A breakdown in the distribution network is a disturbance in the movement of procedures involving businesses engaged in manufacturing, selling, or disseminating particular merchandise or offerings. Foreseeing and planning for natural catastrophes such as earthquakes and tsunamis is challenging. For instance, due to the natural calamity in Japan, Nissan lost 2,300 automobiles that were scheduled to be sent to the United States. Planning for calamities is crucial to the sustainability of a firm and should be specified as a corporation method for minimizing destruction and missed manufacturing time in the event of a disaster. The purpose of the paper is to evaluate the operational and recovery strategies implemented by Nissan.
Nissan’s Plan to Recover Its Supply Chain Operations
Because of Nissan’s readiness, they were able to restore manufacturing quickly, permitting them to commence reimbursing lost financials before their rivals. Therefore, this reduced the $25 million a day they would have proceeded to incur. Nissan did encounter certain obstacles when attempting to recover lost equipment, including the need to stockpile collection, diversify logistics, provide backup supply, manage demand, and bolster its distribution network. Having a contingency supply and expanding the use of several suppliers would aid in solving the issue (Shekarian et al., 2020). When a calamity strikes, being flexible about where a firm’s parts come from can lessen the likelihood that the business will be damaged.
Numerous international vendors are advantageous because if a catastrophic event afflicts one region, the other areas can assist with the work. Despite the fact that Nissan has conducted drills since 2003, it is substantiated that the company’s organizational methodology was to prioritize the protection of its staff and understand the wellbeing of its distributors, suppliers, and affiliates before determining the most effective methods for rebuilding activities. However, none of the aforementioned tactics could have been successful (Olivares-Aguila and ElMaraghy, 2021). Nissan failed to quickly assemble its top leaders to examine the disaster and generate potential remedies.
Every firm should have an emergency response plan in place. Plans for calamities are crucial to a firm’s sustainability and should be specified as an enterprise solution to reduce disruption and lost manufacturing time in the event of a disaster. Commercial reconstruction operations also require disaster recovery tactics, which can be identified as a part of an institution’s business continuity strategy (BCP). The primary objective of BCP is to eliminate company disruption and swiftly recommence all functions in the case of a crisis (Aziz and Jambari, 2019). Plans for recuperation in the aftermath of a tragedy should include the actions necessary to reestablish fundamental support structures. Generally, connectivity, hardware, and IT capabilities are the systems most severely damaged by emergencies.
Regarding Nissan, the firm’s Business Continuity Plan (BCP) is established at its Global Disaster Control Headquarters (GDCH) in Yokohama. Nissan’s approach prioritizes employee safety, as well as the safety of suppliers, dealers, and other related businesses (Gong et al., 2021). To safeguard the security of its distribution network and personnel, the firm developed a safety verification system. Initially, the program was email-based, but Nissan transitioned to an effective web-access scheme.
The organization had practiced emergency exit and command posts well in advance of this event, which was crucial for their resiliency. Due to their annual exercises and rehearsals, Nissan could undertake disaster recovery expeditiously and with precision (Anbumozhi, V. and Kimura, 2020). Hitoshi Kawaguchi, Nissan’s senior vice president at the time, stated that once individuals are prepared for all types of emergencies, they do not despair (Anbumozhi, V. and Kimura, 2020). Due to their preparedness, the company managed the earthquake with prudence and composure. Therefore, this eliminated some of the $25 million they would have continued to lose each day.
Nissan resumed all operations in just one month, whereas other companies could not carry out their activities. Due to Nissan’s sophisticated development and testing of seismographic modeling, they were able to promptly respond to the detrimental tremor that struck on March 11, 2011, and guaranteed that they had made adequate preparations beforehand. Emergency procedures and egress pathways were among the vital data that was kept, produced, and distributed to personnel. During a natural disaster, the executive group at Nissan assured that staff safety was accorded the utmost importance. Consequently, Nissan’s BCP is regarded as one of the business’s top mitigation and incident management tactics. Due to these tragic events, the corporation was capable of providing automobiles to the USA and Chinese marketplaces when its rival companies were unable to (Ivanov, 2018). Nissan demonstrated remarkable resilience in the face of the tragedies on their doorstep.
Operational Strategies
A firm’s operations are planned, analyzed, and executed using its operating model. Using operational frameworks, enterprises establish and implement cost-effective procedures for producing and delivering services and products. To optimize earnings, an entity’s activity plan facilitates its overall strategic plan (Wang et al., 2020). The size and quantity of a business’s manufacturing facilities impact its operational effectiveness. To operate well, specific structures require attainable production targets, defined safety protocols, and inventory management systems.
The primary operational solutions for handling supply chain disruptions include inventory stockpiling, supplier diversification, alternative supply, demand control, and distribution network reinforcement. Stockpile inventory is merchandise that is stored and later used to fulfill consumer requirements despite interruptions in production (Hamm et al., 2022). The manufacturing system of a company dictates the short- and long-term management of how materials are transformed into competitive goods and services. An entire production network has distinct processes, quality assurance standards, and distribution network management techniques. During crises or natural catastrophes, stockpiling inventory that can be used in emergencies is the primary tactic (Hamm et al., 2022). Nissan had bought many parts, and their arrival coincided with the period shortly before the earthquake. The risk mitigation strategy is crucial for this stock stockpiling technique.
Nissan has an effective risk administration system in place, which offers it a significant advantage when stockpiling inventories during a catastrophe. Diversify distribution is when businesses acquire products from different merchants and institutions so that a malfunction with a single supplier or center does not affect the total supply (Todo and Inoue, 2021). Nissan has efficient logistics partner synchronization and has broadened its supplier to regulate its distribution network. Nissan’s usage of ubiquitous and standardized components worldwide culminated in low-cost production. Nissan offered a variety of vehicles under the Nissan and Infiniti brands, thus, producing intriguing and novel items. Therefore, this enabled Nissan to build only its best-selling automobiles during a time of difficulty.
Demand approach encourages consumption to more closely match accurate supply by, for instance, modifying prices or providing incentives that motivate clients to buy items for which collection is less restricted. Nissan’s data governance and intelligent and quantitative control systems are superior. Nissan has a solid integrated research platform that may aid in demand management and, as a result, a solid operational plan. Nissan produced only the most popular designs and focused on vehicle deliveries to the American and Chinese markets. Thus, this allowed Nissan to deliver automobiles while its contemporaries could not, leading to increased sales.
An alternative supply is a non-regular provider or transport supplier that can be triggered in the case of a supply issue. Nissan’s downstream and upstream supply solution design allows reliable backup supplies. Personnel from other locations were requested to aid in the retrieval of damaged components. As such, better ideas were generated in a cross-functional and cross-regional approach (Son et al., 2021). The business ran at night and produced its electricity as the workweek was altered to account for the negative impacts of the electricity shortage. Nissan’s initial action was to safeguard the safety of its distributors, retailers, and related businesses (Son et al., 2021). It had been conducting trailing simulations to ensure priority decision-making rather than fear when a crisis comes.
Rapid and precise feedback indicated a functional recovery, and the corporation’s greatest asset was its capacity to collaborate with speed and concentration. Reducing the incidence and intensity of supply difficulties is achieved by fortifying the production process or collaborating with providers (Son et al., 2021). Nissan has deployed distribution network disruption methods to bolster its procurement. They have versatile and robust supply chain methods and appropriate value chain harmonization and incorporation (Son et al., 2021). Nissan has effectively controlled supply chain interruptions by implementing appropriate operating measures.
In contrast to other Japanese automakers, whose boards consisted solely of Japanese nationals, Nissan’s board consisted of individuals of many nationalities and had a Chief Recovery Officer. Nissan ensured that its Tier 2 and Tier 3 suppliers developed alternative sources for their components (Katsaliaki et al., 2021). Thus, this was done to guarantee that contractors could produce the same element in multiple facilities across the nation and to maintain supply continuity even during disruptions. It established a logistic portfolio management sequence and incorporated risk assessment features (Katsaliaki et al., 2021). After analyzing the catastrophe-related losses, they revisited and updated their emergency approach.
Recovery Strategies
Critical to the emancipation process, resilient techniques are a vital justice endeavor that transforms the influence of structures on people’s bodies, behaviors, and the institutions they establish. Corporate resilience is defined as an institution’s capacity to adapt swiftly to unplanned downtime, safeguard its individuals and assets, and continue commercial operations (Aldianto et al., 2021). It is also called continuity planning and strives to respond to challenging conditions, recover swiftly from them, safeguard personnel, clients, capabilities, the working atmosphere, and worker safety, and keep the system functioning efficiently.
Nissan’s proactive responses to the events outlined in the case are primarily attributable to the corporation’s well-organized incident management program. This technique included but was not confined to rapid decision-making and the company’s previously built skills that allowed for swift restorations. First, Nissan developed a clear hierarchy of significance and assessment, which is essential for synchronizing and disseminating the emergency administration vision with all participants for immediate actions contributing to snap decisions following the happenings. Moreover, Nissan utilized the swift recovery skills it had built in the past. According to Lei et al. (2021), Nissan had already arranged its safe places and paths in readiness, and the business had implemented seismic retrofitting and standards in all of its factories and facilities in earthquake-prone regions since 2003. Therefore, this indicates that Nissan had devised an effective response to the crisis far before it transpired.
It is noted that the organizational strategy was to prioritize the safety of its personnel and comprehend the wellbeing of its vendors, distributors, and linked companies before determining the most effective methods for resuming operations. However, none of the preceding options could have been successful. Nissan forgot to quickly assemble its top leaders to examine the calamity and generate potential remedies. According to Ivanov (2018), the corporation collaborated swiftly and methodically, paving the way for hundreds of personnel from other facilities to participate in the rescue mission.
Finally, the organization employs a dynamic distribution network tactic, contributing to greater overall robustness. Nissan demonstrated appropriate horizontal and vertical procurement integration throughout the text. As previously mentioned, Nissan anticipated requiring its Tier 2 and Tier 3 providers to use substitute purchasing for its components in the future to maintain a continuous flow of constituent elements (Katsaliaki et al., 2021). The firm’s risk administration program was prominently presented throughout the lawsuit. Their production process demonstrated versatility throughout the disasters’ effects.
The potential identification areas for improvement for Nissan Company to be better equipped to handle future catastrophes are as discussed herein. Executives at Nissan have the chance to enhance their effectiveness by improving and altering their workplace culture. For instance, Aldianto et al. (2021) reported that forty percent of US personnel think their jobs are worthwhile. Thus, this is disturbing because organizational culture begins with the company’s objectives. If a corporation’s culture is poor, its personnel lack focus, making it less robust and less productive over time. It can also impair the firm’s brand value, resulting in a loss of adaptability, creativity, and efficiency. Companies owe it to their workforce to fulfill their objectives in terms of reliability and concerning the company’s wellbeing. With the understanding that its staff is in synchronicity, Nissan has a chance to illustrate the business’s ideals to its clients (Fani and Subriadi, 2019). Additionally, core competencies can be included in a well-established decision-making system. Nissan’s purpose, goal, and ambition should be strengthened in the face of change.
In addition, by redefining the corporation’s customer experience, Nissan can be ready to confront the problems head-on. Enterprises need the commitment to remain adaptable in the face of current difficulties. Using complex algorithms, business executives must evaluate and enhance the user journey and third-party targets to provide a buyer engagement that fosters customer satisfaction (Fani and Subriadi, 2019). Nissan will be able to consistently provide its clients with the highest level of consumer care and the most outstanding shopper encounter by fostering an imaginative and transformative culture. Nissan must also build and cultivate new methods for customers to contact them.
In comparison to 2010, Nissan’s overall performance in 2011 was extraordinary. Nissan’s capacity to grow, analyze, and execute during critical times has been demonstrated through its success in the face of natural disasters. With solid business continuity strategies in place, businesses can set demands on their tier providers to guarantee that they can always satisfy their requirements even during a catastrophe (Rezaei Soufi et al., 2019). What Nissan has accomplished regarding supply chain administration is unprecedented.
After natural disasters, Nissan’s infrastructural and material issues are as follows: first, a fire broke out at Tochigi Factory and an Iwaki foundry, causing harm to lithium-ion batteries manufactured at Iwaki factory engines, Tochigi Factory, Oppama Factory, Yokohama Factory engines, and Zama Works. In addition, suppliers of components struggled to resume operations.
Overall, Nissan’s recovery measures were conducted effectively. They comprehended where resources must be allocated and discovered crucial connections required to restart operations.
Conclusion with Recommendations
The 2011 earthquake and tsunami were devastating natural calamities that wreaked havoc throughout Japan. Even if natural disasters cannot be predicted, one must constantly be ready for them. Japanese manufacturers, whose assembly lines were closed for weeks, were hit the worst by accident. In addition, 2,300 ready-to-ship vehicles to the United States were lost by Nissan. Given the ferocity of the storm, its course appears to be uncertain. However, Nissan should have prepared for the shipment of most of these automobiles to the United States before the accident, as this would have likely resulted in a minor loss.
The establishment of the Global Disaster Control Headquarters (GDCH) offered up-to-date information on emergency preparedness, promoted workers’ wellness, and secured the continuation of commerce. Therefore, this scenario should have been established before a natural disaster, even though it required no time to implement. Toshiyuki Shiga of the Global Disaster Control Headquarters stated that the organization has been conducting training exercises since 2003. In light of Nissan’s overall loss due to the tragedies, their conditioning workouts require enhancement.
Using what they have learned from the earthquake and tsunami, they may build a more comprehensive education program to brace for any foreseeable calamities that may transpire. Ultimately, natural catastrophes are unanticipated obstacles businesses must confront head-on to safeguard their properties and supply chain. Without suitable precautions, a company may suffer a complete loss or a slight rectification. On the other hand, Nissan addressed the recovery operations for the 2011 earthquake and tsunami to the best of their abilities through experience and the correct execution of risk and crisis response, as well as learning and methodical enhancement for future occurrences.
Recommendations
Although Nissan’s catastrophe rescue attempts have been lauded as the industry’s best emergency and incident administration tactics, Nissan has significant room for advancement in reducing the manufacturing impact. Nissan’s prospective path of action should involve an examination and eventual upgrade of its existing calamity recovery methodology to include extra safety precautions in the event of a catastrophe. The first modification should be explicitly connected to personnel training. Establishing a disaster recovery instructional program will ensure that personnel receives further education on responding during a tragedy. This learning experience should also cover how to manage corporate operations in the case of a calamity.
In this recommendation, a road map of assigned responsibilities should be provided. Therefore, this transition plan should include the method for submitting evaluation results and how and to whom they will be conveyed. Top executive personnel should also be engaged and determine who will appear at the catastrophe site to inspect any impacts and provide real-time choices on whether the workforce should proceed, halt, or pause vital commercial operations. Nissan will have a complete contingency plan with a more significant reduction in a manufacturing loss in the event of future calamities due to these modifications.
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