Nissan competitive advantage using operations management

OPERATIONS MANAGEMENT 1

OPERATIONS MANAGEMENT 12

Operations Management

Angela Fasoli

Southern New Hampshire University

Operations Management

Operation management is very critical, and it helps an organization to be able to deal with different forms of disasters. A company should be able to face any disaster so that it can have a mechanism to protect its operations and also a mechanism which ensures that the smooth flow of operations has been maintained. In the case of Nissan, the tsunami and earthquake disasters affected the operations of the company, and since the company is a multinational corporation, the supply chain was badly affected. It is, therefore, important to consider the various techniques and factors which should have been considered for Nissan to be prepared for the disasters. Disaster management and preparation is very essential, and it is part of operations management. A company should be able to invest in operations management and there various steps which should be taken to ensure that a company is safe and ready to face any disaster and also to ensure that there will be business continuity after a disaster (Bhattacharya, 2014). The discussion below will help Nissan to recover from the massive earthquake and tsunami effects and also to prepare for future disasters. The paper also examines the different ways of achieving business continuity.

Generating value

The use of operation management functions to provide products and also to provide value to Nissan customers

The case study in question is about the Nissan Company. This company can be seen to have used operation management functions to ensure that the customers continued to receive products of the company and also they were able to receive value for their money. The company used an operation management function which is planning. The company planned for the disasters, and it can as be seen to have carried out previous drills and simulations on disaster management. This is planning and preparation on how a disaster can be handled. Planning, therefore, ensures that a company is ready for any disaster and that after the disaster the product provision will continue since the company will be able to recover faster from the disaster.

Another operation management function which was applied by Nissan is staffing and controlling. Nissan Company took the lead and tried to organize its workers from different plants to help with the situation in Japan (Birmingham, McNeill, 2014). The Nissan firm can, therefore, be seen to have taken the necessary steps to ensure that products have been provided. It took only a month for the plants in Japan to fully recover and fully go back to their operations. The company also used operation management like providing the funds which are required to prepare and also to deal with the challenges which are brought by the disaster. This shows that the Nissan Company acted in good faith to ensure that products were provided and also customers were able to get value.

Competitive advantage

The Nissan Company was able to show that it is very competitive even amidst the disaster of the earthquake and tsunami of 2011. The company was able to use operation management to achieve competitive advantage. One of the ways in which the company was able to achieve a competitive advantage is by setting a recovery committee. The company created a recovery committee to deal with the disaster situation. This helped the company to recover in a faster manner. The company was, therefore, to go back to business in a faster manner which makes the company more competitive. The company was also able to help the community members who were affected by the earthquake and the tsunami. This shows that the company is concerned with its customers and this gives the company a good reputation. The positive public image created is, therefore, given the company a competitive advantage.

The company also carries drills and simulations which make the employees and the company ready for disaster. The company also have been able to set a certain amount of money to deal with the crisis. This makes the company concerned, and it also makes the recovery process to be swift and efficient. Another reason why the company gains a competitive advantage is sharing of information. During the disaster, the company invited staff from other regions to come and collect information.

The company was also able to manage its production activities. This means that the company was able to control the production of its plants. This is because the disaster affected the sale and also production of the company’s products. The company was, therefore, able to use its in-transit and in-stock as a way of managing its production. The company is also able to obtain competitive advantage due to its strong financial base. The company has a strong financial background which makes it able to support its operations hence it is easy to gain competitive advantage.

Compare and contrast service operations and manufacturing operations

Both the service operation and manufacturing operations are customer focused which means that they are similar. They are focused at ensuring that the customer has been able to receive value. The two types of operations are also meant to ensure that the customer has been able to get a high level of satisfaction. Therefore service and manufacturing operations are similar. Service operations use different techniques from manufacturing operations. The Nissan Company uses service operations to manage manufacturing operations. A service like funding is very critical for the success of manufacturing operations.

Theories and techniques

Compare and contrast the critical path method (CPM) and the program evaluation and review technique (PERT)

The critical path method and the program evaluation and review technique are two statistical tools which are used in business management of projects. PERT is a tool which is aimed at planning and reducing the time of completing a project. On the other hand, CPM is a statistical tool which is aimed at controlling time and cost of a project. PERT is a technique which is favored by projects which involve events. The projects which involve events do not favor the use of CPM (Hill, Hill, 2011). This is because PERT uses the probalistic model to manage a project while CPM depends on a deterministic model hence not easy to deal with events. For example, for disaster planning and preparation, the Nissan Company should use CPM since it deals with activities. Predictable activities also favor the use of CPM. For example, the fall of sales can be determined through the use of CPM while PERT should be used for unpredictable activities like an earthquake or a tsunami.

Developing a forecasting system

There are various steps which Nissan will have to take when developing a forecasting system. At step one, the Nissan Company will have to define the problem. This is where the reason for developing the forecasting system is defined. The second step is data collection. The Nissan Company will gather information which will be required in the forecasting process. The Nissan Company will, therefore, take step three and sort the necessary data. The fourth step is a preliminary analysis which shows whether the data collected is essential. The Nissan Company will, therefore, move to step five where a forecasting model is selected and then step six is where the forecasting is done. The Nissan Company will also evaluate the effectiveness of the forecasting system as the last step.

Supply chain risk

There are various risks which the supply chain of every company which has a long supply chain faces. One of the risks which the Nissan Company faces is the risk of inadequate supply to meet the high demand (Zsidisin, Ritchie, 2008). This would be caused by low production as a result of a natural disaster. The Nissan Company can mitigate this through engaging different plants in providing products and also through the use of in-stock and in-transit inventory. Another supply chain risk is the disruption of supply operations where the parties involved with the distribution of products have been affected hence the operations are affected. The Nissan Company can be able to mitigate this problem by immediate reinforcement of workers.

The above strategies and functions of operations management will help the Nissan Company to be able to recover from a natural disaster and also to ensure that there is business continuity even after a disaster. It is, therefore, critical to use these techniques for effective operation management in the Nissan Company.

Theory of Constraints

The policy constraints can be eliminated easy after developing key skills required for an organization. To ensure that the organization achieves the key skills, the following five steps of theory of constraints is necessary:

Theory of Constraints Steps

Identification of the constraint: this step addresses the question of what needs to change. It is an old and popular technique or step that individuals can use in an organization to arrive at the cause of the problem and address the core problem (Tulasi & Rao, 2012). It therefore focuses on arriving at the root problem by identifying the causes of an issue at every step. From these problems, the organization will be able to identify the constraints.

Exploitation of the constraint: the step involves making use of the available resources to get most out of the constraints identified. The constraint’s productivity and utilization is maximized to achieve the intended results rather than acquiring more constraints like purchasing machinery and employing more workers.

Subordinating all other things to the identified constraint: it is true that some non-constraints can have a larger capacity of producing more results than the constraint itself. In this step, the organization should focus on making the non-constraints to be subordinate of the constraints (Tulasi & Rao, 2012). This will avoid the situation where the non-constraints are producing more than the constraints can handle. It will avoid elongated lead times, bloating of the WIP inventory and firefighting.

Elevating the constraint: this step comes after the system has exhausted the capacity of a constraint. The constraint is then elevated by expanding it and investing in additional machinery, more land and hiring more people.

Preventing inertia from becoming another constraint: this step involves elevating other weak resources and links so that the old constraints are retained and maintained. Introducing a new constraint implies that additional resources are required due to the need to have a completely new system (Tulasi & Rao, 2012).

Processes that Nissan can Apply TOC

Supply chain management: the company can apply the Theory of Constraints in the supply chain structure. Implementing the TOC on this process will help the organization to achieve a stronger central coordination even in times of a crisis in the global operations. Through TOC, the company would strengthen the constraints in the supply chain structure where it will leverage decentralized and regional supply methods sustainably.

Production process: in the production process, Nissan Company can utilize the TOC in ensuring that the product lines are very simple and easy to maintain. The TOC processes will help the company identify the major needs of the market and help it simplify the product lines (Tulasi & Rao, 2012). This is advantageous because simpler product lines compared to the competitors will lead to achieving of a competitive advantage. TOC will also help the company to establish the exact SKUs requires building a better stock strategy for each product model.

Using TQM tools to Improve Quality

TQM tools and principles are generally aimed at ensuring the organization becomes customer-focused by involving all the employees in the process of continuous improvement of products. Nissan will use data, strategies and effective communications between customers, employees, suppliers and other stakeholders to develop effective and high performance relationships (Goetsch & Davis, 2016). These effective communications will form the foundation for integrating the high quality discipline into the production process and the new lines of products. The communications will provide feedback to help improve product quality and make continuous quality improvement part of the organizational culture.

The common tools and principles in TQM that Nissan Company can use in its latest lines of products include quality control, quality planning and quality improvement. Through quality planning, Nissan will gather the customer feedback, set goals and develop a plan to achieve the goals based on the customer feedback and need to improve product quality. Through quality control, the company will be able to meet the goals in terms of quality and customer needs (Goetsch & Davis, 2016). Finally, the quality improvement tool will show a breakthrough for all the other levels of performance and meet the needs of customers.

PART II: Data Analysis

Cause-and-effect Diagram

From the cause-effect diagram above, it is clear that the struggle in implementing the new material was caused by the complexities in the new materials. This led to unavailability, high cost and struggling to handle the materials.

Hypothetical Process Map

A hypothetical process map with a time function for the X-trail SUV product from Nissan can be developed as shown below:

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As an operations manager, I will use the value map to evaluate and analyze the current state of the X-trail SUV project. The map provides a number of critical elements that can provide details on the state of the current project. The details include the development, production technology and production. In addition, I will use the value map to project the future requirements of the product.

Company Location

Based on the data provided, it would be appropriate to locate the company at Mexico City because the operation costs at this location would be very minimum as compared to the other location. The only challenge with this location is the low productivity of labor that can be easily solved through proper strategies like outsourcing. Transportation costs is the major consideration in the location of the firm because of the high weight and it is a fixed variable. The organization could end up with reduce the costs by more than half if the location was at Mexico city hence making Mexico City a favorable location. Other risks like political risks have a small probability variation while the rest are less significant due to low weighting.

The impact of disaster either natural or manmade can be detrimental to not only individuals, but also corporations and the overall economy. It is due to this fact that the availability of contingency strategies and escape plans has become a norm and a priority in the day to day operations of most people and organizations. The Nissan Case was an eye opener and they came up with a number of theories that would help them cope in case of disaster.

Just in time manufacturing

Just in time manufacturing was a move away from production practices that were viewed ubiquitous in the United States automobile industry. It basically meant reducing buffer stocks; raw material and the work in progress were no longer pushed from early production to final assembly but, were instead pulled forward only when they were needed (Monden, 1993). Just in time manufacturing further meant that component was produced and received in lots as small as possible with no stockpiling at all and the equipment was generally modified so that they could not only allow quick setup but also rapid transmission to the different jobs in the manufacturing process.

The advantage of this method was that it was synchronized and it was technology driven. This makes it convenient for the company which runs many operations at any given time. It makes it easier to track raw materials usage. (Only need disadvantage)

Toyota Production System

The main aim of this method was to ensure that there was close coordination across the manufacturing process and it made it easier to identify the problems that would otherwise go unnoticed in a system with a larger buffer (Monden, 1993).

The Toyota production system had its pros and cons. The fact that it aimed at achieving world class operations by reducing waste and lead times was a major advantage. The disadvantage of the system was that it was not risk free. If the flow of material was disturbed, it could idle manufacturing states downstream.

Lean

This was a burn mode that primarily aimed at reducing throttling losses. This was an engine modification that meant eliminating anything that did not result to value. This ultimately translated into automatic improvement and profitability. It also led to better performance and fuel use. Another advantage is the fact that it resulted to low exhaust hydrocarbon emissions (Shang, & Low, 2014).

The main disadvantage of lean is the fact that the more work done in pumping the air through the throttle reduced the efficiency of the engine.

There is a general relationship between these three methods. It is evident that they all aim at eliminating unwanted cost, ensuring that there is continuous and positive improvement, respecting humanity and ensuring quality in production.

Triple Bottom Line

This is aimed at creating greater business value by evaluating the performance of an organization. It comprises three major components that must all be considered to achieve success. They are the social, financial and environmental aspects (Henriques & Richardson, 2004).

The triple bottom line approach enhances the operations of an organization through income gained by offering employment opportunities to the social enterprises and the whole community where it operates. This forms part of the corporate social responsibility of the organization. The environmental aspect is met by recycling and ensuring the environment is protected against all sorts of pollution for the safety of the people. The financial aspect of the TBL is achieved by making sure all activities in the organization result to efficiency and profitability.

Integration of the ISO 14000 Standards in Manufacturing Plants

The International Organization for Standardization (ISO) came up with a series of frameworks that provide guidance to organizations that ultimately systematize and improve their environmental management strategies. Adherence to these standards is voluntary since the laws are not really meant to regulate any environmental activities of the organization or aid in any way the enforcement of environmental laws (Pride, Hughes & Kapoor, 2014). The main focus of the ISO 14000 standards is on how the product comes into existence and not the product itself. This is emphasis on the production process.

The organizations integrate the ISO standards by first of all having a publicly available environmental policy articulated by the top management which indicates its commitment towards pollution and continuous improvement of the environment. Second is putting in place procedures that will enable identify important environmental aspects and their associated impacts. This will lead in formulation and documentation of aims and objectives towards maintenance of consistent environmental management policy. Each individual’s role in continuous improvement and overall pollution prevention should be clearly defined.

ISO standard integration further require the necessary information needed to achieve EMS be always available in the organization. Finally, continuous monitoring and evaluation accompanied with documentation of organizations environmental efforts should be done periodically and it should always ensure effectiveness and nonstop development.

Integration of Corporate Responsibility Principles

First, organizations have to make environmental protection efforts in pursuit of fulfilling their corporate responsibility. This is done by reducing the emission of dangerous waste and other harmful substances. The organization must therefore take control and determine whether their impact in the environment is either positive or negative.

Corporate social responsibility can also be manifested by treating employees fairly and in an ethical manner. This is down to following the labor laws though they may differ from what the organization is used to. Volunteering and basically participating without expecting any favors in return demonstrates an organizations’ support and concern for certain issues in society. Philanthropy is the biggest indicator of especially when it is toward the community that surrounds the organization. This may include donating to charities and any other community programs (Moon, 2014).

I believe that these organizations should do more to protect the environment that sustains their existence, they get raw material, labor and other inputs necessary for operation. They should therefore ensure that pollution and degradation is minimal or completely stopped since it has a lot of complications that range from health issues to the bigger global warming problem.

References

Bhattacharya, S. (2014). Operations management. Place of publication not identified: Prentice-Hall of India.

Birmingham, L. & McNeill, D. (2014). Strong in the rain: surviving Japan's earthquake, tsunami, and Fukushima nuclear disaster. New York, NY: Palgrave Macmillan.

Goetsch, D. L., & Davis, S. B. (2016). Quality Management for Organizational Excellence: Introduction to Total Quality. Pearson. https://doi.org/British Library Cataloguing- In Publication data

Henriques, A., & Richardson, J. (2004). The Triple Bottom Line: Does It All Add Up. London:

Earthscan.

Hill, A. & Hill, T. (2011). Essential operations management. Basingstoke: Palgrave Macmillan.

Monden, Y. (1993). Toyota Production System: An Integrated Approach to Just-In-Time.

Boston, MA: Springer US.

Moon, J. (2014). Corporate social responsibility: A very short introduction.

Pride, W. M., Hughes, R. J., & Kapoor, J. R. (2014). Business. S.l.: South-Western Cengage

Learning.

Shang, G., & Low, S. P. (2014). Lean construction management: The Toyota Way.

References

Tulasi, C. L., & Rao, A. R. (2012). Review on theory of constraints. International Journal of Advances in Engineering & Technology, 3(1), 334–344. https://doi.org/10.2307/25148735

Zsidisin, G. & Ritchie, B. (2008). Supply chain risk: a handbook of assessment, management, and performance. New York: Springer.

Unavailability of materials

Cost of Materials

Complexities in the materials