QSO 300 Final Project Milestone One Guidelines and Rubric
Prompt: For the first milestone of your final project, you will submit a managing operations case study analysis that uses the tools and techniques that operations managers use. This case study analysis will be incorporated into the final summative analysis. This milestone is due in Module Two.
Refer to the Nissan case study, your own independent research, and the course materials to complete this milestone. Specifically, the following critical elements must be addressed:
I. Generating Value
A. Evaluate how the company in the case study uses operations management functions to provide products and generate value for its customers. Support your claims with examples from the case study or outside sources.
B. Assess how this company achieves a competitive advantage using operations management. Provide examples found in the case study or outside sources to support your reasoning.
C. Compare and contrast service operations and manufacturing operations at the company in the case study. How are they the same? How do they differ? How does each of these operations provide value for their customers?
II. Theories and Techniques
A. Compare and contrast the critical path method (CPM) and the program evaluation and review technique (PERT). What types of projects at this company would favor PERT over CPM? Why? What types of projects at this company would favor CPM over PERT? Why?
B. Explain the steps used to develop a forecasting system. How would these steps be specifically utilized by this company? What do you predict would be the result of implementing a forecasting system for the top-selling product line at this company?
C. List the major categories of supply chain risk and associated risk reduction tactics. How could the company mitigate exposure to supply chain disruptions caused by natural disasters? For example, consider the 2011 earthquake and tsunami that devastated parts of Japan.
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 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.
Instructor Feedback: This activity uses an integrated rubric in Blackboard. Students can view instructor feedback in the Grade Center. For more information, review these instructions.
Critical Elements
Proficient (100%)
Needs Improvement (75%)
Not Evident (0%)
Value
Generating Value: Functions
Evaluates how the company in the case study uses OM functions to provide products to customers and generate value both for customers and the firm
Evaluates how the company in the case study uses OM functions to provide products to customers but does not describe how OM functions generate value for the customer or firm
Does not evaluate how the company in the case study uses OM functions to provide products to customers
15
Generating Value: Competitive Advantage
Accurately assesses how the company in the case study achieves a competitive advantage using OM and provides support
Assesses how the company in the case study achieves a competitive advantage using OM but assessment is inaccurate or does not provide support
Does not assess how the company in the case study achieves a competitive advantage using OM
15
Generating Value: Compare and Contrast
Compares and contrasts service and manufacturing operations and includes how each operation provides value for its customers
Compares and contrasts service and manufacturing operations but does not include how each operation provides value for its customers
Does not compare and contrast service and manufacturing operations
15
Theories and Techniques: Compare and Contrast
Compares and contrasts CPM and PERT and explains which projects would favor each technique
Compares and contrasts CPM and PERT but does not explain which projects would favor each technique
Does not compare and contrast CPM and PERT
15
Theories and Techniques: Forecasting System
Accurately describes the steps used to develop a forecasting system and predicts the results of using a forecasting system in the context of the case study
Accurately describes the steps used to develop a forecasting system but does not predict the results of using a forecasting system in the context of the case study
Does not describe the steps used to develop a forecasting system or description is inaccurate
15
Theories and Techniques: Supply Chain Risk
Correctly lists the major categories of supply chain risks and associated risk-reduction tactics and explains how the company could avoid exposure to supply chain disruptions
Correctly lists the major categories of supply chain risks, but does not accurately identify associated risk-reduction tactics or explain how the company could avoid exposure to supply chain disruptions
Does not list the major categories of supply chain risks and associated risk-reduction tactics or list and associated risks are incorrect
15
Articulation of Response
Submission has no major errors related to citations, grammar, spelling, syntax, or organization
Submission has major errors related to citations, grammar, spelling, syntax, or organization that negatively impact readability and articulation of main ideas
Submission has critical errors related to citations, grammar, spelling, syntax, or organization that prevent understanding of ideas
10
Earned Total
100%
Operations Management
The Nissan case study on operations management provides invaluable insight into the subject area. This particular case study looks into the Nissan Motor Company, and how it dealt with a natural disaster that hit the base of its operations in Japan in march 2011. The following evaluation looks into how the company reacted to the crisis, as well as how the company uses operations management to generate value. Nissan has some of the best operations management practices, spanning several areas such as production, competitive advantage and environmental conservation. Nissan creates products that remain high in demand and at a quality that adds value to the customer. Moreover, the rate and quality of Nissan’s output is comparable to only a few companies.
Milestone One
Nissan uses the OM function to generate value in many different ways, and in fact, it was astute OM principles that allowed the company to get through the crisis in 2011. The crisis was one of a colossal magnitude, since it involved three catastrophic events: an earthquake, a tsunami and a nuclear meltdown. The damage occasioned by these disasters was of devastating proportions, including 25,000 deaths and casualties, and an economic cost of ¥16.9 trillion. Many of the Japanese automotive plants had to suspend their production operations. Nissan’s operations management approach, however, allowed the company to stay on track. Its production system features a decentralized supply chain, but with centralized control in the event of a crisis. Nissan’s corporate officers comprised of a range of nationalities, allowing the company to tap into the unique constraints and opportunities in their local areas. Moreover, Nissan also focuses on simplified product line, with a build-to-stock strategy for a few SKUs, with a build-to-order strategy for the rest of the stock. This approach allowed Nissan to continue with production and to continue satisfying its customers. Nissan was able to meet customer requirements and even service demands from customers of other companies. In this way, Nissan’s risk management allowed the company to sustain value during this period.
The operations management approach as described above also enables Nissan to acquire a competitive advantage. One of the ways it is able to do this is by sustaining production and continuously meeting its customers need, with minimum shocks due to disruptions in its supply chain. This is best illustrated by the situation involving the three natural disasters. While other companies struggled to sustain production due to discontinuation of operations in various production plants, Nissan was able to leverage its decentralized supply chain to continue its production process. In this manner, Nissan was not only able to meet the demands of its clients, but also those of the clients of other manufacturers. The risk management approach adopted by Nissan allowed it to obtain a competitive advantage over other automotive manufacturers operating in the region.
As part of its operations, Nissan engages in both manufacturing operations and service operations. Much of the manufacturing operations are self-evident, even from the case study. For the service operations, however, one needs to take a closer look at the company’s operations. Manufacturing and service operations differ not only in principle, but also in practice but nonetheless; there are also similarities between the two types of operations. One principle difference between the two is that manufacturing operations produce physical, tangible goods, while service operations produce intangible outcomes (services), which may not be easily identifiable. One of the service operations that Nissan engaged in was the launch of a warranty program that allowed the company to gain a competitive advantage over its competitors (NissanMotorCompany Ltd., 2012).
In the course of the operations, organizations may adopt a variety of approaches to their planning and production. Two such approaches are the critical path method (CPM) and the program evaluation and review technique (PERT). CPM uses a single time factor for each activity, whereas PERT applies three estimates per activity (Heizer, & Render, 2014 pg. 65). The PERT method appears more suited for planning for emergencies and unexpected events such as natural disasters and economic downturns. PERT is a complicated and sophisticated approach that takes into consideration the time and effort required for each activity, as well as how each of these activities are related. It is an integrated project management approach, which was designed specifically to address the constraints that are associate with complex manufacturing operations (Advameg, 2016). Consequently, such an approach would be suited to address the uncertainties of shock events that tend to destabilize operations. The PERT approach supplies a contingent of alternatives in the event that the desired alternative is not capable of being deployed. The CPM method, on its part, would be best suited towards securing a competitive advantage for the enterprise, by reducing the complexity of the overall operations process.
A forecasting system is essential in allowing a company to address the present requirements of future operations. Developing a proper forecasting system allows a company to anticipate material and other requirements. There are seven steps involved in the development of a forecasting system. These steps are discussed in relation to the case study. The first step is to determine what the use of the forecast will be. For Nissan, they wanted to acquire a competitive advantage over their key competitors such as Toyota and Honda. The second step is the selection of items to be forecasted, whereby for Nissan, this was their entire inventory. The third step is to determine the horizon of the forecast, whether short term, medium term or long term. For Nissan, their horizon was a long term one, and this paid off in the end. The next step is to choose an appropriate forecasting model. For Nissan, it would appear that they chose the Delphi model, which was essential in consideration of the merger with Renault. Once the model is chosen, the fifth step is the collection of data required for forecast, and the standards needed to ensure productivity. Once these steps have been fulfilled, the next step is to make the actual forecast. For Nissan, they forecast a need to get ahead of the curve for their services. The final step is to validate and implement the results, and this is an ongoing process, one that Nissan is still engaging in to date. Nissan is still validating its services daily by monitoring services and parts and improving or replacing them (Heizer, & Render, 2014; Schmidt, & Simchi- Levi, 2013). With proper forecasting, a manufacturer is better able to handle shocks in the manufacturing process, as well as other risks.
Risks have the capacity to disrupt a company’s flow of operations, and can interfere with processes such as the supply chain. Indeed, the supply chain is one of the most vulnerable aspects of manufacturing that is susceptible to risks. The risks may hamper production or delivery processes, either of which would have adverse effects on the entire supply chain. Some of the major supply chain risks include natural disasters such as those highlighted in the case study. Other supply chain risks including theft, burglary, breakdown in machinery as well as sociopolitical risks. A company can address supply chain disruptions that are associated with natural disasters by distributing its production activities across a range of diverse geographical locations. While doing so, the target would be to ensure that no significant proportion of the supply chain is located in a particular geographical area. This is because natural disasters tend to be localized to a given geographical jurisdiction. By spreading out the supply chain, the company minimizes risk. A company can go a step further by ensuring that supply chain processes are replicated in an array of vastly different geographical locations.
Conclusion
This project has taken a closer look into the operations management of the automotive manufacturer that is Nissan, from the perspective of a case study. The case study details how a series of natural disasters adversely affected production and manufacturing sites in Japan, in addition to other devastating effects. The project finds that Nissan uses operations management functions such as supply chain management to enhance value for its customers. For example, the company combines build to stock and build to order approaches, an instance of mass customization. Through this astute supply chain practices, as well as a litany of risk management practices, Nissan is further able to derive a competitive advantage for itself. This was especially the case during the 2011 natural disasters, where Nissan’s advanced risk managem,ent system, allowed the manufacturer to continue with its production processes, thereby continually satisfying its customers’ needs at a time when other manufacturers had to halt their production processes.
The project has also dealt with a host of theories and
techniques that are imperative to the operations management process. For
instance, the project recommends that the project evaluation and review
technique (PERT) is best suited for dealing with natural disasters and similar
shock activities. Another important tool for companies is forecasting, which
involves six key steps. Through forecasting, companies are able to anticipate
demands and shocks in supply, and to adjust their processes accordingly.
Another tool that allows companies to deal with shocks in production is the
theory of constraints, which involves five steps. Through the theory of
constraints, manufacturer are able to identify and address bottleneck resources
that hamper the production process. This is especially essential in the
production process, whereby much like in the supply chain, disruption in a
single process can have an adverse effect on the entire chain of activities.
For the supply chain, supply chain risk management allows companies to avoid
the adverse impacts associated with supply chain risks. Such supply chain risks
include natural disasters, whereby devastating effects in a particular
production plant can cause the entire manufacturing operations to come to a
grinding halt, as was the case with Toyota and Honda. To deal with this,
companies need to distribute their production activities. The Nissan production
approach is quite similar to the Just in Time, Lean and Toyota Production
System philosophies. Each of these entails the maintenance of a low level of
inventory. Nissan’s approach goes a step further to decentralize production
processes, and this is what allowed the manufacturer to stay on track during
the wave of natural disasters.
References
Advameg . (2016). PROGRAM EVALUATION AND REVIEWTECHNIQUE (PERT).
Retrieved April. 21. 2016. From. www.referenceforbusiness.com/ encyclopedia/Per-
Pro/Program-Evaluatio n-and-Review-Technique- PERT.html
Heizer. J. & Render. B. (2014). Operations Management Student Cd (11th ed.). Pearson
College
NissanMotorCompany Ltd. (2003-2012). Warranty. Retrieved. April. 21. 2016. From.
https://owners.nissanusa.co m/nowners/navigation/ warrantyContent
Schmidt,. W., & Simchi. -Levi, D. (2013., August. 27). NissanMotorCompanyLtd.:
Building Operational. Retrieved April 21. 2016.
