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Nissan studies plants, suppliers to shave its costs

By: Lindsay Chappell
AUTOMOTIVE NEWS

July 29, 2013

NASHVILLE — Nissan Motor Co. is attempting to pare U.S. operating costs by rethinking the way it buys parts, builds cars and moves cars and components around the continent.

The company won't say how much it hopes to save in the far-ranging campaign, except that the amount is significant.

U.S. executives are looking for the cost reductions to help Nissan meet CEO Carlos Ghosn's "Power 88" business plan, which calls for a global consolidated operating profit of 8 percent by March 2017.

To get there, the U.S. company is looking into such unglamorous minutiae as how many individual parts are shipped in a single container; who performs the task of electrocoating a part; and where stamping presses are located.

"We're looking throughout the supply chain," says Dan Bednarzyk, who is heading the campaign. "We're reviewing opportunities with the suppliers -- everything in the supply chain from Tier 1 to the delivery of vehicles."

It will also re-examine past decisions to source parts for North America from sole suppliers overseas. The search, which is gaining momentum as Nissan attempts to boost both U.S. market share and production levels, will attempt to bring new suppliers closer to Nissan assembly plants to cut transportation expenses.

Bednarzyk, a longtime manufacturing manager with the company and most recently vice president in charge of Nissan's assembly plant in Canton, Miss., took up the new post of vice president of total delivered cost in May.

His mission is to enlist different parts of Nissan Americas — including the company's purchasing, engineering and design functions — to adopt less expensive ways of making cars and trucks, he says.

Several recent moves illustrate Nissan's thinking:

  •  Nissan previously deemed DVD screens in the back of vehicle headrests to be an accessory option. That meant the screen would be installed in the finished vehicle after it had left the assembly line. The car would move into accessorizing, where a Nissan employee would remove the base headrests, throw them away, and then insert the deluxe "accessory" headrests containing the DVD components. Nissan now has the DVD headrests installed during the initial assembly process.
  •  Nissan discovered that its seat suppliers have been paying different prices for seat-covers from Tier 2 companies. A review revealed that was largely because the seat covers were being shipped in different packaging. After much back-and-forth among the suppliers, Nissan has adopted a standardized guideline requiring the covers to be packed more densely in shipping cartons.
  • Nissan is saving "millions" on that change alone, Bednarzyk says.
  •  The company has recognized that it needs to help some suppliers move closer to its assembly plants to reduce transportation costs. Nissan plans to build factory and warehouse space at Canton to facilitate the moves. It is also assisting with real estate issues in Smyrna, Tenn.
  •  Nissan has been purchasing some truck splash guards for factory installation, and others for low-volume accessories installed by Nissan after a truck leaves final assembly. Nissan developed a scheduling method to tell assembly workers which splash guards to install, and has now brought higher-grade splash guards in-house.

"It seems simple, but somebody just had to look at it to see there were differences in costs," he says. "We're going out supplier by supplier, doing line walks, doing product tear-downs. We're sending logistics people, process people and manufacturing people to help with the look."

Bednarzyk and executives from purchasing and design have begun meeting weekly to review a stream of cost-cutting ideas, most of them submitted by suppliers.

"Some of the proposals require fairly major design changes," he says. "And sometimes the bureaucracy of a big company slows down the progress of ideas. So sometimes it takes a little push to get it done.

"I believe our suppliers will look at this as a way to accelerate their ideas about how to achieve cost savings," he says. "Yes, we're asking our suppliers for cost reductions, and that's a standard practice. But we're going to work with them to establish real sustainable savings that are win-wins for both of us."

A complete version of this story is available at www.autonews.com.