Research Paper on Renault: Global Procurement & Coordination Across Subsidiaries

Paper Type:  Essay
Pages:  6
Wordcount:  1579 Words
Date:  2023-03-12


Renault is a French multinational automobile company that began operations in 1899 at Boulogne-Billancourt, France. It specifically manufactures trucks, tractors, aircraft engines, auto rail vehicles, and buses. Renault has different subsidiaries in different parts of the world, including Romania, Germany, Russia, South Korea, and Turkey, amongst others. Therefore, it must coordinate operations and procurement activities across its global subsidiaries. This essay analyzes how Renault manages people in operations and supply chains and its versions of Just-In-Time and lean manufacturing. The analysis will also utilize particular motivational theories and Toyota Production Systems (TPSs) to identify the possible aspects in which the company needs to undertake improvements.

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How Renault Manages People in Operation and Supply Chains

The current scholarly literature lacks substantial data for the employee management techniques that Renault utilizes to manage its workers at plant level or manufacturing site operations. However, the company's 2001 report offers some insights into specific techniques that it utilizes to manage employees in operations. Renault (2002, p.24) noted that the company perceives employees to be the most critical assets in steering sustainable development and competitiveness. As such, Renault has diverse performance management techniques that, as motivational theories will affirm later, are likely to ensure consistent performance and the fulfillment of client demand. Specifically, the company manages employees under three broad perspectives, forward-thinking, attracting and motivating workers, and facilitating involvement (Renault, 2002, p.24).

In forward-thinking, the human resource develops skills management programs that include training programs to ensure that employees have skills to not only increase performance but also fit in the ever-changing industry requirements (Renault, 2002, p.24). Indeed, Renault has e-learning platforms that facilitate the training of employees located in different sites or geographical regions. In 2001, for instance, the company dedicated about 1,500,000 hours to training (Renault, 2002, p.23).

Also, as part of the forward-thinking philosophy, Renault develops specific recruitment approaches to foster effectiveness in diversity management. One of the diversity management approaches the company employs is selecting managers who have an international profile, particularly those experienced in working across a multicultural environment (Fitzsimmons et al., 2011, p.199). In 2001, 27% of Renault managers had an international profile (Renault, 2002, p.24). After the recruitment, the management encourages managers to learn diverse languages and ensure fluency in English, which is an international language.

Still, Renault demonstrates some commitment to protecting employee safety by assessing and developing techniques to mitigate possible ergonomics (Renault, 2002, p.24). Also, the company concentrates mainly on recruiting workers from within, which studies view to be a significant knowledge management technique (DeVaro, 2016, p.2). The existence of career growth is associated with increased performance as workers must attain exemplary performance to get promotions. More importantly, the company earmarks more than 3% of its shares as part of the active employee share ownership plan (Renault, 2002, p.26). Mostly, share ownership makes employees perceive a sense of belonging and become more likely to initiate independent efforts to foster the growth of an organization (McConville et al., 2016, p.3).

Further, Renault implements innovative mechanisms for promoting employee involvement, including the use of a weekly internal newsletter, and dual-language intranet that facilitates two-way communication between the management and employees (Renault, 2002, p.24). Besides, Renault has a Group Works Council through which representatives for employees from different subsidiaries present critical employee issues (Renault, 2002, p.27). The management also has a communications kit that offers them with guidelines for ensuring a continuous dialogue with the employees. All these techniques ensure that employees get involved in the decision-making process and do not harbor issues that may cause dissatisfaction and poor performance.

In addition to the above motivational techniques, Renault motivates its workers through favorable compensation practices. An analysis compiled by the Wall Street Journal indicates that the company pays employees above the industry's average. For example, its former Chief Executive Officer, Carlos Ghosn, was receiving an annual compensation of EUR7 million (Simply Wall Street, 2018, Para.2). However, the median annual compensation for large automotive companies with market capitalization similar to that of Renault is EUR4 million (Simply Wall Street, 2018, Para.2). Applying the picture painted by the CEO remuneration, it may be plausible to conclude that Renault compensates its workers higher than other large firms in the automotive industry.

At the plant level, Renault has production supervisors who offer technical support and guidelines about quality standards. Also, these supervisors gather employees' issues and collaborate with the top management to enable workers to perform optimally (Kumar et al., 2017, p.1). The direct supervision of workers ensures that all automobiles produced across different plants follow specific quality standards. Besides, supervision keeps a certain production pace so that the company fulfils the current level of demand consistently.

Additionally, Renault has recently adopted Software as a Service (SaaS) system to boost the effectiveness of employee management. The technology is mainly applicable in tracking attendance, management of compensation, leave, payroll, recruitment, and performance, amongst other critical H.R. functions (DeCenzo et al., 2016, p.5). Besides, the SaaS system has a self-service functionality that enables employees to complete many activities independently and thereby allocate more time to production. More importantly, the system consolidates activities that the company H.R. adopts in different geographical locations (Atem de Carvalho, 2011, p.117).

How Renault Manages People in Supply Chains

Renault adopts the Alliance Purchasing Way of its partner, Nissan, which involves establishing shared values and principles to ensure that inputs meet sustainable goals related to quality standards, environment, human rights, and social welfare (Hadwiger, 2018, p.150). Specifically, the company requires all suppliers to exercise the principles of trust, respect, and transparency. These shared values enable Renault to contribute to the elimination of child labor, and malpractices that can put clients purchasing its vehicles into some risks. The principle of transparency particularly mandates suppliers with the reporting of procedures they apply in their operations, which gives Renault managers opportunities to steer standards and compliance with the law. Besides, Renault partners with third-party organizations that physically assess the activities of its global suppliers to ensure compliance with standards. More importantly, Renault inculcates supplier motivation and loyalty by the sustainable procurement award that it awards to high-performing suppliers who comply with the set standards. Additionally, the company implements supplier mapping in terms of the level of risk that each faces to develop specific mitigation mechanisms. Lastly, Renault has developed digital platforms, including the drones created by Hardis Group, to promote real-time monitoring of people in different segments of the supply chain (Reflex Logistics Solutions, 2018, Para.1).

Evaluation of Renault's Techniques of Managing People by Comparisons with Toyota's Techniques and Theoretical Frameworks

Renault implements techniques similar to Toyota Way of Human Resource Management that includes inclusion, creativity, continuous improvement, respect, safety, and equal chances to self-actualization (Liker and Hoseus, 2009, p.7). The discussion on the management of people has all these elements of Toyota's human resource strategy. However, Toyota has a higher commitment to employing female employees in executive positions than Renault because it has a plan to have gender equality in administrative positions (Schoppa, 2006, p.168). Like Toyota also, Renault has partnered with suppliers and utilizes a trust, transparency, and information sharing as the basis of supplier management.

In retrospect, Toyota has a more comprehensive supplier management approach than Renault. Unlike Renault, Toyota's partnership with suppliers ensures the development of capabilities necessary to adhere to standards of the automotive industry (Gao and Low, 2014, p.78). Firstly, Toyota follows the principles of variety, velocity, variability, and visibility to ensure a constant flow of information and fulfillment of demand. Besides, Toyota has quality procedures for guiding parts ordering, production scheduling, and dealership, all of which promote effective supply chain management (Betz, 2016, p.166). Lastly, Renault has implemented informational technology at a lesser scale compared to Toyota. The latter has a more comprehensive array of emerging technologies, including enterprise resource planning, demand planning systems, SAS business intelligence, and Hyperion intelligence, to name a few.

However, Renault fulfills most of the required put forth by motivational theories. In particular, Maslow's self-actualization theory posits that an individual has to fulfill physiological needs, safety, and need for belongingness, before gaining self-esteem and self-actualization (Neto, 2015, p.23). As indicated earlier, Renault compensates workers higher, which boosts the fulfillment of physiological needs, and has mechanisms for promoting safety and belongingness. Thus, the company has done well in enhancing employee self-actualization. Herzberg's two-factor theory indicates that for employee motivation are recognition, challenging tasks, involvement in the decision-making process, sense of value, and opportunities for personal growth (Alshmemri et al., 2017, p.13). In the two-factor theory also, Herzberg developed a set of other factors known as hygiene factors that promote job satisfaction, including job security, salary, fringe benefits, vacations, and work conditions. Renault achieves both motivational and hygiene factors, as expressed in the two-factor theory, with specific accomplishments seen in employee involvement, higher salaries, challenging tasks, and a sense of value.

Just-In-Time (JIT) and Lean. Renault has implemented most of the guidelines of JIT as advanced by Toyota. It particularly pursues several techniques for reducing the time between production and the time that suppliers respond to customers (Xu and Chen, 2016, p.326). Its stakeholder involvement tradition and information sharing promote communication between stakeholders that curtails the response time. Before the JIT philosophy, Renault operated based on a commercial commitment plan that involved a complex and lengthy distribution system. In the early 2000s, however, the company adopted a new distribution plan that required dealers to transmit orders directly and daily to the company factories. The plan reduced supplier response and the time that the company took to produce subsequent vehicles. Notably, the effective distribution system ensures that the company warehouses do not exhibit surplus inventory and thereby allow consistent production. Therefore, Renault's ap...

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Research Paper on Renault: Global Procurement & Coordination Across Subsidiaries. (2023, Mar 12). Retrieved from

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