Nissan Motors: Surviving Japan's 2011 Triple Catastrophe - Case Study

Introduction

The case study of Nissan Motor company highlights the operation management strategies set in place during its hardest moments on March 11, 2011, when a 9-0 magnitude of the earthquake struck off the coast of Japan, Tsunami and the meltdown of the three nuclear reactors in Fukushima Daichi(Schmidt,& Simchi, 2013). This combined catastrophe of a tsunami, an atomic emergency, and an earthquake was a big blow to the Japanese economy, where 125 000 buildings were damaged. With this disaster, Japanese automotive factories suspended production, and the automotive industry dropped by 60% and never recovered until October 2011(Schmidt,& Simchi, 2013). Nissan, among other companies such as Honda and Toyota, were hard hit with its sic production facilities being damaged, and 50 of Nissan's vital suppliers were impaired (Schmidt & Simchi, 2013). Despite the shortcomings, Nissan had the right risk management and operation strategies that helped it come back to its feet.

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Case Issue Analysis

Disrupted Supply Chain

After the disaster, all automotive companies, including Nissan's supply chain, was significantly disrupted. The earthquake damaged more than 50 of Nissan's dealers and 40 of its suppliers, Tsunami, and the meltdown. The meltdown meant that electricity flow was disrupted, and no production would take place, making it hard for the company to maintain its production and supply levels at the time. Nissan closed 5 of its plants immediately after the disaster happened. Nissan lost 2300 vehicles that were ready to be loaded and transported to the US while its biggest supplier could not manage to supply, and employees were unable to reach to work (Schmidt,& Simchi, 2013). The automotive industry supply chain was cut down, and production operations were at zero.

Nissan motor company had a beneficial recovery process from the calamity that occurred in March 2011. It incorporated the layout operation management strategy in its planning and company structure, which was all-inclusive. Layout operation management strategy involves consideration of the right flow of information, safe working conditions of the employees, flexibility, and cost minimization (Render & Heizer, 1997). The corporate structure of Nissan was very different compared to other automotive companies whose board members were exclusively Japanese. Nissan's chairman and Chief Executive Officer was a French-Lebanese-Brazilian while its board members comprised of members of different nationalities (Schmidt, & Simchi, 2013). Colin Dodge, who was the only senior board member but a non- Japanese, took a unique role in the Chief recovery office at Nissan. The recovery committee was responsible for allocating supply such that the sales, marketing, and area supply chain management roles were incorporated to identify and decide how to allocate amounts globally. In this case, the company gave high-end models the allocation of available Global Positioning System (GPS) since they had high returns in the supply market (Schmidt,& Simchi, 2013).

The process operation management strategy was well set and implemented by the Nissan motor company. The company had laid down the processes that ought to take place in case earthquake-related calamities occurred. Nissan had an earthquake- response place put in place long before the occurrence of the 2011 disaster. Its approach was in case of such disasters like earthquakes, first and foremost was to confirm the employee's safety followed by suppliers and finally, the vendors. This safety confirmation system was shifted to the web, which made communication easier. After confirming the employee, suppliers, and vendors' safety, then the company would embark on recovery operations at all plants and business locations. It further adopted a location operation management strategy (Schmidt & Simchi, 2013). Process strategy involves plans setting aside plans to primarily support and sustain a business while delivering customer value McGinnis & Kohn, 2002), where it selected a global disaster headquarters which would be responsible for gathering information on facility damage, employee safety, and business continuity.

The company used an Agile operation management strategy to plan for any forecasted cases of earthquakes properly. Agile planning involves forecasting and estimating work using self-contained work units where they set the focuses on the set work and aims to complete it using laid procedures (Gates, 2018). Nissan had proper risk strategies set in place. Since some of its facilities and plants are located in earthquake-prone areas, the company had set the evacuation centers and routes ready (Schmidt,& Simchi, 2013). Additionally, it had, in the past, been applying seismic retrofitting and necessities in its facilities and plants located in earthquake-prone areas (Schmidt, & Simchi, 2013). Nissan ensured to practice regular drills and simulations every year and thus was able to carry out recovery operations in an advanced and focused way helping Nissan to predict and respond to every eventuality that followed the natural disasters (Schmidt, & Simchi, 2013). Therefore, Nissan made use of these early developed aptitudes to make a prompt recovery, which was a success.

Disrupted Communication

When the disaster occurred, the communication system of Nissan motor company was disrupted following the destruction of several of its facilities and plants. The loss of power and fuel broke down all the communication systems among Nissan plants and facilities. Besides, employees could not manage to report to work hence paralyzing the communication systems of the company.

Nissan automotive company had adopted an effective agile operation management strategy. The agile approach involves the ability of the business to respond faster and adapt to any changes in the business environment (Gates, 2018). Its plan was structured in a way that there would be quick decision-making processes. Within 15 minutes after the disaster struck, Nissan company had set up its global disaster control headquarters in its head office located in Yokohama (Schmidt,& Simchi, 2013). This type of response ensured that there would be business continuity, could update information on disaster management, and also work for employee's safety. The company established a central communication location where all information would be conveyed quickly and also involve not only Nissan's employees but also its suppliers. By making communication and information flow more accessible, the company slowly achieved business continuity and effective aftermath management of the disaster. The layout strategy was advantageous.

Conclusion

The case study of Nissan motor company response to the earthquake, Tsunami, and the meltdown of Fukushima Daichi reactors is a perfect example of how operation management strategies can be well planned and executed. Additionally, it shows the importance of laying the right operational management strategies for the success of any company. Layout, agile planning, and process of operation management strategies have been executed, which explains how Nissan motor company recover from the disaster and managed to stay afloat while all other automotive companies like Toyota and Honda are still struggling to recover from the accident.

References

Gates, L. P. (20180. Agile Strategy: Short Cycle Strategy Development and Execution. Retrieved from https://insights.sei.cmu.edu/sei_blog/2018/06/agile-strategy-short-cycle-strategy-development-and-execution.html

McGinnis, M. A., & Kohn, J. W. (2002). Logistics strategy-revisited. Journal of Business Logistics, 23(2), 1-17.

Schmidt, W., & Simchi-Levi, D. (2013). Nissan Motor Company Ltd.: Building Operational Resiliency. MIT Sloan management review, 13-149.

Render, B., & Heizer, J. (1997). Principles of operations management (pp. 518-520). Prentice-Hall. Retrieved from