Nissan is a leading company in the global automotive industry. The company has an impeccable supply chain that is dependent on the localization principle under a central command or control. The center is flexible since it permits other plants to develop their organizational cultures and the mode of production base on the unique circumstances found in the region of operation. The case study proves that the production plants close relations with each other since the central management develops a single production plan relied on by all the plants (Motavalli, 2011). The initial production of merchandise in Japan and the subsequent transportation to the point of consumption would magnify the effects of the disaster like the Tsunami that occurred in 2011 due to the disruption of entire business processes. The decentralization of the company's operations allows the company to reach the market in record time.
Nissan's Response and the Potential Benefits
The operations function played major roles in ensuring that Nissan did essentially bounce back from the devastating effects of the Tsunami and the accompanying disasters. Additionally, the operations department was central in ensuring sustainability and the continued profitability of the company after it bounced back. The gathering and the subsequent sharing of information was the major operations functions that enabled the company to bounce back from the devastating consequences associated with the Tsunami. The collaborative and the decentralized approach applied by the company were quite effective. The operations management received the representatives sent by each region to Japan to help in gathering, disseminating, and applying information. The department collaborated with the regional representatives to centralize the information gathered for appropriate application and utilization.
The collaborative effort and the apparent decentralization of information led to reduced, nominal use of resources that subsequently lowered the cost, particularly that of transportation. It is worth noting that the entire operation accommodated two representatives to sustain the collaborative initiative. The benefits of the application of such methods were quite noticeable. Having both the regional and local representatives in the company's circle was quite essential since it permitted the prioritization of the regions based on the extent of the effects of the disaster. The highly affected regions would get priority over the less affected regions that eventually reduced the overall effects of the disaster. The sharing of information and prioritization of the regions based on the extent of the damage has various benefits that include but not limited to allocation of supplies, the management of production, and the empowering of actions by every region.
Expounding on Measures undertaken by Nissan in the Case Study
The company's responses to the earthquake are consistent with the principles contained its emergency plan, Nissan Global disaster Control Headquarters, which was responsible for the supervision of activities and return to operational normalcy. Setting up of the Global Recovery Committee did accelerate the establishment of the global operations, especially in optimizing the whole supply chain system. The sharing of information undertaken by the Recovery Committee helped in the creation of a well-coordinated processing unit that led to innovation and improvisation of ideas. The assembling of the different departments that include supply chain management, sales, and marketing helped the company to focus on high margin goods. The Empowering Action, which allowed the management to make decisions, allowed a bit of autonomy and freedom that ensured that the company's regional offices operated within the unique circumstances that they faced.
Measures to Assess the Risk Disruption at the Nissan Plant
Nissan is a multinational that has high involvement in international operations, which are susceptible to disruptions form various factors. The occurrence of disaster tends to affect the company's smooth operations that also affect the organization of the company's systems. The continued rise of risk factors associated with supply chain operations is a serious headache to multinational companies such as Nissan. The first step in evaluating the risk factors associated with supply chain management is the assessment and the identification of the risk factors. The company should identify the risk factor, analyze it, note its potential effects, and develop a sound strategy that will help mitigate it in case it occurs. Developing alternatives for the supply chain when the risk factor strikes is essential in ensuring continued company operations. Establishing alternative supply routes or suppliers is necessary since it ensures continuous flow of operations. Developing flexibility process is of great essence. The global motor vehicle industry is quite dynamic, meaning that Nissan should operate with unmatched flexibility to survive any disaster. Flexibility allows a company to adapt to the changing business environment. Flexibility would allow Nissan to take actions much faster without disruption to its business processes. Development of a clear vision allows the company to be alert concerning its supply chain processes and operations.
Theories and Techniques
Expounding on Measures Undertaken by Nissan in the Case Study
The material planning approach (MRP) is an important approach that helps Nissan to control the scheduling process as well as its entire inventory. The appropriate allocation of supplies had various benefits to the company that allowed it to bounce back, become profitable and sustainable in the future in record time. It is worth noting that the disaster affected the company's inventory and sales in other regions across the globe other than Japan. The prudent allocation of resources, which was one of the leading decisions by the operations management, prevented the loss of sales and revenue since most of Nissan's inventory was allocated to high margin vehicles. The achievement of that feat was possible because the regions that produced low margin vehicles stopped operating. During the time of the disaster, the company mainly concentrated on high margin vehicles forcing it to move the GPS to the regions that required the application of the units for the production of the high unit vehicles. Such created an environment for greater generation of revenue. The strategy worked since it prevented the decrease in sales associated with the delay of the production of the high margin vehicles. The reduction of the associated costs happened because the company forewent the unnecessary sales features of low margin vehicles. Therefore, the strategy was to facilitate the revenue benefits obtained from the higher margin vehicles.
The company's management uses Program evaluation and Review Technique (PERT) for the management of uncertain activities. Additionally the company utilizes Critical Path Method (CPM) to mane predictable or well-defined activities. It is worth noting that is tools to manage its production using CPM while it uses PERT for risk management (Herod, 2011). The use of sequencing allows the company to determine the sequence in which it carries out its operations and various jobs. The management of production certainly had minimal increase in the costs, but portended greater degree of benefits. The company (Nissan) reduced the pace of production of lines. Instead, it considered the in-transit and in-stock inventory to anticipate any arising challenges or bottlenecks. Such prevented the stock form developing into idle inventory that would require warehousing and gobbling sitting costs. Additionally, it reduced the overtime, which is exceedingly costly, that arise even during the normal production circle. Therefore, the company saved millions of Yen by applying the right production strategy. The management understood that moving the inventory by air would be much quicker but would cost more, and instead opted for sea shipment.
The management empowered action that made the brand, Nissan, quite flexible since it allowed the regional management to execute decisions much quicker since it was devoid of the tiresome analysis from the central management figures (authorities). In essence, the company saved millions of Yen by accelerating the decision-making process, particularly for the critical operations, activities (Cooper, Donnelly, & Johnson, 2011). The company also accelerated the recovery related issues through the process of downward delegation of duties and responsibilities for a given period. Such permitted the company personnel to execute the corrective measures much quicker since they were privy to information from different regions. Despite the impressive feat achieved in the entire process, the company suffered since removing the central authority did affect quality of service and products offered to the market. As demonstrated, the benefits included quick decision-making process that prevented the wastage of resources through idleness further leading to reduced costs and preventing loss of sales and the accompanying revenue.
Possible Measures by Nissan for Disaster Preparedness
The first measure is to develop an appropriate plan when dealing with different unforeseen phenomena such as the tsunami. To its credit, the company had a comprehensive emergency response blueprint before the occurrence of the tsunami. However, the company's top executives and management ought to have had proactive involvement. Such event require the involvement of the top executives, meaning that they should help in the recovery process since the situation requires their skills, knowledge, and experience. The company had a good plan, but the implementation was evidently poor leading to more losses. The lack of initiative and responsibility from the top leadership was certainly costly to the company. Secondly, the company should have proper maintenance of the data center. It is worth noting that data centers has various components that include but not limited to firewalls, routers, gateways, security, and network solutions. Such help I the back up of information in case of accidents or incidents. Company databases normally consist of manufacturing operations, supply chain information, stock details, production process, and the information on materials required for the production process. Keeping the data centers or the database away from the disaster area is vital since it ensures the continuity of the company and the processes that keep the company alive.
The company should further develop better risk management strategies that will help it to determine the extent of the damage and the employ strategies that will help it bounce back from any disaster. The recovery committee should thoroughly indulge in the assessment of the risk with the view of keeping the company running as soon as possible after an incident. Analyzing the company's operating units is essential since it allows the determination of the extent of the damage and then employing the right resources to make the company operational in record time. The next step is to formulate and then document the best plan that contains detailed recovery procedures. The plan should consistent and flexible enough to accommodate any arising changes. The mentioned procedures should as well encompass back up plans in case the initial one fails. The next step is to test the viability or the functionality of the proposed plan. Additionally, the documentation of the testing procedures is necessary for posterity.
Analysis of the company Operations (Data)
Strategy: Analysis of the Costs and Benefits
Apparently, Nissan underest...
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