QSO 300 Final Project Milestone Two Guidelines and Ru
ic
Overview: For the second milestone of your final project, you will submit a quality, process, and location analysis case study analysis that will address the
typical problems that operations managers face. This case study analysis will be incorporated into the final summative analysis. This milestone is due in Module
Four.
Prompt: Refer to the Nissan case study, your own independent research, and the course materials to answer the following items. Specifically, the following
critical elements must be addressed:
I. Theories and Techniques
A. Explain the five steps of the theory of constraints (TOC) process. To what processes might the company in the case study apply TOC? Why would
applying TOC to these processes be advantageous?
B. Describe how total quality management (TQM) principles and tools can be used to improve quality in the latest line of products in the context of
the case study.
II. Data Analysis
A. Draw a cause-and-effect diagram that assesses why some of the company’s supply chain partners might have struggled to implement some of the
company’s newly developed materials. Summarize your findings from the diagram.
B. Draw a hypothetical process (time-function) map for producing a recently released (within the past two years) product manufactured by the
company. As an operations manager, how will you use the value map? Be sure to include your process map within your case study analysis.
C. Considering the data and options below, determine where the company should locate its new manufacturing plant. Explain why this would be
the favorable location.
Factor Weight Mexico City Columbia, SC
Political Risk XXXXXXXXXX
Transportation Costs XXXXXXXXXX
Labor Productivity XXXXXXXXXX
Rental Costs XXXXXXXXXX
Labor Costs XXXXXXXXXX
Taxes XXXXXXXXXX
Guidelines for Submission: The format for this assignment will be a Word document using a business writing format of your choice. There is no minimum page
length requirement, but the submission should be double spaced, and no more than four pages in total. Copy and paste any data analysis from Excel into your
Word document for submission. You may include your original Excel documents as supplementary material if you believe this will strengthen your contribution.
https:
mitsloan.mit.edu/LearningEdge/CaseDocs/13-149%20Nissan.Simchi-Levi.pdf
Ru
ic
Critical Elements Proficient (100%) Needs Improvement (75%) Not Evident (0%) Value
Theories and
Techniques:
Theory of
Constraints
Co
ectly explains the five steps
of TOC and explains why it would
e advantageous to apply TOC to
specific processes in the case
study
Co
ectly explains the five steps
of TOC but does not explain why
it would be advantageous to
apply TOC to specific processes in
the case study
Does not explain the five steps
of TOC or explanation is
inco
ect
18
Theories and
Techniques:
Total Quality
Management
Describes how TQM can be used
to improve quality in the context
of the case study
Describes how TQM can be used
to improve quality but does not
provide context in the case study
Does not describe how TQM
can be used to improve quality
18
Data Analysis:
Diagram
Properly draws a cause and effect
diagram assessing the struggle to
implement newly developed
materials and summarizes
findings
Properly draws a cause and effect
diagram assessing the struggle to
implement newly developed
materials but does not
summarize findings
Does not properly draw a cause
and effect diagram
18
Data Analysis:
Process Map
Accurately draws and includes a
process map for product and
thoroughly describes how it
would be used by an OM
manager
Draws and includes a process
map for product, but drawing is
inaccurate, and description of
how it would be used by OM
manager is either not thorough
or missing
Does not draw and include a
process map for a product
18
Data Analysis:
Data
Co
ectly determines where the
new plant should be located and
explains why this is a favorable
location
Co
ectly determines where the
new plant should be located but
does not explain why this is a
favorable location
Does not co
ectly determine
where the new plant should be
located
18
Articulation of
Response
Submission has no major e
ors
elated to citations, grammar,
spelling, syntax, or organization
Submission has major e
ors
elated to citations, grammar,
spelling, syntax, or organization
that negatively impact readability
and articulation of main ideas
Submission has critical e
ors
elated to citations, grammar,
spelling, syntax, or organization
that prevent understanding of
ideas
10
Total 100%
Microsoft Word XXXXXXXXXXNissan.Simchi-Levi.docx
13-149
August 27, 2013
This case was prepared by David Simchi-Levi, MIT Professor of Civil and Enviornmental Engineering and Engineering
Systems and Co-Director, Leaders for Global Operations, and William Schmidt, PhD candidate, Harvard Business School.
Copyright © 2013, David Simchi-Levi and William Schmidt. This work is licensed under the Creative Commons Attribution-
Noncommercial-No Derivative Works 3.0 Unported License. To view a copy of this license visit
http:
creativecommons.org/licenses
y-nc-nd/3.0/ or send a letter to Creative Commons, 171 Second Street, Suite 300, San
Francisco, California, 94105, USA.
Nissan Motor Company Ltd.: Building Operational
Resiliency
William Schmidt, David Simchi-Levi
On March 11, 2011 a 9.0-magnitude earthquake, among the five most powerful on record, struck off
the coast of Japan. Tsunami waves in excess of 40 meters high traveled up to 10 kilometers inland
and three nuclear reactors at Fukushima Dai-ichi experienced Level 7 meltdowns. The impact of this
combined disaster was devastating, with over 25,000 people dead, missing or injured.1 Governments,
non-government agencies, corporations and individuals in Japan and around the world responded with
elief teams, supplies and donations to help ease the suffering and support the recovery.2 In truth, the
disaster was three calamities in one – an earthquake, a tsunami and a nuclear emergency. Recovering
from such a catastrophe was unprecedented.
The event was not just a humanitarian crisis, but also a heavy blow to the Japanese economy: 125,000
uildings were damaged and economic costs were expected to be ¥16.9 trillion.3 In the weeks
following the disaster, approximately 80% of Japanese automotive plants suspended production and
Mitsubishi UFJ Morgan Stanley Securities estimated utilization at other plants were below 10%.4
1 Ministry of Foreign Affairs, Government of Japan, http:
www.mofa.go.jp/j_info/visit/incidents/index2.html, accessed July 15, 2012.
2 Ministry of Foreign Affairs, Government of Japan, http:
www.mofa.go.jp/j_info/visit/incidents/pdfs
_goods.pdf, accessed July 15, 2012.
3 Ministry of Economy, Trade and Industry, Government of Japan,
http:
www.kantei.go.jp/foreign/policy/documents/2012/__icsFiles/afieldfile/2012/03/07
oad_to_recovery.pdf, accessed Fe
uary 27, 2012.
4 Tsuyoshi Mochimaru, “Auto sector: Our Stance in Wake of Recent Earthquake,” Mitsubishi UFJ Morgan Stanley Securities Co., Ltd., April 12, 2011.
NISSAN MOTOR COMPANY LTD.: BUILDING OPERATIONAL RESILIENCY
William Schmidt, David Simchi-Levi
August 27, 2013 2
Across the industry, monthly production dropped nearly 60% in March and April 2011 compared to
2010, and did not fully recover until October.5 Production for all of 2011 was down 9%.6
Markets outside of Japan were affected as well. Toyota, Honda and Nissan, the three major Japanese
automotive original equipment manufacturers (OEM), exported a significant amount of their Japanese
production to serve foreign markets (Exhibit 1). Declines in Japanese production impacted product
availability in those export markets. In addition, overseas production had expanded in recent years,
ut only 70% - 80% of the production components were sourced locally with the remaining 20%
coming from Japan.7 Disruption to the Japanese supply base affected firms and factories around the
world.
Toyota, Honda and Nissan were all impacted by the disaster (Exhibit 2). In particular, Nissan
suffered damage to six production facilities and about 50 of its critical suppliers were impaired.
Nevertheless, the company was prepared to withstand the shocks.
History of the Japanese Automotive Industry
Prior to the 1930’s the domestic automobile manufacturing capability in Japan was essentially limited
to military-sponsored initiatives, hand-built models and imported automotive kits.8 The industry’s
nascent steps toward mass production started in 1933 when Aikawa Yoshisuke established Jidosha
Seizo Company, the predecessor of Nissan Motor Company.9 Around the same time, Toyoda Kiichirō
established an automobile department within Toyoda Automatic Loom, which would eventually grow
into Toyota Motor Company.10 In spite of protectionist government policies restricting imports and
direct foreign investment, prior to World War II the Japanese subsidiaries of Ford and General
Motors dominated the automobile industry in Japan. After the war, Nissan and Toyota were ho
led
y low production productivity and were at risk of slipping into bankruptcy if not for a combination
of huge governmental loans and special orders from the United States Army during the Korean War.11
Japanese automotive firms initially relied heavily on technology transfer from the United States and
Europe. Toyota was more aggressive in developing internal research and development capabilities, a
strategy eventually adopted by other Japanese automobile manufacturers.12 Japanese automotive
manufacturers also concentrated on process improvements, with Toyota being an early innovator. In
5 “Japan Production by Month, XXXXXXXXXX,” WardsAuto Group, 2012.
6 Ibid.
7 Ibid.
8 Koichi Shimokawa, The Japanese Automobile Industry: A Business History (London: Atlantic Highlands, NJ, Athlone Press, 2001).
9 Nissan Motor Company, http:
www