Nissan Case Study:Final Project

Introduction

Nissan Motors Company Ltd. is a Japan-based multinational automobile manufacturer. It was established in the 1930s, producing its first automobile vehicle known as the DAT. Since its inception, the firm has seen significant changes in the automobile industry. Furthermore, it has strategically merged with a variety of other automobile firms to expand its automobile operations across the globe. Currently, it boasts approximately 17 production units in distinct nations, with the products used in 160 nations. Its success has been hugely boosted by its huge human resource manpower throughout the over 8 decades it has been in business.                                                  

This paper has been organized into six sections, with this section providing a brief overview of the firm. The second section highlights the systems used by Nissan Motors in generating value, specifically, how it utilizes its operation management to generate value for its consumers and achieve a competitive edge. Consequently, the section provides a contemporary analysis of the service and manufacturing operations of the firm. Section three of ttotal he paper presents the theories and techniques that have been utilized by the firm to achieve its current success. The fourth section provides the data analysis while section five examines its response to corporate sustainability.   

  • Generating Value

Nissan Motors activated its risk management framework after the March 11, 2011 tragedy in Japan, ensuring it was minimally affected. The company had prepared for such situations to avoid affecting its consumers around the globe. Through its Global Disaster Headquarters, the company gathered critical information on safety, damages, and business continuity for the company and its suppliers. The company realized the need for preparation to respond to risks and emergencies after its financial difficulties in 1999 when it was forced to create an alliance with Renault. By 2010, the firm had already designed an earthquake emergency-response plan, thereby, impacting on their quick recovery to the 2011 Japan tragedy.

Kumar & Suresh (2009) indicates that it is of high significance for firm managers to make effective decisions in processes and service technology, design, control, and location. Effective decisions in these key management areas allow operation management to support a firmís vision, mission, and business objectives. Moreover, an efficacious product approach through design, description, and selection of products and services translates to the production process. Therefore, operation management must design, launch, and fabricate effective systems that can yield a competitive advantage in the market. Nissan motors have effectively positioned itself in the market through its unique diesel engine design, which makes Nissan the leading manufacturer of low-cost automobiles. Through this operational strategy, the company has been able to penetrate new markets. Furthermore, the firm utilizes a cost leadership strategy in securing its consumer base. It has positioned itself as a low-cost manufacturer of automobiles, with almost all its market segment emphasizing on minimizing the cost of productions through suppliers. Through this, the company reduces the overall cost of cars, thereby, increasing the total demand for its products, its profits, and the market share.  

        A mixture of both manufacturing and service operations occurs in almost all tangible products before they are sold. Nissan motorís manufacturing operations including the production of tangible automobile products while its service operations handle consumer-related operations like customer purchase and warranty handling. All these operations are aimed at offering value to the consumer, though in distinct aspects. The manufacturing operations will offer the consumers the automobiles while service operations assist the consumers in purchase and maintenance.

  • Theories and Techniques
  • Material Requirement Planning (MRP)

Gross-to-net calculations for MRP require the development of a gross requirement plan, a product structure, and a net requirement plan, ensuring that material planning meets the requirements and production capability. This allows for a faster response to market dynamics and consumer orders. As the manager of the firm, I would focus on demand based on item quality and would use a schedule whenever possible. To achieve this, material specification, master production schedule, production lead time, availability of inventory, and better order purchase is significant.

Material Requirement Planning is always a dynamic system that should be replaced in case of changes to allow for effective analysis. Input files are a necessary part of a planning system and they require fixed lead times. The main input files that should be added into Nissanís MRP process are;

  1. A master production schedule to define product production requirements.
  2. A bill of materials to define the requirements needed to manufacture a product.
  3. A production cycle to define the production stages and material requirement.
  4. Supplier lead times and a factual approach to decision-making and leadership.
  5. Customer focus and employees and stockholders buy-in.
  6. PERT and CPM

PERT and CPM are all concerned with providing project management tools, updating and monitoring projects. PERT mainly aims at events while CPM aims at activities. The risk management process applied at Nissan Motors favor PERT over CPM. The firmís risk management framework aims to identify, analyze risks, and implement countermeasures early in the process of planning. The event here is forecasting change impacts and preparing countermeasures for the situation, which is in-line with the focus of PERT in project management. The firmís project management tools majorly favor CPM. The company manages its production in a targeted way, slowing and increasing production based on its constructed production plan.

  • Primary Priority Job Sequencing Rules
  • First Come First Served (FCFS). This job sequencing rule is advantageous since job offering is a known quantity, and there is no addition of jobs after the commencement of processing. It also does not allow for the cancellation of jobs after processing begins. On the contrary, in case of a longer job, downstream idleness exists due to a longer waiting time. 
  • Shortest Processing Time (SPT). This job sequencing technique allows for a minimum job completion time, thereby, lowering shop congestion and idle time. It is disadvantageous as it ignores downstream information and due dates, allowing for a higher job waiting for variation.
  • Earlier Due Date (EDD). The method is fast and simple but focuses unnecessarily on the past due date jobs, ignoring the remaining work content.
  • Longest Processing Time (LPT). This job sequencing technique recognizes the jobís processing time and due dates, incorporating downstream information in decision-making. It is of a disadvantage as it highly prioritizes on the past due jobs with no consideration for the remaining job operations.
  • Theory of Constraint (TOC)
Step    Nissan
Step 1 Constraint IdentificationIdentification of all potential bottlenecks through distraction elimination and information sharing.
Step 2 Planning on how to overcome the constraint in step 1.The firm decides on a plan. The company joined the marketing, supply, and sales functions to create a global network of operations. Consequently, it changed its supply allocations to meet demand.
Step 3 Resources aim to accomplish step 2.The company focuses its resources on undertaking the plan in step 2. For instance, Nissan ramping production down by the management to lower overtime and situating the vacation periods in the early months of the year to not impact on productions in the summer.
Step 4 The impacts of the identified constraint are minimized either through expanding capabilities or through work offloading.The firm would minimize the impacts of the constraint by adding additional labor to the quality control area.
Step 5 Overcome the constraint.The company solves the bottleneck and goes to step 1, where another constraint will be detected.

Nissan Motors has realized tremendous improvements through the utilization of TOC. For instance, its increase in production in North America allows it to better understand the dependencies beyond tier 1 suppliers and the supply chain process.

  • The steps used to develop a forecasting system

 The following steps are used to develop a forecasting system and can be utilized by Nissan motors as described.

  1. Problem definition. Here, the company carefully analyzes data and makes projections determining how the forecasting system will fit the firm, the group of consumers that require it, and how it will be used.
  2. Information gathering. In this step, data aggregation and statistical analysis occur.
  3. Preliminary analysis. Analysis of the corrected data forecast is done to ensure it contains all the required details.
  4. Fitting and choosing models. In this step, the company makes a comparison between explanatory and forecast model variables, thereby, choosing the best fitting model.
  5. Forecasting and evaluation. This step involves accessing the forecast collected accuracy through a variety of methods before forecasting them.
  6. The major categories of supply chain risk and associated risk reduction tactics
  7. External risks
  8. Business risks. This risks are caused by volatility and economic issues in management.
  9. Environmental risks. Majorly caused by environmental factors outside the supply chain but has relations to social, governmental, climatic, and economic factors.
  10. Demand risks. Mainly caused by consumer misinterpretation.
  11. Supply risks. Caused by interruptions in the product supply chain.
  12. Internal risks
  13. Cultural risks. For instance, the cultural tendency of certain businesses to delay negative information.
  14. Manufacturing risks. Mainly caused by disruptions of internal processes.
  15. Planning and control risks. A firm will experience this risk after inadequate assessment and planning or basically ineffective management.
  16. Business risks. Mainly caused by critical changes in personnel, reporting structures, business operations, and management.
  17. Contingency risks. This occurs when a company lacks alternative contingency solutions.

Supply chain risk reduction tactics

  1. Expedited shipping. Certain firms will prepare for contingent situations, in which they will be forced to expedite shipments. These firms will plan for such situations and even estimate the expedited shipment percentage.
  2. Insurance. Insurance is an appropriate means to mitigate company risks.
  3. Just-In-Case Inventory. This concept allows an organization to advance its resources to where they are highly required.
  4. Six/lean sigma. This principle allows firms to find various ways to lower cycle time and variations through the elimination of wasteful operations in the process of risk management.
  5. Disaster preparation. This mainly implies the firmís preparedness to mitigate disaster. For instance, knowing the first step of managing a natural disaster like an earthquake.

A company will do the following to mitigate supply chain interruptions caused by natural disasters.

  1. Establishing secure links of communication
  2. Locating safe locations to situate its facilities as natural calamities are never evenly distributed across geographical regions.
  3. Utilizing robust suppliers and transportation networks.
  4. Establishing efficient HRm and weather forecasting.
  5. Theory summary
  6. Just-In-Time. This a manufacturing strategy theory that focuses on boosting a firmís ROI through the reduction of the response time and production flow (Hirano, 2016). It aims to offer customers the right product at the right price and time. The theory leads to the production of high-quality at low-cost largely through waste elimination.

Advantages

Fewer wastes Ė it decreases the unsold items, which though can have impacts on a firmís other products.

Lean inventory Ė it allows a firm to free capital for other areas of business investment.

Increased customer satisfaction Ė the theory aims to serve consumers in a more efficient way and control, thereby, making it easier to respond to customer changes.

Disadvantages

Seasonality- it does not allow seasonal businesses to prepare for a large influx of orders during the peak season.

Delays Ė any challenges in the order process can set back the production process.

Lack of control- it allows a firm to overly rely on suppliers to meet consumer demands and expectations, hence, being at risk of losing clients.

  • The Toyota Production System (TPS). Kehr & Proctor (2017) indicate that TPS is derived from the concept of challenge visualization. The system focuses on building quality in the manufacturing process, and therefore, in case of a malfunction, the affected manufacturing machine is stopped until the defect is corrected. Firms utilizing the TPS focus on waste elimination and the creation of efficient production methods. TPS also utilizes the JIT concept to only produce the required product.

Advantages

  • It empowers the team members to optimize quality through constant process improvement and waste elimination.
  • It influences every aspect of an organization through its common set of procedures, values, and knowledge.
  • The TPS also entrusts workers with effectively defined responsibilities in every step of production and allows every team member to improve the overall success of the process.

Disadvantages

  1. The system can include a major overhaul of a firmís operations, thus, it can be expensive to set-up.
  2. The system is also vulnerable to disruptions in the production line. The production will quickly stop for issues or challenges in the production system, thereby, setting back the production process.
  3. Lean Manufacturing

This is an assembly process line that was originally developed by Toyota Motors Company and majorly focuses on doing more with less. Majorly, it is the elimination of production activities that do not add value to the design, distribution, and manufacturing.

Advantages

  • Limited wastes. The system eliminates dates and obsolete inventory and the risk of item expiry.
  • Less infrastructure. A firm utilizing lean production only uses the building supplies, space, manpower, and equipment to achieve consumer inventory demand.
  • Strong consumer relationship. The process aims to meet the demands of loyal consumers on a predictable basis, thereby, ensuring that a firmís best consumers are always satisfied.

Disadvantages

  • Equipment failure. Just like the other production processes, lean production will also set back the production process in case of equipment or labor failure.
  • Missed deliveries. System halt can potentially lead to missed deliveries, thereby, impacting on the consumers.
  • Total Quality Management (TQM)

Among the major challenges that Nissan encounter is the increased supply chain risk due to unexpected natural disasters. The firm can lower its risks to these by identifying the most vulnerable regions and reducing its reliance on the regions. This can easily be achieved through TQM.

Similarly, the firm can utilize TQM to create sustainable quality movements. The firm uses the statistical quality control movement to elevate its product line, where measurements and what defines quality is set for all the products.

  • Data Analysis
  • Hypothetical (time-function) map
Time-function map
CustomerOrders Nisan Rogue   Receives Nissan
Rogue
SalesOrder Processing    
Production InputWaiting    
Production  Machine reading the order 
Detailing   Finishing details 
Warehousing    Another waiting
Delivery     Order delivery
23 Days3522101

Presented above is the time function map for the 2019 Nissan Rogue, determining how to escalate the process between order delivery and order placement. Operation managers can eliminate the wait time to improve the speed of product delivery.

  • Cause and effect diagram

Based on the diagram above, the calibration of the machine does not fit the bumper design.

  • Locating a new manufacturing plant

The best alternative to locate a new manufacturing plant for the company would be Mexico City since it has the highest average point value.

  • ABC classification system

The ABC analysis could create a more improved inventory reduction, supplier reliability, and physical control analysis. The inventory management of the company presents huge inefficiencies, and therefore, items in A will require strict inventory controls in comparison to the items in B and C.

  • Sustainability
  • Triple bottom line

The concept of sustainability refers to the ability to satisfy the current needs without impacting that of the coming generations. Heizer & Render (2014) indicates that a company will determine the sustainability of its processes by utilizing a system that supports the people, the planet, and profits. To achieve sustainability, Nissan motors should closely work with its stockholders to achieve activities that meet the requirements of the society, both now and in generations to come. It ensures that the people, the automobiles, and the planet can co-exist. To achieve these sustainability motives of the company, it must have the necessary profits.

  • ISO 14000 Standard

This is an environmental management standard that aims to support the UNís mission of sustainable development. Nissan Motors became ISO 14001 certified in January of 2011 (for all its Japan operations). The company has been at the forefront for sustainable development through its demand for environmentally sustainable supplies. Together with its stockholders and partners, the firm desires to achieve sustainable development through a foundation of mutual trust.

  • Corporate Responsibility

Nissan motors company has also integrated corporate responsibility through the integration of CSR in its management system. The company aims to create value by contributing to sustainable social development through its worldwide operations. It has been building trust with its stockhiolders, consumers, employees, investors, and business partners through societal growth, short and long-term growth, and stockholder value provisions. The company achieves decision-making through a balanced viewpoint, with societal issues and sustainable development being of the priority goal.  

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References

Heizer, J., & Render, B. (2014). Operations Management Sustainability and Supply Chain Management (11th ed). Upper Saddle River, NJ: Pearson Education Inc.

Hirano, H. (2016). JIT Implementation Manual--The Complete Guide to Just-In-Time Manufacturing: Volume 2--Waste and the 5S's. Productivity Press.

Kehr, T. W., & Proctor, M. D. (2017). People Pillars: Re?structuring the Toyota Production System (TPS) House Based on Inadequacies Revealed During the Automotive Recall Crisis. Quality and Reliability Engineering International, 33(4), 921-930.

Kumar, S. A., & Suresh, N. (2009). Operations management. New Age International.