Nissan Case Study Milestone 3 PDF

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Running Head: MILESTONE 3

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Nissan Case Study Milestone 3 Christopher Gouchenouer QSO 300 Operations Management Instructor Marc Voorhees 6/10/2018

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In the daily operations of every business, sustainability should always be the top priority of the teams driven down from the operations manager. There are multiple techniques at the disposal of each operations manager but the ones that will be the most beneficial to Nissan will be to implement Just in Time (JIT), Toyota Production Systems (TPS) and Lean operations. By using these techniques, Nissan will continue to operate as a sustainable business and improve the companies triple bottom line. The three concepts which will be applied by Nissan are: Just in Time, Toyota Production Systems and Lean manufacturing. Just in Time is the approach of continuously forced problem solving by placing a focus on throughput and reduced inventory with an emphasis on forced problem solving (Heizer, Render & Munson, 2017). Toyota Production Systems places the focus on the ideas of continuous improvement, respecting their employees and standardizing the work process by placing an emphasis on the employees training and empowering them to make decisions concerning their work (Heizer, Render & Munson, 2017). The last concept is Lean operations. Lean operations are the concept of supplying the customer with the exact product they want, when the customer wants the product with minimal waste by using continuous improvement techniques (Heizer, Render & Munson, 2017). What sets Lean operations apart from JIT and TPS is the importance that is placed on understanding the wants and needs of the customer. While Lean has a different approach towards the customer, all three of these concepts carry on by sustaining a competitive advantage and result in the increase of overall returns (Heizer, Render & Munson, 2017). These concepts are completely different yet when they are implemented into the business culture the differences disappear and tend to be used throughout all three concepts.

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The implementation of JIT into Nissan’s daily production would prove to be an advantage in that it would highlight the problems that present themselves as well as eliminate unnecessary waste and delays in the process. This is proven to allow the business to respond to the customers needs while presenting them with a less costly product that is produced with a level of quality that is second to none. JIT will also allow Nissan to implement a reduced inventory by introducing the Kanban methodology. Kanban methodology is a method for managing the creation of products with an emphasis on continual delivery while not overburdening the development team. Kanban is simply a system that pulls inventory from the supply as it is needed rather than producing product whether it is needed or not (Heizer, Render & Munson, 2017). By using the JIT concept at Nissan, the inventory levels were reduced which had also allowed Nissan to use a build-to-stock strategy for having a few SKU’s of each model and buildto-order strategy for the rest of their products (Schmidt & Simchi-Levi, 2013). The biggest disadvantage of JIT would have to be that with using a handful of suppliers to stock the parts needed for production, there would be no way to quickly solve the supply shortage should the suppliers not be able to meet the demands of Nissan’s production lines. With the introduction of the Toyota Production System, Nissan has focused on three components: continuous improvement, respect for the people/employees and a standard for work process. By hiring a diverse corporate team, that had represented numerous nationalities, and giving them training across different areas of the business, to include supply chain/risk management, Nissan was able to empower their employees showing the respect and confidence that they held for the employees. This has proven to be very advantageous for Nissan due to the engagement from the employees that had empowered the employees to make decisions for improvements to the process without having to seek approval from the upper echelons of

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management. With the advantages of using a TPS, also come with disadvantages. TPS, when implemented, has the potential to create a close supply chain for Nissan. This would hinder the ability for quickly making necessary adjustments to the suppliers. Nissan had foreseen this issue and used a decentralized supply chain structure that had shown strong central control and coordination in the event of a global crisis that will affect the production of their automobiles (Schmidt & Simchi-Levi, 2013). With Lean manufacturing, the main concept is to maximize the customer value whilst minimizing the waste created. A lean organization must understand the customer value and focus on the processes to continuously increase it with the end goal of providing the perfect value to the customer through a zero-waste perfect creation process (Lean Enterprise Institute, n.d.). Nissan has utilized Lean operations in the increase of localizing the production of automobiles in the United States which had reduced the reliance on components that had been produced within Japan (Schmidt & Simchi-Levi, 2013). By doing this there had been a decrease of time in production which had significantly increased Nissan’s production sustainability for any future operations success. There are three components to the Triple Bottom Line (TBL) consisting of: People, Planet and Profit. Nissan has utilized the TBL concepts to enhance the operations management used in its business model. Nissan has set the bar when it has come to the people aspect of TBL. To ensure that there was always a focus on the people, Nissan had introduced a disaster plan that had established protocols in accounting for every employee, as well as their families, on or off the clock. This was done before production could resume. Since Nissan had shown a committed plan in the event of a natural disaster, the employees have a high sense of security and worth within the company. When you look at Nissan’s global operations, an area that could be

MILESTONE 3 improved to cut down on the damage to the planet would be to look at the shipping process. After the tsunami in 2011, Nissan had increased the production into the United States which had decreased the distance that the product would have to be shipped which would also decrease the carbon footprint that was being produced (Schmidt & Simchi-Levi, 2013). Nissan’s profitability has increased in many ways. When you think of profits, one tends to think largely in a monetary sense which is not always the case. Nissan places high regard on the people in the overall operations of the business. For instance, by hiring such a diverse group of people in their corporate operations group, Nissan has been able to implement a people-first business practice that has enabled the company to grow while in the stages of recovery from a natural disaster. “This diversity is considered by Nissan, to be a source of strength in managing a large global operation and it valued that the executive team could speak first-hand to the unique constraints and opportunities that were present in each market” (Schmidt & Simchi-Levi, 2013). These concepts will assist the different operation teams around the world to collaborate on the improvement of the TBL on both the world and local markets combined. ISO 14000 a family of standards which provide practical tools for companies to manage their environmental responsibilities. The actual standards of ISO14000 deal with the way in which a company manages the environment conditions inside their production facilities as well as the immediate outside environment. The standards also call for the analysis of the entire life cycle of the product being produced, from the raw materials to the eventual disposal of the finished product. While these standards do not mandate a level of pollution or performance, they do focus on the awareness of the process and procedures that can affect the environment (Martincic, 1997). Nissan had announced in January 2011, that they had received the ISO14001 certification, the international standard for environmental systems, for the global headquarters

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including all facilities located within Japan to include the research/development, production and distribution departments (Nissan, 2011). These standards have allowed for the integration of a reusable parts container rather than a cardboard one that would eventually breakdown and be rendered useless. Nissan had also eliminated the waste sent to landfills by more than 90% and taken measures to reduce the carbon footprint from the manufacturing facilities across the world. The definition of Corporate social responsibility is “the managerial decision making that considers the environmental, societal and financial impacts (Heizer, Render & Munson, 2017). Nissan’s corporate responsibility can be easily achieved by viewing the systems in place that will allow for an improved sustainability. This would require Nissan to examine the products life cycle from the first steps in the design process to the disposal. This would include all the required raw materials that are needed throughout the production process. For this to work, all operations managers utilizing the system view process must look at how each aspect of the operation affects and/or affected by the other aspects of production. This will also allow for the managers to identify any potential improvements to the production process, reduce the time and/or costs of the process as well as eliminate potential waste. This system view approach will eliminate the waste that is produced, ultimately saving the company money and producing a smaller carbon footprint to the planet which will drive costs down.

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Heizer, J., Render, B. & Munson C. (2017). Operations Management with MyOMLab. Harlow: Pearson Education. Lean Enterprise Institute (n.d.). What is Lean? Retrieved June 10, 2018, from https://www.lean.org/WhatsLean/ Martincic, C. J. (1997, February 20). The ISO 14000 Series of Standards. Retrieved June 08, 2018, from http://www.sis.pitt.edu/mbsclass/standards/martincic/14000ovr.htm NISSAN | Nissan obtains integrated ISO14001 certification for all main facilities in Japan. (2011, January 20). Schmidt, W., & Simchi-Levi, D. (2013, August 27). Nissan Motor Company Ltd.: Building Operational Resiliency....