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

Nissan Case Study: Final Analysis Page | 3

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
Nissan Case Study: Final Analysis Page | 4

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
Nissan Case Study: Final Analysis Page | 5

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
Nissan Case Study: Final Analysis Page | 6

business continuity planning for Nissan’s operations and those of its suppliers.[ CITATION

Wil13 \l 1033 ] 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. [ CITATION Kyr13 \l 1033 ] 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.[ CITATION NisND \l 1033 ]

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,
Nissan Case Study: Final Analysis Page | 7

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. [ CITATION MRPND \l 1033 ] 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
Nissan Case Study: Final Analysis Page | 8

and this list could go on. [ CITATION MRPND \l 1033 ] 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. [ CITATION MRPND \l 1033 ]

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. [ CITATION Ren141 \l 1033 ]

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
Nissan Case Study: Final Analysis Page | 9

date (EDD), 3. Shortest processing time (SPT), 4. Longest processing time (LPT) and 5. Critical

ratio (CR). [ CITATION HarND \l 1033 ]

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. [ CITATION HarND \l 1033 ]

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. [ CITATION ConND \l 1033 ] 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. [ CITATION ConND \l 1033 ] 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. [ CITATION Ren141 \l 1033 ]

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. [ CITATION
Nissan Case Study: Final Analysis Page | 10

ConND \l 1033 ] 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. [ CITATION ConND \l 1033 ] 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.[ CITATION ConND \l 1033 ] 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.[ CITATION

ConND \l 1033 ] 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. [ CITATION ConND \l 1033 ]

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
Nissan Case Study: Final Analysis Page | 11

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. [ CITATION

ForND \l 1033 ]

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
Nissan Case Study: Final Analysis Page | 12

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.[ CITATION Kyr13 \l 1033 ]

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.

Nissan Case Study: Final Analysis Page | 13

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. [ CITATION Ren141 \l 1033 ] 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. [ CITATION Ren141 \l 1033 ] 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.[ CITATION Ren141 \l 1033 ] For Nissan, their assembly
Nissan Case Study: Final Analysis Page | 14

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.[ CITATION Ren141 \l

1033 ] 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
Nissan Case Study: Final Analysis Page | 15

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.[ CITATION KokND \l

1033 ] 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. [ CITATION KokND \l 1033 ]

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.[ CITATION Ren141 \l 1033 ] 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
Nissan Case Study: Final Analysis Page | 16

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.[ CITATION Ren141 \l 1033 ] 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. [ CITATION Ren141 \l 1033 ] 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
Nissan Case Study: Final Analysis Page | 17

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) [ CITATION Ren141 \l 1033 ]

[ CITATION TPSND \l 1033 ] 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.[ CITATION TPSND \l 1033 ] 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. [ CITATION Ren141 \l 1033 ] 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.[ CITATION ShpND \l 1033 ]

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
Nissan Case Study: Final Analysis Page | 18

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.[ CITATION Lin09 \l 1033 ]

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. [ CITATION Wil13 \l 1033 ]

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,

Nissan Case Study: Final Analysis Page | 19

benchmarking, just-in-time, Taguchi concepts, and knowledge of TQM tools. [ CITATION Wil13

\l 1033 ]

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. [CITATION tooND \l 1033 ] 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.[ CITATION Ren141 \l 1033 ]

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
Nissan Case Study: Final Analysis Page | 20

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.

Nissan Case Study: Final Analysis Page | 21

Sum of Sum of Mexico Sum of Columbia,

Row Labels Weight City SC
Labor Costs 0.10 80 50
Labor Productivity 0.20 85 75
Political Risk 0.25 70 80
Rental Costs 0.15 90 55
Taxes 0.10 90 50
Transportation
Costs 0.20 40 90
Grand 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.

100.00
90.00
80.00
70.00
60.00
50.00
40.00
30.00 Sum of Weight
20.00 Sum of Mexico City
10.00 Sum of Columbia, SC
0.00

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
Nissan Case Study: Final Analysis Page | 22

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.

[ CITATION MarND \l 1033 ] 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 [ CITATION NisND \l 1033 ]

Item Annual Demand Cost/Unit Dollar value % Dollar Value

A2 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
Nissan Case Study: Final Analysis Page | 23

Nissan ABC Analysis

500000
450000
400000
350000
300000
250000
200000
150000
100000
50000
0
A2 B8 C7 D1 E9 F3 G2 H2 I5 J8
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
Nissan Case Study: Final Analysis Page | 24

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. [ CITATION Rep14 \l 1033 ]

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.[ CITATION ISO11 \l 1033 ]

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
Nissan Case Study: Final Analysis Page | 25

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

one year.[ CITATION ISO11 \l 1033 ]

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.[ CITATION ISO11 \l 1033 ] 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. [ CITATION Ren141 \l 1033 ] Such activities will

only strengthen the CSR of Nissan and their sister companies.

Nissan Case Study: Final Analysis Page | 26

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 Labor Productivity

Costs

RisingBring
Fuel
in extra Low Morale
Trade Costs
employees
Usage to
Overtime
of Shipment
Storage
Embargos Export/Import Import/Export
make deadlines
Transport
Due to Deadlines
HourTaxes
Fees Fees
Rental Costs Ship DeadlinesLabor Costs Reductions Taxes
Nissan Case Study: Final Analysis Page | 27

Appendix B:
Nissan Case Study: Final Analysis Page | 28

[ CITATION StrND \l 1033 ]

References
14001, I. (2011, January - March). Nissan obtains integrated ISO 14001 Certification for all amin facilities
in Japan. Retrieved from Nissan Motor Corporation: http://www.nissan-
global.com/EN/NEWS/2011/_STORY/110120-02-e.html
Nissan Case Study: Final Analysis Page | 29

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
Nissan Case Study: Final Analysis Page | 30
Nissan Case Study: Final Analysis Page | 31