Business
2016-07-28
Introduction
This paper is devoted to the company Nissan Motor Company Ltd. and its management system. The great attention is paid to the operations management, supply chain, inventory management and other aspects, which can significantly impact on the company’s effectiveness.
Nissan is currently demonstrating a steady growth in terms of volume of production and sales, as well as developing its technologies in different fields. Nowadays, the company Nissan produces cars in twenty countries around, which include Japan, USA, England, Spain, India, Brazil, Mexico, Russia and others. Sales are conducted in more than one hundred and sixty countries.
Company Nissan is a clear example of the successful use of the Japanese model of management. Japanese management model deserves great attention. Formation of it has happened at the end of the nineteenth and twentieth centuries with the participation of some Western models, while complementing them with their radically different principles (for example, the relationship with the labor force is based on paternalism). The phenomenon of the Japanese management model is presented with the concepts that explain the management on the part of the cultural and technological determinism.
Discussion
Generating Value
Nissan is a well-known Japanese automobile manufacturer. This company actively uses the operations management techniques in its activity. Responsibilities of the operations managers in Nissan can be divided into three main groups:
development and implementation of the overall strategy and direction of the operational activities of the organization;
development and implementation of the operating system, including product development, production process, standards and norms, the design of the enterprise, the decision on the placement of production facilities;
planning and control of the current functioning of the system.
The efficiency of operations is the market value of outputs produced, divided by the total value of the organization costs on the expended inputs. Market value is defined as the number of outputs and output quality, such as, compliance with the range of products or services provided to the existing demand for them; timely release of production; flexibility of the manufacturing system while meeting the individual requirements of consumers.
In 1999, Nissan made the decision to implement the risk management planning for possible disruptions or emergencies in the further activity (Schmidt & Simchi-Levi, 2013). Since that time, Nissan has started to make plans for a whole range of different emergencies, to test them and to analyze the company’s responses to the hypothetical emergencies. Also, Nissan identifies the so-called “risk owners”, who must be responsible for making appropriate and effective plans due to the features of the location, environment, culture and other characteristics of the office of the company. One more example is “Global Disaster Headquarters”. It is considered as a focal point for coordination of any company responses in the case of the emergencies. After implementing such system in 1999, Nissan has effectively and rapidly mitigated the damages after the earthquake of the coast of Fukushima related tsunami in 2011 (Schmidt & Simchi-Levi, 2013) .
The company achieves quite many advantages through the usage of the operations management. The most important of them is localization strategy that has been implemented since 2008. According to this strategy, Nissan localized almost all manufacturing operations outside the country. In this case, Nissan more effectively answered to the crises (Fukushima disaster or others).
The company Nissan differs by the complicated system of the services and manufacturing operations. Operations management team of the company has a crucial impact on that process. For example, the flexible production schedule allowed to more effectively use labor resources on the manufacturing during crisis and after them (Schmidt & Simchi-Levi, 2013).
Theories and Techniques
As we know, material requirements planning is the system that aims to satisfy the needs in materials, components and additional production for manufacturing planning and delivery for customers. Such system is actively used in the company Nissan Motor Company Ltd. There are some obligatory input files for the effective functioning of the MRP system: the main production schedule, specifications and data on stocks and opened orders. All these documents can be used by the operations manager for improving current MRP system.
The critical path method (CPM) as well as program evaluation and review technique (PERT) are used by the company in the project management. Both approaches focus on the identification and the following analysis of how much time it needs to complete the project and which sequence of activities can be the most effective (Heizer & Render, 2013). At the same time, above mentioned approaches have some differences. CPM is usually used, when the situation is predictable or has repetitive processes (for example, production line). PERT is used, when there are some changeable conditions and it is quite difficult to forecast indicators (for example, developing a risk-management plan).
Four priority rules for the job sequencing play a crucial role in the production line, where the process sequence is. At the same time, the decisions in critical situations or emergencies require a more flexible approach. In this case, above mentioned rules can be disadvantageous.
The theory of constraints process (TOC) aims to identify the most important limiting factor and then gradually improve it until it is no longer the constraints on the way of achieving set goals. There are five main steps of the theory of constraints process:
The company should apply TOC to quality of products and exceeding markets. Focusing on the quality inputs can help Nissan Motor Company to more effectively satisfy all needs of the customers as well as find new ones (Schmidt & Simchi-Levi, 2013).
A forecasting system that is used in Nissan has been developed through several steps. According to the experts Heizer and Render, there are six steps to develop the forecasting system:
The company Nissan quite successfully used the forecasting system, especially, for developing a risk management plan or programs after the financial troubles in 1999. Also, Nissan developed forecasts about earthquake probability and possible related problems in manufacturing. As a result, after Fukushima disaster, Nissan has effectively responded to the emergency and continued its business (Schmidt & Simchi-Levi, 2013).
Supply chain risks are usual for each company-manufacturer. The most important supply chain risks, which occurred with Nissan, where the economic crisis of 2007-2008 and natural disaster (Fukushima earthquake). In order to mitigate exposure to supply chain disruptions the company should localize its supply chain resources and partners around the world. In this case, the probability of disruptions at the several plants simultaneously was reduced to zero. At the same time, non-affected facilities can increase production in order to support the affected plant.
Theories just in time, Toyota Production System and lean production at the main supply chain theories in the Japanese management. Each of them has some advantages as well as drawbacks. The most important advantage of the theory JIT is that it helps to increase productivity and receive some components or goods as they are needed. At the same time, the company should quite accurately forecasts the demand, because in case of a large order, the company will not receive necessary components in required deadlines.
The second theory allows producing the customer-ordered vehicles quickly and in the efficient way. At the same time, such system is quite expensive and the company should train its employees on how to use the system.
The third theory focuses on minimizing all forms of waste. The main disadvantage of the lean production is that is makes the workplace too impersonal.
The total quality management (TQM) can be considered as the tool to improve the quality of products through the entire organization, from the suppliers to customers. There are main five principles of TQM: quality work, focus on the customer, existing strategic approach to improve all main processes, gradual improvement, encouraging the teamwork and mutual respect. The company Nissan uses the principles of TQM in order to support its image and constantly improve the quality of products, which are offered to the customers (Schmidt & Simchi-Levi, 2013).
Data Analysis
The company Nissan has released new Forward Emergency Braking system in 2016. It uses the radar to monitor speed and the distance to the vehicle ahead. The following map describes the process of the producing new system and its delivery to the customer (fig. 1).
As an operations manager, I can forecast the demand and control the production, given that proposed system provides additional value for the customers (as a higher level of safety and others).
Cause-and-effect diagram can be considered as an effective tool for the operations manager (fig.2).
Time constraints Damage to factories)
Slowing down production to stay insulated Allocating resources to the right cars to meet customer demands
Using it, it is possible to find problems. For example, the Fukushima earthquake was a great problem for the supply partners.
After analyzing the possible places for the new manufacturing and their total influence of factors, one can say that Mexico City would be more favorable. This variant has better values of such factors as transportation costs, political risks and labor productivity.
The efficiency of the inventory management can be estimated through the ABC classification (table 1).
As we can see, the group A accounts 30% of the all items and generates around 80% of revenues. It should to concentrate more attention on the items I5 and D1 as they differ by the high costs and can generate 80% of revenues. In this case, the group B should be increased due the transition of item A2.
Sustainability
As we know, triple bottom line assumes that planet, people and profit are the most important directions for the company. In this case, the company Nissan aims to get high profit through the satisfying needs of the customers as well as the needs and expectation of its employees. At the same time, environmental protection is one more principle, by which Nissan operates in its activity.
The ISO 14000 standards are integrated in the manufacturing plants. They were the basis for risk management plans, operations management programs and other systems of the company Nissan.
The company Nissan can integrate corporate responsibility principles into their operations through the offering “green” products to the consumers. Environmental protection programs as well as participation in the social activities play a crucial role for the company, its image and recognition among clients.
Conclusion
In summary one can say that the company Nissan is characterized by quite effective supply chain system and operations management. The last one is considered by experts as a set of principles, methods, means and forms of production management, which aims to improve its efficiency and increase profits. The main recommendations for improving operations at the company Nissan concern the following points: to improve the localization strategy, to use principles of different strategies, where it is necessary, to review the inventory management of the company and some others.
References
Heizer, J. & Render, B. (2013). Operations Management: Sustainability and Supply Chain Management, 11th ed. New York, NY: Prentice Hall
Schmidt, W., & Simchi-Levi, D. (2013). Nissan Motor Company Ltd.: Building operational resiliency. Retrieved from https://mitsloan.mit.edu/LearningEdge/CaseDocs/13-149%20Nissan.Simchi-Levi.pdf
