Bill Krueger

1
Bill Krueger

• Senior Vice President, Manufacturing, Purchasing
  and Supply Chain Management
  for the Americas
• Nissan North America Inc.

2
Global Sourcing Strategies Supply
Chain 15,000km, 150km or 15km?

Bill Krueger Automotive News Manufacturing
Conference May 17, 2007
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Whats the correct answer?
INDIA
INDIANA
or
IN THE PLANT
4
Low cost of labor availability
2,600 M
349 M
807 M
5
Technology map of the world
Source The Economist, June 24th 2000, p.81
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Technology centers
Stockholm, Sweden
Hsinchu-Taipei, Taiwán
Helsinki, Finland
Cambridge, England
Munich, Germany
Silicon Valley, CA
Boston, MA
Sillicon Alley, NY
Monterrey MEX
Austin, TX
Sophia Antipolis, France
Singapur
Tel Aviv, Israel
Bangalore, India
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Logistics Distances for Global Parts
Europe - Local 600km
US - Local 500km
Japan Local 130km
Lower labor?JPN 2400 - 6500Km 18-50 x
Lower labor ? NA 2000 - 15000Km 4-30 x
Lower labor ? EUR 2500 - 8000Km 4-13 x
Average Distance 350 Km ?4,600 Km(13 x)
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Order Lead Time Firm Horizon
86
D A Y S
40
16
4
U.S.
Mexico
Japan
China
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Risks associated with Global sourcing

• Financial Risks
• Obsolescence-Commitment for Fab Raw materials
  due to extended supply pipeline.
• Currency Fluctuation/Stability-price adjust
  agreements
• Premium Freight-recovery refilling the pipeline
• Inventory Carrying Cost
• Non-Price related Supply Chain Costs
• Warehousing
• Repackaging
• Expendable packaging disposal
• Sequencing parts
• Transportation Price Fluctuations
• Supplier Management Oversight Cost

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Risks associated with Global sourcing

• Supply Risks
• US Customs Delays due to lack of C-TPAT
  certification
• Transit Delays
• Weather
• Carrier route changes
• Port of call cancellation
• Port labor or Customs disruptions/ strikes
• Freight Damage
• Systems failures
• Raw Material Supply Control Stability
• Design Change Engineering Change Coordination
• Global Supplier Capacity

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SCM process map
MS
Material Handling
Manufacturing
CCR
Transport
Service Parts
Service Part Suppliers
Service/ Accessory Parts
Service Accessories
Service/ Accessory Parts
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STRONG BUT INDEPENDENT

• MANUFACTURING

PURCHASING
CONSEQUENCES?
Customers
Suppliers
SUPPLY CHAIN MANAGEMENT
DESIGN
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Optimal Purchasing
Sub-optimal Logistics
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MONOZUKURI MAKING THINGS
NOW
MANUFACTURING
PURCHASING
REGIONAL INTEGRATION NNA, NMEX, NBA
CONSOLIDATED OBJECTIVES
CUSTOMER QUALITY
CUSTOMER RESPONSIVENESS
Suppliers
Customers
DESIGN
SUPPLY CHAIN MANAGEMENT
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MONOZUKURIS Overarching Goal
Value creation by reducing the total delivered
cost of high quality products to our customers.
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Regional Supply Chain Management (Americas)

• Parts assembly level optimization
• Development of efficient packaging
• Transportation filling optimization
• Build the logistics corridor

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Utilization of Efficient Packaging
1.00
P

• Packaging must guarantee parts QUALITY during
  transportation and handling.
• To achieve max. quantity of parts per m³.
• Use of returnable or disposable packaging based
  on optimum logistics cost.

OK
Best practice
- parts per m³
0.50
O
NG
0.00
- logistics cost (pkg freight)
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Transportation fill optimization
Modular packaging
ok
OK
Non modular packaging
P
ng
(per piece)
Dimensions according to AIAG standards (48 x 45
pallet footprint) to get maximum transport
utilization
NG
O

• Key elements to succeed
• Use of modular packaging (AIAG)
• Standardized transportation equipment
• Supplier responsibility as shipper of their own
  products

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Logistics corridor
Nissan Mexico USA plants
United States

• Smyrna, TN(USA)
• Stamping
• Vehicle

NNA-S
NNA-D
NNA-C

• Aguascalientes (MEX)
• Stamping
• Engine Transaxle
• Vehicle

Eagle Pass, TX
Laredo, TX

• Decherd, TN (USA)
• Engine Transaxle

Mexico
NMEX-A
Altamira
Veracruz
NMEX-C
Manzanillo
Lazaro Cardenas

• CIVAC (MEX)
• Vehicle
• Production of service parts

Acapulco

• Canton, MS (USA)
• Stamping
• Vehicle

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Critical success factors

• Manage the supply network, not just suppliers
• Effective supplier relationship management and
  supplier development
• Focus on total delivered cost, not price
• Involve all functions in the value network
• Develop parts commonization strategy reduce
  complexity
• Seamless global processes, program discipline and
  efficient way of working
• KPIs and Goals aligned across all functions

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The Americas SCM Mission is to .
Support Regional Purchasing sourcing activities
which result in the optimum Delivered Duty Paid
(DDP) parts cost. Support the manufacturing
process with the packaging designs, logistics
routes and facilities which optimize the delivery
of globally, regionally, and locally sourced
parts.
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MONOZUKURI MAKING THINGS
NOW
MANUFACTURING
PURCHASING
VALUE NETWORK OPTIMIZATION
DESIGN
SUPPLY CHAIN MANAGEMENT