Running head: NISSAN CASE STUDY 1

Final Project- Nissan Case Study

Name

Institutional Affiliation
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Final Project- Nissan Case Study

Introduction

Nissan stands out as one of the best auto companies; it’s located in Japan. The company

ones several manufacturing plants and sales locations all across the world. The fact that Nissan is

a global company, they have not missed a share of logistic challenges.one of the major setbacks

being the earthquake that befell Japan leading to crippling of Nissan's production because of

several damages that come with it leave alone the lack of suppliers.Since the Nissan operated

with the limited inventory structure, the whole ordeal left them unable to get goods from the

suppliers. As a matter of this, Nissan had to re-evaluate their reliance on the foreign suppliers

and shift top local production.

Material Requirements Planning (MRP)

Material Requirements Planning (MRP) is a system that is computerized to ensure that

the manager’s to purchase, track orders and be in control of the production. They are also able to

distribute the manufacturing materials where they are needed. The system requires heavy data

input. The MRP depends on the demanding technique and some of the inputs into the system are

a bill of material, master schedule, and inventory, purchasing and lead times. The systems give

the managers power to purchase the subassemblies and the components that are a retirement for

the next processing stage (Yazuan, 2012).As a result the Nissan enjoys cost flexibility and

informality during the process inventory planning. The Nissan still utilises the MRP in

calculating the required materials weekly to avoid stock-outs delays and shortages. And

calculation goes as follows “Net requirements=Gross requirements+Allocations − (On

hand+Scheduled receipts)”
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Primary Priority Rules

 The company uses four basic priority rules including; First

come/first served, Shortest processing time, earlier due date and Critical Ratio

(Yazuan, 2012).

 First, come/first served- the jobs are handled in the way they

arrive. The advantage of this is the fairness that is created from the customer but

the disadvantage it does not contextualize some jobs that needs longer time frame

(Yazuan, 2012).

 Shortest processing time- the job is accomplished within the

shortest time possible. The advantage here is that it’s very simple to use, but

disadvantage comes where it can lead to incomplete work.

 Earlier due date- the jobs process commences with the earliest due

date (Yazuan, 2012).

 Critical Ratio- the jobs are copompletd according to the urgency

order. It has an advantage such that it considers the propriety of the orders, but

disadvantages come in that it’s not usable during calamities where the data may

not be current.

Theory of constraints

The theory of constraint is one of the best management patterns that organizations use to

manage and run their processes. The theory of constraints consists of management decision
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making and critical thinking tools which are summarized as a critical thinking process. The TOC

provided for steps for operation in five distinct stages (Nicolaides, & Harding, 2016).

 Identify the constraint in the system

 Exploit the constraint which involves salvaging what’s possible in order

not to spend expensively

 Subordination of everything else to the constraint- The system should be

oriented in a way that the constraint in the system function at maximumeffe3ctiveness.

 Elevation of the constraint- If the constraint is persistent then the company

has to search for various ways of eradicating it.in some cases it requires capital

investment.

 Repeat – Upon the completion of address to the constraint, the next

constraint is identified and tackled effectively using the steps above.

Implementation of the TOC ensures that the company improves substantially without

gambling with several resources. Implementing the TOC at Nissan’s manufacturing and

assembling companies is very ideal.It will provide an avenue which the workers can realize their

weaknesses and works towards gratifying the consumers and the employees.

Just in time (JIT), Toyota Production System (TPS), and Lean

Just in time theory (JIT), is a tactic for inventories that is utilized by companies with the

aim of improving the efficiency while reducing the level of wastes. This is done by ensuring that

goods are received in the manufacturing process only when they are needed, the practice help to

lower the inventory costs. For example, a car manufacture that works with low inventory costs

and is self-reliant on own supply chain to provide the materials needed for assembly.in such
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scenario is difficult for the car parts needed for manufacturing to arrive before or after thru

process but just in time (Alyea, 2012).

At the Nissan, the process of manufacturing automatically monitors the progress at each

stage of construction. The transponder that is at the leg of the chassis has got all the vehicle

production information .with the (JIT) theory various parts of the vehicle are created as their

demand arises which lowers the amount of cash that gets tied in the stock and work in progress.

The advantages of utilizing this system at Nissan is the overall reduced damage costs, inventory

and scrap lead to better quality and reduces the lead time.One disadvantage of using this system

would be delayed in production due to the limited inventory at hand (Goldratt Research Labs ,

2013).

The Toyota production system is one system that was channeled towards the complete

elimination of waste. The establishment of the system was under the pillar of two concepts

“jidoka” meaning arise of the problem, the equipment halts preventing the development of

flawed products. The manufacturing process, however, demands that a high level of

synchronization be kept at all levels of manufacturing and prevent the overlook of any problem

during the process. The system, however, cannot be considered as risk-free in cases where the

process was disturbed the whole operation downstream stops. This system ensures that quality of

the products produces is maximum.It reduces the amount of waste that comes from the system,

the customer satisfaction is also optimized, and most of all improve the employee safety during

the manufacturing process. However a disadvantage comes as it can slow the whole

manufacturing process (Alyea, 2012).

The lean on differs with the JIT in one aspect, the way it focuses on the customer

externally and focuses on enhancing the process from the perspective of the customer. However,
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one disadvantage of the lean is that its flexibility is not guaranteed, transitioning to the lean

system can pose several difficulties.

ABC classification system

On the basis of the ABC classisfication I wopuld strongly recomemnd the company to

track the inventories in classisfication group a keenly since they add up to 78% of the total

inventory.

Conclusion
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In conclusion, the system that Nissan possess is one that can be described as fiscally

smart and yield good results. However, one of the main risks is inventory issues disrupting the

process of manufacturing which can occur as a result of disasters an example being the 2011

earthquake or wrong forecasting on demands. One strategy that the company should ensure is

having more of their suppliers near their manufacturing plants or in areas where risk are low.

Resources

Yazuan, A. (2012). Priority Sequencing Rules-WordPress.com [PowerPoint Slides].

Retrieved from https://irzaidan.files.wordpress.com/2012/.../fr-process-scheduling-sequencing-

rules.pptx

Goldratt Research Labs. (2013). Retrieved from

http://www.goldrattresearchlabs.com/articles/what_is_toc.aspx

Alyea, J. (2012, January 2). Jimmy Alyea, MBA: Supply Chain Analysis

of Why Nissan’s Disaster Recovery Bested Rivals. Retrieved from

http://jimmyalyea.blogspot.com/2012/01/supply-chain-analysis-of-why-

nissans.html

Nicolaides, A., & Harding, P. (2016). Retrieved July 31, 2016, from

http://jetems.scholarlinkresearch.com/articles/Evaluation%20of%20the

%20Nissan%20Plant%20Management%20System.pdf

Cary Countryman (2013, November 15). Inventory ABC analysis

Retrieved from https://www.youtube.com/watch?v=2h7nOY2ICHA