenario which has raised questions for its market position and survival in the market. The OEMs companies were relied on the customized micro controllers that were produced in the Fab of Naka facility. Thus, the earthquake had caused damages in the company Fab facility due to which the production was delayed. The delayed production of the company had brought the management and workers of the company in pressure to restore the production as soon as possible.......................

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