Introduction
The March 2011 earthquake significantly impacted numerous businesses’ financial health and the lives of thousands of Japanese individuals. One of the businesses that took a severe hit was Nissan. The Japanese car sector has suffered greatly due to this issue. Japan was about to lose its competitive advantage in the global automobile sector after only recently gaining ground there (Schmidt & Simchi-Levi, 2013).
Nissan has been severely impacted despite being one of the market leaders. Most of the company’s risk management plan was based on her expertise. The goal of the risk management team was to identify current dangers and swiftly eradicate them.
Because employees lacked the requisite abilities, the absence of training made the procedure extremely challenging (Schmidt & Simchi-Levi, 2013). After the disaster, production fell off quickly. Supply chain interruptions have impacted a lot of businesses. Still, Nissan has successfully mitigated this risk thanks to its risk management system.
Effective Aspects of Nissan’s Disaster Response
As the case study demonstrates, Nissan has concentrated on improving its supply chain to repair the losses caused by the earthquake. This action can be considered reasonable because it helps resolve the issues by supplying the required resources.
The key point was that the groundwork was set for recognizing issues and utilizing the resources to create a sustainable plan. The organization has many advantages, including rapidly handling the issue (Schmidt & Simchi-Levi, 2013). Regarding costs, the value can be attributed to the focus on production management and the decision to prioritize high-margin vehicles over low-margin ones, which will be financially beneficial in the long term.
Additional Preparedness and Response Strategies
Although the mechanism Nissan used to lessen the effects of the disaster was successful in its aim, there were still a number of ways to enhance the outcomes. For instance, better safety measures and a better disaster management strategy could be a huge improvement. Nissan executives appear to have overestimated the effects of natural disasters and, as a result, created a flimsy disaster management system (Schmidt & Simchi-Levi, 2013). One possibility, for instance, is to establish new routes by doing a more thorough analysis of the local infrastructure. This will benefit organizational development and lower production costs due to the potential focus on local routes.
Risk Assessment in Nissan’s Supply Chain
Building strong, cooperative connections with primary and secondary suppliers would aid the business in determining which one is best equipped to offer alternative sources. This is because the business had to be in touch with the suppliers in case of an interruption. As a result, a business must be aware of all potential risks related to its suppliers, including those posed by their regulatory compliance, financial stability, political stability, and risk management procedures (Schmidt & Simchi-Levi, 2013). Finally, the business could take the initiative to make supply chain activities more transparent to get a clear view of material movement.
Impact of Product Line Strategy on Disaster Recovery
Compared to its rivals in the market, Nissan generally keeps a more straightforward product line approach. Following the catastrophe, the company implemented a “build-to-order” strategy for models with a high level of customization and low market demand and a “build-in-stock” strategy for models with a lower level of customization and higher market demand (Schmidt & Simchi-Levi, 2013). Due to the disaster’s significant impact on the company’s production process, the company was able to manufacture a product that assures a profit margin despite an increase in workload, thanks to this type of strategy.
Additionally, this product line strategy has helped the business streamline processes and product offerings, which has increased earnings significantly. Nissan, in particular, sustained significant damage to its six production plants (Schmidt & Simchi-Levi, 2013). As a result, the company’s strategy removed it from the attrition scenario by implementing the build-to-order method and achieving product specialization. Goods are defined as manufacturing a product that is in line with customer expectations and requirements.
Operational Changes and Future Risk Management
To prepare for possible difficulties in the near future, Nissan Corporation has addressed some operational issues in its business operations. The corporation has undertaken several measures to lessen the reliance on Japanese-manufactured components at its plants in international markets (Schmidt & Simchi-Levi, 2013). After learning many lessons from this catastrophe, the company decided to alter its method to improve its future. This included changing the way critical components are purchased to improve business continuity and lower the risk of supply concentration to level one, which should be less severe than other levels. This will affect the operations by altering the routes and diversification of products, which can lead to the initial costly proceedings but benefit the company in the long term.
Conclusion
Since a drop in production could result in a scarcity of product supply on the domestic or international market, one compromise that the firm’s management is currently making is that the company only continues its production on a local basis. By analyzing catastrophe risk at its quickly growing facilities in the international market and bolstering procedures throughout the supply chain, which includes secondary, tertiary suppliers, and beyond, the company hopes to boost resilience (Schmidt & Simchi-Levi, 2013). The company would be less vulnerable to damaging disruptions in the future by doing this.
Reference
Schmidt, W., & Simchi-Levi, D. (2013). Nissan Motor Company Ltd.: Building operational resiliency. Cambridge, MA: MIT Press.