By: Lindsay Chappell
August 7, 2014
TRAVERSE CITY, MICH. — Nissan North America is pulling back from a strategy of buying parts from low-cost countries and is now encouraging suppliers to locate near its U.S. assembly plants instead.
“It’s a step away from the practice of using low-cost countries for our parts,” said Chris Styles, Nissan’s senior director of logistics and supply chain management.
Styles said Tuesday at the 2014 Management Briefing Seminars that the shift is a return to a previous logistics strategy. In 2003, Nissan was among the first automakers in the United States to open an integrated supplier park at its then-new Canton, Miss., assembly plant. At that time, Nissan brought several suppliers into an on-site building to perform parts-assembly work within walking distance of the Canton vehicle assembly line.
Nissan slipped away from that practice in the years that followed, Styles said. But several recent global challenges -- a destructive tsunami in Japan, flooding in Thailand and unpredictable foreign currency changes -- prompted Nissan to re-develop the on-site supplier concept, he said.
Nissan will open a 1.5 million-square-foot supplier center in Canton this year, and a similar new facility at its plant in Smyrna, Tenn. Each one will house an undetermined number of suppliers that currently operate out of state.
“We look at commodities that make the most sense,” Styles said of which parts it wants closer at hand. Those include parts that are difficult to or expensive to transport.
“We focus our resources on the ones that give us to the most bang for the buck.”
The Canton operation will launch with the start of Murano crossover production there in October.
“When you have a new model, you may have a supplier who has to expand or invest somewhere,” he explained. “You can create the argument that, since they have to expand anyway, their best option is for them to do that is here with us.”