Operations Management at Nissan Motor Manufacturing
United Kingdom Limited.
A Report Prepared For,
Tutor:
Course:
Subject: Operation Management
Prepared By;
Name: Amandeep Kaur
Student ID:
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INTRODUCTION
Operations management involves the responsibility of ensuring that business operations are
efficient in terms of using as little resources as needed, and effective in terms of meeting
customer requirements. It is concerned with managing the process that converts inputs in the
forms of materials, labor, and energy into outputs in the form of goods and/or services.
This report examines the operations and quality management of Nissan Motor Manufacturing
UK Limited (NMUK). It looks into variuos processes which are carried out in the plant and the
quality management aspect of those process. It also includes the human resorce management
practices in the plant. In the later part of report the forecasting for the supply chain mangement
analysed with the identification of various methods used for this purpose by plant.
1. COMPANY BACKGROUND
It has been active since 1986. This plant is owned by the Japnease organisation Nissan Motors.
This report comprises of quality management processes in this plant. Largest in the UK and
most productive in Europe, this car plant is located in sunderland.
This unit of Nissan is producing most number of cars in Europe. This is just not the co
incidence. This has become possible due to focus on the quality management. In fact the quality
management and planned outset has led to the Nissan’s success.
2. QUALITY MANAGEMENT
a. Contemporary development in Quality Management
This plant has adopted the Kaizen principles to implement quality. Kaizen is also associated
with the continous improvement. This is the contempraory approach to improve the quality.
Nissan states that it does not stop improving by looking at its success and existing ways of
doing things. It keep on improving things. Small steady changes are maintained to make sure
that they actually work. No improvement is too small.Team of employees in this plan sit
together and contribute their ideas towards improvement in quality. This includes bringing a
small change in routines to big changes at production level. Each employee is responsible for
the way things are done and finding the better ways of improving the things. Kaizen involves
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small, positive ongoing improvements to working practices. Employees suggest many of these
improvements. The Kaizen process is highly motivating as it involves everyone as part of the
TQM process. Lots of small improvements over time can lead to very large improvements in
quality, reduce costs, and increase profits, they are only required once in a while and are very
costly to implement. Radical changes are unlikely to involve the entire workforce in their
development.The kaizen suggests that the award should not be for only one employee rather
should be for whole team eg. Pool table in canteen.
b. Quality Measures
Customer satisfaction is the top priority in the Nissan manufatcuring plant. The customer
satisfaction is used to measure the quality. They say that the when it comes to quality they are
trying to gain the trust of their customer.
The next quality measure is the qulaity of product. The quality of product will ebnable to drive
the car comfortably for long period of time. The product quality is very important for the Nissan
as the product quality can reduce the after slales maintance and hence reduce the cost for
company. The product quality is also measured by the number of warranty claim rate that arise
within three months of purchase.
c. Approches to the quality management
The Nissan always look for improving the quality. So, the approch to the quality is by adopting
the total quality management. At this plant everything is done by focusing on creation of
quality. Everything involves not only the end product but all the processes through which it
goes. Each and evry step is checked for quality. The total quality management also leads to
involving employees at all levels. Lots of small improvements over time can lead to very large
improvements in quality, reduce costs, and increase profits, they are only required once in a
while and are very costly to implement. In this Nissan plant all the employees are educated and
trianed for the quality. The objective of implementing TQM here are as follows
• Identiying the customers requirment
• Stating the objectives for all the activities carried out
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• Removing all the causes of problems by correct identification
• Decisions taken after thorough research instead of hunches
• Eductaing employees
Nissan is using TQM approach sucessfully. As this is an ongoing process, there is always scope
for improvement. It is cycles having the phases : plan, do, check and action. The plant is trying
to buid the culture of quality.
d. The characteristics of lean production
Lean management means creating value without wastage (Petschnig S., 2009). A key benefit of
lean manufacturing is having a system in place to quickly detect problems and inefficiencies.
Continuously solving these problems steadily improves the process. Lean production is about
using the all available resources including human resources efficiently and reducing the
wastage. This plant is employing 5,000 people directly and anther 15,000 in its supply chain.
The employees are involved in decision making within the organisation. This has encouraged
their workforce to become more focused and as a result more productive. The approach is
reducing the wastage and removing the unnecessary activities. So, all the employees have
adopted this approach. The quality of the product is determined by following the quality
schemes which act as benchmark. Vehicle Quality Assurance (VQA) and Powertrain Quality
Assurance (PQA) are some of them. The VQA checks the quality of overall vehicle including
the after sales service and warranty. PQA checks the quality of engines produced at this plant.
3. PRODUCT DESIGN
a. Product design, Processes, operations and supply
The design teams are responsible for the design of product like color, trim design and modeling.
This team focuses on the design for European markets. The following are the products of this
plant.
• Micra: It is small economical car. It is inexpensive to run this car due to high mileage.
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• Almera: It was launched in 2000 and transformed this plant into 3 model plant. It is
medium sized multi passenger vehicle.
• Primera: It is medium sized family car. It has innovative design and advanced
technology in it.
This plant handles all the aspects of manufacturing these products. There are three main
processes involved in manufacturing these products which are body assembly, paint and
final assembly. These processes are further supported by five manufacturing area.
Manufacturing process in Nissan UK manufacturing Plant
Source: www.nissan.co.uk
These manufacturing processes are main operations of this plant.
b. System used in operations management
This plant uses Just in Time (JIT) system. In this approach is the, the parts or specific vehicles
are manufactured when they are demanded. The rationale behind JIT is Production of only the
minimum necessary units in the smallest possible quantities at the latest possible time. This is
best way to efficiently use the resources. The parts are sent to the assemblers when assemblers
are ready. Similarly, components arrive when they are ready to be installed. The machinery is
set to work up to certain level but is flexible to adjust according to the demand. This helps in
meeting the demand quickly just in time. This leads to minimum stocks and saves the space of
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costly warehousing. This system depends on the human intervention at each stage rather than
relaying on machine precisions. For example, message is sent by transporter to produce a car
seat to supplier who further sends it to the plant. This way a car seat is produced according to
the specifications.
4. INVENTORY MANAGEMENT
a. Elements of Inventory Management
Inventory management is a system of overseeing the flow of inventory through a business and is
an integral part of any company. It involves ordering, price comparison, space management,
shipping, receiving, and controlling the products to make sure the inventory gets neither too
high nor too low. As discussed above this plant is using JIT system to control the inventory. The
inventory management has contributed to the success of this plant by reducing costs at each
step. This plant is highly automated and used advance technology. The machinery used is
sophisticated and use of robotics is done in managing the operations.
b. Inventory Control System
In this plant EDI (Electronic Data Interchange) is used to control the inventory. The suppliers
receive all order and forecast information for all supply types via EDI. EDI is computerized
system to exchange the documents. EDI reduces the cost by saving paper processes and is many
times quicker than traditional method of Fax or mail. EDI system covers production, service and
trial orders. By using this system, suppliers receive much earlier notification of delivery
requirements. This can be used to help minimize inventory holding and achieve better
production scheduling. This also helps in getting prepared in advance for logistics collections
where applicable.
c. Economic order quantity models
Economic order quantity is the level of inventory that minimizes the total inventory holding
costs and ordering costs. It is one of the oldest classical production scheduling models. This is
achived by the combination of EDI and JIT in this plant. The EDI forecast the supply by quickly
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informing the suppliers and manufcturers and Jit enables plant to manufacture it in minimum
time.
5. PROCESS AND TECNOLOGY
a. process planning
In a manufacturing setting, Process planning includes establishing the general sequence of steps
that beginning with the acquiring resources and end with the creation of a finished product. The
process planning is vital for the Nissan to be carried out at this plant as car manufacturing is
complex process. So assembling so many parts together needs excellent process planning and
then carrying out exactly in the same way to save the resources. For example Micara has 2239
part to assemble and it takes 7 hours to manufacture and assemble a car.
b. process analysis
Process analysis generally defines the process boundaries and mark the input point and exit
point of the product. This also includes constructing a process flow diagram and evaluating the
limitations of the process by identifying the bottleneck. Production methods must be able to
produce what customers want, in the quantities customers require, at a price consumers are
willing to pay, and at a cost that yields a profit to the business. That means that being efficient is
vital to success. So, it is about identifying the processes which are slow in whole production
system and improve them.
c. process innovation
Innovation is about doing things in different way to make them better. The process innovation is
important for Nissan UK plant as by investing in innovative processes, firms can gain in terms
of productivity, material utilization, quality or reliability. The processes in this plant are very
good example of innovation as they using very flexible approach for production process. It can
increase and decrease the efficiency according to demand. The quality is anther aspect in the
process innovation for this plant. Each and every step of production is monitored for quality.
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6. CAPACITY MANAGEMENT AND FACILITY
a. Types of facilities
The things which facilitates the manufacturing, assembling and supplying the cars and their
parts is available in this plant. The skilled workforce, power supply and transportation is
available to this plant. In fact it uses wind power to run a part of this plant.
b. Site Selection : where to locate
Nissan Manufacturing UK is located in the sunderland covering 300 hectare former airfield.
This was key decision for the plant. Manufacturing has a long tradition in the area. A decline in
other local manufacturing meant that skilled labour was readily available. Sunderland has good
road and rail links to all major UK areas. This makes it relatively easy to bring in supplies from
105 separate UK component and sub-assembly suppliers, and also to distribute completed
vehicles. A nearby deep water port (Port of Tyne) gives ready access to export markets and for
the import of vehicles to the UK.
c. capacity planning
Capacity planning is about determining the production capacity in terms of number of units
produced to meet the changing demands. This plant in Sunderland site, Nissan is taking its
production capacity to 500,000 vehicles per year. With a two-shift pattern, NMUK has a total
production capacity of around 360,000 units/year – a third shift can be introduced which would
take production up to 500,000 units/year if and when required.
d. designing process layouts
In industrial engineering, a process layout is when you group similar activities together
according to the process or function they perform. There are five process which are as follows
• Press shop – produces panels for the vehicles
• Plastics shop – makes bumpers (fenders) on site
• Castings shop – makes engine parts e.g. cylinder heads
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• Engine shop – assembles engines, installs oil, coolant fuel
• Axle plant – produces axles that are joined to engines in final assembly.
• Widely different processes generate different jobs across three main broad areas.
e. designing product layouts
A product layout arranges activities in a line according to the sequence of operations for a
particular product. In this plant the product layout is an assembly line for Micra. this sequential
layout allows the entire process to be laid out in a straight line, which at times may be totally
dedicated to the production of only one product or product version. The flow of the line can
then be subdivided so that labor and equipment are utilized smoothly throughout the operation.
7. HUMAN RESOURCES AND QUALITY MANAGEMENT
Human resource management is key division of an organization. For a successful organization,
managing people in efficient manner is very important. NMUK
a. Changing resources of human resources management
The trends are changing now. Finding talented and skilled employees has become difficult for
the companies due to increased competition in the market. Now skilled people have many
choices to choose from. Competitors poach the talent employees from each other. This plant is
associated with one of the most successful companies in the world in automobiles industry. So,
recruitment talent employees are very important for the organization. In 1999 it recruited 800
employees from over 11,000 applications. The staff has now increased to 5000 employee
directly and 15,000 in supply chain.
b. Contemporary trend in human resources management
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The approach of managing people is changing. It is much about treating them as humans rather
than just machines. They are counted as assets rather than liability. They are important resource
of the organization. There is approach of building relationship and empowering employees. In
NMUK, employees are empowered and encouraged to take their decisions. Nissan expects and
requires its employees to become multi-skilled decision makers. Most employees also want that
for themselves reaching that goal involves training employees to develop their skills. The
human resource management policies also include organising employees into participative
teams. Teamwork is important for the plant to coordinate the activities efficiently.
c. Employee compensation
Employees at NMUK work a standard 39 hour week. The Office staff work on a Day shift
basis, manufacturing staff work alternating morning and evening shifts. A 3-shif' system has
been introduced at times of high demand, meaning that the factory is active 24 hours a day. It is
global company so the salaries and other banifits to the staff is quite competitve encouraging
people to join this company and retain the talented employees for long time.
d. Managing diversity in workplace
Diversity in the workplace is increase with immigrations and globalisation. People are free to go
to anther country in search of work. This has resulted in a diverse workforce in UK. There are
many benefits of diversity. Diversity is beneficial to both the organization and employees. It
brings people with diffeerent skills, qualifiction, and expereince into organisaton. Employees
with different skills and cultural viewpoints helps in understanding the needs and requirements
of the customers, on a global scale. Diversity could be managed by investing in storng diversity
polciy. Diversity policy should be strong enough to stop the discrimination in workplace from
all levels. One way to overcome these challenges is to promote awareness and acceptance;
providing diversity training is good way to accomplish this.
e. Job design
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Job design involves systematic attempts to organize tasks, duties and responsibilities into a unit
of work to achieve certain objectives. Job design integrates the work content and qualifications
required for each job that meets the needs of employee and the organization. The jobs are very
specific to the manufacturing of automobile parts and assembling. So the job design is done
very carefully and skills are stated according to the requirement of plant. Most of the employees
in NMUK are skilled workers with jobs related to engineering and automobiles.
f. Job analysis
It is a process of collecting all relevant information about the job. The information collected
relates to the nature of the job and the qualification required for performing the job. Job
Analysis is the starting point of the whole process of recruitment and selection. The workforce
in the plant is expected to have technical qualification relevant to the job.
g. Learning curves
The learning curve is graphical representation of rate of learning for a given activity or tool
carried out in workplace for training employees. It is about the ability of retaining the
information by employees by performing the activity. Steep learning curve indicates that
something is difficult to learn. So the steep curve refers to the demands of the task rather than a
description of the process. There are many training programs in the NMUK which help
employees to learn and train. With 14 qualified trainers and admin support, Sunderland Plant’s
training department is responsible for co-ordinating all the plant’s training needs and delivers
over 42 courses from leadership and workshop management to robotic programming.
8. FORECASTING
Forecasting is here about analyzing the future demand of products to make the supply chain
efficient. Forecasting plays a very important role in reducing the wastage and meeting the
demand.
a. strategic role of forecasting in supply chain management.
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In supply chain, forecasting is necessary for companies that manufacture items for inventory.
Manufacturers will use material forecasting to ensure that they produce the level of material that
satisfies their customers without producing an overcapacity situation where too much inventory
is produced and remains on the shelf. Equally, the forecast must not fall short and the
manufacturer finds them without inventory to fulfill customer’s orders. The cost of failing to
maintain an accurate forecast can be financially catastrophic. Thus it is important for sustained
success of company to be able to forecast near to real needs. Forecasting enables the supply
chain to be more efficient in serving customers. In NMUK this is done by Electronic Data
Exchange which is computerised tool to communicate in the supply chain.
b. Components of forecasting demand.
The components of forecasting demand are systematic and random demands. The systematic
component measures the expected demand and random is deviation from systematic demand
component. The main factors influencing the forecasting of demand are the past demands, lead
time of products, state of economy, planned advertising or marketing effects. These factors
determine the demand of supply chain forecasting. The main factors is how much time a
product takes in supply chain after being ordered which helps in forecasting the demand.
c. Time series method.
Time series is one of the methods of forecasting demand. This method forecasts on the basis of
past figures. It uses the historical data. In this method it is assumed that past demand history is
able to indicate the future demand. This method is appropriate when the pattern of demand does
not vary significantly. This method is quite simple.
d. Time series forecasting using excel
The time series method is could be used by inputting the data into excel sheets. Microsoft Excel
is used which is in form of rows and columns and helps plotting data and analyzing it over the
period of time. This helps in studying the demand correctly over time and making future
predictions.
f. Forecast accuracy
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Forecast accuracy is very important for supply chain to work smoothly. It can be achieved by
using combination of methods for forecasting the supply rather than just one method. The
forecasting accuracy must be obtained by comparing actual and predicted demand at the end.
g. Regression method
It is a statistical approach to forecasting change in a dependent variable (sales revenue, for
example) on the basis of change in one or more independent variables (population and income,
for example).
9. PLANING AND MANAGING OPERATIONS
Planning and managing operations include all the activities involved in productions. As
mentioned earlier the manufacturing of car is complex process and requires thousands of part to
be assembled so, it requires competency and expertise to handle the operations. It is about
manufacturing, transferring, scheduling the assembling of small parts correctly. The main parts
of planning and managing operations are production planning, production control and quality
control. During production planning, managers determine how goods will be produced, where
production will take place, and how manufacturing facilities will be laid out. Once the
production process is under way, managers must continually schedule and monitor the activities
that make up that process. They must solicit and respond to feedback and make adjustments
where needed. At this stage, they also oversee the purchasing of raw materials and the handling
of inventories. Finally, the operations manager is directly involved in efforts to ensure that
goods are produced according to specifications and that quality standards are maintained.
10. PLANING SUFFICENT RESOURCES
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This is one of the important part of operations management. It is associated with using resource
planning tools such as ERP (Enterprise Resource Planning), MRP(Material Resource Planning)
and MPS( Master production schedule). These are the tools used mostly in big organization to
make operations efficient by ensuring sufficient resources all the time. These tools are used
along with demand forecast to predict the correct demand.. Technology has made resource
planning easy. But at the same time increasingly dynamic and complex environment has made it
difficult. Thus resource planning is important, as without sufficient resources all the operations
could get affected if they are interdependent.
11. FAILURE PERVENTION AND RECOVERY
The failure prevention is something which helps in detecting the failure before they occur in
operations activity. This often involves visualising every possible reason why an operation
might fail and what would be done about it. The maintenance of machines and everything which
is involved in operations is one of the significant aspects of preventing failures. Recovery
comes after a failure occurs. First step is to determine what went wrong and the cause behind it.
The second step is fixing the things and minimizing its affects. Short-term recovery involves
detecting the fact that a failure has occurred and doing something about it in a speedy and
appropriate manner. The long term measures include learning from it and making sure it does
not occur again. In NMUK the operations management is such that failures are prevented and
detected early. This relates to the quality. The TQM approach allows the continuous
improvement and quality at each step which helps in preventing the failures.
CONCLUSION
In this report we studied various aspects of operations management in NMUK. Though it is a
brief study, it has attempted to analyze the various processes of producing cars in the plant. In
conclusion it could be said that NMUK has achieved its success due to efficiently managed
operations and supply chain. Thus operations management contributes a lot to the company and
are very important part of an organization to be managed.
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