Content

Introduction 3
Overview of Nissan 3
Supply chain management 4
Description of the project 4
SWOT analysis 5
SWOT Nissan and Supplier (Prior to COGENT) 6
Supplier development 8
Stages of supplier development 9
JIT Approach 12
Ownership cost minimization 13
Cogent fast track 15
What is the future? 15
Conclusion 16
Reference 17

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 Introduction
Many successful organizations are now following supply chain management as a benchmark for
themselves. In different organizations and firms the operation of supply chain management
varies greatly and it is complex. Supply chain management is practiced by both servicing and
manufacturing industries. Organizations are now adapting SCM to earn more profits and
provide more customer satisfaction. Knowledge quality of a firm is the key factor to success in a
competitive business environment which is now admired by all the successful organizations.

SCM is the management of the raw materials, with proper planning, quality manufacturing and
correct distribution. To develop a product it is crucial to know about the customer demands
and expectations. With this knowledge combined with new technology and marketing a firm
creates successful products. Sometimes companies solely try to improve but most of the time
they discuss with their suppliers to gather knowledge about the customer requirements. This
knowledge exchanging process enables the firms to learn more about their customers and also
about the supplier’s awareness about the market. This is beneficiary to both supplier and buyer
firms. It is a common scene that powerful organizations insist their supplier to adapt their
proposed process to improve the product quality and coordination.

Overview of Nissan
Nissan, established in 1933, is a well-known brand in manufacturing cars of today’s automobile
industry. Nissan Motor Company Ltd, which in short known as Nissan, is a market leading auto
manufacturer with the headquarter in Japan. This multinational automaker was a central part
of Nissan group. But with the reformation under Carlos Ghosn, the CEO of Nissan, it has
become independent automaker. Their main products include, automobiles, outboard motors
and forklift trucks.

Nissan used to market their autos under the brand name of Datsun which is a renowned car
manufacturer. It is affiliated with Renault S.A. which holds its 45% of shares while Nissan has
15% of Renaults shares. Its listed in the top 3 auto manufacturers in asia. It also owns the luxury

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brand called Infinity. With a revenue of over $93 billion (2008) and operating income of over
$1.5 billion (2008) its one of the biggest automaker in the market. It has over 2 hundred
thousand employees with a determination of constant improvement.

Supply Chain management

“Supply chain management (SCM) is the combination of art and science that goes into
improving the way your company finds the raw components it needs to make a product or
service and deliver it to customers.” [ CITATION Tho08 \l 1033 ]

Physical Flow

Receiving Manufacture Packing Distribution

Customer
Supplier

Master production plan

Purchasing Scheduling Demand management

Information Flow

Diagram 1: Supply Chain Management (Basu & Navan, 2008)

Nissan Cogent:

Description of the project

Cogent, the short form of Co development Regeneration Tool, is a research project done by
Nissan with the coalition of Cranfield University and its suppliers. The main purpose of the
research was to improvise the capabilities of the automobile components producers in UK and

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make better designs to sustain in the UK market. The design of a component is helpful to satisfy
the customer demand and expectations.

SWOT Analysis
SWOT is a short form of Strengths, Weaknesses, Opportunities and Threats. It is a tool to
analyze the internal and external environment of an organization (Mullins L. 1996). Strengths
and weaknesses are assessed in internal environment of the organization. External
environment is analyzed by opportunities and threats. By the proper understanding of the
external factors and internal factors an organization decides how to increase its strengths,
minimize the weaknesses, work for its opportunities and eliminate the threats.

SWOT
analysis

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Internal:

Strengths and weaknesses of a company mainly depend on the following issues:

 Structure of the organization, representation, culture and key bodies of the

organization.
 Accessibility of raw materials and natural resource.
 Organizations capacity and effectiveness
 Amount of market share
 Brand consciousness
 Economic situation

External:

Opportunities and threats are external conditions. Opportunities may arise because of changes
in the business or in the environment. Company should know how to take advantage of their
opportunities. But sometimes changes become a threat to the company. So the company
should know how to handle and omit the threats. External factors are:

 Rivals
 clients
 suppliers
 Market
 Changes in the technology
 Economy
 Legal and political influence
 Social alteration

SWOT- Nissan and the suppliers (prior to COGENT)

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When the question “where we are now?” was introduced, we got the SWOT of Nissan and the
suppliers in the answer.

Where we are now?

S
Where we want to go?

The main purpose of the COGENT project was to increase the performance by altering
the relationship in the development and design phase.
Reduce and omit the wastes during the operation.
Achieving an improved QCDDM
Omit the communication gap between Nissan and the suppliers
Making more attractive and featured automobiles.
Reduce the time during the process.

How the company will get there?

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COGENT made a detailed plan to achieve the goals. The process is discussed below with
explanation.

Supplier Development
“Supplier development can be loosely defined as the process of working collaboratively with
your suppliers to improve or expand their capabilities. An example may be teaching a supplier
how to manufacture a type of item that they never manufactured before for the purposes of
giving you the option to buy, rather than make, that item. In recent years, it is has become
increasingly common for buying organizations to train their suppliers in Six Sigma and Lean
techniques.” [ CITATION Cha06 \l 1033 ]

Supplier development makes the suppliers to develop themselves with the help of the buyer
company to make new and more advanced products. We can say that, customers are
responsible for the demand condition, manufacturers are responsible to react to the condition
and suppliers are responsible to deliver the quality goods for the manufacturers to react most
effectively to the demand.

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 Stages of supplier development
Supplier development has 4 stages. It includes identifying the supplier base as well as assessing
and rationalizing, problem solving improvement, proactive condition developing and ,
integration development.

Customer and supplier co development:

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Customer and supplier co development can be successful if the customer has the right
capabilities and expand it with the suppliers. According to Henry K. (2001), supplier
development is a joint effort by the suppliers and buyer companies to bilaterally develop the
supplier’s abilities and potentials in one or more of the following areas”

1. Quality
2. Delivery
3. Cost
4. Technology
5. Environmental responsibility
6. Time to market
7. Financial feasibility
8. Managerial capability

Supply chain productivity, superiority and World-class alliance:

Main goal of a successful management system is to boost the profitability by generating more
revenues and by minimizing the cost and waste by omitting useless products and non-valued
products. Schonberger (1986) first commenced about the notion of world class industrialization
and the keys to achieve the world class performance.

Principles of World class supply chain management:

Time to market:

Use of Proper Time to enter in a market with a new product is an important issue. Previous
research proved that more than forty percent of market share can be occupied in a market with
a new product if its been introduced in a proper time. Earny et. Al. (2005) cited that Late entry
is a drawback to gain good market share and sometimes the firm doesn’t get good market and
has to withdraw because of being late.

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It is important to reduce the process time to introduce a new product early so that more
market share can be taken. Researches show that world class organizations reduce their
process time by 30% to introduce a new product to get more market shares.

Quality improvement:

Improvement in quality enables the firm to get more customer loyalty and customers trust.
Quality can be achieved in many ways. A lot of individuals has researched and proved the
importance of quality improvement but it was ignored by the big companies because they could
not see the relationship between good quality and a better competition.

European Perception of Quality

(Southey p. Nissan COGENT case)

But in today’s business world it is mandatory to have a good quality product, good quality
service and a good reputation in order to compete in the market.

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 Just in Time Approach
“It is a manufacturing philosophy which refers to the elimination of waste associated with time,
labor and storage space.” [ CITATION Rad06 \l 1033 ]. Just in time approach is an important
concept for successful supply chain management. It is the idea to get the right product, in the
right time and in the right amount. Its actually the exact response to buyers order. It helps the
supplier to not make excess supplies and maintain inventory. But it needs a good and fast
operational base.

JIT System

Principles:

There are 3 principles of JIT system:

 Waste minimization and elimination

 Total quality
control and
 Involvement
of people.

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 COGENT – saving time and resource approach

(Southey p. Nissan COGENT case)

Ownership cost minimization

To gain competitive advantage in supply chain management one important issue is to lower
total cost of ownership. Cost of ownership involves the expenses while acquiring, changing,
using, maintaining, or getting rid of anything for an extended period of time. [ CITATION Cos07 \l
1033 ].

How to maintain and lower the TCO?

 More attractive design

 Negotiating the acquisition cost
 Increase efficiency and lowering processing cost
 Proper asset usage by sharing the knowledge, resource and materials, removing
obstacles, and waste management.
 Quality cost minimization by working with the selected suppliers and continuously
improving the quality.
 Reducing the down-time cost

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 (Southey p. Nissan COGENT case)

 By reducing the risk costs

 By reducing the cycle times with proper collaboration with suppliers.
 Time management, asset utilization, reducing labor and utility cost can lower the
conversion cost.

Co-development process of COGENT

(Southey p. Nissan COGENT case)

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 COGENT fast track

Cogent fast track system

(Southey p. Nissan COGENT case)

What is the future?

After researching in the websites, in approximately 90 companies who are represented over
100 sites have improved their co development potential by almost 10% within the first year of
their involvement in COGENT. With this supplier co-development the processing time has
reduced to almost 30% with almost 40% reduced engineering cost and almost 30% cost
minimization in parts.

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 Appraisal trend by suppliers

(Southey p. Nissan COGENT case)

Conclusion
For the best outcome and performance from the suppliers it is important to maintain a good
communication with them. Supplier integration is also an important issue for a profitable result.
Supplier development is a crucial fact for the benefit of the buyer company. Supply chain
integration and improvisation process of Nissan, which is known as COGENT, has increased the
performance level of the company in various issues such as supply cost reduction, raw material
and inventory maintenance cost reduction and transport cost minimization. As COGENT case
study describes, Nissan achieved NEXT21 goal by taking some initiatives. These were, co-
development and alignment, improved internal consistency for development, involvement of
third party, use of performance measurement system, focusing on a real project and use of
detail while interact and use the events as accelerators.

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Works Cited
Cost of ownership, ROI, and cost/benefit analysis: What´s the difference? (2007, february 12). Retrieved
april 4, 2010, from www.solutionmatrix.com: http://www.solutionmatrix.com/tco-roi-cba-
difference.html

Dominick, C. (2006, november 1). Charles' Purchasing Certification Blog . Retrieved february 19, 2010,
from www.purchasingcourses.com: http://www.purchasingcourses.com/2006/11/supplier-
development-definition.html

Radisic, M. (2006). Just-In-Time concept.

Wailgum, T., & Worthen, B. (2008, november 20). Reflect Changes in Supply Chain Management
Technology. Retrieved february 16, 2010, from www.cio.com:
http://www.cio.com/article/40940/Supply_Chain_Management_Definition_and_Solutions

Ron. Basu & J Nevan Wright,(2008)Total Supply Chain Management, 1 st Edition.

Southey, P,(2009/2010) Coventry University Module Notes.
Monkzka, Trent & Handfield, (2005) Purchasing & Supply Chain Management, 3 rd Edition.
D. Taylor, D. Brunt,(2001) Manufacturing Operations & Supply Chain Management.

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