OperationsMMilestone3Rubric NissanCaseStudy OperationsManagementFinalProjectRubric
This is a sustaining operations case study analysis. I have attached the rubric and the case study by Nissan that you will reference. I also added the final project rubric so you can have an overall idea.
QSO 300 Final Project Milestone Three Guidelines and Rubric
Overview: You will submit a sustaining operations case study analysis that will discuss the emerging concepts of sustainability in business management,
specifically the topics of corporate responsibility and environmental compliance. This case study analysis will be incorporated into the final summative analysis.
This milestone is due in Module Five.
Prompt: Refer to the Nissan case study and the course materials to answer the following items. Specifically, the following critical elements must be addressed:
I. Theories and Techniques
A. Summarize the following theories: just in time (JIT), Toyota Production System (TPS), and Lean. How are these concepts related? Describe the
advantages and disadvantages for using each of these concepts at the company presented in the case study.
II. Sustainability
A. Describe how the emerging concept of the triple bottom line can be used to enhance operations management at the company. Be sure to
address each component of the triple bottom line.
B. Explain how the company integrates ISO 14000 standards in its manufacturing plants. Support your explanation with citations from your
textbook or outside sources.
C. Describe ways by which the company can integrate corporate responsibility principles into their operations. Which of these do you believe to be
the most effective? Why? Support your opinions with citations from your textbook or outside sources.
Guidelines for Submission: The format for this assignment will be a Word document using a business writing format of your choice. There is no minimum page
length requirement, but the submission should be double spaced, and no more than four pages in total. Copy and paste any data analysis from Excel into your
Word document for submission. You may include your original Excel documents as supplementary material if you believe this will strengthen your contribution.
https://mitsloan.mit.edu/LearningEdge/CaseDocs/13-149%20Nissan.Simchi-Levi
Rubric
Critical Elements Proficient (100%) Needs Improvement (75%) Not Evident (0%) Value
Theories and
Techniques:
Summarize
Summarizes JIT, TPS, and Lean
and explains how the concepts
are related, integrating the
advantages/disadvantages of
using each in the case study
context
Summarizes JIT, TPS, and Lean
but does not explain how the
concepts are related, integrating
the advantages/disadvantages of
using each in the case study
context
Does not summarize JIT, TPS, or
Lean
20
Sustainability:
Triple Bottom
Line
Describes how the triple bottom
line can enhance OM and
addresses each component of
the triple bottom line concept
Describes how the triple bottom
line can enhance OM, but does
not address each component of
the triple bottom line concept
Does not describe how OM can
enhance triple bottom line
20
Sustainability: ISO
14000
Accurately explains how the
company integrates ISO 14000
standards in the manufacturing
plants and provides support
Explains how the company
integrates ISO 14000 standards
in the manufacturing plants but
does not provide support or
explanation is inaccurate
Does not explain how the
company integrates ISO 14000
standards in the manufacturing
plants
20
Sustainability:
Corporate
Responsibility
Describes ways the company can
integrate corporate
responsibility principles into
operations and defends opinion
of the most effective way with
support
Describes ways the company can
integrate corporate
responsibility principles into
operations but does not defend
opinion of the most effective
way with support
Does not describe ways the
company can integrate corporate
responsibility principles into
operations
20
Articulation of
Response
Submission has no major errors
related to citations, grammar,
spelling, syntax, or organization
Submission has major errors
related to citations, grammar,
spelling, syntax, or organization
that negatively impact
readability and articulation of
main ideas
Submission has critical errors
related to citations, grammar,
spelling, syntax, or organization
that prevent understanding of
ideas
20
Total 100%
13-149
August 27, 2013
This case was prepared by David Simchi-Levi, MIT Professor of Civil and Enviornmental Engineering and Engineering
Systems and Co-Director, Leaders for Global Operations, and William Schmidt, PhD candidate, Harvard Business School.
Copyright © 2013, David Simchi-Levi and William Schmidt. This work is licensed under the Creative Commons Attribution-
Noncommercial-No Derivative Works 3.0 Unported License. To view a copy of this license visit
http://creativecommons.org/licenses/by-nc-nd/3.0/ or send a letter to Creative Commons, 171 Second Street, Suite 300, San
Francisco, California, 94105, USA.
Nissan Motor Company Ltd.: Building Operational
Resiliency
William Schmidt, David Simchi-Levi
On March 11, 2011 a 9.0-magnitude earthquake, among the five most powerful on record, struck off
the coast of Japan. Tsunami waves in excess of 40 meters high traveled up to 10 kilometers inland
and three nuclear reactors at Fukushima Dai-ichi experienced Level 7 meltdowns. The impact of this
combined disaster was devastating, with over 25,000 people dead, missing or injured.1 Governments,
non-government agencies, corporations and individuals in Japan and around the world responded with
relief teams, supplies and donations to help ease the suffering and support the recovery.2 In truth, the
disaster was three calamities in one – an earthquake, a tsunami and a nuclear emergency. Recovering
from such a catastrophe was unprecedented.
The event was not just a humanitarian crisis, but also a heavy blow to the Japanese economy: 125,000
buildings were damaged and economic costs were expected to be ¥16.9 trillion.3 In the weeks
following the disaster, approximately 80% of Japanese automotive plants suspended production and
Mitsubishi UFJ Morgan Stanley Securities estimated utilization at other plants were below 10%.4
1 Ministry of Foreign Affairs, Government of Japan, http://www.mofa.go.jp/j_info/visit/incidents/index2.html, accessed July 15, 2012.
2 Ministry of Foreign Affairs, Government of Japan, http://www.mofa.go.jp/j_info/visit/incidents/pdfs/r_goods , accessed July 15, 2012.
3 Ministry of Economy, Trade and Industry, Government of Japan,
http://www.kantei.go.jp/foreign/policy/documents/2012/__icsFiles/afieldfile/2012/03/07/road_to_recovery , accessed February 27, 2012.
4 Tsuyoshi Mochimaru, “Auto sector: Our Stance in Wake of Recent Earthquake,” Mitsubishi UFJ Morgan Stanley Securities Co., Ltd., April 12, 2011.
NISSAN MOTOR COMPANY LTD.: BUILDING OPERATIONAL RESILIENCY
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August 27, 2013 2
Across the industry, monthly production dropped nearly 60% in March and April 2011 compared to
2010, and did not fully recover until October.5 Production for all of 2011 was down 9%.6
Markets outside of Japan were affected as well. Toyota, Honda and Nissan, the three major Japanese
automotive original equipment manufacturers (OEM), exported a significant amount of their Japanese
production to serve foreign markets (Exhibit 1). Declines in Japanese production impacted product
availability in those export markets. In addition, overseas production had expanded in recent years,
but only 70% – 80% of the production components were sourced locally with the remaining 20%
coming from Japan.7 Disruption to the Japanese supply base affected firms and factories around the
world.
Toyota, Honda and Nissan were all impacted by the disaster (Exhibit 2). In particular, Nissan
suffered damage to six production facilities and about 50 of its critical suppliers were impaired.
Nevertheless, the company was prepared to withstand the shocks.
History of the Japanese Automotive Industry
Prior to the 1930’s the domestic automobile manufacturing capability in Japan was essentially limited
to military-sponsored initiatives, hand-built models and imported automotive kits.8 The industry’s
nascent steps toward mass production started in 1933 when Aikawa Yoshisuke established Jidosha
Seizo Company, the predecessor of Nissan Motor Company.9 Around the same time, Toyoda Kiichirō
established an automobile department within Toyoda Automatic Loom, which would eventually grow
into Toyota Motor Company.10 In spite of protectionist government policies restricting imports and
direct foreign investment, prior to World War II the Japanese subsidiaries of Ford and General
Motors dominated the automobile industry in Japan. After the war, Nissan and Toyota were hobbled
by low production productivity and were at risk of slipping into bankruptcy if not for a combination
of huge governmental loans and special orders from the United States Army during the Korean War.11
Japanese automotive firms initially relied heavily on technology transfer from the United States and
Europe. Toyota was more aggressive in developing internal research and development capabilities, a
strategy eventually adopted by other Japanese automobile manufacturers.12 Japanese automotive
manufacturers also concentrated on process improvements, with Toyota being an early innovator. In
5 “Japan Production by Month, 2005-2011,” WardsAuto Group, 2012.
6 Ibid.
7 Ibid.
8 Koichi Shimokawa, The Japanese Automobile Industry: A Business History (London: Atlantic Highlands, NJ, Athlone Press, 2001).
9 Nissan Motor Company, http://www.nissan-global.com/en/history/, accessed August 3, 2012.
10 Michael A. Cusumano, The Japanese Automobile Industry: Technology and Management at Nissan and Toyota (Cambridge, MA., Published by the Council
on East Asian Studies, Harvard University, 1985).
11 Ibid.
12 Ibid.
NISSAN MOTOR COMPANY LTD.: BUILDING OPERATIONAL RESILIENCY
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August 27, 2013 3
the late 1940’s through the early 1960’s, Toyota transitioned away from push manufacturing
techniques that were ubiquitous in the United States automobile industry. The firm reduced buffer
stocks and instead adopted the principles of just-in-time manufacturing. Raw materials and work-in-
process were no longer pushed from early production stages to final assembly, but were instead
pulled forward only when needed. Components were produced and received in lots as small as
possible, with no stockpiling and Toyota modified its equipment to allow for rapid set-up so it could
be quickly transitioned to different jobs.13
The manufacturing principles pioneered by Toyota were also adopted, in varying degrees, by other
manufacturers inside Japan and globally. Toyota remained at the vanguard of refining and
formalizing these principles into what would eventually be known as the Toyota Production System
(TPS). TPS required close coordination across manufacturing processes and helped identify problems
that could otherwise go unnoticed in a system with a larger buffer. The system, however, was not risk
free. If something disturbed the flow of information or material, it could idle manufacturing stages
downstream of the disturbance.
The Japanese automotive industry began to hit its stride. By the late 1960’s, both Toyota and Nissan
had rapidly increased both their production and exports. By the late 1970’s, exports accounted for
over 50% of Japanese production and by 1980 Japan overtook the United States as the world’s top
automobile producing country.14 Japanese automobile companies began building manufacturing
facilities in North America, with Honda, Nissan and Toyota moving first and Mazda, Mitsubishi,
Suzuki, and Isuzu eventually following. The rapid appreciation of the yen after agreements made at
the G-5 meeting in September 1985 led to further expansion of foreign production in both advanced
and developing countries.15 The three largest Japanese firms globalized their operations at different
paces, however, with Honda and Nissan expanding their foreign manufacturing footprint much more
aggressively than Toyota.16
Nissan’s Supply Chain Philosophy: A Focus on Flexibility
In contrast to the close supply chain control that is a hallmark of TPS, Nissan leveraged a regional,
decentralized supply chain structure, but imposed strong central control and coordination when crises
affecting global operations occurred. Maintaining a flexible organization and integrating a variety of
perspectives were important cultural attributes at the company. As an indication of the way the firm
embraced diversity, Nissan’s corporate officers represented a range of nationalities and most of them
had extensive experience in overseas operations – traits that were not shared by other Japanese
13 Ibid.
14 Ibid.
15 Ibid.
16 Ibid.
NISSAN MOTOR COMPANY LTD.: BUILDING OPERATIONAL RESILIENCY
William Schmidt, David Simchi-Levi
August 27, 2013 4
OEM’s.17 Nissan considered this diversity to be a source of strength in managing a large global
operation and it valued that the executive team could speak first-hand to the unique constraints and
opportunities that were present in each market.18
Complementing this focus on flexibility, Nissan maintained a simplified product line compared to its
competitors. The company adopted a build-to-stock strategy for just a few SKUs in each model and a
build-to-order strategy for the rest. Management believed that this strategy had not only helped it to
simplify its operations and product offerings, but it actually contributed to a significant increase in
sales. As explained by John Martin,19 the company’s SVP of manufacturing, purchasing and supply
chain management:
Nissan was a company reborn from crisis. In 1999 Nissan was rescued from impending
bankruptcy by Renault who put in place a revitalized management team led by Carlos Ghosn.
This sense of crisis persists in the organization to this day. This ‘crisis mentality’ was critical to
our recovery from the 2007/2008 Global Liquidity Crisis, the Great Japan Earthquake and
subsequent Thai Floods in 2011. Our supply chain philosophy is one of vigilance and extreme
responsiveness allied with single point responsibility. It is the supply chain management
organization’s responsibility to keep the production plants running. This clarity of purpose and
responsibility engenders confidence and decisiveness both of which are crucial to disaster
recovery.
Risk Management at Nissan
Nissan’s attitudes toward risk and emergency response emerged through the company’s experience in
overcoming daunting challenges. In 1999 the company faced severe financial difficulties that were
only resolved when it formed an alliance with Renault. Under the terms of the alliance, Renault
bought 36.8% of Nissan’s outstanding stock and Nissan agreed to buy into Renault when it was
financially able to do so.20 This deal forced Nissan to confront entrenched practices and biases and to
take proactive action to ensure the company’s survival and ultimate success. (See Exhibit 3 for
financial performance.)
Nissan’s risk management philosophy was born out of its near-death experience. It focused on
identifying and analyzing risks as early as possible, and planning and rapidly implementing
countermeasures. The company established a dedicated risk management function which was
responsible for these activities. There was also an executive-level committee that made decisions on
corporate risks, designated “risk owners” to manage the specific risks, and regularly reported to the
17 Interview with John Martin, February 25, 2012.
18 Interview with John Martin, May 28, 2012.
19 At the time of the crisis John Martin served as Corporate Vice President for Nissan’s Global Supply Chain division in Japan.
20 Nissan eventually bought a 15% stake in Renault. Renault has subsequently increased its stake in Nissan to 44.4%.
NISSAN MOTOR COMPANY LTD.: BUILDING OPERATIONAL RESILIENCY
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August 27, 2013 5
Board of Directors on progress. Each division was empowered and expected to take preventive
measures to minimize the realization and impact of risks that did not require corporate coordination.
Nissan’s continuous readiness process included activities such as ongoing seismic reinforcement of
facilities, improvement to its business continuity planning (BCP), and disaster simulation training.21
Nissan had an earthquake emergency-response plan in place well in advance of the 2011 earthquake,
which was described in its 2010 annual report (Exhibit 4).22 The principles of Nissan’s emergency-
response plan included a priority on human life, prevention of follow-on disasters, rapid disaster
recovery and business continuity, and support for the neighboring community, companies, and
government. It designated a Global Disaster Headquarters that, in the aftermath of a disaster, was
responsible for gathering and distributing information concerning employee safety, facility damage,
and business continuity planning for Nissan’s operations and those of its suppliers. In addition, the
plan required that Nissan conduct earthquake simulation training to test and improve upon the
effectiveness of the organization and its contingency plan.
Nissan’s Response to the Disaster
Nissan’s actions after the earthquake and tsunami adhered to the principles detailed in its earthquake
emergency-response plan. Immediately after the disaster, Nissan’s Global Disaster Control
Headquarters, headed up by the chief operating officer, was convened to evaluate the impact on
operations and to oversee the restoration of activities. A Recovery Committee was established to
coordinate the global recovery actions, in particular the work of optimizing the entire supply chain.
As Nissan’s Chief Recovery Officer Colin Dodge wrote in the company’s 2011 Annual Report,
The impact on our business [of the disaster] was felt in all regions. Nissan’s manufacturing
operations are thoroughly global in nature, and disruption to the supply structure in Japan spreads
quickly through our supply chain all around the world. In the past months Nissan has been
implementing countermeasures in every region where it does business.
In Europe, for example, where we maintain production bases in the United Kingdom, Spain and
Russia, we took steps immediately after the quake to ensure supplies of needed parts. The
European regional team worked closely with the Japan side to share information about the status
of the Japan-sourced parts supply, swiftly reflecting these updates in the regional supply side. The
level of depth and accuracy of this information sharing has been truly amazing. It has allowed us
to constantly update our regional production forecast, so that we can align our production
calendar with conditions in production sites in Japan.23
21 Nissan 2011 Annual Report.
22 While similar response plans may have been in place at Honda and Toyota, neither organization provided visibility of them in their annual reports.
23 Ibid.
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August 27, 2013 6
The Recovery Committee emphasized a few simple yet meaningful practices in coordinating the
company’s response to the disaster:
1. Sharing information – Nissan brought all of their global regions into the response process.
Management recognized that the non-Japanese operations would want information, but the
effort to provide it would be a distraction to those on the ground handling the crisis. They
also recognized information might be used selfishly by dependent facilities optimizing
against its own needs. To address these two concerns, each region was asked to send two staff
members to Japan to gather their own information and to help solve problems holistically.
Instead of becoming a drain on the local response effort, the other regions and plants
contributed to solutions. In addition, the regions had complete visibility into what was
happening in Japan and could help the organization improve the response.
2. Allocating supply – Given the capacity constraints in the weeks and months after the
disaster, and the dependencies that existed across the Nissan operational network, allocation
of component parts was critical. The sales, marketing, and the regional supply chain
management functions were brought together to identify how to globally allocate supplies to
focus on highest margin goods. For example the supply of integrated Global Positioning
System (GPS) units was constrained by the disaster. Nissan identified which car models
required integrated GPS to meet customer demands, and allocated resources accordingly.
Low-end models did not receive the allocation of available GPS since they did not have
commensurately high margins, and customers were willing to purchase those models without
an integrated GPS. This process was completed within two weeks of the earthquake and
continually updated as the supply situation became clearer.
3. Managing production – Nissan slowed their production lines in a targeted way.
Management closely considered in-stock and in-transit inventory within their network and
slowed production upstream and downstream of anticipated bottlenecks. For example, the
company was able to ramp down production, and thereby decrease costly overtime, for
operations that were expected to be bottlenecked. Management also pulled vacation time into
April and May in order to free up capacity later in the summer when upstream bottlenecks
were projected to have cleared.
The company used the time bought by having in-transit inventory to identify and implement
supply alternatives. For example, the lead-time for ocean transport from Japan to the west
coast of the United States was 15 days, plus five days to move material to plants in Tennessee
and Mississippi. This meant that management had as many as 20 days to identify how to
access alternative supplies of critical components. They were also able to secure air freight
out of Japan so they could get critical parts out of the country faster and mitigate the
reduction of in-transit stocks.
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William Schmidt, David Simchi-Levi
August 27, 2013 7
4. Empowering action – Nissan emphasized rapid and flexible action. Management was
empowered to make decisions in the field without lengthy analysis from a central authority.
To speed critical decision-making process on recovery-related issues, the company modified
its delegation of authority rules for a limited period. The decisions were iterated upon as new
information surfaced so that the company could course correct, if necessary. As Nissan’s
Chief Operating Officer Toshiyuki Shiga explained,
The disaster response simulations we have carried out regularly served us particularly
well. By envisioning a full range of potential situations arising from a major disaster and
preparing for them, we successfully enabled ourselves to take prompt actions when the
time came.
At a time of disaster, it is essential to make speedy decisions while grasping the latest
situation, including details on employees’ safety and damage caused, and to take
appropriate actions based on this. We launched the Global Disaster Control Headquarters
just 15 minutes after the earthquake occurred. The team immediately gathered and
assessed damage while overseeing restoration efforts at various facilities.24
Recovery by the Big Three Japanese Auto Manufacturers
In the six months following the earthquake, production across all auto manufacturers in Japan
declined 24.3% compared to forecast.25 The big three Japanese manufacturers each contended with
different issues associated with the disaster. Toyota had significant exposure due to its large size and
its high rate of Japanese production (including for export). Nissan had several plants in close
proximity to the disaster area. While Honda was partly insulated due to its large localized U.S.
production, recovery from the disaster was still slow. Honda attributed its production problems to
constraints in its supply chain,26 a problem that Nissan had successfully insulated itself from. As
Nissan’s Chief Financial Officer Joseph Peter remarked,
Most of the steps we have taken in response to the March 11 disaster have been continuations of
strategies, priorities and plans that were already in place. One example of this is the localization
strategy we have been pursuing to better balance our manufacturing and sourcing footprint to our
sales footprint. Our actions in this area date back to the start of the financial crisis in 2008, when
our primary objectives were to reduce volatility from foreign currency movements, particularly
the appreciating yen, and to reduce cost.27
24 Ibid.
25 “Japan Production by Month, 2005-2011,” WardsAuto Group, 2012.
26 Q2 2012 Honda Motor Co Ltd Earnings Presentation.
27 Ibid.
NISSAN MOTOR COMPANY LTD.: BUILDING OPERATIONAL RESILIENCY
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August 27, 2013 8
Going Forward
In January 2012, Nissan announced that it would increase the localized production of its cars in the
Americas from approximately 70% to 90% by 2015.28 The company also set aggressive targets to
reduce its reliance on Japanese-made components in its foreign factories. For instance, the company
was hoping to reduce the number of components brought in to North America from Japan by 50% by
the end of fiscal 2013.29 The company, according to Peter, was also making a concerted effort to
better understand critical dependencies that exist within its supply chain beyond the first tier of
suppliers:
We are learning fresh lessons from the earthquake, too. Moving forward we will be modifying
our purchasing process to enhance our business continuity plan at the parts level, particularly for
critical components, and to mitigate potential supply risk concentration beyond the Tier 1 level.
These are evolutionary kaizen changes, though, as opposed to fundamental shifts in our sourcing
strategy.30
As COO Shiga pointed out, despite its preparedness, Nissan had work to do to be even better
protected the next time disaster struck:
Many challenges still lie ahead. Some parts suppliers have yet to restore their operations. Our
supply chain requires rehabilitation. This experience has instructed us in the necessity of an
actionable BCP (business continuity plan) that encompasses all our suppliers, including those in
the second and third tiers. Development of a more robust supply chain and comprehensive risk
management are imperative in making our business more sustainable.31
Case Discussion Questions
1. The case identifies several aspects of the Nissan response that were particularly beneficial.
Expand on the points made in the case to identify the potential costs and benefits of these actions.
2. What else could Nissan have done to prepare for and respond to the disaster? Try to articulate the
costs and benefits of your suggestions.
3. What could Nissan have done to assess the risk of disruption in their supply chain?
4. How did Nissan’s product line strategy help or hurt its ability to respond to and recover from the
disaster?
28 Chester Dawson, “Nissan Aims to Boost North American Production,” The Wall Street Journal, January 9, 2012.
29 Ibid.
30 Ibid.
31 Ibid.
NISSAN MOTOR COMPANY LTD.: BUILDING OPERATIONAL RESILIENCY
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August 27, 2013 9
5. How will the operational changes announced in 2012 affect Nissan’s exposure to future
disruptions? How will it affect its steady-state operations? What trade-offs is management
making and why?
NISSAN MOTOR COMPANY LTD.: BUILDING OPERATIONAL RESILIENCY
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August 27, 2013 10
Exhibit 1 Production to Sales Ratios for Select Japanese OEMs
Source: Chester Dawson and Neal E. Boudette, “Too Big in Japan, Toyota Struggles,” Wall Street Journal, May 12, 2011.
Exhibit 2 Initial Damage Reports from Major Japanese Automotive OEMs
Company Damage
status
Nissan
Motor ü Fires
broke
out
at
Tochigi
Factory
and
a
foundry
in
Iwaki
ü Damage
to
the
Tochigi
Factory,
Iwaki
Factory
(engines),
Yokohama
Factory
(engines,
etc.),
Oppama
Factory
and
Zama
Works
(lithium-‐ion
batteries,
etc.)
ü It
will
take
some
time
before
the
Iwaki
Factory
is
repaired
Toyota
Motor ü Partially
damaged
facilities
at
the
Iwate
Factory
(subsidiary
Kanto
Auto
Works),
Miyagi
Factory(subsidiary
Central
Motor),
and
Tohoku
Factory
(parts)
Honda
Motor ü Some
damage
in
to
facilities
in
Tochigi
Prefecture
Mazda
Motor ü No
major
direct
impact
Suzuki
Motor ü No
major
direct
impact
Source: Kohei Takahashi, “Autos and Auto Parts,” J.P. Morgan Equity Research, March 22, 2011.
NISSAN MOTOR COMPANY LTD.: BUILDING OPERATIONAL RESILIENCY
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August 27, 2013 11
Exhibit 3 Select Nissan Financials, 2009-2011, (millions of yen)
2009 2010 2011
Revenue 8,436,974 7,517,277 8,773,093
Cost of Goods Sold 7,118,862 6,146,219 7,155,100
Gross Profit 1,318,112 1,371,058 1,617,993
Operating Expenses
Sales, General & Administrative 1,456,033 1,059,449 1,080,526
Operating Income (137,921) 311,609 537,467
Net non-operating income (34,819) (103,862) 347
Net special gains (losses) (46,031) (66,127) (57,673)
Earnings Before Taxes (218,771) 141,620 480,141
Total Income Taxes 36,938 91,540 132,127
Income (loss) attributable to
minority interests
(22,000) 7,690 28,793
Net Income (233,709) 42,390 319,221
Source: Nissan 2011 Annual Report.
Exhibit 4 Excerpts from Nissan 2010 Annual Report
Risk Management Measures & Actions (Related to Earthquakes)
Nissan is assuming earthquake (EQ) as the most critical catastrophe. In case of EQ which intensity is
5-upper or over in Japan, First Response Team (organized by main functions of Global Disaster
Headquarters) will gather information and decide actions to be taken based on the information. If
necessary, Global Disaster Headquarters and Regional Disaster Headquarters are set up and gather
information about employees’ safety and damage situation of facilities and work for business
continuity.
At the same time, efforts to develop Business Continuity Plan (BCP) are being done involving
suppliers, such as, each and every function assessed its priority work, develop countermeasures to
continue the priority works. BCP will be reviewed annually in the process of rotating PDCA cycle.
Policy & Principle in Case of EQ
1. First priority on human’s life (Utilization of Employees’ safety confirmation system, EQ
preparedness card to be carried on a daily basis)
2. Prevention of second disaster (In-house firefighting organization, stockpiling, provision of
disaster information)
NISSAN MOTOR COMPANY LTD.: BUILDING OPERATIONAL RESILIENCY
William Schmidt, David Simchi-Levi
August 27, 2013 12
3. Speedy disaster recovery and business continuity (Measures for hardware, improvement of
contingency plan and development of BCP)
4. Contribution to local society (cooperation / mutual aid with neighboring community,
companies, local and central government)
Global Disaster Headquarters and Regional Disaster Headquarters conduct simulation training
assuming large EQ to prepare catastrophe. The drill tests the effectiveness of this organization and
contingency plan, and clarifies the issues to be improved. The contingency plan is reviewed based on
the feedback.
Nissan Global Headquarters Building where Global Disaster Headquarters is supposed to be set up
(built in August 2009) has EQ resistant structure by vibration controlling brace damper. The safety is
assured even in case of maximum level of EQ assumed at the site.
EQ: Earthquake
QSO 300 Final Project Guidelines and Rubric
Overview
The final project for this course is the creation of a comprehensive case study analysis. Every business—whether a beauty salon, automobile manufacturer, or
professional baseball team—has an operations component that creates goods and services by transforming inputs into outputs. There are a wide variety of tools
and techniques that operations managers draw upon to increase efficiency and effectiveness, creating value for customers. Operations management
professionals are in high demand across a variety of industries. Having basic knowledge of operations functions and their integration capabilities is critically
important in the world of business. For example, applying the limitations of production in marketing and sales is a routine task. Managing the equipment and
supplies needs of operations management is a basic skill looked for in finance and accounting workers.
For your final assessment in this course, you will analyze a case study that addresses several key operations management fundamentals. You will use the tools
and techniques that operations managers use and incorporate your instructor’s feedback into the final summative analysis. You will address the typical problems
that operations managers face using the knowledge you have gained from this course. Finally, you will discuss the emerging concepts of sustainability in business
management, specifically the topics of corporate responsibility and environmental compliance.
The project is divided into three milestones, which will be submitted at various points throughout the course to scaffold learning and ensure quality final
submissions. These milestones will be submitted in Modules Two, Four, and Five. The final project is due in Module Seven.
In this assignment, you will demonstrate your mastery of the following course outcomes:
Evaluate the influence of operations functions on generating value for a firm and its customers
Explain theories and techniques used by operations managers for informing production processes
Accurately apply problem-solving and decision-making skills to real-world problems using quantitative and qualitative methodologies
Integrate emerging principles into operations management functions by addressing corporate responsibility and environmental sustainability
Prompt
Using the knowledge you have gained from this course, you will write a comprehensive analysis of the Nissan case study we have been analyzing throughout this
course by addressing the critical elements below.
Imagine that you are hired into the role of the operations manager at the company described in the case study. Although there are many issues facing the
company, you have some experience and are well qualified to provide direction in solving these problems. To address many of the questions below, you will want
to review your submissions from previous modules and incorporate instructor feedback. Using the case study, course materials, and outside sources, prepare a
cohesive case study analysis for submission as one document.
https://mitsloan.mit.edu/LearningEdge/CaseDocs/13-149%20Nissan.Simchi-Levi
Specifically, the following critical elements must be addressed:
I. Generating Value
A. Evaluate how the company in the case study uses operations management functions to provide products and generate value for its customers.
Support your claims with examples from the case study or outside sources.
B. Assess how this company achieves a competitive advantage using operations management. Provide examples found in the case study or outside
sources to support your reasoning.
C. Compare and contrast service operations and manufacturing operations at the company in the case study. How are they the same? How do they
differ? How does each of these operations provide value for their customers?
II. Theories and Techniques
A. Explain how gross-to-net calculations are processed for material requirements planning (MRP). What specific input files would the company in
the case study need to include in this process for a successful MRP? How would you use the MRP information to improve the operations as the
manager of this company?
B. Compare and contrast the critical path method (CPM) and the program evaluation and review technique (PERT). What types of projects at this
company would favor PERT over CPM? Why? What types of projects at this company would favor CPM over PERT? Why?
C. Explain the four primary priority rules for job sequencing. In what instances at the company might each rule be most advantageous? When
would each rule be most disadvantageous? Support your claims with citations from your textbook or outside sources.
D. Explain the five steps of the theory of constraints (TOC) process. To what processes might the company in the case study apply TOC? Why would
applying TOC to these processes be advantageous?
E. Explain the steps used to develop a forecasting system. How would these steps be specifically utilized by this company? What do you predict
would be the result of implementing a forecasting system for the top-selling product line at this company?
F. List the major categories of supply chain risk and associated risk-reduction tactics. How could the company mitigate exposure to supply chain
disruptions caused by natural disasters? For example, consider the 2011 earthquake and tsunami that devastated parts of Japan.
G. Summarize the following theories: just in time (JIT), Toyota Production System (TPS), and Lean. How are these concepts related? Describe the
advantages and disadvantages for using each of these concepts at the company presented in the case study.
H. Describe how total quality management (TQM) principles and tools can be used to improve quality in the latest line of products in the context of
the case study.
III. Data Analysis
A. Draw a hypothetical process (time-function) map for producing a recently released (within the past two years) product manufactured by the
company. As an operations manager, how will you use the value map? Be sure to include your process map within your case study analysis.
B. Draw a cause-and-effect diagram that assesses why some of the company’s supply chain partners might have struggled to implement some of
the company’s newly developed materials. Summarize your findings from the diagram.
C. Considering the data and options below, determine where the company should locate its new manufacturing plant. Explain why this would be
the favorable location.
Factor Weight Mexico City Columbia, SC
Political Risk .2
5
70 80
Transportation Costs .20 40 90
Labor Productivity .20 85 7
5
Rental Costs .15 90 55
Labor Costs .10 80 50
Taxes .10 90 50
D. The company believes that it might have some inefficiencies in its inventory management process. Develop an ABC classification system for the
following 10 items. Based on this information, what do you recommend for improving inventory management?
Item Annual Demand Cost/Unit
I5 1750 10.00
D1 6000 10.00
A2 3000 50.00
E9 1000 20.00
J8 2500 5.00
C7 1500 45.00
B8 4000 12.00
G2 300 1500.00
H2 600 20.00
F3 500 500.00
IV. Sustainability
A. Describe how the emerging concept of the triple bottom line can be used to enhance operations management at the company. Be sure to
address each component of the triple bottom line.
B. Explain how the company integrates ISO 14000 standards in its manufacturing plants. Support your explanation with citations from your textbook
or outside sources.
C. Describe ways through which the company can integrate corporate responsibility principles into their operations. Which of these do you believe
to be the most effective? Why? Support your opinions with citations from your textbook or outside sources.
Milestones
Milestone One: Managing Operations
In Module Two, you will submit a managing operations case study analysis, which evaluates how Nissan uses operations management functions to provide
products and generate value for its customers and how it achieves a competitive advantage using operations management, among other critical elements. To
complete this milestone, you will use the Nissan case study, your own independent research, and the course materials. This milestone is graded with the
Milestone One Rubric.
Milestone Two: Quality, Process, and Location Analysis
In Module Four, you will submit a quality, process, and location analysis case study analysis that addresses the typical problems that operations managers face.
To complete this milestone, you will use the Nissan case study, your own independent research, and the course materials. This milestone is graded with the
Milestone Two Rubric.
Milestone Three: Sustaining Operations
In Module Five, you will submit a sustaining operations case study analysis that discusses the emerging concepts of sustainability in business management,
specifically the topics of corporate responsibility and environmental compliance. To complete this milestone, you will use the Nissan case study, your own
independent research, and the course materials. This milestone is graded with the Milestone Three Rubric.
Final Submission: Comprehensive Case Study Analysis
In Module Seven, you will submit your final comprehensive case study analysis. It should be a complete, polished artifact containing all of the critical elements
of the final product. It should reflect the incorporation of feedback gained throughout the course. If you have not included it already, be sure that this final
submission includes an introduction section, which provides an overview of the company and some of the key challenges that it is facing. Also, be sure to include
a summary/conclusion section that highlights some of your most important recommendations for improving operations at the company. This will be graded
using the Final Project Rubric.
Deliverable Milestones
Milestone Deliverables Module Due Grading
1 Milestone One: Managing Operations Two Graded separately; Milestone One Rubric
2 Milestone Two: Quality, Process, and
Location Analysis
Four Graded separately; Milestone Two Rubric
3 Milestone Three: Sustaining Operations Five Graded Separately; Milestone Three Rubric
Final Product: Comprehensive Case
Study Analysis
Seven Graded separately; Final Project Rubric
Rubric
Guidelines for Submission: Written components of projects must follow these formatting guidelines when applicable: double spacing, 12-point T imes New
Roman font, one-inch margins, and citations in APA style. This assignment should be 10–12 pages in length, not including cover page and resources.
Critical Elements Exemplary (100%) Proficient (85%) Needs Improvement (55%) Not Evident (0%) Value
Generating Value:
Functions
Meets “Proficient” criteria and
directly ties specific OM activities
to actual measures of customer
satisfaction related to the case
study
Evaluates how the company in the
case study uses OM functions to
provide products to customers
and to generate value and
provides support
Evaluates how the company in the
case study uses OM functions to
provide products to customers
and to generate value but does
not provide support
Does not evaluate how the
company in the case study uses
OM functions to provide products
to customers
5
Generating Value:
Competitive
Advantage
Meets “Proficient” criteria and
provides additional real-world
examples of times when the
company in the case study out-
performed a competitor
Accurately assesses how the
company in the case study
achieves a competitive advantage
using OM and provides support
Assesses how the company in the
case study achieves a competitive
advantage using OM but
assessment is inaccurate or does
not provide support
Does not assess how the company
in the case study achieves a
competitive advantage using OM
5
Generating Value:
Compare and
Contrast
Meets “Proficient” criteria and
addresses implications of strategic
OM decisions for both service and
manufacturing
Compares and contrasts service
and manufacturing operations
and includes how each operation
provides value for its customers
Compares and contrasts service
and manufacturing operations but
does not include how each
operation provides value for its
customers
Does not compare and contrast
service and manufacturing
operations
5
Theories and
Techniques: Gross-
to-Net
Meets “Proficient” criteria and
integrates additional
organizational functions that
affect inputs to and outcomes of
MRP
Correctly explains how gross-to-
net calculations are processed for
MRP and identifies the specific
input files needed and how the
company uses the MRP
information
Correctly explains how gross-to-
net calculations are processed for
MRP but does not identify the
specific input files needed or how
the company uses the MRP
information
Does not correctly explain how
gross-to-net calculations are
processed for MRP or explanation
is incorrect
5
Theories and
Techniques:
Compare and
Contrast
Meets “Proficient” criteria and
supports explanation with
concrete real-world examples
Compares and contrasts CPM and
PERT and explains which projects
would favor each technique
Compares and contrasts CPM and
PERT but does not explain which
projects would favor each
technique
Does not compare and contrast
CPM and PERT
5
Theories and
Techniques: Four
Primary
Meets “Proficient” criteria and
explains a situation where a
hybrid approach might work best
Accurately explains the four
primary priority rules for job
sequencing, explaining where
each rule would be most
advantageous/disadvantageous
and provides support
Accurately explains the four
primary priority rules for job
sequencing, but does not explain
where each rule would be most
advantageous and
disadvantageous or does not
provide support
Does not explain the four primary
priority rules for job sequencing
or explanation is inaccurate
5
Theories and
Techniques: Theory
of Constraints
Meets “Proficient” criteria and
predicts the results of applying
TOC to specific processes in the
case study
Correctly explains the five steps of
TOC and explains why it would be
advantageous to apply TOC to
specific processes in the case
study
Correctly explains the five steps of
TOC but does not explain why it
would be advantageous to apply
TOC to specific processes in the
case study
Does not explain the five steps of
TOC or explanation is incorrect
5
Theories and
Techniques:
Forecasting System
Meets “Proficient” criteria and
defends prediction with support
Accurately describes the steps
used to develop a forecasting
system and predicts the results of
using a forecasting system in the
context of the case-study
Accurately describes the steps
used to develop a forecasting
system but does not predict the
results of using a forecasting
system in the context of the case
study
Does not describe the steps used
to develop a forecasting system or
description is inaccurate
5
Theories and
Techniques: Supply
Chain Risk
Meets “Proficient” criteria and
provides support for explanation
Correctly lists the major
categories of supply chain risks
and associated risk-reduction
tactics and explains how the
company could avoid exposure to
supply chain disruptions
Correctly lists the major
categories of supply chain risks
and associated risk-reduction
tactics but does not explain how
the company could avoid
exposure to supply chain
disruptions
Does not list the major categories
of supply chain risks and
associated risk-reduction tactics or
list and associated risks are
incorrect
5
Theories and
Techniques:
Summarize
Meets “Proficient” criteria and
describes how a specific process
could be leaned at the company
Summarizes JIT, TPS, and Lean and
explains how the concepts are
related, integrating the
advantages/disadvantages of
using each in the case-study
context
Summarizes JIT, TPS, and Lean but
does not explain how the
concepts are related, integrating
the advantages/disadvantages of
using each in the case-study
context
Does not summarize JIT, TPS, or
Lean
5
Theories and
Techniques: Total
Quality
Management
Meets “Proficient” criteria and
integrates Deming’s points into
the discussion
Describes how TQM can be used
to improve quality in the context
of the case study
Describes how TQM can be used
to improve quality but does not
provide context in the case study
Does not describe how TQM can
be used to improve quality
5
Data Analysis:
Process Map
Meets “Proficient” criteria and
description of map’s use
demonstrates insight into the
importance of OM tools
Accurately draws and includes a
process map for product and
thoroughly describes how it would
be used by an OM manager
Draws and includes a process map
for product, but drawing is
inaccurate, and description of
how it would be used by OM
manager is either not thorough or
missing
Does not draw and include a
process map for a product
5
Data Analysis:
Diagram
Meets “Proficient” criteria and
explains what could be done to
encourage supply chain partners
to comply with new requirements
Properly draws a cause-and-effect
diagram assessing the struggle to
implement newly developed
materials and summarizes findings
Properly draws a cause-and-effect
diagram assessing the struggle to
implement newly developed
materials but does not summarize
findings
Does not properly draw a cause-
and-effect diagram
5
Data Analysis:
Data
Meets “Proficient” criteria and
explains additional criteria that
might also need to be considered
Correctly determines where the
new plant should be located and
explains why this is a favorable
location
Correctly determines where the
new plant should be located but
does not explain why this is a
favorable location
Does not correctly determine
where the new plant should be
located
5
Data Analysis:
Inventory
Management
Meets “Proficient” criteria and
justifies improvements with
logical reasoning or support from
outside sources
Correctly develops an ABC
classification system and
recommends improvements in
inventory management
Correctly develops an ABC
classification system but does not
recommend improvements in
inventory management
Does not correctly develop an ABC
classification system
5
Sustainability:
Triple Bottom Line
Meets “Proficient” criteria and
provides support
Describes how the triple bottom
line can enhance OM and
addresses each component of the
triple bottom line concept
Describes how the triple bottom
line can enhance OM but does not
address each component of the
triple bottom line concept
Does not describe how OM can
enhance triple bottom line
5
Sustainability:
ISO 14000
Meets “Proficient” criteria and
describes additional
environmental policies and
standards
Accurately explains how the
company integrates ISO 14000
standards in the manufacturing
plants and provides support
Explains how the company
integrates ISO 14000 standards in
the manufacturing plants but does
not provide support or
explanation is inaccurate
Does not explain how the
company integrates ISO 14000
standards in the manufacturing
plants
5
Sustainability:
Corporate
Responsibility
Meets “Proficient” criteria and
support includes research on the
best practices in corporate
responsibility
Describes ways the company can
integrate corporate responsibility
principles into operations and
defends opinion of the most
effective way with support
Describes ways the company can
integrate corporate responsibility
principles into operations but
does not defend opinion of the
most effective way with support
Does not describe ways the
company can integrate corporate
responsibility principles into
operations
5
Articulation of
Response
Submission is free of errors
related to citations, grammar,
spelling, syntax, and organization
and is presented in a professional
and easy-to-read format
Submission has no major errors
related to citations, grammar,
spelling, syntax, or organization
Submission has major errors
related to citations, grammar,
spelling, syntax, or organization
that negatively impact readability
and articulation of main ideas
Submission has critical errors
related to citations, grammar,
spelling, syntax, or organization
that prevent understanding of
ideas
10
Earned Total 100%
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