NISSAN MOTOR COMPANY LTD.

: BUILDING OPERATIONAL RESILIENCY

VIEWPOINT: TOSHIYUKI SHIGA

TIME CONTEXT: JANUARY 2012

I. STATEMENT OF THE PROBLEM:

Decline in Nissan’s production rate
II. STATEMENT OF THE OBJECTIVE:
To develop a more robust supply chain structure in span of 2 years.
III. AREAS OF CONSIDERATION

INTERNAL ENVIRONMENT
STRENGTHS WEAKNESSES
1. Flexible organization and integrating a 1. Heavily damaged by March 11 disaster
variety of perspectives to six (6) identified factories and 50 of
2. Embraced diversity – corporate officers its critical suppliers were impaired
represented a range of nationalities 2. No risk management measures for
and most of them had extensive other kinds of calamities such as
experience in overseas operations tsunami and nuclear emergency
3. Executive team could speak first-hand 3. Supply chain philosophy is allied with
to the unique constraints and single point responsibility
opportunities that were present in
each market
4. Maintained a simplified product line
compared to its competitors
5. Risk management philosophy which
focuses on identifying and analyzing
risks as early as possible and planning
and rapidly implementing
countermeasures
6. Continuous readiness process which
includes activities such as ongoing
seismic reinforcement of facilities,
improvement to its business continuity
plan and disaster simulation training
7. Nissan’s emergency response plan
includes priority on human life,
prevention of follow on disasters, rapid
disaster recovery and business
continuity and support for the
neighboring community, companies
and government
 EXTERNAL ENVIRONMENT
OPPORTUNITIES THREATS
1. Rapid appreciation of the yen which I. Various catastrophes affecting
led to further expansion of foreign Japanese economy
production in both advanced and II. Part suppliers have yet to restore their
developing countries operations
2. With globalized operations
3. Export transactions

IV. ASSUMPTIONS:
NONE.

V. ALTERNATIVE COURSES OF ACTION:

1. Establishment of additional factories in other domestic location
2. Production components to be 100% available in foreign countries
3. Backward integration for critical components

VI. ANALYSIS:

ACA 1: Establishment of additional factories in other domestic location

Advantages Disadvantages
1. Adheres to same government policies 1. Increase in total cost
2. Back-up of existing facilities in case of 2. Entails time to set-up
contingencies 3. Business continuity planning requires
rhythm and coordination
ACA 2: Production components to be 100% available in foreign countries
Advantages Disadvantages
1. Internal research and development 1. Change management
capabilities 2. May be subject to different government
2. Business continuity planning can be easily regulations
established
3. Better information sharing
4. Reduce volatility from foreign currency
movements
ACA 3: Backward integration for critical components
Advantages Disadvantages
1. Improvement in materials management 1. Requires personnel cost and additional
2. Control in the timing and frequency of capitalization
production 2. May divert management focus
3. Disaster risk can be well anticipated and
properly mitigated

VII. CONCLUSION:

Decision Matrix
 Criteria ACA 1: Establishment ACA 2: Production ACA 3: Backward
of additional factories components to be integration for critical
in other domestic 100% available in components
location foreign countries
1. Improved supply 1 3 2
chain structure
2. Risk management 2 3 1

3. Timeliness 2 1 3
5 7 6

Criteria Definition

1. Improved supply chain structure – efficient distribution of component parts resulting to timely
production
2. Risk management – well-planned business continuity and disaster recovery measures
3. Timeliness – reasonable timing of implementation, i.e. 2 years

Scoring
1 – Good
2 – Better
3 – Best

Based on the foregoing, the chosen ACA is ACA 2 to develop a more robust supply chain
structure in span of 2 years.

VIII. PLAN OF ACTION

The following activities have to be undertaken in order to implement the chosen ACA.

ACTIVITIES TO BE PERSON RESPONSIBLE TIMEFRAME

UNDERTAKEN
1. Series of meetings and
preparation to cascade the
strategy on how Nissan’s Toshiyuki Shiga (COO) 2 weeks
supply chain structure can be
improved.
2. Communication of the Toshiyuki Shiga (COO)
localization strategy to the
Heads of Nissan’s subsidiaries John Martin (SVP of
6 months
in foreign countries Manufacturing, Purchasing
and Supply Chain
Management
3. Cascade of information to
Toshiyuki Shiga (COO) 2 weeks
the whole Nissan Community
4. Modification of business
continuity plan which includes
identification of disaster John Martin
recovery and contingency Colin Dodge (Chief Recovery 5 months
measures in relation to Officer)
Nissan’s new supply chain
structure
5. Analysis of financial related
transactions as a consequence
Joseph Peter (CFO) 6 months
of strategic change
implemented
6. Monitoring and review
Toshiyuki Shiga
through feedback, survey and 6 months
John Martin
open discussions