Nissan S Supply Chain
[pic] FACULTY OF ENGINEERING AND COMPUTING Module Assignment SUPPLY CHAIN MANAGEMENT M25EKM By Rama Venkata Naveen Reddy Karri STUDENT ID: 2891540 MODULE LEADER: Mr. Phil Southey YEAR 2009-2010 INDEX PAGES 1) Introduction 3 2)Nissan European Technology Center 3 3)How information is shared 3 ) NX96 4 5) How is supply chain performance measured 4 6) kanban 4 7) NEXT21 5 8) Cogent 6 9) Lean management 6 0) Just in time 6 11) Fast track cogent 7 12) Kaizen 7 13) Results 7 14) key learning points 7 15)Recent trends 7 6)Conclusion 7 17)References 8 18) Bibliography 9 Introduction:- Nissan Motor Manufacturing (UK) Limited, a Japanese transplant in sunderland uk was started in 1986. Japanese Manufacturers are known for their quality, this is main reason the first three companies in perception of quality are Toyota, Honda and Nissan.
One of the main reason behind this is Japanese suppliers. Below is comparison table of Japanese ventures work when compared to US plants and European plants. Table 1. 1 Comparative Table of Japanese plants with US an Europe plants. |Comparative Japanese and American |Transplants in |U. S. Plants |European Plants | |Plant Performance in North America |North America |in America |in Europe | |Productivity |21. 2 |25. 1 |36. | |Quality |65 |82. 3 |97 | |Inventories |1. 6 |2. 9 |2 | |Size of repair area |4. 9 |12. 9 |14. 4 | |Absenteeism |4. 8 |11. 7 |12. 1 | |Training of new production |370 |46. |173. 3 | |Percentage of work force in teams |71. 3 |17. 3 |0. 6 | |Number of job classifications |8. 7 |67. 1 |14. 8 | (Robert R. Heder, Judith Kenner Thompson) Japanese Manufacturers are known for their quality, this is main reason the first three companies in perception of quality are Toyota, Honda and Nissan. One of the main reason behind this Japanese suppliers. Taking this into consideration SDT(Supplier Development teams) were developed .
At first Nissan selected two engineers to undergo training activities in Japan. Based on this training, they have developed a 10 day improvement activity which started improving the suppliers by a major extent. They carry out evaluation of supplier activities at the supplier place and discuss necessary improvements and disclose the necessary action plan with senior management and take approval from them and carry on with improvement activity. Nissan European Technology Centre (NETC) :- NETC, started in 1988 has centres at Cranfeild, Sunderland, Barcelona, Brussels and Munich.
NETC plays a key role in design and developing the vehicles manufactured and marketed in Europe. Its other activities include market research, research on styling, Testing of vehicles according to the emission standards. NETC Europe is reputed for improving the identity of the brand and enhancing the quality. The Design Engineers in Europe, NETC USA and NETC Tokyo are connected through satellite for uninterrupted sharing of information. How is the information shared:-Communication of information between suppliers and Customer is very important for developing an efficient supply chain.
Proper usage of Technology like OSI(Open Systems Interconnection), EDI(Electronic Data Interchange), EPOS(Electronic Point of Sale) can improve the supply chain performance to a greater extent. NX-96:-It is an initiative by Nissan to evaluate and improve its Supplier base. It started in early 1990 and the approach was to set targets for Quality, Cost, Delivery, Development and Management. And encourage the suppliers to reach them. How is Supply Chain Performance Measured:-Supply Chain in most cases is measured by inventory tied up with the company as it adds up to the cost to he company. There are two ways to measure supply chain efficiency mathematically 1) Inventory Turnover Method :- [pic] 2) Weeks of Supply Method;- This method is mainly used, where there is more distribution inventory involved [pic] Cost of goods sold :- also known as ‘cost of revenue’ is annual cost incurred by the company in production of goods and services to the end user. Average Aggregate Inventory value :- It is the total value of the inventory held by the company So there is a need for efficient way of maintaining inventory which lead to introduction of kanban.
Kanban means ‘card you can see’ can be defined as ‘Pull’ system of maintaining inventory. It starts from the customers order and follows production line to the customer. According to kanban, every part should have a card and it has an inventory number attached to it, which should be removed before it is installed and sent to the purchase department as a request for another part. So a part is manufactured only if there is a kanban card attached to it. Quality:- The Key corporate principle of Quality for Nissan UK is “Building Profitability the highest quality car sold in Europe” (Robert R.
Heder, Judith Kenner Thompson) Nissan tries to think from customers perspective, and there will be no customer who will be ready to accept defective parts. So it is important from Nissans perspective, that all its products reach the quality standards. So it expects its suppliers to have high quality standards. Cost:- Suppliers are expected to have good cost control measures suitable targets were set to them and many of them were achieved. Delivery:- Nissan looks for right quantity to be delivered at right time and in right condition. And this particular area is easy to measure.
Development:-Development activity is very difficult to be measured due to wide variety of supplier base, products and technologies. Which resulted in poor results Management:- Nissan expects its suppliers to have a open approach, suppliers should be willing to share development plans it is only when true co development takes place. They found that there was a problem regarding measuring development. As they have wide variety of supply base. It is difficult to assess to what extent, that particular supplier has developed leading to poor results and suppliers were also dubious about future results.
These conditions resulted in a new programme ’Next 21’. Nissan Euro Excellence Towards 21st Century(Next 21) :- This particular programme set ongoing improvement targets for the next millennium. It was observed that Nissan is still ranked below when compared to its competitors like Toyota and Honda. Though its actual quality is far better. So Nissan has shifted its attention for building more stylish designs which would appear to the customer and incorporating durability and reliability in their total quality experience.
Cogent(Drive forward Together) :- Cogent is an innovative program started by Cranfeild university, NETC and Suppliers. It was funded by Innovative Manufacturing Initiative(IMI), supported by DTI. They were 88 suppliers who participated in this initiative. It is introduced to integrate design and development activities of both Nissan and Suppliers at the development stage. As they found that if 80% of cost, Quality and performance are determined at product development phase, the business profit that is achieved is relatively higher.
According to Andy Palmer NETC, general manager for vehicle design though product development accounted for only 5% of total vehicle budget ,it dictated 70-80% of total production life costs. Objectives :- 1) To Develop the supplier continuously towards world class standards, introducing concept of design and development at initial stages. 2) To have a clear understanding of factors which are responsible of co development. Cogent Results Development of an environment involving which involves both customer and suppliers by eliminating waste at every stage using Lean management techniques.
Maximise resources at intial stage which results less use of resources like trial parts at the end Teams Involved :- 1)Nissan European Technology Center 2) Cranfeild University 3) 88 Nissan Suppliers Cogent’s main aim is to improve communication between supplier and customer at early stages of development. It tries to follow lean management principles by eliminating waste at every stage of product development. Lean Management:-Lean management aims at eliminating waste in all the activities involved in producing the final product. The ultimate aim to ccelerate the time that is involved in making the final product. It actually starts with identifying unproductive resources, excess inventories, time lags in production, delivery problems, use of unreasonable floor space . The management takes immediate measures to correct these issues and tries to improve lead times, costs involved in production and a good product quality. Suppliers can improve their performance by following JIT Methods Just in time (JIT) was invented by Toyota Motor Company . According to which, the customer tells the supplier to produce correct quantity at the correct time.
Which means the supplier have to keep his inventory levels of raw materials, components and finished goods as low as possible. So the supplier have to plan his production schedule very carefully so that their customers production does not get hindered. It started with calling managing directors of its suppliers and organising a workshop with them regarding development activities and improving relationship with the supplier It actually aims to use maximum amount of resources at the initial stage so that resources used are less in the later stage.
The emphasis is on having the right first time design. By following such a process there will be reduction of lead times and true co development. In cogent they found that they need more efficient way to communicate, which paved way for Fast Track Cogent. Fast Track Cogent:- Fast track cogent is a programme in which 40 suppliers were divided into three groups and three specific workshops were conducted . They were asked to discuss core messages of cogent. They were asked what they would need to deliver world class performance. and they were asked to discussed the action plan to get there.
They were actually aligning there perceptions, processes and targets. They finalised on a target for each supplier, So the supplier is clear on the targets he has to achieve and Nissan would monitor these improvements. Kaizen: Derived from a japanese word ‘Kai’ means continuous and ‘zen ’ means improvement. It means that it is continuous and never ending improvement. It is slow, incremental and constant. The way this process is done is pretty simple. The organisation forms team which are responsible analyze problems on our day to day activities and generate solutions.
And these teams will have take the approval from the senior management before implementing these solutions. Results:- Launch of NX-96 resulted in good results. If the same is continued uptill 1998 they would have improved by one percent. With the introduction of Cogent, They have increased by 11 %. As the number of suppliers introduced to cogent increases the improvement also increases significantly. Results clearly shows that there is significant development in the suppliers activity. The codevelopment capability increased by more than 10%.
Companies performance increased by 0. 6 % per annum. Cost Reduction for about 30%. Development cost was reduced by 40%. Manufacturing costs reduced by 30%. Key learning points:- 1) Increase in business profits through alignment of design and development activities. 2) Good Return on Capital Employed(ROCE). 3) Strong agreement between supplier and customer is necessary for development of such a programme. 4) Collaboration with cranfeild university helped to get good results. 5) Reducing waste during the process increases the performance of the product. ) Development of an efficient system to measure development. 7) Development of good supplier evaluation and development system. Recent Trends :- Nissan has come up with a new supplier development program called ANPQP(Alliance New Product Quality Procedure). ANPQP sets internal standards for the suppliers for delivery of high quality components. Conclusion :-With development of programmes like cogent,Nissan can improve supplier relationships to a greater extent. And in Industry like automobiles where there is fierce competition, It is very important for Nissan to have strong supplier base.
It had already started reaping benefits of cogent best example for it is production of its new electric car ‘leaf’. The research on this electric car started in 1992. And now it is far ahead when compared to its competitors like GM, Honda on its electric car specifications. References:- 1) Anon. [online]. Available from http://www. supplychainstandard. com/liChannelID/15/Articles/465/Shaping+the+future+of+the+automotive+supply+chain. html 2) Anon. [online]. Available from http://www. foresightvehicle. org. uk/dispproj1. asp? wg_id=1050 3) Anon. [online] available from http://www. just-auto. com/article. spx? id=86119 4) Anon. [online]. Available from http://www. nissan-global. com/EN/QUALITY/GLOBAL_SP/GUARANTEE/ 5) Anon. [online]. Available from http://www. cardata. com/electric_cars. htm 6) Becker, S. F. U. ‘Supplier Integration—Controlling of Co-Development Processes. ‘ [online]. Available from http://www. sciencedirect. com/science? _ob=ArticleURL&_udi=B6V69-4H57JVT-2&_user=10&_coverDate=01%2F31%2F2006&_alid=1123485106&_rdoc=24&_fmt=high&_orig=search&_cdi=5809&_sort=r&_docanchor=&view=c&_ct=11097&_acct=C000050221&_version=1&_urlVersion=0&_userid=10&md5=367e67989ac4be5c49be09f037bbe7ba ) Thompson, R. R. R. J. K. ‘ Nissan U. K. : The Japanese Transplant Beachhead in Europe. ‘ [online]. Available from 9) Wickens, P. The Road to Nissan 10) Agarwal, R. B. C. F. R. J. N. J. A. N. K. Operations Management for Competitive Advantage. 11) M. Srinivasan, M. ‘Streamlined:14 Principles for Building and Managing the Lean Supply Chain. ‘ 12) Southey, P. (2009) ‘Supply Chain Management – Module Notes. Bibilography :- 1) Bhaskar, K. The Future of the World Motor Industry.
