1. NANYANG TECHNOLOGICAL UNIVERSITY
SCHOOL OF MECHANICAL AND AEROSPACE
ENGINEERING
T
MA6535- Management of Global Manufacturing
“Analysing Supply Chain of Automotive Industry with the
context of Global Manufacturing”
COURSE COORDINATOR
Associate Professor Sivakumar Appa Iyer
TEAM MEMBERS
RAMANATHAN RAMANATHAN G1101248A M.Sc., Logistics (Full-Time)
KANNAN SOMASUNDARAM G1101243E M.Sc., Logistics (Full-Time)
MOORTHY ASHOKAN
SAMIDURAI GOVINDARAJU G1101249J M.Sc., Logistics (Full-Time)
MUTHU KUMAR
MAHESWARAN MASILAMANI G1102334J M.Sc., Logistics (Full-Time)
KANNATHASAN NARESHKUMAR G1102357G M.Sc., Precision (Full-Time)

2. Introduction:
Ikeda Hoover Ltd (IHL) was established in 1986 to supply seating modules on a
synchronous basis to Nissan’s UK plant located in Sunderland. The company
undertakes cutting and sewing, injection moulding, welding and assembly activities
within a single plant located within five minutes of the Nissan car plant. It is a joint
venture company between Ikeda Bussan of Japan and Johnson Controls Inc. USA.
Ikeda Bussan is a major seat and interior trim manufacturer in Japan supplying Nissan,
Honda, Mitsubishi and other Japanese and world customers. Ikeda Bussan is in turn a
subsidiary of Nissan.
Johnson Controls is a multinational organization with 12 billion dollar annual
turnover. Its Automotive Division has expanded extensively from America in to
Europe with foam, cut and sew, and seat assembly plants. Their major customers
include General Motors, Ford, Rover, Nissan, Honda, and Renault. The joint venture
was formed in 1986 to supply Nissan Motor Manufacturing UK Ltd. (NMUK) with
car seats on a synchronous just-in-time basis, initially for the Bluebird. Present
production is for the Micra, and new Primera which was launched in 1996. New
products include the Primera estate, to be launched in early 1997, and the third model
recently announced by Nissan.
The way it works with IHL and Nissan Manufacturing UK (NMUK) is by computer
link. Nissan downloads information onto our computers, informing us exactly when
each car has joined their production line. The computer at NMUK tells Ikeda Hoover
Limited (IHL) what seat to make i.e., variant, colour and other specifications, to
enable the correct seat to be put together. We have no more than approximately two
and a half hours in which to manufacture and deliver the seat to the Nissan assembly
operator at lineside. In this way the NMUK and IHL production lines are
synchronized. As each seat at IHL is a particular car at Nissan, there is no end of line
stock at IHL. The seats have to be produced right first time, every time. IHL is,
therefore, at the leading edge of the European Automotive supply industry.
Objective:
In this case study the characteristics of synchronous manufacturing, supplier-buyer
relationship, and modular supply model with an automobile content is examined. In a
deeper extent the essential difference between the traditional just in time
manufacturing and the synchronous manufacturing are examined taking the buyer
supplier relationship in to account. Analyzing the buyer supplier relationship and the
manufacturing strategies leads to the development of the modular supply model since

3. the buyer supplier relationship may change. Moreover, the growth of modular supply
model is likely to require a reappraisal of supply chain relationship as both the nature
of buyer – supplier change and a new tier-one position is established that moves the
modular suppliers close to the buyers.
The objective of our work is to further study the modular supply chain model with
many parts outsourced to low cost manufacturing facilities, OEM setting up the plant
in low cost manufacturing cities, mass customisation employed by the OEM to target
niche customers with respect to the current globalised scenario. We would like to
study the impact of ever increasing oil prices and labour wage increase in the
traditional low cost manufacturing facilities which makes the manufacturers to study
the impact of outsourcing rather than going to the low cost manufacturing facilities
blindfolded. With this context we would like to propose the future supply chain model
on the basis parts divided as strategic and non strategic components.
Buyer – Supplier Relationship:
The relationship between a supplier and buyer can be a complex one. Each party
wants to maximize its time, resources, and cash investment; these may be competing
priorities that can strain the relationship. The summary of the automotive buyer
supplier relationship is presented here in order to provide an idea of the existing buyer
supplier relation between IHL and Nissan. The buyer supplier relationship varies with
respect to the geographical nature and commercial contexts.
The Toyota Australia’s case study suggests that there are difficulties associated with
moving from “arm’s length” to “obligation “buyer supplier relationship. These
difficulties helped them to develop a new approach which involves the supplier to
learn about the principles Toyota Production System from showcase. Within U.K
automotive context, Leverick and Cooper (1998) demonstrate that there is trend in
closer buyer supplier relationship between the indigenous suppliers and primary
customers. The selection of right partner, ensuring effective communication of
sensitive issues and partnership monitoring, helps in success of closer relationship.
According to Spekman the closer buyer supplier relationship should be encouraged
only for the components that are consider strategically critical to the buyer and the non
critical components should adopt more traditional open market negotiation approach.
Lamming provides an overview of the buyer supplier relationship in automotive
industry for decades. In 1970’s the buyer supplier relationship was characterized as
adversarial contractual relation (ACR). In the later part of 1970’s the trend started
changing and the buyer started demanding quick cost reduction, open book
negotiation and adherences to strict quality control regimes. After mid 1980’s they
started realizing the close buyer supplier relationship could actually improve the
performance of both parties.

4. The close buyer supplier relationship is complicated, but the best partnerships can be
attained by focusing on three critical and intertwined business tenets:
 Compliance with local and international regulations
 Conduct that breeds honesty, respect and open dialogue
 Strategic financing that benefits both parties.
Synchronous Manufacturing:
Synchronous Manufacturing is an operational strategy that incorporates lean
principles, but adds flexibility to the process. Where lean manufacturing is oriented
toward a repetitive manufacturing environment, synchronous manufacturing applies to
low-volume/high mix type of order characteristics. It also applies to environments
where a large degree of customization or "customerization" is required, or a make-to-
order environment.
Lean manufacturing applies best when the order characteristics are high-volume/low-
mix. In these cases, components are identical, or differences lie in scale or size. WIP
inventory is low in variety and can be controlled with ease. In contrast, in a low-
volume/high-mix environment, the componentry tends to vary greatly, and the WIP
inventory mix is characterized with a much greater variety, and is more difficult to
control.
Synchronous manufacturing employs the synchronization between customer orders
and work stations. In other words, the first order worked on in the first work station is
the first work order worked on in the second station, and so on. This requires a good
systems scheduling algorithm often using a first-in/first-out method to scheduling
customer orders. Synchronous manufacturing can be applied within an Agile
Manufacturing strategy.
Synchronous scheduling is often mixed in the same manufacturing environment with
Kan-ban signals, but at a later stage in the manufacturing process. For instance, a
process that begins by taking raw steel and producing blanks can be scheduled using
Kan-ban pull devices.

5. The primary difference between the JIT and synchronous manufacturing environment
is the issue of supplying the exact needs of the customer. IHL is a true synchronous
manufacturer for Nissan; it manufactures and delivers up to 200 seating variation for
three models that are produced at Nissan’s plant. As the body of the car passes over
the transceiver in the assembly line, the Nissan computer system transmits data to all
the first tier suppliers. As IHL being the first tier supplier receives the data within 3
seconds.
This is the data that has been transmitted. The data provides vehicle specific
information relating to fabric color, head rest requirement, front and rear seat
requirement, the vehicle chassis code, time the order has been received and comments
relating to the individual seats.
IHL buys the seat frame that forms the backbone of the seat and does some additional
welding operations with the help of robots and manual work. IHL has three assembly
lines for three different models. Once the seat frame is ready then the assembly
process begins. Since it’s synchronous in nature, the three assembly lines are mirror to
Nissan’s assembly line.
Once the process is completed the seats are picked off from the three assembly lines
and quality check is done so that no faulty seat is sent to Nissan. Correct alignment,
correct mobility and visual precision are checked. When the seats pass the tests it is
made to rejoin the assembly line. The critical success to the synchronous
manufacturing is the low parts per million rejection rate. Nissan insists the first tier
suppliers for the PPM to be less than 50. In order to reduce the possibility of getting
damaged while transporting, IHL has built a vehicle especially for this purpose.
The flowchart below depicts the process that takes place at IHL.

7. The benefits of synchronous manufacturing are generally higher flexibility, lower
costs, higher quality, lower inventory, and shorter lead times. The characteristics of
synchronous processes are:
 Make to order
 Synchronized production
 Just-In-Time materials/pull scheduling in early stages
 Synchronized scheduling in later stages
 Short cycle times
 Highly flexible and responsive processes
 Highly flexible machines and equipment
 Quick changeover
 Continuous flow work cells
 Collocated machines, equipment, tools and people
 Compressed space
 Multi-skilled employees
 Empowered employees
 High first-pass yields with major reductions in defects
The synchronous manufacture is logistically problematic for both buyers and
suppliers. To ensure that the system works properly it is essential to have an efficient
management of supply chain interface. With the context of Nissan an IHL, the buyer
supplier interface is governed to a large extent by the Nissan’s Pre Production Quality
Assurance Scheme. The quality, cost, delivery and other issues are focussed in this
scheme. This aspect of supply chain management is very critical to the success of
Nissan.
Modular Manufacturing:
The term ‘modular manufacturing model’ refers to a model of a manufacturing system
based on modularization theory. The manufacturing system created based on design,
construction, operation and control technology derived from this model is the
‘modular manufacturing system’.
The modular manufacturing model has in its background a paradigm as follows. The
manufacturing system (mechanical) and its information system reflect each other. This
results in a comprehensive model of representation, design, construction, control and

8. operation, and the systems themselves, including exchange of information between the
two systems. We may easily accept the idea that within the information system that
corresponds to the physical systems (manufactured objects that have physical shapes
and characteristics, manufacturing resources, manufacturing equipment, etc.),
description and handling are performed in a unified manner. It follows, then, that
objects and information are exchanged in a unified manner.
In a traditional supply chain model, suppliers send basic parts for en element, such as
an automobile seat, to the manufacturer. The manufacturer then assembles the parts
into a complete seat as the car is assembled. In modular supply chain, the supplier
creates the complete seat, and sends it ready to install.
The benefits of modular supply chain management are, suppliers have considerable
design and innovation leeway. Suppliers often provide design and cost saving
development because they are given such a degree of freedom in production. With
long-term commitments and aggressive cost goals, the suppliers and manufacturers
work together to create value. Modular components can be reused in a variety of
models of similar products, saving money and time.
Modular supply chain management is a method of working with suppliers to deliver
products in a shorter time frame. With the complexity and speed of manufacturing
increasing, modular supply chain management allows suppliers to create complete
components quickly.
The most striking example of modular manufacturing is the collaboration of Mercedez
Benz with swatch, the watch makers. A typical vehicle maker has to deal with 200-
300 suppliers but Mercedez and Swatch built a smart car with only 25 module
suppliers. The examples of smart modules are dashboard structure, body structure,
breaking and the seat structure. Similar thing was carried out in Ford. Ford ka,
replacement of Ford Fiesta. Modular manufacturing was introduced and the worker
strength falling from 3000 to 1200 and there was a reduction in the cycle time also.

9. Conclusion:
The above findings indicate that where a product is viewed as “strategic” by the buyer
then the mode of commercial engagement facilitates closer buyer supplier
relationship, particularly where modules are manufactured, supplied and fitted on a
synchronous basis.
Because of the natural disaster in Japan, Toyota motors are overhauling its supply
chain. The disaster showed just how vulnerable carmakers' supply chain systems are
and Toyota has taken on board the harsh lessons it learned when rebuilding its supply
chain system with a focus on diversifying procurement sources, boosting overseas
purchasing and standardising parts designs across the world.
Considering the impact of ever increasing oil prices and labour wage increase in the
traditional low cost manufacturing facilities, emphasis on optimisation by region
which leads to producing a diverse array of parts and in case of any natural disaster in
the particular region the availability of certain modules will fail. In order avoid these,
the architecture should be global and the parts design should be standardised in order
to hedge against the risk.

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