In early 2011, an earthquake of a 9.0 magnitude caused tsunami waves up to 40 meters high and struck the Island of Japan with such force, it traveled almost 10 kilometers inland This massive earthquake and tsunami devastated Japanese citizens and local businesses. The damage was so severe that there are still recovery and rebuilding operations going on to this day. Nissan Motor Company was one of the businesses affected by this disaster. Considering the events that happened, Nissan Motors created and built the Nissan Global Disaster Control Headquarters shortly after. This assignment is going demonstrate how Nissan achieved an advantage over other automobile manufacturers and how they can provide products to their customers using current operations management techniques.
Operations management can be defined as: Activities that relate to the creation of goods and services through the transformation of inputs and outputs. Operations managers are those personnel that try to create the highest level of efficiency for their company. The supply chain and logistics management are terms closely associated to operations management. An example that can be looked at when discussing the Nissan Motor Company is that they decided to install GPS locators in their more expensive models, forgoing the lesser expensive models, to curb costs and lower overhead. Also, another reason is that the components became scare after the earthquake and tsunami so, in order to keep production moving, it worked well to not include the GPS locators on the lesser expensive models. Instead of slowing down the cleanup efforts and putting additional stress on their employees, they decided to have two employees from every facility gather their own information to begin solving problems. At this time, Nissan upper management delegated the decision-making abilities to the facilities. This action also enabled recovery-related decisions to be made quickly and more efficient, because they did not have to report to any central authority to wait for results or decisions to be made.
While the focus was for the safety of their employees, Nissan motors began to make changes so that their business would not suffer as severely. A huge advantage that Nissan Motors had over the other automobile manufacturers was that their facilities outside of Thailand had not been affected by the tsunami and they utilized a regionally structured supply chain and were able to impose central control and coordination during the time of extreme crisis. Manufacturing operations are broken down into two groups: process manufacturing and discreet manufacturing. Process manufacturing create goods from ingredients while discreet manufacturing use parts to assemble the products. Nissan Motors is in the business to assemble automobiles with parts, which considers them a discreet manufacturer. Services and manufacturing can provide the best value for customers, when combined.
Program Evaluation and Review Technique is a risk management tool and it can give management teams more realistic estimates of project timelines and milestones. The Critical Path Method breaks down larger projects into smaller, more manageable tasks and then they can sort them properly. Managers can benefit from using CPMs because these present a series of events, an order to the project. PERT is used as a risk assessment tool by being more mathematic and analytical in their decision making.
Forecasting is predicting future events and follows seven steps. Those steps are: 1.) Determine the use of the forecast, 2.) Select the items to be forecasted, 3.) Determine the horizon of the forecast, 4.) Select the forecasting models, 5.) Gather the data needed to make the forecast, 6.) Make the forecast, and 7.) Validate and implement the results. If Nissan were to utilize a forecasting system, they could provide more reliable information for events
business has inherent risks and with those risks, comes either success or failure. These risks can come from a variety of places, internal or external and can be related to mistakes made by the management team, supplier or even by a natural disaster, like a tsunami. Using multiple suppliers would support their continued growth and help mitigate problems that can be out of their control. Increased security measures would also help keep overhead and shrinkage to a minimum.
Japanese businesses were hit hard with the earthquake and tsunami, in May 2011, the economy and the environment are both still recovering to this day. Nissan Motors made their decision to become more proactive in disaster response, not only for their benefit, but for that of their customers and the general population. By relocating some of their factories, they were hoping to increase their production and additional 20% when they began opening facilities in America. Nissan also began to reduce their dependence on Japanese-made components.
The Theory of Constraints can be defined as: a body of knowledge that will deal with anything that limits an organization and its ability to achieve its goal (Heizer & Render, 2017). Those constraints are usually physical but can also be non-physical. Nissan had to adopt process management functions to use daily and some of those functions will be discussed in the paper. There is a five-step process to recognize and overcome these constraints and that is as follows:
||Nissan considered their in-stock and in-transit inventory within their supply line|
||Nissan slowed production upstream and downstream of any anticipated bottlenecks.|
||They were able to ramp down production, and decrease costly overtime for the operations that were expected to be bottlenecked|
||They pushed vacation times to April & May to free up their capacity later in the summer when their upstream bottlenecks were projected to be cleared.|
||Nissan used the extra time they had gained by having in-transit inventory, in order to identify and implement other supply alternatives.|
(Heizer & Render, 2017), (Schmidt & Simchi-Levi, 2013)
Total quality management is not just about increasing quality for the organization but, increasing quality from the supplier all the way through to the customer. Customer satisfaction is a key to quality management. In order to grow and continue to be a leader in the world market, Nissan must meet and exceed the expectations of TQM. That way, they can excel in every area that the customer is looking for and with the customer expectations met, they will continue to return to Nissan. Also, word of mouth can create or destroy customer relationships. A happy customer will more likely spread their positive interactions with other potential customers.
There are seven key concepts that are used to implement TQM effectively; (1) continuous improvement, (2) Six Sigma, (3) employee empowerment, (4) benchmarking, (5) just-in-time (JIT), (6) Taguchi concepts, and (7) knowledge of TQM tools (Heizer & Render, 2017). The Just in Time (JIT) systems are utilized to produce or deliver goods only as they are needed. This can keep costs and inventory lower, can also decrease overhead but, in the disaster like an earthquake, can mean a shortage or parts and therefore, a decrease of products for customers. Nissan wanted to look for a substitute to this method, a way to allocate supplies through various suppliers and to focus on a higher margin.
The below time-function map represents the time it takes for a vehicle to move through a production line. There is an abundant amount of unnecessary waiting time at several different areas in the warehouse, between production and delivery to locations. By reducing the waiting time at the warehouses, this could ultimately increase customer satisfaction levels and potentially increase sales because the customers would receive their vehicle quicker and get Nissan’s name out in the field quicker and more abundantly than the competitors.
Nissan has continued to explore process management functions. I will describe some of these process management functions that Nissan incorporates to their daily practices.
JIT, TPS and Lean are all three related. When implemented as a comprehensive operations strategy the systems sustain competitive advantages and result in increased overall returns (Heizer & Render, 2014, p.627).
focuses on the management of the supply chain, to reduce overhead by having only the supplies and output available exactly when needed. This technique will keep supplies off the shelf and not have an accumulation of debt. Once the excess inventory is removed, quality, layout, scheduling and supplier issues become immediately evident (Heizer & Render, 2014, p.627). The disadvantages for Nissan to use this technique is that if there were a disaster or shortage, Nissan could have a problem getting the supplies and parts needed to complete their products in a timely manner.
TPS focuses on constant improvement. However, TPS also focuses on employee empowerment (Heizer & Render, 2014, p.627). This means that all the employees should be highly trained and educated. Employees should know how to complete their job and the jobs of employees to each side of them, in case there comes a situation that requires a shift in operations. All improvements in the TPS theory are driven from the bottom, where the Lean and JIT are driven from the top. The downfall to using this practice is the cost of training all employees on all the parts of the supply line.
Lean, like TPS and JIT, focuses on continuous improvement. The main difference is Lean is customer focused, if it does not add value to the customer it is not added (Heizer & Render, 2014, p.627). An advantage to this process is that Nissan would not provide any more than what the customer wants. A large disadvantage of using Lean would be creating employee resentment because the employee needs are not taken into consideration, only the customer needs are taken care of.
Triple bottom line is one of the three concepts that managers use when considering sustainability decisions. Triple bottom line consists of the 3 P’s: people, planet and profit (Heizer & Render, 2014, p.190).
People; The stakeholders are the employees, the customers and the people in the surrounding area. Nissan would improve their standing with the people by paying their employees above average wages.
Planet; Nissan can continue to excel in this category by continuing to reduce their factory’s total greenhouse emissions. They can also focus on reducing the amount of electricity used, perhaps by using motion activated lighting and CFL bulbs.
Profit; If a company does not make a profit, it will not be able to stay in business. Nissan can continue to remain active in the research and development department by making sure they continue to grow with technology.
International Organization for Standardization (ISO) 14000 is a set of standards developed and published by the ISO for companies and corporations. ‘An ISO 14000 certification was given to the Nissan Global Headquarters and all of the other main Nissan facilities in Japan, including for R&D, production and logistics, along with all product development processes’ (“NISSAN | Environmental Approach | Environmental Management,” n.d.). They will also complete audits by third-party organizations (“NISSAN | Environmental Approach | Environmental Management,” n.d.) to remain in compliance always.
Corporate responsibility has more to do than simply worrying about the financial bottom line. Corporations have the responsibility to consider environmental, social and financial impacts, too (Heizer & Render, 2014, p.188). I would like to think that the triple bottom line is probably the more effective corporate responsibility that Nissan can take because when firms do not consider how their decisions affect their stakeholders, they will usually see reduced sales and overall lower profits (Heizer & Render, 2014, p.189). It is also to determine the impact on the planet by monitoring their carbon footprint and other environmental considerations (Heizer & Render, 2014, p.190).
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- Heizer, J., & Render, B. (2014). Bookshelf Online. Retrieved from https://mbsdirect.vitalsource.com/#/books/9780133558203/cfi/6/36
- What is ISO 14000 and 14001? – Definition from WhatIs.com. (2005, September). Retrieved from http://whatis.techtarget.com/definition/ISO-14000-and-14001
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- Schmidt, W., & Simchi-Levi, D. (2013, August 27). Nissan Motor Company Ltd.: Building Operational Resiliency. Retrieved from https://mitsloan.mit.edu/LearningEdge/CaseDocs/13-149%20Nissan.Simchi-Levi.pdf
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