Nissan Case Study Milestone 2 PDF

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Nissan Case Study Milestone 2 Christopher Gouchenouer QSO 300 Operations Management Instructor Marc Voorhees 6/3/2018

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Throughout the course of a normal business day both the operations manager, as well as the project manager, could be faced with numerous challenges that may range from a quality defect to a breakdown in the operational processes that are in place. This paper will identify and explain the 5 steps of the theory of constraints process. Furthermore, this paper will analyze a cause and effect diagram explaining the struggles a company may face when implementing new policies into the business process. The theory of constraints is a procedure set in place to assist companies, such as Nissan, in identifying types of physical constraints and/or nonphysical constraints. Physical constraints that a company may face are a breakdown in the supply chain from disasters or a lack of materials available for production. A nonphysical constraint is something that could be attributed to a lack of training or a procedural issue. Both constraints will lower the possibility of achieving the goals that have been set for the business (Heizer, Render & Munson, 2017). Step number 1 is to identify the constraint that is hampering the speed in which the goals are accomplished. The earthquake, as well as the tsunami that had followed, had affected the automakers of Japan by causing a supply chain meltdown. Nissan was also affected due to a transportation constraint which had taken the shipping process away from them. Step number 2 is to implement a plan in which to prevail over any identified constraints. Nissan’s operations team had recognized that they needed to address alternate methods for the transport of the finished product as well as the course for obtaining the raw materials for production to continue so that the delivery deadlines would be met.

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Step number 3 is implementing a focused plan un which to overcome the businesses identifiable constraints. An investigation of the constraints will provide the business with the knowledge to get past the constraint and commit to the changes, if any, in the supply chain without the added expense of reengineering a certain part. By doing this, Nissan had utilized their international suppliers to maximize their production and meet the customers’ demands (Schmidt & Simchi-Levi, 2013). Step number 4 is the process of decreasing the effects which the constraints had caused to the business by adjusting the workload to different areas for achieving maximum results (Heizer, Render & Munson, 2017). After the devastating tsunami, Nissan had made the decision to relocate 70 – 90 percent of its manufacturing to the United States to reduce the dependability for parts made in Japan to foreign factories (Schmidt & Simchi-Levi, 2013). Step number 5 is simply to repeat the steps to identify and resolve other constraints. With continuous improvement in mind, the moment a constraint is resolved, the next constraint must be immediately addressed. Total Quality Management, or TQM, embraces an entire organization from the suppliers of raw materials to the customer who are purchasing the finished product. TQM pushes management to implement a constant drive for achieving excellence related to the finished goods and customer service (Heizer, Render & Munson, 2017). There are 7 concepts that are necessary for a Total Quality Management program to achieve the desired effect: 1. Instill a continuous improvement mindset. This is the concept of striving to perfect the production process that is in place. For this to be achieved, the staff must be properly

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trained as well as equipment upgrades and improved raw materials from the suppliers. Nissan had implemented this mindset by performing customer surveys to capture data showing how they could improve the way they were doing business in each market they had a presence. 2. The implementation of a Six Sigma process to develop alternate methods for cutting costs and becoming better efficient in the manufacturing processes. This philosophy had allowed for the employees to take ownership in identifying potential bottlenecks in a process while deciding the method for correcting it without getting approval from corporate managers. 3. Benchmarking performance standards which represent the absolute best process or activity (Heizer, Render & Munson, 2017). Nissan introduced a Business Continuity Plan (BCP) as it’s benchmark that placed a priority on human life, rapid disaster recovery and the continuity of the business operations. They had also established a global disaster headquarters that had collected information about their employees, the business facilities in which they are operating and introduced a recovery plan that would optimize the supply chain (Schmidt & Simchi-Levi, 2013). 4. Employee empowerment in the production process (Heizer, Render & Munson, 2017). Nissan’s expectations for its employees is to work towards achieving all goals and allowing them to make decisions without coordination from corporate managers. 5. Just in time production is yet another continuous improvement system that has been implemented by Nissan to better manage their resources. For Nissan to manage their international resources, they had to combine all facets in management if they were to function in the global market place. Nissan had identified specific automobile models that

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required GPS to be installed and relocated the resources that were needed to accomplish the process (Schmidt & Simchi-Levi, 2013). 6. Taguchi concepts are methods used for controlling quality. Sometimes referred to as a robust design method, it is focused more on the design of a product so that they can reduce the amount of defective product. Nissan’s successful implementation of this concept had managed the production by slowing the process involved while working on inventory in stock or in transit while anticipating any possible bottlenecks to production. This had the desired effect by decreasing the overall cost for production (Schmidt & Simchi-Levi, 2013). 7. Nissan has used their knowledge of TQM tools to work towards accomplishing the goals which they had set for their continued success. This has been achieved through employee empowerment.

In the below diagram, we see many delays that had affected the company’s manufacturing deadlines. Before the new process could be implemented into the daily routines of the employee’s management had to address the establishment and learn the possible improvements for resolving them before they have a negative effect on the company’s daily operations. The improvement methods set in place for a production line is the first priority for a successful production model. Nissan holds a high level of quality while implementing efforts to continuously improve the production steps in the implemented processes. This has allowed them to redefine the quality standards they operate by as well as produce a higher level of customer satisfaction.

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Fishbone Diagram

The following process map will allow for visualizing of a work in progress and give a clear understanding of what the process for the business entails. A process maps the analysis of a structured process implemented by a business for optimal success allowing the operations management team to adjust production forecasts pertaining to the customization of the product.

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Factor Political Risk Transportation Costs Labor Productivity Rental Costs Labor Costs Taxes Total

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Weight 0.25 0.2 0.2 0.15 0.1 0.1

Mexico City 70 40 85 90 80 90

Total 17.5 8 17 13.5 8 9 73

Columbia, SC 80 90 75 55 50 50

Total 20 18 15 8.25 5 5

71.25

Considering the above data, I would choose to construct a new Nissan manufacturing facility in Mexico City versus South Carolina. While the political risk has a higher presence in Mexico, the transportation costs will be lower because of the centralized location in the country to both coastlines for distribution purposes. The major concern that I would have with implementing the construction in Mexico City is the primary safety of the business and its assets as well as the presence of corruption within the businesses and political offices.

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References Heizer, J., Render, B., & Munson, C. (2017). Operations management: sustainability and supply chain management (12th ed.). Boston: Pearson Schmidt, William, and Simchi-Levi, David. “Nissan Motor Company Ltd: Building Operational Resiliency” MIT Sloan Management 27 Aug. 2013...