A Nissan spokesperson responds to questions about the company’s supply chain issues.supply chain management

Cliff Welborn

English

Research Papers in Economics

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What do you perceive as the primary
logistics advantages to your Tennessee
location?
Fifty percent of the U.S. population is
within 500 miles of Smyrna and 72 percent
within 800 miles. Because of this location, cou-
pled with the interstate highway network that
serves middle Tennessee (I-24, I-65, and I-40)
and railroad service provided by CSX that con-
nects Nissan’s Smyrna vehicle assembly plant
directly to all rail ramps east of the Mississippi,
Nissan has a natural competitive advantage
when it comes to delivering cars and trucks to
its customers.
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A Nissan spokesperson 
responds to questions about the
company’s supply chain issues 
liff Welborn, MTSU assistant profes-
sor of management and marketing,
conducted this interview via e-mail
with a Nissan spokesperson. CNissan’s Smyrna assembly
plant covers 5.4 million
square feet and produces
five Nissan vehicles includ-
ing the Maxima sedan,
Altima sedan, Frontier
pickup truck, Xterra SUV,
and Pathfinder SUV.
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continued on page 14
Which supply chain work is done 
in-house and which outsourced?
Nissan considers the following activities to
be key supply chain functions:
 strategic planning,
 procurement,
 bills of material establishment 
and maintenance,
 production scheduling,
 vehicle order processing,
 parts ordering,
 inventory management,
 logistics network planning,
 transportation,
 warehousing,
 material handling, and
 export operations.
Generally, Nissan employees perform activ-
ities involving supply chain process planning
and management, and logistics service providers
handle more routine, repetitive functions prima-
rily associated with those plans’ execution. The
mix of employee-provided and purchased serv-
ices continually changes depending on current
business needs, available technology, and out-
side service provider capabilities. How many Nissan employees are
directly involved with logistics or 
distribution?
Today, Nissan employees support produc-
tion parts logistics and vehicle distribution
through the planning and management of these
activities—for not only the production of vehi-
cles and engines at the Smyrna and Decherd
facilities in middle Tennessee but also vehicle
production at Nissan’s plant in Canton, Missis-
sippi, and production parts exports that support
Nissan production in Japan, Mexico, Brazil,
Spain, and Thailand.
How much of a vehicle is produced 
in-house and how much procured
through the supply chain?
The major components produced in
Smyrna by Nissan employees are stampings for
the body assembly and the plastic bumper fas-
cias. Engine assemblies are produced at Nis-
san’s power train plant in Decherd. The
remaining parts are purchased from 450 suppli-
ers (125 in Tennessee).
Several of these Tennessee suppliers who
manufacture major components such as truck
frames, cockpit and front end modules, and
brake and fuel tube assemblies have operations
located on-site at Nissan’s Smyrna facility. This
allows just-in-time manufacturing and delivery
of these components not possible from off-site
locations. Nissan’s strategy includes on-site
supplier operations, resulting in a supply chain
more efficient and cost competitive than other
auto manufacturers’.
Who is your largest logistics/distribution
vendor, and what does this vendor do
for you?
Currently, Nissan’s largest logistics service
provider in North America is Wallenius Wil-
helmsen Logistics Vehicle Services Americas,
or WWL VSA.
WWL VSA is responsible for operating all
of Nissan’s Vehicle Processing Centers (VPCs)
located in Canada, the U.S., and Mexico. This
involves managing vehicle inventories at all of
Nissan’s vehicle manufacturing plants and ports
of entry. WWL VSA is responsible for acces-
sory installation and loading railcars and truck
haul-away carriers for the delivery of the vehi-
cles to Nissan and Infiniti dealers located
throughout North America.
WWL VSA is also responsible for develop-
ing the distribution logistics network used to
deliver the vehicles produced in North America
or imported into North America to Nissan and
Infiniti dealers, and the company negotiates the
transportation services used to provide short sea,
rail, and truck services required for those deliv-
eries. Additionally, WWL VSA arranges for
transportation to the ports for vehicles produced
by Nissan in North America that are exported to
countries in other regions of the world.  
Who is your largest Tennessee-based
logistics supplier, and what does this
supplier do for you?
Presently, Venture Express, a trucking
company headquartered in La Vergne, is Nis-
san’s largest Tennessee-based logistics service
provider. Based on Venture’s ability to meet
Nissan’s supplier selection criteria of quality,
cost, delivery, development, and management
(QCDDM), Venture Express has grown over the
years to become Nissan’s leading core carrier
for the transportation of production parts used at
Nissan’s manufacturing facilities located in
Smyrna and Decherd as well as Canton, Missis-
sippi. 
How many inbound trucks/containers
do you receive each day?
The daily volume of inbound trucks and
marine containers required to support produc-
tion capacity at Smyrna and Decherd is approx-
imately 450 trucks and 50 marine containers.
How many outbound trucks/containers
do you ship each day? 
At capacity production volume, the number
of railcars and trucks shipped daily from Nis-
san’s vehicle assembly plant in Smyrna is
approximately 75 to 100 railcars and 100
trucks. The average number of cars and trucks
shipped per railcar is 12, and the average num-
ber of cars and trucks shipped per truck is nine.
The actual number varies based on the size of
the vehicle being shipped (primarily height) and
the mix of cars and trucks being shipped on the
same railcar or truck.
What are your current primary supply
chain issues?
Several challenges are common to all
North American automotive manufacturers,
including Nissan:
 The financial stability of the U.S. automo-
tive supply base is being affected by the
current financial difficulties facing General
Motors, Ford, and DaimlerChrysler. This
financial strain can harm some suppliers’
ability to meet their supply obligations to
their customers.
 The rise in global competition between the
traditional North American automotive
supply base and automotive suppliers in
countries such as Mexico, China, Korea,
continued from page 13
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Factors supporting
the relocation
decision included
the potential to
improve
operational
efficiencies among
its North American
functions due to
Tennessee’s lower
costs of doing
business, favorable
business and
taxation climate,
and central
location.  
Nissan’s parts redistribution
center in Smyrna ships
service parts to Nissan’s
mega and speed centers.India, and other emerging countries world-
wide has literally stretched Nissan’s supply
chain around the globe. This presents new
challenges that must be managed in order
to maintain an uninterrupted parts supply to
Nissan’s manufacturing facilities.
 Currently, transportation infrastructure
issues within the U.S. affect Nissan’s sup-
ply chain. Capacity constraints include port
facility capacities; railroad capacity and
railroad investment in capital equipment
required for shipping automobiles and
trucks; truck driver shortages, which limit
the national trucking capacity and the
growth of trucking companies; and obvi-
ously the rising cost of fuel, which
adversely affects the cost of transportation
of both parts and finished vehicles.
 Supply chain management organizations
must manage the availability of resources
and time required to adopt advanced infor-
mation technology required to keep pace
with advances in supply chain management.
What major developments do you 
foresee for your supply chain in the
near future?
The biggest development will be the con-
tinued expansion of global vehicle assembly
operations and automotive supplier bases. The
supply chain for both finished vehicles and pro-
duction parts supply will continue to expand on
a global basis to support these activities and
provide new opportunities for companies that
learn how to compete globally—particularly
logistics service providers. 
What factors influenced Nissan’s 
decision to relocate its corporate 
headquarters to Tennessee?
The relocation of Nissan’s corporate head-
quarters to Tennessee is providing strategic,
long-term operational benefits and supports the
company’s ongoing efforts to create synergies
and improve performance. Prior to the reloca-
tion, corporate functions such as sales, market-
ing, product planning, corporate planning,
communications, and training were managed
from Nissan’s corporate facility in Gardena,
California. The relocation allowed those func-
tional groups to have closer collaboration and
higher levels of cross-functional involvement
with the manufacturing, purchasing, product
quality, and supply chain management func-
tions based in Smyrna. Other factors supporting
the relocation decision included the potential to
improve operational efficiencies among its
North American functions due to Tennessee’s
lower costs of doing business, favorable busi-
ness and taxation climate, and central location. 
With the corporate relocation, will there
be any significant changes in the way
this plant’s supply chain operates?
Prior to the relocation of the headquarters
to Nashville, Nissan’s supply chain manage-
ment group was looking into opportunities that
could be gained by combining the production
parts and service parts logistics networks.
Opportunities included combining suppliers’
production parts shipments to Smyrna with
service parts shipments and negotiating com-
mon transportation service provider contracts.
The relocation of the headquarters operation to
Nashville facilitates the working relationship
between the groups responsible for product and
service parts, allowing Nissan to accelerate
these collaborative efforts. 
Multiple model production at Nissan assembly plants maximizes haul-away
trailer load efficiency.
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Logistics centers attached to Nissan assembly plants are used to receive, sort,
and sequence inbound production parts for delivery to Nissan’s vehicle assem-
bly lines.

Questions and Answers: Nissan Case Study

http://www.mtsu.edu/~berc/tnbiz/supply/nissan.pdf

Questions and Answers: Nissan Case Study

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