Transcript pres miller nissan

John Miller
Vice President, Purchasing
Nissan North America, Inc.
Automotive News Manufacturing
Conference
John Miller
Vice President, Purchasing
Nissan North America, Inc.
CURRENT CHALLENGES
• Increasing price pressure on raw
materials
• Increasing price of oil and ocean freight
• Impact of global competition
• Increased outsourcing
• Financial instability of supply base
Bottom Line?
OEMs and suppliers must collaborate
to provide customers the greatest
value at the lowest cost
NISSAN’S APPROACH
Value network optimization strategy
Conducted within a framework of transparency and open
communication for mutual benefits – for Nissan and our
supplier partners
INITIATIVES FOR BETTER
PERFORMANCE
• 3-3-3
• Alliance Supplier Improvement
Program (ASIP)
• Leading Competitive
Countries (LCC)
INITIATIVES FOR BETTER
PERFORMANCE
• 3-3-3
• Alliance Supplier Improvement
Program (ASIP)
• Leading Competitive
Countries (LCC)
3-3-3 CONCEPT
3 Partners
Suppliers
Acceleration
3-3-3
Nissan
Nissan
Purchasing Promotion Engineering
Office
Technical information
Cost information
3-3-3 CONCEPT
3 Partners
3 Regions
3 Years
• PURCHASED PARTS COST REDUCTION ACTIVITY
• Cost reduction without negatively affecting performance,
perceived quality/reliability, brand image
• “WIN – WIN” FOR NISSAN AND SUPPLIERS
Not profit reduction, but base cost structure change
3-3-3 AND PDT
PRODUCT DEVELOPMENT TEAM PROCESS
PDT ensures good communication (Engineering, Purchasing,
Suppliers) related to part changes and/or opportunities
• Key PDT Objective:
− Communicate cost saving opportunities based on
benchmarking, best practices, specification
rationalization, etc.
• PDT Activities:
− Vehicle/commodity teardowns, parts
investigations, line walks, “CSP” days, progress
review meetings, etc.
30% annual cost-reduction savings since 2000
3-3-3 EXAMPLE:
VEHICLE TEARDOWN
Engineering, Purchasing
and Suppliers (PDT Team)
conducting part
investigation review
Generating Cost
Savings Proposals
(CSPs)
3-3-3 EXAMPLE:
SEAT FRAME BENCHMARKING
NISSAN
(USA)
NISSAN
(China)
COMPETITOR COMPETITOR COMPETITOR
A
B
C
INITIATIVES FOR BETTER
PERFORMANCE
• 3-3-3
• Alliance Supplier Improvement
Program (ASIP)
• Leading Competitive
Countries (LCC)
ASIP MISSION STATEMENT
ASIP is a cost-reduction program based on activities that
promote continuous improvement of Renault-Nissan and
its suppliers, applying the NPW methodology
DEFINITION:
A
S
I
Developed and applied by the Renault-Nissan Alliance
P
Programmed, structured, team-based approach
Deployed at the Supplier’s facility and its supply chain,
if necessary
Focused on QCD Improvement through effectiveness and
efficiency
Adopt the NPW principle and focus to implementation
(not to investigation)
ASIP SCOPE
is
is not
... an approach for continuous
improvement of the QCD:
• Developed for key RenaultNissan suppliers
• Followed by agreed-upon
action plans
• Applied to production, VA,
Logistics. in order to be
competitive (including Supply
Chain)
• Followed until implementation
• Accomplished by equal
relation between R/N
(Purchasing, Design and NPW
Dept. ) and supplier
• An audit to verify
• A project to reduce the
supplier’s margins
• A measure to get information
of cost benchmark and new
model planning of R/N
• A measure for R/N to get
information to make
negotiation favorable
• A session to negotiate prices
or volumes
WHAT IS THE ACTIVITY AREA?
Process
Improvement
B/O
parts
Logistics
Production
Cost / Price
SC Process
Improvement
Raw
Material
Activity area
Value
Analysis
O/H
Profit
PROCESS IMPROVEMENT
• Discussion about future supplier plans and
production policies
• Analyze and find potential in production and
production control
• To clarify the attainable / ideal condition
and to make an achievement plan
• Realize actual cost-down by R/N and
supplier
SUPPLY CHAIN PROCESS IMPROVEMENT
• Supplier member will lead it with R/N
VA
• Clarify ongoing ideas
• Drive current idea
• Realize visual control way
• Rise new item
PROCEDURE FOR FIXING
ATTAINABLE CONDITION
ATTAINABLE CONDITION
3
1
ASIP activity
4
Describe the attainable
condition using flow chart,
line-spec and W/S
ASIP CLOSING GAP STYLE
2
1 Opportunity identification by
flow chart, line spec, W/S
Ideal
condition
Benchmark
Attainable
condition
Potential
identification
Supplier
current
condition
2 Potential
3 Make attainable a
common understanding
4 Potential gap – Industrial
Engineering tools
ASIP ACTIVITIES
# of activities
FY06 activities = 872% ROI
64*
40*
CY
9
9
8
10
2005
2006
2007
(planned)
MEXICO
* Including kaizen expert companies
U.S.
EXPECTED BENEFITS
RENAULT/NISSAN
•
•
Cost reduction, which is
caused by exact cost
improvement
implementation
SUPPLIER
•
Realizes price down by
cost-down requested
by R/N
•
Carry-over of QCD
improvements on other
products, enhancing
competitiveness and margins
•
Gains from Supply Chain
Management
•
Acquires improvement
program
Understanding of supply chain
structure
Common understanding quality issues, delivery
characteristics and product cost
MUTUAL COMMITMENT &
COOPERATION
The supplier commits to:
• Keep promise, commit deadlines and
punctuality
• Provide active top management support
• Supply the required resources for each
phase of the project
• Nominate a team leader
• Open its organization in order to create
a transparent work environment
Renault and Nissan commit to:
• Keep promise, commit deadlines and
punctuality
• Respect the confidentiality of the
obtained information
• Provide the tools and techniques
necessary
ASIP EXAMPLE: TRUCK SEATS
IMPROVEMENT CONDITION
Total Element Time
Line Balance
67%
+13.6%
Total Element Time
Line Balance
Real Improvement
24.628 min
25.77 min
Output
66 pcs/hr
Operators
45
Shifts/Day
2
Productivity
1.46 pcs/hr/op
80.60%
+28.7%
Operators Difference
(Potential Target)
Operators Difference
(Gap Agreed)
12
Output
10
66 pcs/hr
Operators
35
Shifts/Day
2
Productivity
1.88 pcs/hr/op
INITIATIVES FOR BETTER
PERFORMANCE
• 3-3-3
• Alliance Supplier Improvement
Program (ASIP)
• Leading Competitive
Countries (LCC)
LEADING COMPETITIVE
COUNTRIES
30
Global LCC
utilization ratio
24%
20
10
Hungary
Romania
Egypt
0
China
India
Thailand
12%
FY05
15%
FY06
FY07
Vietnam
Mexico
Mercosur
NISSAN IN THE AMERICAS
Vehicle production plants
Smyrna, TN
Annual capacity
550,000
Canton, MS
Annual capacity
400,000
Aguascalientes,
Mexico
Annual capacity
350,000
Cuernavaca,
Mexico
Annual capacity
200,000
* Nissan and Renault vehicles
Curitiba, Brazil*
Annual capacity
50,000
THREE-STEP LCC
ANALYSIS PROCESS
Step 1:
If tier 1/2/3 component is
already localized, is it globally
competitive?
Action
Benchmark against PRC,
THI, BRA, etc.
Step 2:
If tier 1/2/3 is not currently
localized or LCC, can it be?
Benchmark supply chain
against other Nissan and
non-Nissan suppliers
Step 3:
If tier 1/2/3 cannot be localized
or LCC, is the price globally
competitive?
Benchmark against price
paid in other Nissan
regions
CONCLUSION
Success in this industry is linked to
providing customers with the greatest
possible value at the lowest possible cost
Automakers and auto suppliers must
collaborate closely to allow both to
realize sustainable benefits