John Miller

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John Miller

• Vice President, Purchasing
• Nissan North America, Inc.

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Automotive News Manufacturing Conference
John MillerVice President, PurchasingNissan
North America, Inc.
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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
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NISSANS APPROACH
Value network optimization strategy Conducted
within a framework of transparency and open
communication for mutual benefits for Nissan
and our supplier partners
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INITIATIVES FOR BETTER PERFORMANCE

• 3-3-3
• Alliance Supplier Improvement Program (ASIP)
• Leading Competitive Countries (LCC)

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INITIATIVES FOR BETTER PERFORMANCE

• 3-3-3
• Alliance Supplier Improvement Program (ASIP)
• Leading Competitive Countries (LCC)

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3-3-3 CONCEPT
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3-3-3 CONCEPT
Partners
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Regions
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3
Years

• 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

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3-3-3 AND PDT
PRODUCT DEVELOPMENT TEAM PROCESS PDT ensures good
communication (Engineering, Purchasing,
Suppliers) related to part changes and/or
opportunities

• 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.

30 annual cost-reduction savings since 2000
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3-3-3 EXAMPLE VEHICLE TEARDOWN
Engineering, Purchasing and Suppliers (PDT Team)
conducting part investigation review
Generating Cost Savings Proposals (CSPs)
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3-3-3 EXAMPLE SEAT FRAME BENCHMARKING
NISSAN
NISSAN
COMPETITOR
COMPETITOR
COMPETITOR
(USA)
(China)
A
B
C

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INITIATIVES FOR BETTER PERFORMANCE

• 3-3-3
• Alliance Supplier Improvement Program (ASIP)
• Leading Competitive Countries (LCC)

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ASIP MISSION STATEMENT
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
Suppliers 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)
A
S
I
P
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ASIP SCOPE
is
is not
... an approach for continuous improvement of the
QCD

• 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

• An audit to verify
• A project to reduce the suppliers 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

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WHAT IS THE ACTIVITY AREA?

• 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

Value Analysis
SC Process Improvement
Process Improvement
Activity area
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PROCEDURE FOR FIXING ATTAINABLE CONDITION
ATTAINABLE CONDITION Describe the attainable
condition using flow chart, line-spec and W/S
ASIP activity
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ASIP CLOSING GAP STYLE
1
2
Opportunity identification by flow chart, line
spec, W/S
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Potential
2
Make attainable a common understanding
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Attainable condition
Supplier current condition
Ideal condition Benchmark
Potential identification
Potential gap Industrial Engineering tools
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ASIP ACTIVITIES
FY06 activities 872 ROI
of activities
64
40
9
9
8
10
2005
2006
2007 (planned)
CY
U.S.
MEXICO
Including kaizen expert companies
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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
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MUTUAL COMMITMENT COOPERATION

• 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

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ASIP EXAMPLE TRUCK SEATS
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IMPROVEMENT CONDITION
Real Improvement
Total Element Time 24.628 min
Line Balance 67
Output 66 pcs/hr
Operators 45
Shifts/Day 2
Productivity 1.46 pcs/hr/op
13.6
Total Element Time 25.77 min
Line Balance 80.60
28.7
Operators Difference 12
(Potential Target) 12
Output 66 pcs/hr
Operators 35
Shifts/Day 2
Productivity 1.88 pcs/hr/op
Operators Difference 10
(Gap Agreed) 10
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INITIATIVES FOR BETTER PERFORMANCE

• 3-3-3
• Alliance Supplier Improvement Program (ASIP)
• Leading Competitive Countries (LCC)

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LEADING COMPETITIVE COUNTRIES
Hungary
Romania
China
India
Vietnam
Egypt
Thailand
Mexico
Mercosur
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NISSAN IN THE AMERICAS
Vehicle production plants
Smyrna, TN Annual capacity 550,000
Canton, MS Annual capacity 400,000
Aguascalientes, Mexico Annual capacity 350,000
Curitiba, Brazil Annual capacity 50,000
Cuernavaca, Mexico Annual capacity 200,000
Nissan and Renault vehicles
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THREE-STEP LCC ANALYSIS PROCESS
Step 1
Action
If tier 1/2/3 component is already localized, is
it globally competitive?
Benchmark against PRC, THI, BRA, etc.
Step 2
If tier 1/2/3 is not currently localized or LCC,
can it be?
Benchmark supply chain against other Nissan and
non-Nissan suppliers
Step 3
If tier 1/2/3 cannot be localized or LCC, is the
price globally competitive?
Benchmark against price paid in other Nissan
regions
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CONCLUSION
Success in this industry is linked to providing
customers with the greatest possible value at the
lowest possible cost
Automakers and auto suppliers must collaborate
closely to allow both to realize sustainable
benefits