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John MillerVice President, PurchasingNissan North America, Inc.
Vice President, PurchasingNissan North America, Inc.
John MillerVice President, PurchasingNissan North America, Inc.
Automotive News Manufacturing Conference
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
Value network optimization strategy
Conducted within a framework of transparency and open communication for mutual benefits – for Nissan and our supplier partners
NISSAN’S APPROACH
• 3-3-3
• Alliance Supplier Improvement
Program (ASIP)
• Leading Competitive
Countries (LCC)
INITIATIVES FOR BETTER PERFORMANCE
INITIATIVES FOR BETTER PERFORMANCE
• 3-3-3
• Alliance Supplier Improvement
Program (ASIP)
• Leading Competitive
Countries (LCC)
3-3-33-3-3
PromotionPromotion OfficeOffice
Suppliers
NissanEngineering
NissanPurchasing
3 Partners
Technical information Cost information
Acceleration
3-3-3 CONCEPT
• PURCHASED PARTS COST REDUCTION ACTIVITY• Cost reduction without negatively affecting performance,
perceived quality/reliability, brand image
• “WIN – WIN” FOR NISSAN AND SUPPLIERSNot profit reduction, but base cost structure change
Partners
Regions
Years
3-3-3 CONCEPT
3
3
3
• 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.
3-3-3 AND PDT
PRODUCT DEVELOPMENT TEAM PROCESSPDT ensures good communication (Engineering, Purchasing, Suppliers) related to part changes and/or opportunities
30% annual cost-reduction savings since 2000
Engineering, Purchasing and Suppliers (PDT Team) conducting part investigation review
Generating Cost Savings Proposals
(CSPs)
3-3-3 EXAMPLE: VEHICLE TEARDOWN
(USA)
3-3-3 EXAMPLE: SEAT FRAME BENCHMARKING
NISSAN(China) NISSAN COMPETITOR
ACOMPETITOR
BCOMPETITOR
C
INITIATIVES FOR BETTER PERFORMANCE
• 3-3-3
• Alliance Supplier Improvement
Program (ASIP)
• Leading Competitive
Countries (LCC)
ASIP is a cost-reduction program based on activities that promote continuous improvement of Renault-Nissan and its suppliers, applying the NPW methodology
DEFINITION:
Developed and applied by the Renault-Nissan Alliance
Deployed at the Supplier’s facility and its supply chain, if necessary
Focused on QCD Improvement through effectiveness and efficiency
Programmed, structured, team-based approach
Adopt the NPW principle and focus to implementation (not to investigation)
AS
I
P
ASIP MISSION STATEMENT
• Developed for key Renault-Nissan 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
is... an approach for continuous
improvement of the QCD:• 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
is not
ASIP SCOPE
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
Activity area
Pro
cess
Im
pro
vem
ent
SC
Pro
cess
Im
pro
vem
ent Valu
e
Analy
sis
Production
Logistics
B/Oparts
RawMaterial
O/HProfit
Cost / Price
WHAT IS THE ACTIVITY AREA?
ATTAINABLE CONDITIONDescribe the attainable condition using flow chart, line-spec and W/S
Att
ain
ab
le
con
dit
ion
Ideal
con
dit
ion
B
en
ch
mark
Su
pp
lier
cu
rren
t con
dit
ion
Pote
nti
al
iden
tifi
cati
o n
1 2
34
1
2
3
4
Potential
Make attainable a common understanding
Potential gap – Industrial Engineering tools
Opportunity identification by flow chart, line spec, W/S
ASIP activity
PROCEDURE FOR FIXING ATTAINABLE CONDITION
ASIP CLOSING GAP STYLE
* Including kaizen expert companies
FY06 activities = 872% ROI
ASIP ACTIVITIES
U.S.
2005
MEXICO
2006 2007 (planned)
# o
f acti
vit
ies
99 8 10
40*
64*
CY
EXPECTED BENEFITS
RENAULT/NISSAN SUPPLIER
• Cost reduction, which is caused by exact cost improvement implementation
• Understanding of supply chain structure
• 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
Common understanding quality issues, delivery characteristics and product cost
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
MUTUAL COMMITMENT & COOPERATION
ASIP EXAMPLE: TRUCK SEATS
IMPROVEMENT CONDITION
Total Element Time 24.628 min
Line Balance 67%
Total Element Time 25.77 min
Line Balance 80.60%
Operators Difference12
(Potential Target)
Operators Difference10
(Gap Agreed)
Output 66 pcs/hr
Operators 45
Shifts/Day 2
Productivity 1.46 pcs/hr/op
Output 66 pcs/hr
Operators 35
Shifts/Day 2
Productivity 1.88 pcs/hr/op
Real Improvement
+13.6%
+28.7%
INITIATIVES FOR BETTER PERFORMANCE
• 3-3-3
• Alliance Supplier Improvement
Program (ASIP)
• Leading Competitive
Countries (LCC)
Thailand
China
EgyptIndia
RomaniaHungary
Vietnam
Mexico
Mercosur
FY05 FY06 FY07
10
0
20
30
12%15%
24%
Global LCC utilization ratio
LEADING COMPETITIVE COUNTRIES
Vehicle production plants
NISSAN IN THE AMERICAS
* Nissan and Renault vehicles
Curitiba, Brazil*Annual capacity
50,000
Aguascalientes, Mexico
Annual capacity 350,000
Cuernavaca, Mexico
Annual capacity 200,000
Smyrna, TN Annual capacity
550,000
Canton, MS Annual capacity
400,000
THREE-STEP LCC ANALYSIS PROCESS
If tier 1/2/3 component is already localized, is it globally competitive?
If tier 1/2/3 is not currently localized or LCC, can it be?
If tier 1/2/3 cannot be localized or LCC, is the price globally competitive?
Step 1:
Step 2:
Step 3:
Action
Benchmark against PRC, THI, BRA, etc.
Benchmark supply chain against other Nissan and non-Nissan suppliers
Benchmark against price paid in other Nissan regions
CONCLUSION
Automakers and auto suppliers must collaborate closely to allow both to realize sustainable benefits
Success in this industry is linked to providing customers with the greatest possible value at the lowest possible cost