om final project

RUNNER: Nissan Case Study: Final Analysis Page | 1

Nissan Case Study: Final Analysis

James O’Brien

Southern New Hampshire University

Nissan Case Study: Final Analysis Page | 2

Outline

Part 1. Generating Value:

1. Evaluate how the company in the case study uses operations management functions to

provide products and generate value for its customers

2. Assess how this company achieves a competitive advantage using operations

management.

3. Compare and contrast service operations and manufacturing operations at the company in

the case study. How are they the same? How do they differ? How does each of these

operations provide value for their customers?

Part 2. Theories and Techniques:

4. How are gross-to-net calculations processed for material requirements planning (MRP)?

a. What specific input files would Nissan need to include in this process?

b. How would you use the MRP information to improve the operations as the

manager of Nissan?

5. Compare and contrast the critical path method (CPM) and the program evaluation and

review technique (PERT). What types of projects at this company would favor PETT

over CPM? Why? What types of projects at this company would favor CPM over PERT?

Why?

6. Explain the four primary priority rules for job sequencing.

a. In what instances at the company might each rule be most advantageous?

b. When would each rule be most disadvantageous?

7. Explain the five steps of the Theory of Constraints (TOC)

a. Explanation of the Theory


b. Step 1: Identify

i. Step 2: Exploit

ii. Step 3: Subordinate

iii. Step 4: Elevate

iv. Step 5: Repeat

8. Explain the steps used to develop a forecasting system. How would these steps be

specifically utilizes by this company? What do you predict would be the result of

implementing a forecasting system for the top--selling product line at this company?

9. List the major categories of supply chain risk and associated risk reduction tactics. How

could the company mitigate exposure to supply chain disruptions caused by natural

disasters? For example, consider the 2011 earthquake and tsunami that devastated parts

of Japan.

10. Theories: discuss the following and describe the advantages and disadvantages of each,

and how they are related.

a. Just in Time (JIT)

b. Toyota Production System (TPS)

c. Lean

11. Describe how Total Quality Management (TQM) principles and tools can be used to

improve quality in the latest line of products.

Part 3. Data Analysis

12. How as an Operations Manager will you use the time-function map to keep the assembly

process flowing


13. Assess why some of the company’s supply chain partners might have struggled to

implement some of the company’s newly developed materials. Utilize Cause and Effect

Diagram

14. Utilizing the data, determine where the company should locate its new manufacturing

plant. Why would this be the favorable location?

15. Develop an ABC classification system

a. What do you recommend for improving inventory management

Part 4. Sustainability:

16. How can the Triple bottom line be used to enhance operations management at Nissan?

17. How does Nissan integrate ISO 14000 standards in its manufacturing plants?

18. Describe ways that Nissan can integrate corporate responsibility principles into their

operations.

19. Conclusion

20. Appendix

21. References


The following is an analysis of the Nissan Motor Company. In this analysis we will look

at a variety of operational management functions and theories that could help bring Nissan into

the future. We will also look at some of the operational management functions and reports that

they utilize in their day to day data analysis. We will finally finish the analysis with how Nissan

is contributing to the sustainability efforts.

I have broken this analysis up into three parts. In part one we will look into how Nissan

is generating value using competitive advantage and the usage of operational management

functions. In part two we will take a look at the management theories and techniques that have

been put in place at Nissan to bring them into the future. Theories like total quality management,

forecasting, as well as different systems that are in place to ensure proper functionality at the

manufacturing plants. In part three we will take a look at some raw data and run some analysis

to see if Nissan is operating at functioning levels. Part four will take a look at some of the way

in which Nissan is responding to the need for being corporately sustainable. I hope you enjoy

and can learn a few things about Nissan and how they function as a company on an operational

level.

Part 1: Generating Value

During and after the tragic events of March 11, 2011, Nissan put their risk management

guidelines into effect. Nissan had been prepared for situations like these so that in the event of a

natural disaster they would be able to utilize their remaining functioning plants around the world

to continue to manufacture their products so the consumers would not be affected. Their

operational management team created a Global Disaster Headquarters which was in charge of

gathering and distributing information concerning employee safety, facility damages, and


business continuity planning for Nissan’s operations and those of its suppliers. (William

Schmidt, 2013) The results of Nissan having this continuity plan in place is the reason why

Nissan had one of the shortest down times from this event.

To achieve competitive advantage, managers need to make effective decisions in good

and service design, process, capacity design, location, process technology and control. These

decisions are the support that operations management can make in order to support the

company’s mission and therefore its business strategy. One way that Nissan is able to offer a

competitive advantage is by use of just-in-time technology. With this technology specific

vehicles and their components are produced just-in-time to meet the demand for them. What this

does in turn is allow for a lower inventory level which then keeps overall costs down due to not

having to find place to store all of the extra inventory. (Kyratzoglou, 2013) Another advantage

that Nissan brings is by their use of capacity. Nissan’s capacity affects a large portion of the

fixed cost and it also determines if demand will be met or if facilities will be unused. For

example, if the facility is too large, portions of it will be still and will add cost to existing

production or clients. On the other hand, if the facility is too small customers and perhaps

markets will be lost. Therefore determining the capacity is a crucial step to help the achievement

of the company’s strategies. (Manufacturing, N.D.)

Nissan has two major components in their business, service operations and manufacturing

operations. Although you would think that these processes would always go hand in hand, there

are differences in which you can still run a business even if one of these is not in a working

order. The main comparison between these two operations is that without the service operations

there would be no need for the manufacturing operation. You need to have clients in order to

sell your product and you need the money from these clients to manufacture the product.


However, if for some reason like the earthquake of 2011 the manufacturing plants suffer heave

damage and cannot produce vehicles at the present time the service operations team can still

work with the existing inventory to continue to make sales for the company. Each of these

operations provide value to their customer as the organizations overall objective is customer

satisfaction. Service operations work directly with the customer in regards to specification’s that

are wanted and quantities, color, accessories etc. Manufacturing operations takes the

information that is given to the Service operations department and puts these specifications into

the vehicle that the customer is looking for.

Part 2: Theories and Techniques

Material requirements planning or (MRP) is a computer-based inventory management

system designed to assist production managers in scheduling and placing orders for items of

dependent demand. Dependent demand refers to items that are components of finished goods

such as raw materials or component parts. (MRP, N.D.) Nissan would utilize this program by

imputing information such as a billing of all materials needed, the master scheduling files and

inventory records files. What the MRP does is utilizes the bill of materials to determine the

quantity of each component that is needed to produce a certain number of finished products.

From this quantity, the system subtracts the quantity of that item already in inventory to

determine order requirements which goes along with the primary rules of job sequencing which

we will touch on later.

As with any program the MRP system does have its pros and cons. Some of the potential

benefits that Nissan could look forward to when using this system would be helping production

managers to minimize inventory levels and the associated costs, track material requirements,

determine the most economical lot sizes for orders, compute quantities needed as safety stock


and this list could go on. (MRP, N.D.) Some of the drawback that Nissan could face when

utilizing this system could be inaccurate inventory levels if the records were not up to date prior

to installation, all bills of materials are not current. The results of these inaccuracies could be

missing parts and excessive order quantities to schedule delays and missed delivery dates. These

are some drawbacks that could really hurt the company’s customer service reputation. (MRP,

N.D.)

The critical path method (CPM) and the program evaluation and review technique

(PERT) are two ways that project management teams can utilize in order to prioritize their target

goals. These are basically diagrams that companies utilize to find the best way to get to from the

starting point of a project to the end result. In the case of Nissan, the CPM is a method that

would work when planning out their Global Disaster Headquarter contingency plans. This CPM

is a way to compute one way to arrive to the overall goal of this project. The PERT method is a

method that uses three estimates in order to reach a final destination in the planning process.

This method would generally be used when trying to come up with a plan to get one of their

vehicle lines out of production and onto the showroom floor. With this type of project there are

many factors that need to be included into the equation such as labor, materials, equipment,

maintenance, down time and more. The PERT method can take all of these factors into

consideration when plotting the overall ending date to the project at hand.

Once work has been loaded into the work center, managers decide the sequence in which

each job is to be completed. Sequencing also known as dispatching is done by specifying

priority rules as to which jobs get released for production first. (Render, 2014) There are 5

major priority sequencing rules that a company can choose to utilize for their productions. These

five sequencing rules are: 1. First come, first served (FCFS), 2. Earliest due date (EDD), 3.


Shortest processing time (SPT), 4. Longest processing time (LPT) and 5. Critical ratio (CR).

(Hartman, N.D.)

First Come, first served is where jobs are sequenced in the order in which they arrive at

the work station. Earliest due date jobs are sequenced in the order in which they are due for

delivery. Shortest processing time jobs are sequenced in order of the processing time required at

the work station, with the job requiting the least processing time at the work station scheduled

first. Longest processing time are jobs that are sequenced in order of the processing time

required at the work stations with the job requiring the longest processing time at the work

station scheduled first. The last rule are the critical ratios. These are jobs that are sequenced in

order of increasing critical ratio (the ration of time required by work left to be done to time left to

do the work. (Hartman, N.D.)

The theory of constraints or (TOC) is a methodology for identifying the most important

limiting factor that stands in the way of achieving a goal and then systematically improving that

constraint until it is no longer the limiting factor. In manufacturing, such as with the Nissan

Company the constraint is often referred to as a bottleneck. (Constraints, N.D.) What the TOC

does is takes a scientific approach to improvements. It hypothesizes that every complex system,

including manufacturing processes, consists of multiple linked activities, in which one of these

acts as a constraint upon the entire system. (Constraints, N.D.) The TOC comprises of five steps

in which we will take a closer look at next. These steps are: Identifying the constraint, Exploit

the constraint, Subordinate and synchronize to the constraint, Elevate performance of the

constraint and finally repeat the process. (Render, 2014)

In step one, identifying the constraint is where the operations manager needs to figure out

which part of the process is limiting the rate by which the goal can be achieved. (Constraints,


N.D.) An example of this would be if the plant manager for Nissan notices that they are running

out of a particular part for a vehicle which puts the assembly process at a halt. Step two,

exploiting the constraint is where you would need to make quick improvements to the throughput

of the constraint using existing resources. (Constraints, N.D.) This would be where a manager

would go through the entire inventory to make sure how much of the part they have on hand to

make sure that they can continue producing for as long as possible. In Step three which requires

the managers to subordinate and synchronize to the constraint, involves reviewing all other

activities in the process to ensure that they are aligned with and truly support the needs of the

constraint. (Constraints, N.D.) An example of this would be to make sure that all possibilities to

work through this problem have been resolved and that there are no other possibilities to fix the

issue sooner.

Step 4 is where you elevate the performance of the constraint. This involves making

sure that the constraint still exists after following the first three steps and if it does then one must

consider what further actions can be taken to eliminate it from being the constraint. (Constraints,

N.D.) Generally, this step is continued until the constraint is eliminated. This would be where

the manager would probably be calling to all of their suppliers and sister plants to see if any of

these parts can be expedited to the facility so that the assembly process can resume. The final

step to this process is to repeat. What this means is that the steps are an ongoing processes in the

continuous improvement cycle. Once the constraint has been fixed the next one should be

addressed immediately. (Constraints, N.D.)

Forecasting is an integral part of any company’s strategy. By utilizing forecasting tools a

company can predict what products or in Nissan’s case vehicle models will be in higher demand

so that way Nissan can make sure that they have enough inventory to meet the demands of their


customers. In order to create a successful forecasting system there are generally five steps that

need to be taken, these steps are defining the problem, gathering information, preliminary

analysis, choosing and fitting models and using and evaluating a forecasting model.

In step 1 defining the problem, this is often one of the most difficult parts, you need to

carefully understand the way that the forecast will be used and who will be requiring the

forecasts. In this step there is a lot of data that will need to be gathered, inputting the data into a

database and setting up for the forecasting. In step 2 gathering information there are usually at

least two kinds of data that will need to be acquired, statistical data and the accumulated

expertise of the people who collect the data and use the forecasts. Step 3 is where you start

getting your preliminary analysis. The best way of sorting this information is usually by

graphing the data and looking for consistent patterns. You are also looking for trends,

seasonality, and evidence of business cycles. Step 4 is started by choosing and fitting models.

Each model is an artificial construct that is based on a set of assumptions and usually involves

one or more parameters which must be fitted using know historical data. Step 5 consists of using

and evaluating the forecasting model. Once a model has been selected and its parameters

estimated, the model is used to make forecasts. The performance of the model can only be

properly evaluated after the data for the forecast period has become available. (Forecasting,

N.D.)

In the case of Nissan, these forecasting models can be extremely helpful when trying to

figure out if any new concept vehicles would have a customer base. For instance, if Nissan were

to send out a survey to existing customers and asked for information regarding their favorite

features of the existing models and were to transpose these features into a new model the

forecasts could show how this new vehicle could fare on the showroom floor. In the automotive


industry customer trends alone with the demographics of where they are planning to sell the

product could have weighing factors in the production of newer vehicles.

Nissan has identified seven factors that enable stronger capabilities in both supply chain

management and risk management. By matching their practices against these seven enablers,

they can assess how mature or immature their capabilities are. Below are the seven factors and

how they can enable the maturity or immaturity of the company.

1. Risk governance—the presence of appropriate risk management structures, processes, and culture.2. Flexibility and redundancy in product, network, and process architectures—having the right levels of

flexibility and redundancy across the value chain to be able to absorb disruptions and adapt to change.

3. Alignment between partners in the supply chain—strategic alignment on key value dimensions, identification of emerging patterns, and advancement toward higher value propositions.

4. Upstream and downstream supply chain integration—information sharing, visibility, and collaboration with upstream and downstream supply chain partners.

5. Alignment between internal business functions—alignment and the integration of activities between company value chain functions on a strategic, tactical, and operational level.

6. Complexity management/rationalization—ability to standardize and simplify networks and processes, interfaces, product architectures, and product portfolios and operating models.

7. Data, models, and analytics—development and use of intelligence and analytical capabilities to support supply chain and risk management functions. (Kyratzoglou, 2013)

With Nissan’s Global disaster Headquarters put in place prior to the earthquake of 2011,

Nissan was ahead of the game when the disaster struck. They already had plans in place to deal

with shortages and supply chain issues. When the disaster struck Nissan utilized its

manufacturing plants around the world to ensure that all needed supplies and parts were sent to

the areas that were affected in order to minimize downed time on the production lines. Nissan’s

preparedness for catastrophic events allow them to still maintain a positive output within six

months of the disaster while other car manufacturers in Japan were still struggling to pull

themselves back into production.


Of the many theories out there we will take a look at a few of the main ones that the

Nissan Company use in order to continuously improve company standards as working towards

complete sustainability. The first theory that we will look at is the Just-in Time theory. What

the Just-in-Time (JIT) theory is, is a continuous and forces problem solving via a focus on

throughput and reduced inventory. (Render, 2014) With this theory materials arrive where they

are needed but only when they are needed. This allows for less inventory problems as Nissan

would make sure that they had the right amount of inventory on hand to complete the job.

Having no excess inventory allows for less storage space and can help reduce costs. The JIT

theory can also be broken down into five segments as well these would be the JIT Partnerships,

the JIT Layout, JIT Inventory, JIT Scheduling, and JIT Quality.

JIT partnerships exist when a supplier and a purchaser work together with open

communication and a goal of removing waste and driving down costs. This process usually has

specific goals but there could also be concerns by the suppliers. Some of the goals would be the

removal of unnecessary activities, removal of in-plant inventory, removal of in-transit inventory

or obtaining improved quality and reliability through long-term commitments, communication

and cooperation. (Render, 2014) Some of the concerns that this brings by the suppliers are

diversification, scheduling, and lead time, quality, and lot sizes. All of these concerns are viable

concerns for suppliers and they need to be worked out before the JIT process can be validated.

The JIT layout is a process that is designed to reduce movement. The movement of

material of the factory floor does not add value. Consequently, the managers want flexible

layouts that reduce the movement of both people and material. JIT layouts place material

directly in the location where needed. (Render, 2014) For Nissan, their assembly line should be

designed with delivery points next to the line so material can be delivered right to the point


where it will be needed and not to a receiving facility and then needing to be moved again to the

staging area where it will be used on the assembly line. With JIT layouts time and movement

can be reduced allowing for increased flexibility as well as reduced space and inventory.

JIT inventory are inventories in production and distribution systems that often exist “just

in case” something goes wrong. These are utilized in case there is some kind of variation from

the production plans. JIT inventory is the minimum inventory necessary to keep a perfect system

running. With the JIT system the right amount of goods arrive at the plant just at the moment

that it is needed. The two main things that JIT inventory allows for is a reduced inventory and

reduced lot sizes, all of which is a time and cost saver for the company.

JIT Scheduling is where effective schedules are communicated both within the

organization and to outside suppliers. With better scheduling you can also improve the ability to

meet customer orders, drive down inventory and reduce work in process. (Render, 2014) JIT and

Quality can be related in three ways. First, JIT cuts the cost of obtaining good quality because

they care able to save because of scrap, rework, inventory investment, and damage costs. These

costs are hidden within the inventory and the JIT forces down the inventory so therefore fewer

bad units are produced and fewer units need to be redone. The second similarity is that of

quality. JIT creates an early warning system for quality problems so that fewer bad products are

produced and feedback is immediate. The third similarity is that when consistent quality exists

the JIT allows companies to reduce all costs associated with inventories. By being able to utilize

these methods Nissan would be able to completely overhaul their processes and work to create a

JIT environment to utilize all methods and start saving a tremendous amount of overhead and

expenditures.


Of course as with any theory there comes advantages and disadvantages. A couple of

the advantages of the JIT system are customer needs, and Inventory costs. (Kokemuller, N.D.)

The main advantage with customer needs is that with the JIT system automated and efficient

inventory replenishment systems can quickly respond to reduced inventory levels. This allows

for less disruption time for the customers to receive their product from the Nissan. Nissan also

could utilize the JIT system to reduce the amount of holding space and staff required to maintain

it. Nissan could utilize the savings and invest it into business growth and other opportunities.

One disadvantage of the JIT system is coordination. The reason for this being that managing the

JIT inventory system requires significant coordination between retailers and suppliers in the

distribution channel. Retailers often put major trust in suppliers by syncing their computer

systems with suppliers so they can more directly monitor inventory levels so that they can

respond quicker to low inventory levels. (Kokemuller, N.D.)

The next theory that we will look at is the Toyota Production System (TPS). The TPS is

a theory that focuses on continuous improvement in respect for people and standard work

practices. (Render, 2014) This theory was created by Eiji Toyoda and Taiichi Ohno from Toyota

Motors. This system has three core components which are continuous improvement, respect for

people and standard work practice. The first component which is continuous improvement

means to build an organizational culture and instill it in its people a value system stressing that

processes can be improved. In order to do this Toyota begins instilling this component at the

recruiting stage and continues it with continuous extensive training. Instilling this value in their

employees leads into the next component of TPS which is respect for people.

The second component of the TPS theory is respect for people. TPS engages the mental

as well as physical capacities of employees in the challenging task of improving operations. This


function allows for the employee to be empowered to make decisions necessary to the functions

of the business. (Render, 2014) In the case of Nissan the employees would be allowed to stop

the production process if they noticed that there was a problem with a process in the assembly of

the product. What Toyota did with this process is recognize that their employees know more

about their particular jobs than anyone else so therefore they utilize the TPS method because it

gives the employees the opportunity to not only enrich themselves but also the job at hand.

The last component of TPS is having standard work practices. Toyota has a set of

principles when outlying this component. What they expect is that work is completely specified

as to content, sequence, timing and outcome of the process. They also make sure that internal

and external customer-supplier connections are direct, specifying personnel, methods, timing and

quantity. The product and service flows are to be simple and direct. The goods and services are

directed to a specific person or machine. When improvements in the system must be made they

must be done in accordance to the scientific method at the lowers possible level in the

organization. (Render, 2014) All of these components make up a method of work flow practices

that can enhance a company’s social responsibilities with their clients and suppliers not to

mention the impact that they can have on the environment.

As we said before there are advantages and disadvantages to everything and the TPS

system is no different. Some of the advantages of the TPS include reducing the waste as much

as possible, less movement of the producing labor, leads to less time in producing JIT, Every

step of the production can be checked, go smoothly and without any mistakes due to jidoka (the

Japanese name for stopping production when a defect occurs) (Render, 2014) (TPS, N.D.) A

couple of the disadvantages of this system include it high cost to implement, dismantling

previous systems and training employees on how to use it, utilizes suppliers that can handle


small amounts of on hand inventory. (TPS, N.D.) If Nissan were to utilize this method they

would need to be sure that the cost benefits of this would be the best option. There are potential

issues that could affect Nissan with the usage of this method including the lack of required

inventory but the “trusted” suppliers.

That last theory that we will be addressing here is the Lean operations theory. What lean

operations does is eliminates waste through continuous improvement and focuses on exactly

what the customer wants. This operation can be thought of as the end result of a well-run

operations management function, which understands what the customer wants and ensures

customer input and feedback. (Render, 2014) What this function does is analyzes the activities

needed to produce the product by optimizing the process from the customers perspective. Lean

operations utilize some of the same qualities as JIT and TPS. The methods used all work with

sections of the business such as suppliers, layouts, inventory, scheduling and more. Some of the

advantages and disadvantages of this method include waste reduction, worker satisfaction,

competitive advantage, new inefficiencies, worker frustration, and problems with JIT systems.

(Shpak, N.D.)

The purpose of utilizing these methods is not only to create cost effective practices but to

also create a sense of sustainability within the organization. Companies such as Nissan utilize

what is called the triple bottom line. The phrase “the triple bottom line” was first coined in 1994

by John Elkington, the founder of a British consultancy called SustainAbility. His argument was

that companies should be preparing three different (and quite separate) bottom lines. One is the

traditional measure of corporate profit—the “bottom line” of the profit and loss account. The

second is the bottom line of a company's “people account”—a measure in some shape or form of

how socially responsible an organization has been throughout its operations. The third is the


bottom line of the company's “planet” account—a measure of how environmentally responsible

it has been. The triple bottom line (TBL) thus consists of three Ps: profit, people and planet. It

aims to measure the financial, social and environmental performance of the corporation over a

period of time. Only a company that produces a TBL is taking account of the full cost involved

in doing business. (Line, 2009)

With all operations management there are certain subject matter and statistical analysis

that all managers need to be aware of and how to utilize in order to run their business. The two

main functions that we will be looking at here are theory of constraints (TOC) and total quality

management (TQM). We will also be looking at some of the statistical graphs that Operations

managers utilize constantly to ensure that day to day functions as well as special projects are

met.

The next processes that Operations Managers utilize on a daily basis is total quality

management or (TQM). TQM is the management of an entire organization so that it excels in all

aspects of products and services that are important to the customer. (William Schmidt, 2013)

Quality expert W. Edwards Deming came up with 14 points to indicate how he implemented

TQM which were then broken down into seven concepts to utilize an effective TQM program.

These concepts are: Continuous improvement, Six Sigma, employee empowerment,

benchmarking, just-in-time, Taguchi concepts, and knowledge of TQM tools. (William Schmidt,

2013)

There are many tools available today to assist operations managers with TQM in there

day to day routines. Some of these tools are Pie charts and bar graphs, Histograms, Run charts,

Force field analysis, focus groups, brainstorming and affinity diagrams, tree diagrams,

Flowcharts and modeling diagrams, scatter diagrams, relations diagrams and PDCA which


stands for Plan-Do-Check-Act. (Tools, N.D.) All of these tools have different uses for the

operations managers. Each one of these graphs and charts can depict a different aspect of their

jobs or projects. Knowing how to utilize each of these tools can help to set your company aside

from the rest of the field. For example operations managers for the Nissan Company can utilize

Run charts to follow the process of vehicle assembly over a specific time frame and look for

accuracy rates and track the high and low points in the process to see where improvements can

be made. Automobile manufactures also utilize focus groups to see what their customers are

looking for and then take that information and create brainstorming ideas and create Affinity

diagrams.

Part 3: Data Analysis

Cause-and-Effect Diagrams are another tool that operations managers utilize in order to

identify quality issues and inspection points. A Cause-and effect diagram is a schematic

technique used to discover possible locations of quality problems. (Render, 2014) In the case of

Nissan Company utilizing six different factors that could potentially hurt the production or

transportation of parts or goods to and from the manufacturing plant the diagram could

potentially look like the one provided in figure 1(please see appendix A). In this figure you can

see the factors listed in the boxes followed by different causes that could attribute to delays in

reaching their ultimate goal.

Another resource that can allow operations managers to make sure that they are

continuously on track with time demands would be the utilization of a time-function map. A

time-function map is a tool that shows the managers a time line of how long a process should

take and guidelines of where the process should be at any given time. In figure 2 you will see a

basic time function map for the production of the new Nissan NV Passenger van that has recently


hit the showroom floors. This map will give a basic time from when the concept comes down

from R&D to the time the full product comes off of the assembly line and out to the dealerships.

Figure 2: Time-Function Mapping Nissan NV Passenger van

Now let’s say that Nissan is looking for a new location for a manufacturing plant. Nissan’s real

estate team can utilize different forms of charts and graphs to weigh out the potential pros and cons of

particular site interests. Now utilizing the same factors as shown in figure 1 we have created a Pivot

chart to weigh the pros and cons between putting a plant in either Mexico City or Columbia, SC. . Now

using the weight values listed below you can see how Nissan Company feels that these factors could

help to assist in the decision of where to build the plant.

Row LabelsSum of Weight

Sum of Mexico City

Sum of Columbia, SC

Labor Costs 0.10 80 50Labor Productivity 0.20 85 75Political Risk 0.25 70 80Rental Costs 0.15 90 55Taxes 0.10 90 50Transportation Costs 0.20 40 90Grand Total 1 455 400


By utilizing the previous information and putting the data into a chart (figure 3) to compare the two

potential cities, one would see that Mexico City would probably be the best choice for Nissan based on

the weighted values of what they were looking for.

Figure 3: Pivot Chart for deciding what city to choose for a new Manufacturing Plant.

Labor Costs

Labor Producti

vity

Politica

l Risk

Rental Costs

Taxes

Transporta

tion Costs0.00

10.0020.0030.0040.0050.0060.0070.0080.0090.00

100.00

Sum of WeightSum of Mexico CitySum of Columbia, SC

As you can see from the information in the chart with Political risk, Transportation costs and

Labor productivity weighted the highest you can tell that there is less political risk in Mexico City, the

transportation costs are a fraction of the cost than it would be in Columbia, and the labor productivity is

higher in Mexico City. With these three factors weighing in for over half of the factors weights the

obvious choice for Nissan would be Mexico City.

One way that Nissan could help with inefficiencies with their inventory management systems

would be the usage of a chart called the ABC classification system. This system is a ranking system used

for identifying and grouping items in terms of how useful they are for achieving business goals. (Rouse,

N.D.) In figures 4 and 5 you will see a sample of data from Nissan and then you will see that data in an

ABC classification chart. This information will be helpful for Nissan to see what items are costing more

on an annual basis. With that data they can then see if they can find a different supplier that may have

the same parts for cheaper to save money on parts that they use more often.


Figure 4: Data Sample for parts and costs (Manufacturing, N.D.)

Item Annual Demand Cost/Unit Dollar value % Dollar ValueA2 3000 50.00 150000 13.79%B8 4000 12.00 48000 4.41%C7 1500 45.00 67500 6.21%D1 6000 10.00 60000 5.52%E9 1000 20.00 20000 1.84%F3 500 500.00 250000 22.99%G2 300 1500.00 450000 41.38%H2 600 20.00 12000 1.10%I5 1750 10.00 17500 1.61%J8 2500 5.00 12500 1.15%

Figure 5: Data sample in Graph to show costs and dollar values of parts

A2 B8 C7 D1 E9 F3 G2 H2 I5 J80

50000100000150000200000250000300000350000400000450000500000

Nissan ABC Analysis

Annual Demand Cost/Unit Dollar value % Dollar Value

As you can see from this data parts G2, F3, and A2 have the largest percent of dollar

value and have the highest cost per Unit. You can also see from this data that parts G2 and F3 do

not have a high annual demand so I would definitely try to find another supplier for these items

so we can keep our costs under control.

Part 4: Sustainability


Nissan is currently fostering eight sustainability strategies. The three strategies of

environment, safety and philanthropy represent actions that they are uniquely positioned to

pursue as a leading auto maker. While helping to find solutions to issues involving automobiles

and contribute to the realization of a truly sustainable mobility society. Nissan aims to be an

engine for CSR activities across the entire corporate sector. Their other five strategies include

quality, value chain, employees, economic contribution and corporate governance and internal

control. In the appendix B you will see what Nissan is working on for sustainability practices.

As you can see from this figure all three portions of the triple bottom line are being integrated

into Nissan’s CSR. In a meeting held in February 2014 by the executive committee, Nissan is

closely linking CSR actions and business operations to pursue corporate management that

consistently aligns the twin goals of sustainable profit and growth for the company and

sustainable development for society. (Report, 2014)

ISO 14000 standards are another way that Nissan is working towards increases CSR. In

December 2006, Nissan set objectives to bolster its environmental management through Nissan

Green Program 2010, the company's mid-term environmental action plan. Having already

previously obtained the certification for its five production plants, Nissan Zama Operation

Center, Nissan Technical Center (NTC), Nissan Advanced Technology Center (NATC), Nissan

Research Center and its product/development processes, the company has now achieved a

consistent environmental management, as additional certification was obtained at its new Global

Headquarters, Honmoku Wharf, Customer Service Centers, Global Information System Center,

Sagamihara Parts Center, Nissan Education Center and Hokkaido Rikubetsu Proving Ground.

This integrated environmental management has also been applied to Nissan Forklift Corporation

and Automotive Energy Supply Corporation, which are affiliates or partner companies of Nissan.


As a result, a combined workforce of over 30,000 people, is working on environmental activities

with a higher consciousness. (14001, 2011)

In particular, the Global Headquarters (opened in August 2009), has already obtained the

Comprehensive Assessment System for Built Environment Efficiency (CASBEE)'s highest

ranking (Class S) in October 2009, in addition to proactively promoting the efficient utilization

of natural energy. In January 2011 Nissan announced that it had received integrated ISO 14001

certification. This is an international standard for environmental management systems. Their

announcement proves that the Global Headquarters achieved the establishment of environmental

management in all domains-buildings, working processes and business activities in roughly just

one year. (14001, 2011)

Nissan will continue activities to strengthen its environmental management, as well as

providing models to the market with high environmental performance, "Zero Emission" with its

focus on 100% electric vehicles and "PURE DRIVE" that are designed to achieve class-leading

fuel economy with next-generation eco-technologies. (14001, 2011) The usage of the ISO 14001

proves that Nissan is utilizing all methods possible to integrate CSR into their daily production

as well as limiting waste which could affect the environment as well as social stature.

There are many ways in which Nissan Motors Company can incorporate CSR principles

into their Operations. By utilizing methods such as JIT, TPS and Lean operations Nissan is

cutting down on more than just waste. By using the JIT method, the company is cutting down on

storage space needed as well as cutting down on fuel costs to transport supplies and parts from

location to location. By cutting down on storage space it helps the environment due to that fact

that there will be enough empty buildings that another supplier or manufacturer can occupy so


therefore there will be less land clearing for the use of a new building. Of all of the methods that

have been discussed thus far I would have to say that the JIT method would be the easiest

method for Nissan to integrate into their corporate responsibility strategies. With the utilization

of the JIT partnerships suppliers and vendors can work together with open communication and a

goal of removing waste and drive down costs. (Render, 2014) Such activities will only

strengthen the CSR of Nissan and their sister companies.

In conclusion, Nissan has done a tremendous job utilizing all of the functionalities if the

values and theories and technologies in their day to day business activities. By utilizing these

functions of operational management they are setting themselves up for the future. All of the

theories and techniques that were mentioned in this analysis are tools that any company can

utilize. Just always remember there can be drawbacks for every one so be careful about

implementing too many processes at once. From the looks of all of the data and information that

were mentioned I feel that Nissan Motor Company is headed in the right direction. With these

processes and procedures that they have at their disposal they are setting themselves up nicely to

trek on into future endeavors.


Appendix A:

Figure 1: Cause and effect chart for Nissan Production and Transportation costs

Political Risk Transportation Costs

Labor Productivity

Rental Costs Labor Costs Taxes

Trade Embargos

Rising Fuel Costs

Export/Import Fees

Usage of Transport Ship

Low Morale

Shipment Deadlines

Hour Reductions

Storage Fees

Import/Export Taxes

Overtime Due to Deadlines

Bring in extra employees to make deadlines


Appendix B:

(Strategies, N.D.)

References


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Constraints, T. o. (N.D.). Theory of Constraints. Retrieved 04 04, 2015, from Lean Production.com: http://www.leanproduction.com/theory-of-constraints.html

Forecasting. (N.D.). The basic steps in a forecasting task. Retrieved 03 21, 2015, from Otexts: https://www.otexts.org/fpp/1/6

Kokemuller, N. (N.D.). Advantages & Disadvantages of Just-in Time Inventory. Retrieved 04 11, 2015, from Chron: http://smallbusiness.chron.com/advantages-disadvantages-justintime-inventory-21407.html

Kyratzoglou, I. (2013, 10 03). Making the right decisions to strengthen operations performance. Retrieved 03 19, 2015, from MIT system design and management: https://sdm.mit.edu/news/news_articles/kyratzoglou-supply-chain-risk-management/kyratzoglou-supply-chain-risk-management.html

Line, T. B. (2009, 11 17). Triple Bottom Line. Retrieved 04 09, 2015, from The Economist: http://www.economist.com/node/14301663

Manufacturing, N. M. (N.D.). Case study of Nissan Motor Manufacturing UK Limited. Retrieved from UKessays: http://www.ukessays.com/essays/business/case-study-of-nissan-motor-manufacturing-uk-limited-business-essay.php

Render, J. H. (2014). Operations Management (11th ed.). (D. Battista, Ed.) Pearson Education, Inc.

Report, S. (2014). Nissan Motor Corporation Sustainability Report 2014. Retrieved 04 11, 2015, from Nissan Motor Corporation: http://www.nissan-global.com/EN/DOCUMENT/PDF/SR/2014/SR14_E_P005.pdf

Rouse, M. (N.D.). ABC Classification systems. Retrieved from TechTarget: http://searchmanufacturingerp.techtarget.com/definition/ABC-classification

Shpak, S. (N.D.). Advantages & disadvantages of Lean Production. Retrieved 04 11, 2015, from Chron: http://smallbusiness.chron.com/advantages-amp-disadvantages-lean-production-46696.html

Strategies. (N.D.). Blue Citizenship: NIssan's CSR. Retrieved from Nissan Motor Corporation: http://www.nissan-global.com/EN/CSR/STRATEGY/

SWOT. (N.D.). SWOT analysis of Nissan. Retrieved 03 19, 2015, from Strategic Management Insight: http://www.strategicmanagementinsight.com/swot-analyses/nissan-swot-analysis.html

Tools, T. (N.D.). Total Quality Management Tools. Retrieved 04 04, 2015, from Total Quality Management: http://totalqualitymanagement.weebly.com/tqm-tools.html

TPS. (N.D.). Adavantages & disadvantages of Toyota Information Systems. Retrieved 04 11, 2015, from Toyota: http://toyotaprojectteam.blogspot.com/p/advantages-disadvantages-of-toyota.html


William Schmidt, D. S.-L. (2013). Nissan Motor Company Ltd.: Building Operational Resiliency. MIT Sloan Management. Retrieved 03 14, 2015, from https://mitsloan.mit.edu/LearningEdge/CaseDocs/13-149%20Nissan.Simchi-Levi.pdf

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