Nissan Motor Company Ltd, established in 1933, is a well-known brand in manufacturing cars of today’s automobile industry, with its headquarters in Japan. Their main products include, automobiles, outboard motors and forklift trucks. Nissan used to market their autos under the brand name of Datsun which is a renowned car manufacturer. It is affiliated with Renault S. A. which holds its 45% of shares while Nissan has 15% of Renaults shares. It’s listed in the top 3 auto manufacturers in Asia.
It also owns the luxury brand called Infinity. With revenue of over $93 billion (2008) and operating income of over$1. 5 billion (2008) it’s one of the biggest automaker in the market. It has over 2 hundred thousand employees with a determination of constant improvement. In today’s global manufacturing market, there is a need for shorter product development cycles and tighter affordable business structures. It is therefore necessary to achieve ‘right first time’ and ‘on time’ designs.
Any unplanned or additional design effort or late design changes can have serious consequences on the timing, quality or costing of a development program. Burton (1998) and Naumann and Reck (1982) estimated that the suppliers account for 30 percent of the quality problems and 80 percent of the product lead time problems. Clark and Fujitmoto (1991) reported that an automotive assembler could reduce the engineering hours and lead time required for new model development by delegating part or the entire engineering responsibility to selected suppliers
Also with the trend for using ‘full service suppliers’ (i. e.suppliers who take full responsibility for all aspects of sub-system design, manufacture, program management and warranty) , close alignment and integration of the manufacturers with their suppliers at all stages in a development program are critical to meeting overall project objectives. (Southey Et all, 2000).
Early Supplier Involvement (ESI) is a means of integrating supplier’s capabilities in the buying firm’s supply chain system and operations (Dowlatshahi, 1998). Reduced cost, improved quality and design for manufacturability are the beneficial outcomes of early supplier involvement (Liker et al.) together also with greater customer satisfaction due to improved product performance. It is also important to achieve Proper
Timing of market entry with a new product. Earny et Al (2005) cited that late entry is a drawback to gain good market share and sometimes the firm doesn’t get good market and has to withdraw because of being late. (Dowlatshahi, 1999) developed a model for ESI which encompasses four components, including design, procurement, supplier and manufacturing. However the component of design is now focused more on process-development projects rather than on product development projects.
Because the four components of ESI are interrelated to one another, some of the tasks are performed with aid from other components and to form a seamless integrated supply chain information should flow freely between each component. Regarding the identification of suppliers, product development emphasizes more on the identification of suppliers. In process development, emphasis is placed both on identifying important technology as well as important suppliers. The selection of suppliers for process development should place greater emphasis on the technical capability of the suppliers.
Below is a model by Jiao et al( 2008) which compares ESI implementation with focus on product development and process development. Supplier selection criteria for process development have to emphasize more on technology capability of the supplier rather than total cost of ownership. Even though a supplier may have a higher total cost of ownership, the company is forced to engage it when it is the only company with the technical expertise. In addition, obtaining suppliers’ feedback regularly is important because they are the company’s “informants” on new technology.
Furthermore, process developments are more dependent on the OEMs because they produce the equipment. (Jiao et al, 2008) Supplier development has 4 stages. It includes identifying the supplier base as well as assessing and rationalizing, problem solving improvement, proactive condition development, and integration development. Aligning the processes has the additional advantage of increasing consistency and compatibility between the product design and plant capabilities, allowing a company to reduce tooling and manufacturing costs, and recover investment (Liker et al., 1996).
The creation of an agreed “co-development process” was felt to be accelerated when organizations conduct the activity together. However the challenge is how to improve the co development performance and how the separate processes and design teams of each organization could be integrated and aligned to improve their combined performance. The model by Evans and Jukes (2000) suggests that the alignment of processes proceeds in a series of steps, supported by joint team working.
In the first step you need to understand and internalize your customers’ product development cycle, and learn to synchronize internal product development practices to fulfill time, cost, and product requirements (Kamath and Liker, 1994). The second phase of process alignment requires knowledge to be shared across the collaborating organizations, the objective of which is to secure an in-depth understanding of each other’s current practices. Building a co-development framework is the third phase in the alignment process.
This requires the synchronization of both development processes to ensure compatibility and waste elimination between the organizations. The final step closes the loop and lesson learnt from the process is used as feedback for continuously improving subsequent processes. The capture, application and embedding of ‘lessons learnt’ within a Full Service Supplier environment is a complex task for any vehicle manufacturer. Capturing ‘lessons learnt’ relates to organizational learning and four stages of learning were identified which are: Knowledge acquisition, Knowledge dissemination, Knowledge utilization, Knowledge keeping. [Southey et al 2000].