2-2 Final Project Milestone One: Managing Operations

Christian Meese

QSO-300-X1714 Operations Management 19EW1

9/12/19
 In 2011, Japan experienced one of the largest humanitarian’s crisis’ ever recorded. Between

an earthquake, a tsunami, and finally a nuclear disaster, it was clear to the world that Japan

would struggle. 25,000 people died, went missing and were injured, 125,000 buildings were

damaged which amounted to trillions in costs (Schmidt & Simchi-Levi, 2013). What made the

event even more devastating was that most of Japan’s exports are for the automotive industry.

It’s currently estimated that up to 80% of automotive manufactures had to cease production

during this time period (Schmidt & Simchi-Levi, 2013).

Operations management refers to the administration of day to day tasks to create the highest

level of efficiency possible. Nissan brings value to it’s customers by producing automobiles. In

reference to operations management, producing vehicles at the highest efficiency is what Nissan

does on a daily basis. Examples of Nissan using operations management within their company

includes keeping a low SKU amount in production (Schmidt & Simchi-Levi, 2013). This allows

them to focus in on a couple vehicles being extremely finished and efficient rather than trying to

have a wide assortment of vehicles and they all be halfway done. They also bring value to its

customers by having a more efficient production line (Schmidt & Simchi-Levi, 2013). By doing

this, they can have the finished good out the door quicker while remaining lean. A third example

of Nissan bringing value to its customers is them having a decentralized chain structure (Schmidt

& Simchi-Levi, 2013).

Nissan also has a very large competitive advantage and achieves this through operations

management. Due to its decentralized chain structure, it allows each location to make its own

decisions rather than wait on every branch to decide. This fast-paced decision making gives

them a competitive advantage by eliminating time waste. Another way it achieves competitive

advantage through operations management is by having a low SKU level. As said above, this
allows them to focus on a select few vehicles and do them exceptionally well. With the last

statement in mind, they take it a step further by having lean production lines. By doing this,

they’ve eliminated the waste that other automobile manufacturers deal with daily.

One key difference between service operations and manufacturing operations is the idea of a

tangible or intangible product (Williams, 2014). A finished good like a Nissan Maxima is a

tangible product. The customer can touch and drive it. An intangible service they offer is

warranties. While the warranty on a car may end up being a tangible product such as oil

replacements, the idea is an intangible product. Both operations provide value to the customer,

but through different ways. A vehicle will satisfy a customer need for a vehicle while providing

enjoying and a means of transportation. A warranty will satisfy the end need of a customer by

providing the services a vehicle would need to continue running long term.

PERT is Project Management and Review Technique. CPM is the Critical Path Method. The

main differences between them is that PERT event oriented and CPM is activity oriented

(Aditya., (2019) With PERT, Nissan could use this to plan new cars or concept cars since it’s

more of a one-off activity. Nissan would use CPM when working on doing cars repeatedly since

it’s a reoccurring activity.

The steps to developing a forecasting system are as follows: determine the use of the

forecast, select the items to be forecasted, determine the time horizon for the forecast, select the

forecasting model(s), gather the data needed to make the forecast, make the forecast, and validate

and implement the results ((Schmidt & Simchi-Levi, 2013). In determining the use of the

forecast, Nissan could determine they would like to forecast sales. They could select any of the

vehicles they have to offer, such as the Nissan Maxima. They then would determine how often

they would like to forecast the sales of the Nissan Maxima such as quarterly or yearly. They
might use past sales data to determine a statistical model that shows the appropriate sale forecast.

When they gather data, they may look at sales of previous models of the Nissan Maxima, or they

may look at current trends of cars of that size and determine the likelihood of their car being the

top contender. When they make the forecast, it’s likely that they’ll soon implement the results.

Implementing the results will likely be having the marketing department make the necessary

adjustments to meet or exceed their forecast.

Supplier chain risks are 100% unavoidable in any company. With each risk, there ways to

mitigate the risk and still provide a quality end product or service to a customer. Nissan may

face a supplier quality issue. They can mitigate this issue by setting standards for its suppliers,

doing quality control as the parts are installed, and if needed, issue recalls for the faulty parts.

Another risk Nissan may face is logistics delays or damage. This is something they faced in the

2011 crisis. They could mitigate this risk by having factories in other places of the world to

ensure if a disaster strikes, they’re not completely out of the game.

Despite facing natural disaster and unsure times in the economy, Nissan has continued to be a

driving force in the automobile manufacturing world. They’ve used operations management

techniques to maintain their highly efficient production. They’ve implemented different

techniques such as PERT and CPM depending on the projects they’re working on. Most

importantly, they’ve figured out ways to mitigate risk before the risk ever happens. Due to this,

they will continue to be a driving force for the foreseeable future.

 Work Cited

Schmidt, W., & Simchi-Levi, D. (2013). Nissan Motor Company Ltd.: Building Operational

Resiliency .

Heizer, J., Griffin, P., & Render, B. (2013). Operations management. Toronto: Pearson

Williams, M. (2014, July 2). The Key Differences Between Manufacturing and Service

Operations. Retrieved from http://www.changewise.co.uk/the-key-differences-between-

manufacturing-and-service-operations/

Tuabur, Sreekrishna, K. A., Bikash, Ahmad, A., Ali, M., Alvarez, … Aditya. (2019, January 8).

Difference Between PERT and CPM (with Comparison Chart). Retrieved from

https://keydifferences.com/difference-between-pert-and-cpm.html