Sustainability is associated with corporate social responsibility. When referencing sustainability, you have to look at meeting the needs of the present without hurting the needs of people in the future. A company must take into account their environmental impact, as well as, their employees, consumers, communities, and their own brand. The following case study analysis will look at theories, techniques, and sustainability approaches that Nissan can incorporate to achieve true sustainability.
The first theory we will look at is the Just-in Time theory (JIT). JIT systems are designed to produce and deliver goods only when needed. JIT is related to quality in three ways: cuts the cost of quality; improves quality; better quality means less inventory and a better, easier-to-employ JIT system. This theory allows for raw materials to arrive when and where they are required. As an example, this would allow for less inventory problems for Nissan because they would have the correct inventory of hand to complete a job.
Since JIT is a more cost efficient method of holding stock, there are advantages and disadvantages to this system. The advantages are less space needed, waste reduction, and smaller investments. With a faster turnaround of stock, Nissan can limit the number of products stored at facilities. Due to this cut in inventory cost, Nissan can apply those funds to other lines of business. Finally, only ordering stock when it is needed will help improve Nissan’s profit margin.
The disadvantages could severally hurt Nissan if they were to occur. These disadvantages are risk of running out of stock, lack of control over time frame, and more planning required. With less stock on hand, Nissan has to build strong relationships with suppliers. If one or more suppliers fail to fulfill orders or go out of business, the production of all products would be impacted. Delays in products from issues with suppliers could lead to a loss in customer retention and have buyers shop elsewhere. Due to the disadvantages with this theory, Nissan fully understand their sales trends and make accurate future sales projections to ensure they have the correct amount of materials on hand during different times of the year.
The second theory is the Toyota Production System. TPS emphasizes three components: continuous improvement, respect for people, and standard work practices. The first component involves the organization and employees continuously working on improving processes. The second component asks for employees to think about ways to make operations better. The last component focuses and expects work to be completed by completing all aspects of each and every single process.
Toyota themselves list out that advantages and disadvantages of their TPS system. The advantages are “reducing waste as much as possible, less movement of the producing labor, leads to less time in producing, every step of the production can be checked, go smoothly and without any mistakes due to, and goo. The disadvantages of TPS according to Toyota are “TPS is difficult, high cost to implement”. In order to implement this system Nissan would need to eliminate their current system, and train employees on how to use the new TPS system.
The last theory to discuss is the Lean operations theory. A lean operation eliminates waste through continuous improvement and focus on exactly what the customer wants. Lean operations utilize some of the same qualities as JIT and TPS. Just like the other two theories, Lean has pros and cons. The pros include less infrastructure, limited waste, and strong customer relationships. The cons of lean operations center around equipment or labor failure and missed deliveries.
The theories and methods discussed should be used to create sustainability within the company. Long-term sustainability for a company like Nissan can only be achieved if they utilize what is known as the triple bottom line. The triple bottom line consists of the three P’s: people, planet, and profit. The first P: people, looks at both Nissan’s employees and their customers, as well as people who live in the communities around their facilities. The second P: planet looks at ways Nissan can reduce the environmental impact of their operations. The third and final P: profit, refers to how Nissan remains in business. Nissan’s current profits and future earnings can be gauged to figure out their economic sustainability.
Another way that Nissan can maintain sustainability is to incorporate ISO 1400 standards. ISO 1400 certification is an international standard of the automotive industry. Back in December 2006, Nissan set objectives to bolster its environmental management through Nissan Green Program 2010. Nissan has already obtained the certification for five production plants. The company has “achieved a consistent environmental management, as additional certification was obtained at its new Global Headquarters”. Their Global Headquarters, has already obtained the Comprehensive Assessment System for Built Environment Efficiency (CASBEE)’s highest ranking in October 2009, in addition to proactively promoting the efficient utilization of natural energy.
Today, Nissan continues to move forward with a sustainability strategy known as the “Nissan Sustainability 2022”. The strategy is centered around 3 pillars known as ESG. The governance pillar integrates corporate responsibility principles into operations. The corporate governance policies and philosophy will lead to a system of complete business transparency. The system allows Nissan to implement monitoring systems, and manage risks. In addition to carrying out cooperation among sites in the regions in which it operates, “Nissan has set up global management systems and provides relevant training programs to its employees and business partners”.
To respond to changes in its business environment, Nissan has set up a department in charge of risk management that carries out annual interviews of corporate officers, carefully investigating various potential risks and revising the ‘corporate risk map’ in line with impact, frequency and control level.
The Executive-Level Committees make decisions on risk issues that must be handled at the corporate level and designate ‘risk owners’ to manage the risks. Under the leadership of these owners, the company designs appropriate countermeasures. At the end of each fiscal year, the Chief Internal Audit Officer assesses the control level of each risk and determines the effectiveness of each risk management activity. Finally, the board member in charge of internal control regularly reports to the Board of Directors on progress.
Lastly, Nissan expects all employees to do their jobs with high ethical standards. To raise compliance awareness within the company, Nissan has set up a Global Risk & Compliance Office and has appointed officers to promote compliance across the board of all operations.
In conclusion, Nissan has done an outstanding job applying the theories discussed in this analysis. In doing so, Nissan has set them-selves up for future success. Nissan continues to advance its Nissan Intelligent Mobility strategy to lead these technological evolutions and build sustainable society. By continuing on the path already started, Nissan will continue to continue to meet the challenges faced in an always-evolving industry.
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