Introduction –

During the triple disaster that struck Japan in March 2011, Nissan's resilience strategy was
hailed as an outstanding response. After being damaged by an earthquake, a tsunami, and a
nuclear crisis, the Japanese automobile industry made its own recovery efforts to resume
production and delivery of vehicles, but it took months before they could resume their pre-
disaster levels of operations. Experts and analysts recognised that Nissan's resilience practises
and supply chain disruption management are superior to their competitors. The fact remains
that it took Nissan more than a month to resume production, and Nissan lost $25 million per
day of production. When Nissan tried to recover lost inventory, it ran into a number of issues,
including the need to build up inventory, diversify its supply, provide backup supplies,
control demand, and strengthen its supply chain. Having a backup supplier and increasing the
number of suppliers used would help solve the issue. When a disaster strikes, having a
flexible supply chain for your parts can lessen the impact on your business. Having a variety
of vendors available will be beneficial because, in the event that a natural disaster strikes in
one region of the world, the work can still be completed in other locations. In addition to this
Nissan has been conducting drills since 2003, but it has been established that the
organisational strategy was to prioritise employee safety before considering the safety of its
suppliers, dealers, and affiliated businesses. None of the aforementioned tactics could have
worked. Nissan failed to gather its top executives, assess the catastrophe, and develop
potential solutions.

 Following are the sources of supply chain risks for Japanese Automotive
manufacturers such as Nissan –

The supply chain is known as the network of connected processes that turn raw materials and
unrelated parts into a finished vehicle. Finance, advertising, management, and distribution to
the final consumer are also included in the supply chain. Production, final assembly, and
sales of automotive parts are handled by hundreds of businesses.

1. Key industry positions questioned

It wasn't supposed to be this way, so critical questioning soon started. The finger of
blame soon began to point at several of the key tenets of the automotive industry,
following closely on the heels of the ash cloud that the Icelandic volcano's eruption
caused to spread across Europe less than a year earlier.
 For instance, just-in-time replenishment, which results in supply chains having very
little inventory, was a clear target. Like globalisation, which calls for supply chains
that circle the globe to replace those that previously only occasionally extended over a
hundred miles. The practice of single sourcing, which leaves the automakers
extremely vulnerable to disruption when that source is shut down or its logistics are
hampered, was also criticised.

2. Minimising the impact of disasters

Understanding the supply chain at such a level of granularity is only one part of the
picture. Actively doing something with that new understanding is necessary if the
impact of future tsunami-like disasters is to be minimised. “It’s all about risk
management, and recognising potential issues early enough so as to be able to do
something about them,” says Wolfram Schmid, director of marketing for the
automotive sector at enterprise applications company Infor. Nick Wildgoose, global
supply chain product manager at Zurich, agrees. Like other insurance companies, he
points out, Zurich offers risk assessment surveys and tools that routinely identify if
companies are overlooking supplier-generated business interruptions as a source of
risk.

3. Counterparties - In many parts of the world, Nissan conducts business with a variety
of local counterparties, such as sales firms and financial institutions. As a result, there
is a chance that these counterparties could fail to fulfil their obligations. Based on
credit assessment standards, we have established transaction terms and conditions for
operating receivables in Japan and abroad. These requirements, which could involve
requiring advance payments or bank letters of credit, allow us to take action to protect
such receivables. We use an evaluation system based on external credit ratings and
other analyses to manage our counterparty risk for financial transactions such as bank
deposits, investments, and derivatives.

4. Liquidity - An automotive business must have enough liquidity to meet the working
capital requirements of routine daily operations, ongoing research and development,
and capital investment needs for the future. expansion and debt maturity repayment.
 Cash and cash equivalents, internal cash flow generation, and outside financing are all
ways to secure liquidity. Nissan's automotive business had 1,309.6 billion in cash and
cash equivalents as of the end of its fiscal year (March 31, 2019), up from 1,140.6
billion at the previous reporting date.

 Sources of disruption –

Japanese automakers were the ones who were most negatively impacted by the
catastrophe. For weeks, their assembly lines were idle. They determined that the
affected suppliers were in Tier 1, Tier 2, and Tier 3. 19 It was thought that the supply
chains of Japanese automakers were keiretsu—interlocked, with parts obtained from
Tiers 2 and 3 suppliers being used to manufacture goods purchased from Tier 1
suppliers. After the disaster, a Toyota official remarked, "We thought it was pyramid-
shaped, but it turned out to be barrel-shaped," pointing out the network's sparse base
of essential suppliers. Numerous electronic component suppliers who provided vital
components to automakers worldwide could not keep their promises. They quickly
understood that it would take them months to fully recover. For instance, Renesas
Electronics, which supplied 40% of the global market for automotive
microcontrollers, was severely damaged and it took more than a few months to
resume production. All Japanese automakers only received chips from Renesas
Electronics. Toyota estimated a loss of about 140,000 vehicles up until March 26 and
suspended operations in 12 of its assembly plants. 23 Due to the challenges with
shipping parts out of Japan, it halted production in its U.S.-based assembly plants.
Like Honda, which stopped production immediately after the earthquake and kept it
off for an additional two weeks. The earthquake had an impact on one-fifth of its Tier
1 suppliers.

Operational Strategies for Managing Supply Chain Disruption Risk -

 Stockpile Inventory - Hold inventory that can be used to fill customer demand even if
supply is interrupted
 Diversify Supply - Source products from multiple facilities so that a problem at one
facility doesn’t affect the entire supply
 Backup Supply - Have an emergency vendor, facility or logistics provider that is not
normally used but that can be activated in the event of a supply problem.
 Manage Demand- Influence demand to better match the actual supply by, for
example, adjusting prices or offering incentives to encourage customers to purchase
products
that are less supply-constrained
 In my opinion regarding Nissan perfect recovery strategy the business quickly
recovered by utilising the skills, it had already developed. Nissan has been
implementing seismic retrofitting and requirements in its facilities and plants
located in earthquake-prone areas since 2003. Additionally, routes and centres for
evacuation had been planned well in advance. First and foremost, the business
verified the well-being of its personnel, partners, and clients. The previously
email-based safety confirmation system was changed to a web-based one. The
business then began recovery operations at all of its facilities. Nissan was able to
conduct recovery operations quickly and precisely because they had regularly
practised drills and simulations. Nissan was able to anticipate and prepare for
every scenario that might arise after the natural disaster thanks to the drills and
simulations. In addition, Nissan gave the U.S. and Chinese markets top priority
when delivering cars. Nissan saw an increase in sales because the company was
able to deliver cars when its rivals could not. Ghosn acknowledged that Nissan
would initially experience a "significant" loss in market share globally, but he
anticipated that losses would be made up in the second half of the fiscal year.
Though they had made a perfect strategy, as wisely said, there is always scope for
improvement, so for future crises, they must be ready for every new huddle and
prepared to deal with the same.
 Difference between Nissan risk management and crisis management
strategies

The board is where effective risk management and crisis management begin. The
board receives strategic information about the main business drivers through regular
board reports that analyse these critical risks, their monitoring, and treatment. It is not
the board's responsibility to prevent these risks from happening; rather, it is the
board's responsibility to use these risks to its advantage. To build resilient, adaptable,
and risk-aware organisations, boards must collaborate with the CEO and executive
team and pose insightful questions.

Therefore, the main variations could be Responding to, overseeing, and recovering
from an unexpected event are all part of crisis management. Nissan’s Risk
management is concerned with locating, evaluating, and minimising any action or
occurrence that might be detrimental to the company. Risks may be tactical or
strategic in nature. Inadequate planning for emerging trends and market shifts is an
example of a strategic risk, whereas the cost overrun on an infrastructure project is an
example of an operational risk.

Conclusion –

Because of the structure of the modern automotive supply chain, the March disasters
in Japan immediately raised concerns among automakers worldwide. Most vehicles
have parts from multiple nations, and it is highly integrated and international. As the
second-largest auto-producing nation, Japan plays a significant role in the global
supply chain. The Japanese earthquake and tsunami may prompt the auto industry to
reconsider its long-standing practise of customising a large number of its parts. In
order to ensure that there are alternate manufacturers for certain components in the
event of future global supply chain disruptions, the industry may work to establish
standards and multiple sources for specific parts. The crisis management committee
continued to address production recovery problems as they arose over the ensuing
months. Nissan later found out that they had overestimated the potential harm that a
disaster could do. They reviewed and changed their disaster plan. They set up fresh
evacuation routes and centres, and they gathered food and other supplies wherever
they would be needed. There will be another crisis, Ghosn said in a speech toward the
end of 2011. We don't know what kind of crisis will hit us, where it will hit us, or
when it will hit us, but every time one occurs, we will learn from it.

Various entertainment and communication features that need microcontrollers are

now starting to be installed in many vehicles. Internal computers also enable
technology that allows for parallel parking of vehicles. Drive-by-wire (DbW)
technology, which uses electronic control systems to manage a wider range of vehicle
operations, may one day be used in vehicles. The steering column, pumps, hoses, and
belts could all be removed with DbW, altering the very nature of the car. In addition
to these new capabilities, the networks of current electronic parts will be more
cohesive so that they "can share data in real-time, enabling the development of more
intelligent systems." Automakers may be concerned about geographically distributing
their sources of supply in light of the increasingly crucial role that electronic
components play in ensuring the smooth production of vehicles.