Introduction
Technological progress brought many changes to the way humans lived and, in particular, how they produced goods. The old ways of homesteading and self-sufficiency gave way to massive economies of scale. There was no other way, as the population soared and concentrated around economic and industrial hubs. Investigating what drove people to sacrifice their time to a company became as important as investigating nature itself. For the entirety of the value stream, all links of a given supply chain are populated by humans, which need to be managed as well as the tools they use. The way people work needs to be directed, and optimal working conditions need to be created to maximize value.
To answer this need for directing people and their work, numerous business people and academics developed the science of management. Management of tangible business processes, inputs, and outputs is done at the level of operations management. Operations management is connected directly to the value stream and is thus tasked to maximize its effectiveness and efficiency. Competent operations managers are essential to a profitable and stable business. They make the strategic decisions that set up a direction for the company for many subsequent years and design its entire mode of operation. Within their purview is establishing facilities, deciding on their layout, procuring and maintaining equipment, and deciding on products or services provided by the company. These decisions are precise what shapes the company, lays the groundwork for its culture, and dictate its position in the market.
Having done that, operations managers must maintain the business processes they set up. A business is run by performing persistent tactical and operational tasks, such as scheduling shifts, performing quality assurance, or managing inventory. Managing employees and projects are also within the scope of operations management, directly influencing the day-to-day life of regular employees. There is a strong case to be made that operations management is the single most crucial part of running a successful company.
All of these tasks can be given either to upper management or to lower-level management. However, the operations manager’s position combines the strengths of both while relieving the burden of both and allowing them to focus on tasks they are best suited for. Operations managers have a holistic outlook and a bird’s eye view of the entire company that allows them to make meaningful decisions that take everything into account. At the same time, they are involved with all the business processes directly enough to know what the real situation is, as well as the actual needs and capabilities of the company. They are directly connected to each functional department and possess tremendous insight regarding the company, the market, and, to some extent, the world.
Management Approaches
Such a vital and prolific profession as a manager has developed a multitude of different strategies and approaches, each focusing on a particular aspect of a business, and each seeking to achieve excellence through different means. Some of these novel approaches to management were created in Japan. The booming economy that exploded onto the international market with its expertly-made goods lent itself well for developing unique styles of management. A particular example is Just-in-Time, which is aimed at eliminating as much waste as possible and creating as efficient a workflow as possible. JIT has been characterized in the literature as being a management approach, a manufacturing approach, and even just a loose set of techniques. Its effectiveness outside Japanese corporate culture has also been debated. While experts do not agree on what JIT actually is, most of its core tenets have been shown to be effective (Mackelprang & Nair, 2010). The approach has been developed in Toyota in the 1960s, which means it is rooted in manufacturing complex physical machines. However, the ideas behind it can be extrapolated to a variety of different business models.
Primarily, JIT is aimed at eliminating as much waste and inefficiency as possible by optimizing the manufacturing process. An important step is establishing various automated systems and practices that minimize errors and catch them on the production floor, rather than the finished product. The floor itself is operated in a flexible way that facilitates teamwork and empowers high-skilled employees. JIT recognizes that workers are the source of all of the high-quality products, and thus the workers need to be respected and given a healthy environment to work in. Operating and striving in a competitive market requires continuous improvement, and JIT both incentivizes employees to improve the workspace and sets the workspace in such a way as to improve the workers. JIT values organization, tidiness, purity, cleanliness, and discipline, which are essential for a safe and productive work environment. The method encourages upholding business relationships with a smaller number of suppliers, which can draw focus on the quality of these relationships and subsequent services rendered to the customers. Having well-maintained supply lines can ease delivery, making it ‘just in time,’ as the name suggests.
As JIT is concerned with the production floors, supply lines, and functional department relationships, it is well within the scope of operations management. Implementing the method requires furnishing facilities with specialized equipment, creating an efficient layout that can support variability in number and specialization of employees, thus adapting to changes in demand. It also requires hiring and training high-skilled employees and managing their workflow. The effectiveness of the approach needs to be monitored in real-time to steer executive decisions regarding its full implementation. JIT allows operations managers to select best practices according to the company’s needs, for which they are uniquely suited. As JIT is a time-tested approach endemic to the Japanese car market, Nissan is likely to have tested or even adopted it already.
Perhaps the logical development of JIT, Lean production, is also a management approach aimed at efficiency. Its primary aim is to eliminate waste by cutting out any processes that do not add value. The core tenets of Lean production explain that the product’s value is signified by the customer, who needs a specific product at a specific time, which means that there need to be as few obstacles on the value stream as possible. Having cut out all the inefficiencies and wasteful processes, Lean production ensures that high-quality product or service is made as quickly as possible. To ensure this efficiency, Lean is aimed at ‘pull’ production instead of ‘push,’ which means that products are made as the customers demand them, rather than made and pushed into the market.
This principle resembles JIT and appears to have been specifically aimed at reducing inventory costs. Lean is also aimed at creating a healthy workplace environment for employees and empowering them to bolster the company, while also making sure they do not make avoidable and mistakes. This approach mirrors JIT substantially, and operations managers are suited to test and adapt it for similar reasons. Just like JIT, Lean was developed in Japanese manufacturing plants and disseminated due to its apparent effectiveness.
Eliminating waste and minimizing mistakes is a common theme in managerial approaches. Six Sigma, developed at Motorola, is an approach that is aimed at bringing quality into the company culture. According to Six Sigma, mistakes, waste, and inefficiencies happen because of deviations from the ideal business process. Eliminating defects from the end product requires employees to eliminate these deviations. The end goal of Six Sigma is quite similar to JIT and Lean production: excellent quality delivered to the end customer efficiently, while also involving employees in satisfying and meaningful work. A novel principle that Six Sigma added was high-quality after-sale service, which is also seen as part of the business. That particular change is beneficial as the market shifts from goods to services, and value streams become much more than merely turning raw materials into consumer goods.
Another notable difference is the increased reliance on data and analytics. A large portion of the Six Sigma method is aimed at collecting data and analyzing it to recognize what the customers want, what the potential defects in the business process are, and what the best approach to remove them is. The data-driven approach can help the business operate at the best possible capacity with limited resources, manage space better, and scale operations according to available materials. Along with the reliance on data, Six Sigma also recognizes the importance of bringing benefits to highly trained workers and making higher-level management responsible for their own business. As Six Sigma is a particularly knowledge-based approach, it can help operations managers make informed decisions. Its all-encompassing nature can lend itself well to a pick-and-choose approach that could help focus on best practices and discard ineffective ones, according to the operations manager’s discretion.
Another management approach that facilitates a broad culture shift is Total Quality Management. Its central idea is very simple: delivering 100% of the quality possible in all possible dimensions. However, the road to get there that TQM proposes is multifaceted and complex. TQM is aimed at determining what the customer needs, and then providing it at the least possible cost, while eliminating waste, limiting deviations, and ensuring quality. TQM makes a point of involving the employees in this process as a common theme for all managerial approaches. The workers know the business, and they have unique insights that should be utilized. Aside from employee involvement, TQM’s unique focus is on cost management. Both high quality and low quality have their costs, which must be taken into account when developing a business and creating a product. Low quality can cost a company its customer base, waste time or materials on fixing defects, and involve a company in avoidable litigation and conflict with partners and contractors. At the same time, producing high-quality goods will incur costs through employee training, quality assurance, rigorous inspections, and paying salaries to the employees involved in quality assurance.
TQM directs a business through these costs by following the customer’s requirements and eliminating all possible inefficiencies. There is also a unique pressure of doing everything right the first time, as correcting mistakes is an unnecessary cost that can harm the company. TQM recognizes the value of effective management and warns against planning poorly. An effective operations manager is involved with both strategic and tactical decision-making, becoming the ideal vessel for implementing TQM.
Recommendations and Conclusions
The most important thing to consider with all of the approaches described above is that they are tools developed for a particular purpose. Running a profitable business is a complicated task that is contingent on a multitude of factors. For Nissan, in particular, these factors are unlikely to stem from poor plant organization or inefficient manufacturing and delivery processes. Nissan has had a history of poor performance, which stemmed from financial as well as cultural reasons. One of the most effective practices in the past was to reorganize its promotional and reward structure to favor performance over seniority (Ghosh, 2002). Another impactful change was a reorganization of relationships with business partners and decoupling them from costly Japanese tradition. Considering the effectiveness of that particular change within the context of Nissan and Japanese corporate culture, in particular, it becomes apparent that the most useful thing to do is to monitor performance and reward it, as well as viewing tradition with a critical lens.
Nissan’s primary business objective is to provide high-quality automobiles at competitive prices, and corporate traditions must be excised if they are an obstacle. Neither Lean nor JIT operations are necessary for Nissan to flourish, as it is incredibly likely that the best practices of these approaches are already adopted. To maintain effectiveness and efficiency, Nissan needs to value its high-performing employees and reward practical new ideas rather than tradition and complacency. Thus, data-driven solutions would be best to implement to facilitate growth. A savvy operations manager would do well to consider the most effective elements of Six Sigma and TQM and implement them selectively with employees and culture in mind. Workers have always been the most important and the most useful asset of any given company, and managing them well should be Nissan’s first priority.
References
Ghosn, C. (2002). Saving the business without losing the company.
Mackelprang, A.W. & Nair, A. (2010). Relationship between just‐in‐time manufacturing practices and performance: A meta‐analytic investigation. Journal of Operations Management, 28(4), 283-302.