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Introduction

Supply chain management refers to the process of managing services and goods that comprises processes for transformation of the raw materials into the end product. It involves streamlining the supply-side operations of the business through which customer value can be maximized for gaining the competitive edge within the marketplace (Ben-Daya, Hassini and Bahroun, 2019). The report will provide insight into Nissan Motor Co. Ltd is the Japanese multinational automobile manufacturer with their headquarters in Japan and they deliver their operations worldwide. Nissan was hit by tsunami, nuclear crisis and earthquake in 2011 in Japan. Due to this natural calamity, the production operations within the automobile industry was stopped and devastating influence is created on the supply chain operations of the firm. The report is based on the analysis of plan for recovering their supply chain operations, operational strategies to maintain the disruptions, recovery strategies and probable identification of improvisations for addressing future crisis. At last, recommendations will be provided through which the future concerns or issues can be handled effectively so that adaptive and strong supply chain capabilities can be created for overcoming the unforeseen crisis.

Analysis of Nissan’s Plan for Recovering Their Supply Chain Operations

Supply chain operations refer to the activities, processes, and systems work in together for moving products from supplier to merchant and then to their consumers. These enable to plan and implement flow of services and goods from their supplier to the consumers. For maximizing effectiveness, it is necessary to have evaluation of the extended supply chain and internal operations that comprises customers and suppliers for delivering their operations. It involves handling of the complete production of services or goods. The triple calamity across Japan that involved nuclear crisis, tsunami, and earthquake created huge pessimistic impact on the country and organizations delivering their operations (Rajeev et al., 2017). The supply chain operations for auto industries and electronic products are massively influenced and their services were affected. Recovery plan is structured, and documented approach that illustrates how quickly firm can resume their operations after unplanned incident has occurred. It comprises detailed action plan as a response to the unplanned action that took place so that they can get back to normal. The recovery plan considered by Nissan for addressing the calamity that has occurred are presented below:

Crisis management

It is defined as identifying the potential threat to the organization and their stakeholders for mounting the efficient response to it. It involves application of the strategies that have been designed for assisting the firms for dealing with the significant and sudden negative impact. For addressing the event that took place in Japan, for management of the crisis in the organization Nissan formulated GDCH (Global Disaster Control Headquarters) was formulated. It assisted in facilitation of the business continuity plan, real-time information, and employee safety measures updates. Nissan handled the issue in an effective manner as they have imparted simulations and training across the years to cope up with unforeseen events that can hamper their functions and operations (Koberg and Longoni, 2019). It enabled them to utilise their recovery approaches from that instant. The group is handled via Toshiyuki Shiga (chief operating officer) who have illustrated the efficient leadership abilities while handling the crisis. The employees who were given training can comprehend the situations in an effective manner and control them as per the requirements.

Redesigning supply chain and alternate sourcing:

The natural disaster that occurred have illustrates that the supply chain operations have to be redesigned along with this the alternative sourcing must be defined. It is essential to ensure that the organizational operations are conducted despite of the situations that occur as per the required standards. The organizations can minimize the influence through diversifying sourcing regions and execution of redundancies. Nissan has opted to request for the Tier 3 and Tier 2 suppliers for execution of alternative sourcing for all the parts to address the supply chain vulnerabilities. The supply risk management chain can be utilised that will incline the adaptability which will further enable ongoing productions to address the disruptions.

Agile and lean principles:

The production plans must be re-evaluated as an outcome of the crisis for businesses. The modifications can be made considering the agile and lean principles, the firms must rapidly respond to the altering situations and incline the operational efficiency. Nissan has considered these operations for identification of the patterns as an outcome of the recurrent power outages (Lambert and Enz, 2017). Nissan has enabled to regain their market and retain sales by emphasising on the ordering parts and models in the larger quantities through which operations can be conducted as per the requirements.

Just in time and inventory management manufacturing:

The triple disaster disruption illustrated the susceptibility just-in-time production systems. For ensuring steady supply of the components when crisis occurred there has to be relevant safety stock levels for investigation of the vendor-managed inventory through the assistance of critical suppliers. As a result of the strategy, they are more vulnerable to the incidences and thus, Nissan formulated the recovery team after the disaster so that they can handle the crisis that has occurred. The balanced strategy is being utilized through which inventory can be managed so that such sort of risks can be handled. The JIT method was used by the firm to address the risk associated with their operations and ensuring effective working and maintaining their operations.

The organizations must proactively handle the interactions among vendors, formulate the backup plans and improvisation of the collaboration for any sort of disruptions that might occur through creation of understanding related to complete network (Wieland, 2021). The supply chain mapping can be further utilised for identifying the vulnerability points related to the suppliers and supply chain activities.

Operational Strategies of Nissan for Management of Supply Chain Disruptions

The significant impact is created due to Japan’s devastating tsunami and earthquake that has created relevant impact on the supply chain of the worlds automotive industry. Nissan, Honda, Fuji, and Toyota had plants close to the impacted areas and they have been forced to shut these down due to the natural calamities that took place across the country. The organizations were forced to hold their production due to the shortage of the parts as there were logistic difficulties and relevant impact has been created to the tier suppliers’ plants. The three plants of the Nissan were shut down due to the disaster that has occurred. The automobile sector across the country has been effectively impacted, the damage that took place was approximately 235 US dollar that illustrated the difficulties that were being experienced by them while delivering their operations. The suppliers, dealers, and stakeholders were adversely impacted by the calamity that occurred and these were the natural disasters. Distribution and production operations were affected through the power disruptions and fuel shortages and even the employees cannot go to the employment places (Min, Zacharia and Smith, 2019). Tier 3, Tier 2, and Tier 3 suppliers had adverse effect due to the well-represented disaster that took place in Japan.

Nissan was prepared for the event through scheduled preparations and drills for the disasters that occurred and it acted beneficial for them as they were not caught off guard as compared to Honda or Toyota. The action plan was utilised by the management of the company after 15 minutes the disaster occurred but the plan was not perfectly prepared in context of the extent of damage that undertook (Li et al., 2020). The additional strategies were built by the management for ensuring that the impact can be mitigated at quick pace. The operational strategies considered by Nissan are presented below:

Strengthen the supply chain:

The suppliers must work in alignment with the organization through which supply chain issues can be addressed. It is determined that tier 3 and tier 2 suppliers of the Nissans were present in same direction i.e. Japan. It led to the disruption and shortage of the components through which supply chain operations can be conducted. For addressing this aspect, Nissan had a conversation with suppliers so that they can expand their operations in diverse locations. It will assist in decreasing the operations lag time in case if any disruption might occur in future (Sodhi and Tang, 2021). The supply chain operations of Nissan were impacted and supply chain operations must be strengthened. Through the support of the suppliers, their guidance, and resources, Nissan is ensuring the efficient and stable supply of the parts or components in future.

Manage demand:

The operations of the automotive industry were ceased due to 2011 disaster, and it became difficult for them to meet the market demands. Nissan managed to acknowledge the demands by considering the best-selling models across Chinese and US marketplace. The crisis has illustrated the value of enduring supplier relationships and cooperation among them, it assisted in the formulation of quick decisions, coordinate the recovery efforts and resume the business activities. When crisis occurred, supply chain became more resilient and they have formulated efficient relations with the suppliers through enhanced risk analysis, performance monitoring, and regular communication. Nissan emphasised on the well-being of their human resources and for this they formulated efficient strategies at the priority. The culture of cooperation and readiness is being developed by Nissan via a formulation of the precise hierarchy of the priorities, and implementation of the training exercises.

Stockpile inventory:

The term refers to the reserve supply of the essential accumulation in country for addressing the shortage. The components or inventory is kept at the backend for future usage or special purpose. It involves holding up the inventory that can be further utilised for meeting the needs of the consumer if any disruption occurred within the supply chain operations (Mohammed, 2020). It is an efficient strategy that can be relatively used for the management of organizational operations. Nissan has addressed the stockpile inventory through ordering the parts in bulk before the occurrence of the earthquake (Delic and Eyers, 2020). These components were utilised by Nissan during the crisis that took place and enabled them to deliver their operations for months.

Diversify supply:

It implies when the firm outsource their products from diverse suppliers to address the requirements of their potential consumers. If any disruption is experienced by the suppliers or facilitator then the benefits can be attained by the firm as their operations will not be impacted. It was identified by Nissan when crisis took place that all the tiers are present in the same location in which disruption occurred. It was the essential aspect of the strategy that was considered by them as was the critical issue faced in 2011.

Backup supply:

Nissan utilized common parts across the global scale that furnished them with the low-cost edge during the global crisis as they were entirely dependent on the particular suppliers for delivering their operations. Backup supply implies emergency vendors or suppliers that can be utilized when disruption among main suppliers occurred. These vendors can be utilized in case any disruption or emergency occurred (Green et al., 2019). Employees from the distinct sites work in alignment so that supply chain integration operations can be maintained that offers them with the backup support when required. It is the ability of suppliers and employees of Nissan that they work together to have the speedy recovery of the operations.

Recovery Strategy of Nissan and Identifying Improvements to Deal with Future Crisis

The term recovery strategy is defined as the organizational plan to respond to the incident and disaster recovery plan illustrate how firm must response to diverse situations. The recovery strategy utilised by the Nissan is effective and efficient within the minimization of damage that is done to the operations and crisis recovery. There are certain aspects in which improvisation are required for tackling the issues in better manner. The crisis management team formulated by Nissan ensured that they had efficient team for development, directing, and deployment of the recovery strategies. Initially, the team formulated precise risk assessment and ensured that the operations have been conducted effectively like evacuation routes were well prepared and has practiced the drills adequately (Pettit, Croxton and Fiksel, 2019). The employees and all the members of the organization have to adhere the procedures that were developed, analysed and are precisely interacted to the human resources. It is essential that the procedures are smoothly and quickly implemented when calamity occurred.

Nissan can enhance their strategy for better management of the future crisis through switching to just in time case method for the management of their inventory. The components and materials are on hand so these can be accessed when these are required within the manufacturing processes. The organization can make investment within digitalization and technology through which they can have inclined access to the resources as per the requirements. The enhancement of the supply chain resilience need usage of the technology through which they can understand the market requirements and formulate the strategies considering the demand statistics and analysis that will be attained. The capacity will be inclined to foresee the issues that might impact their operations, smoothly react to these and mitigate the impact that will be created on their functioning (Nakasumi, 2017). The digitalization will enable Nissan to attain visibility into their operations, monitor them and develop the decisions considering the real time data. Here, firm can also opt for the communication technologies through which they can analyse the supply chain operations and accordingly address the market requirements.

Nissan can attain benefits through segmentation of their supply chain operations by minimization of reliance on any specific vendor or supplier. It will assist them within diversification of the risk that might occur in future and have access to the resources so that their operations do not come to a halt (Kırılmaz and Erol, 2017). For instance, Nissan can opt for not manufacturing all the components from the same suppliers belonging to same region instead they can opt for the parts from diverse suppliers. In future, if in any region any calamity occurred then still they can conduct their operations. It denotes that their manufacturing will not be impacted in all the regions through the supply chain disruptions within the single geographic region. The segmentation can be done considering different factors such as variety, quality, demand uncertainty, and volume (Farooque et al., 2019). It will allow Nissan to conduct their operations and ensure that needs of their potential consumers are addressed. To deal with the impact created through natural disasters like earthquake or tsunami, the organization can attain advantage through regionalizing their supply chain through which the influence of losing production from one plant is present in the same region. It will assist in containing the impact of disruptive event in the same region which will further minimize the overall cost.

The operational strategies and GDCH that Nissan used assisted them to have resilience within their recovery efforts. The firm was prepared from years so that they can effectively deal with the critical scenarios. The structural updates were made by Nissan in 2003 in their facilities and plants within the earthquake-prone areas so that they can respond to such disasters in better away. After the disaster occurred the priority was made on the safety pf their employees and suppliers which assisted them to formulate the loyalty and attain the dedicated workforce, this made the organization more resilient (De Angelis, Howard and Miemczyk, 2018). The communication was left open so that assistance can be provided if anyone needs it, it implies that the recovery plan formulated by the organization was efficient to cope up with the safety requirements of the human resources and stakeholders of the organization. It is recommended that the tier 3 and tier 2 suppliers of Nissan must spread out in terms of diversity and geographical location. It will assist them to have emergency supplies if similar situation will occur in future.

Nissan must develop the strong relationship with their suppliers as it will enable them to deliver their operations in different countries and ensure that their requirements are addressed timely. Responsiveness and resilience can be improvised when effective supplier development plans are practiced and long-term alliances prevails among the resources that are available. The trust has to be developed through which all the entities can work as single unit to cope up with the disaster and ensure that their functioning is not impacted. The effectiveness of the supply chain enables organization to sustain om the marketplace and address their requirements. It assists firm in smoothly delivering their operations, the firm must also identify the strategies that are used by their competitors so that they can have leverage from the one that will yield them better outcome.

Conclusion

From above it can be concluded that, supply chain management refers to the process of ensuring availability of the resources on time and as per the organizational requirements. The natural disasters can take place at any instance and for this organizations must be prepared beforehand so that they can conduct their operations and ensure that resources are not influenced. Nissan was the firm that quickly responded to the calamity as the supply chain capabilities possessed by them were robust enough for addressing the disaster and efficient management enabled to get the operations back on the track. The supply chain was more vulnerable to the incident as the firm has mostly concentrated their functions across single region and this was the primary reason that they were impacted through the event. The recovery strategy was executed by the management after 15 minutes the disaster occurred but there was the scope for its improvement. They firm must segment their suppliers from their regions so that if due to any reason there is disruption then they can attain response from the other. Further, digitalisation and technology will enable them to analyse the prevailing situations and accordingly they can formulate the decisions.

References

Books and Journals

Ben-Daya, M., Hassini, E. and Bahroun, Z., 2019. Internet of things and supply chain management: a literature review. International journal of production research57(15-16), pp.4719-4742.

De Angelis, R., Howard, M. and Miemczyk, J., 2018. Supply chain management and the circular economy: towards the circular supply chain. Production Planning & Control29(6), pp.425-437.

Delic, M. and Eyers, D.R., 2020. The effect of additive manufacturing adoption on supply chain flexibility and performance: An empirical analysis from the automotive industry. International Journal of Production Economics228, p.107689.

Farooque, M., Zhang, A., Thürer, M., Qu, T. and Huisingh, D., 2019. Circular supply chain management: A definition and structured literature review. Journal of cleaner production228, pp.882-900.

Green, K.W., Inman, R.A., Sower, V.E. and Zelbst, P.J., 2019. Comprehensive supply chain management model. Supply Chain Management: An International Journal24(5), pp.590-603.

Kırılmaz, O. and Erol, S., 2017. A proactive approach to supply chain risk management: Shifting orders among suppliers to mitigate the supply side risks. Journal of Purchasing and Supply Management23(1), pp.54-65.

Koberg, E. and Longoni, A., 2019. A systematic review of sustainable supply chain management in global supply chains. Journal of cleaner production207, pp.1084-1098.

Lambert, D.M. and Enz, M.G., 2017. Issues in supply chain management: Progress and potential. Industrial marketing management62, pp.1-16.

Li, G., Li, L., Choi, T.M. and Sethi, S.P., 2020. Green supply chain management in Chinese firms: Innovative measures and the moderating role of quick response technology. Journal of Operations Management66(7-8), pp.958-988.

Min, S., Zacharia, Z.G. and Smith, C.D., 2019. Defining supply chain management: in the past, present, and future. Journal of business logistics40(1), pp.44-55.

Mohammed, A., 2020. Towards ‘gresilient’supply chain management: A quantitative study. Resources, Conservation and Recycling155, p.104641.

Nakasumi, M., 2017, July. Information sharing for supply chain management based on block chain technology. In 2017 IEEE 19th conference on business informatics (CBI) (Vol. 1, pp. 140-149). IEEE.

Pettit, T.J., Croxton, K.L. and Fiksel, J., 2019. The evolution of resilience in supply chain management: a retrospective on ensuring supply chain resilience. Journal of business logistics40(1), pp.56-65.

Rajeev, A., Pati, R.K., Padhi, S.S. and Govindan, K., 2017. Evolution of sustainability in supply chain management: A literature review. Journal of cleaner production162, pp.299-314.

Sodhi, M.S. and Tang, C.S., 2021. Supply chain management for extreme conditions: research opportunities. Journal of Supply Chain Management57(1), pp.7-16.

Wieland, A., 2021. Dancing the supply chain: Toward transformative supply chain management. Journal of Supply Chain Management57(1), pp.58-73.

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