Nissan Motor Company Operational Resiliency - Case Study Example

Nissan Motor Company Operational Resiliency (Name) (University) Executive Summary Earthquake, Tsunami and Nuclear disaster devastated the Japan simultaneously in the year 2011. The disaster greatly affected the major manufacturing facilities hence affecting the production rates, affecting the integral part of the Nissan Motor company supply chain. In this context, majority of the automotive manufacturing plants had to close down for unspecified duration purposefully to conduct their assessment on issues regarding Nissan supply chain issues and its impact on their tier suppliers. In this retrospect, this paper seeks to conduct an in depth analysis of the case study of Nissan Motor company operational resiliency. Problem Statement Over the past few years, Nissan Motor Company has been experiencing problems that affects the company operational processes. Based on the records, Japan recorded an earthquake of up to 9.0 scale, tsunami, and at least three nuclear reactor catastrophes affected the company production level globally and the disruption of the company supply management structure across the globe. Such an outcome posed challenges to the economic performance of Nissan Motor Company. Several methods are adjudicated towards combating the challenges experienced at Nissan Motor Company: Focusing on supply chain that embraces flexibility towards disaster recovering. It is in this retrospect that the supply chain within Nissan Motor Company spearheads responsiveness and vigilance that will keep the Nissan production manufacturing plant incase of disaster crisis in its operational field. Analyzing Case Data In early 2011, Japan encountered three catastrophic crises (Oskin, 2015). Firstly, the country experienced one of the most powerful earthquakes at a magnitude of 9.0. Secondly, a Tsunami of up to 40 meter high stricken and traveled more than 10 kilometers and lastly three nuclear reactors in Japan experienced a meltdown of up to the 7th level (CNN Library, 2016). Located in this region includes a number of automobile manufacturing facilities that are integral to the global supply of the motor vehicles. The outcome of the three calamities on the same year posed Japan into vast challenges across business entities and Government Entities. Economically, the calamities in Japan led to an economic loss of up to ¥16.9 trillion (Government of Japan, 2011). Additionally, Japan had to suspend at least 80% of the automobile manufacturing in Japan hence the production rate had to go down by 60% thus the total production from automobile industry was at 9% after calamities (Ono, 2014). In this retrospect, the automobiles markets outside Japan were affected adversely. This includes Nissan, Toyota and Honda. In this context, its worth noting that Nissan automobile company suffered a loss up to six production facilities while about 50 of its major product suppliers were impaired (Schmidt, 2013). According to IHS Global Insight, findings predicted that over 4 million will be lost due the disasters while 90 % of the loss will come from the Japanese producers (McKinsey & Company, 2016). The outcome indicates that Nissan Motor company was encountering operational crisis that required urgent interventions. Selecting Decision Criteria Risk and Assessment Firstly, the company had to identify the risk present. By identifying the risk, Nissan company had the ability to quantify and prioritize the risk, then make mitigation strategies to make the disaster appear less severe to the company. From the customer perspective, the company had to gauge the impact of the risk associated with the supply chain disruption towards the company revenue. In this context, it was agreed that the risk and its assessment would focus on the company manufacturing cycle towards potential logistic constraints due to the disaster. Flexibility of Process Generally, decision approaches need to position companies to be flexible based on its process. It is worth noting that the automotive manufacturing industry is dynamic hence any decision made must constantly enable the company to changes across its operating environment. As such, the decision criteria based on the company flexibility of process enabled the Nissan company to take prompt actions to changes with lesser outcomes towards its major operations. Optimization of Buffer Inventory Contrarily to the Japan disaster, it was agreed that the company needs to continue operating so that it can recover from the shock. Such a strategy was applied under the optimization of buffer inventory for the company. The optimization of buffer inventory showcased that the company had enough supplies for its continuous operation though the calamities had affected the company. As such, the decision criteria greatly focused on continues operating of the business and generation of the revenue so that Nissan company can arose from the disastrous shock. Supply and Delivery Alternatives Some of the collaborated regional and international companies receiving supplies from Nissan company were not affected. As such, Nissan company had to strengthen it collaborative relationship with such companies in attaining strong supplies purposefully to generate the company resources. The applied strategy implied that Nissan was basically trying to empower the trading relationship with some of its partners. The decision making approach at this phase focused on reducing the potential errors that could easily affect Nissan company and the ability to simultaneously cut costs from its operation so that enough resources could be collected t restructure the company backs to its market position. Managing Logistic Processes The critical decision aspect on logistic processes was to position Nissan company not to entirely depend on supplies delivery approach as a means of getting back strongly to the automotive industry. The criteria at this stage strongly recommended that Nissan company has to strongly bring critical components to Japan whereby the company services can be aligned to the current economic status of Japan. In this case, Nissan products will only be sourced globally when if only the identified market for supplies is in place. Nissan Involvement with Suppliers Company’s strong relationships with suppliers pose an added advantage during business financial crisis. In this case, Nissan decision approach was to strongly depend on its suppliers after the disruptions occurred and basically monitor the suppliers for any potential problems that could easily arise. In this context, Nissan company would have the audacity to understand the supplier’s risks factors in cases of emergency that could easily affect Nissan businesses. Generating Alternatives Sharing Information Basically, Nissan Motor Company is well recognized as a global operating company hence diversified stake holders for the company (). It is in this context that Nissan company has to share information with the global operating regions about the calamities that have impacted the company negatively. It is worth noting that some of the non-Japanese’s automotive companies are likely to be affected directly or indirectly from the calamities encountered in Japan. In this retrospect, Nissan company sharing information keeps the other companies informed purposefully for their betterment of their own interest. However the information to be displayed for the other automobile companies need to have limits. Firstly, provision of sensitive information to the public could easily affect people working on the crisis or further used by the selfishly by individuals due to persons of interest. In the case, a new alternative needs to be positioned so as the share information effectively. The approach was to invite two regional stuffs to visit the manufacturing plant and collect information based on the regional company’s interests. As such, Nissan Motor company avoided the situation of providing unwanted information to the interested parties which could later be used wrongly. Such an approach showcases the Nissan company applying a holistic approach in solving available challenges for the betterment of Nissan company as a whole. Allocating Supply After the disaster, Nissan company encountered several consequences. Some of the showcased consequences included the company capacity constraints and the dependencies across the company. During the crisis, Nissan allocating supplies and components parts posed as a wise and urgent decision for the company. It is through allocating of supplies that enabled Nissan company to continuously operate and be vigilance in its target market. The Nissan company supplied strategy greatly focused on high margin goods in allocating its supplies while the low margin goods are avoided. For example, Nissan company applied the supply of the Integrated Global Positioning System that was only applied to the high-end model cars rather than the low-end model vehicles. The approach was imperative to the company because it enabled the company to use the scarce resources available, enhancing the revenue generation due to the crisis and lastly enabling manageable supply allocations in different operative locations Managing Production Companies affected by natural calamities are most likely to have a reduced level of production. In this context, Nissan company had to slow its production process both in upstream and downstream considering the bottlenecks that would affect the company. The strategy basically saves such companies from encountering the costly overtime. Regarding the Nissan case, the company is expected to position in-stock and in-transit inventory rather than focusing in the production of the new good which was applicable in Nissan strategy towards tackling the crisis. The in-transit inventory came in handy whereby the company had to use the strategy to identify and implement supply options for its critical components such as securing air freight and transfer its critical products outside the country faster purposefully to limit the apprehension towards the in-transit stocks. Empowering Action Companies having an already established emergency response plan are most likely to have a quick response in handling disasters and crisis. Nissan company ability to foresee disasters enabled the company to take prompt action when the calamities occurred. In this context, the company was able to manage the crisis without taking lengthy time in analysis and getting feedback from the major authorities. Additionally, the flexibility approach used by Nissan company spearheaded the critical decision making process that focused on the company recovery aspects. The attained decision making focused on stationing the Global Disaster Control headquarter few minutes after the disaster. Additionally, the team managed to assess and restore some of the companies facility. Recommendations In case of future disasters, Nissan company need to prepare much better to protect its business from the next disastrous struck. In this context, the company needs to have a well designed actionable business continuity plan that entails all the suppliers as a response towards the natural calamities or threats across the business environment. Additionally, the company ability to develop a powerful supply chain and risk management techniques will make Nissan company much more sustainable in its production and sells services. Restructuring new operational changes in tackling environmental disruptions towards the company will be of huge benefit in Nissan company. Nissan company can adhere towards increasing the localized production of its automotives in several regions of the globe. In this context, the company would be making efforts to reduce the strong dependency of its foreign factories towards the main production plant in Japan. As such, the foreign factories would be able to produce critical components without seeking assistance from the main production plant. In this case, whenever natural disastrous calamities struck, Nissan company can still maintain it production level because of the eradicated dependency traditions. Action and Implementation Plan Nissan company needs to have an actionable business continuity strategy. The continuity plan should entail all the strategic procedural approaches that the company will engage into in case the calamities struck across its operating environment. It is also a mandatory for the Nissan company to have a strong and understandable supply chain and risk management techniques. Regarding the supply management, Nissan company should greatly focus on understand the secondary suppliers rather than primary suppliers in its supply chain aspects especially on issues regarding secondary supplier dependency towards Nissan company. Such an analysis will enable the company to easily tackle business shortcomings incase calamities re-occur in its operational environment. Having a workable risk management technique will enable Nissan company business environment more sustainable for its functionality. If such changes are greatly and correctly adhered to across Nissan company will contribute towards better future recovery plan and make Nissan business less prone to severe environment catastrophes. The implementation plan of the designed action plan basically requires resources. Some of the required resources include an in depth technical management skills from Nissan Employees and available funds to conduct further research on tackling natural calamities. Additionally, the company needs to engage into insurance plans incase of calamities; Nissan automotive can receive grants to boost back its business on market. In this context, Nissan Motor company will be on the urge towards attaining top leadership position across its automotive competitors. References List CNN Library. (2016) 2011 Japan Earthquake-Tsunami Fast Facts. Available at http://edition.cnn.com/2013/07/17/world/asia/japan-earthquake---tsunami-fast-facts/ [Retrieved on 18th/November/2016] Government of Japan. (2011) Japan’s Challenges towards Recovery. Available at http://www.meti.go.jp/english/earthquake/nuclear/japan-challenges/index.html. [Retrieved on 18th /November/2016] McKinsey & Company. (2016) Manufacturing the Future: The Next Era of Global Growth and Innovation. Available at https://www.nist.gov/sites/default/files/documents/mep/data/Manufacturing-the-Future.pdf. [Retrieved on 18th /November/2016] Ono, K. (2015) Analyzing and Stimulating Supply Chin Disruption to the Automobile Industry based on Experiences of the Great East Japan Earthquake. Journal of Integrated Disaster Risk Management. Available at www.idrimjournal.com/OLF/ONLINE-FIRST.pdf. [Retrieved on 18th /November/2016] Oskin, B. (2015) Earthquake and Tsunami of 2011: Facts and Information. Available at http://www.livescience.com/39110-japan-2011-earthquake-tsunami-facts.html. [Retrieved on 18th /November/2016] Schmidt, W. (2013) Nissan Motor Company Ltd: Building Operational Resiliency. Available at https://mitsloan.mit.edu/.../CaseDocs/13-149%20Nissan.Simchi-Levi.pdf. [Retrieved on 18th /November/2016] Read More