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13-149 August 27, 2013 IIIIIIIII MITSloan MANAGEMENT Nissan Motor Company Lid.: Building Operational Resiliency William Schmidt, DavidSimchi-Levi On March 11, 2011 a 9.0-magnitude earthquake, among the five most powerful on record, struck off the coast of Japan. Tsunami wavesin excess of 40 meters high traveled up to 10 kilometers inland and three nuclear reactors at Fukushima Dai-ichi experienced Level Please help in regards to the case study titled ‘ NISSAN MOTOR COMPANY LTD: BUILDING OPERATIONAL RESILIENCY by William Schmidt, David Simchi-Levi. a) What could Nissan have done to assess the risk of disruption in their supply chain?b) How did Nissan’s product line strategy help or hurt its ability to respond to and recover from the Board of Directors on progress. Each division was empowered and expected to take preventive measures to minimize the realization and impactof risks that did not require corporate coordination. Nissan’s continuous readiness process included activities such as ongoing seismicreinforcement of facilities, improvement to its business continuity planning (BCP), and disaster simulation training.” Nissan had an ea access alternative supplies of critical components. They were also able to secure air freight out of Japan so they could get critical parts out of thecountry faster and mitigate the reduction of initransit stocks. August 27, EDI 3 6 NISSAN MOTOR COMPANY LTD.: BUILDING OPERATIONALRESILIENCY Viniliam Schmidt, David Simchi-Levi 4. Empowering action — Nissan emphasized rapid and ﬂexible action. Management Exhibit 1 Production to Sales Ratios for Select Japanese OEMs Ratio of Production in Japan to Sales in Japan 1.8 1.4 12 . 0.8 0.6 0.4 0.2 ToyotaHonda Nissan Source: Chester Dawson and Neal E. Boudette, “Too Big in Japan, Toyota Struggles,” Wall Street Journal, May 12, 2011.Exhibit 2 Initial Damage Reports from Major Japanese Automotive OEMs Company Damage status Nissan Motor Fires broke out at Earnings Before Taxes (218,771) 141,620 480, 141 Total Income Taxes 36,938 91,540 132,127 Income (loss) attributable to minority interests(22,000) 7,690 28,793 Net Income (233,709) 42,390 319,221 Source: Nissan 2011 Annual Report. Exhibit 4 Excerpts from Nissan 2010Annual Report Risk Management Measures & Actions (Related to Earthquakes) Nissan is assuming earthquake (EQ) as the disaster?c) How will the operational changes announced in 2012 affect Nissan’s exposure to future disruptions? How will it affect its steady-state operations? What trade-offs is management making and why? Engineering & Technology Industrial Engineering Supply Chain Management ACADEMICO 01