Like a lot of companies, Nissan approaches lean like the woman who orders a double cheeseburger, chili cheese fries … and a Diet Coke … approaches weight loss. It's a cafeteria approach – "I'll take the JIT and single sourcing (not to form a strategic relationship but to use the volume to hammer supplier pricing), but I'll pass on managing people as a fixed cost and compressing cycle times." And contrary to the opinions of the idiot savants writing for the business press, they are no more lean than the woman with her chili cheese fries is really dieting.
It seems Nissan is having to close several plants for a few days due to a part shortage. The part at the root of the problem is a microprocessor made by a Swiss outfit called STMicroelectronics. Despite Carl Ghosn's international pedigree, Nissan is still a very Japan-centric company. I am admittedly a bit fuzzy on the overall supply chain for these things, but they go into the motors for Nissans, which are produced by Mitsubishi and a Mitsubishi motor for a car made in Mississippi and sold in the USA is, of course, made either in Japan or Thailand. The electronics for the motors are provided, naturally, by another Japanese company – Hitachi – who does just about all of their manufacturing in Japan and China. STMicroelectronics assembles the microprocessors in China, but in spite of the marvels of Chinese manufacturing, the wafer fab is a bit tricky so it is done in Italy, France and Singapore.
So the supply chain, to give Nissan the benefit of the doubt and plot the shortest route would be from Singapore to China to Japan to another place in Japan to the United States – about a 15,000 mile four stop world tour. At worsts if there is more China and a trip to Thailand in the mix, it might be 20,000 miles plus. At the end of this tedious pipeline, there are not enough microprocessors coming out – "drawbacks of lean manufacturing methods, which call for carrying little inventory but make supply snags tougher to offset," according to the Wall Street Journal. This same weakness in lean manufacturing is at the root of Apple's troubles, as well, according to this guy. Now that one is really a stretch inasmuch as Apple does no manufacturing and would not know the first thing about it. They seem to agree with our friend Joe that manufacturing is first and foremost a pastime to occupy the idle time of stupid people – or at least something for the wretchedly poor to do to justify their daily bowl of rice.
There is nothing lean about Nissan and there is especially nothing lean about this ridiculous supply chain, and attempting to run it with minimum inventory in the supply chain no more makes it lean than washing down chili cheese fries with a Diet Coke means you are watching your weight. This is the supply chain for a company that has no concept of cycle times, and therefore, no concept of lean.
The old adage that a chain is as strong as its weakest link applies very well to supply chains, and STMicroelectronics does not even qualify as a link – more like a paper clip. If you read about them here, you can stop reading at the second sentence where it says, "While STMicroelectronics corporate headquarters and headquarters for EMEA region [Europe, Middle East, Africa] are based in Geneva, the holding company, STMicroelectronics N.V. is registered in Amsterdam, Netherlands. That tells you all you need to know about them. It is the structure of choice for companies who think skirting EU tax laws is more important than getting work done quickly and effectively. The fact that they have laid everyone off in countries close to end customers, and have restructured their way to China is the natural next step for such an outfit. And the fact that Nissan plants are shutting down due to their inability to manage capacity and execute quickly to customer demands should come as no surprise to anyone – least of all Nissan.
Lean is a unique and powerful business model – not a menu of devices to use at your convenience to beat up suppliers or to manipulate this quarter's working capital metrics. It requires ordering the salad and the broiled fish along with that Diet Coke, which is often a little more commitment than many are ready to make.