Innovation is key driver for Renault-Nissan
The 17-year-old partnership between Renault of France and Nissan of Japan is still yielding new benefits, and the Alliance views the supply chain as a backbone of its business.
Strategic collaborations don’t get much more global than the Renault-Nissan Alliance. The two carmakers established their formal relationship in 1999 and over the intervening years they have progressively strengthened and deepened their connections in an ongoing quest to increase efficiency and boost revenues.
While the companies remain separate businesses, by 2014 this effort had led to the formal convergence of four key functions: engineering, manufacturing & supply chain management, purchasing and human resources. In 2015, the Alliance sold 8.5 million vehicles across its eight different brands, making it the world’s fourth largest car manufacturing group, with around 10 percent of the global vehicle market.
Today, the Alliance operates a cross-production strategy, building vehicles from both brands on the same production lines in several plants around the world. It has also developed a system of modular vehicle architectures, known as the Common Module Family (CMF), which allows a wider range of cars to be built from a smaller pool of parts. It expects 70 percent of its vehicles to use this approach by 2020.
From the outset, the Alliance has seen the supply chain as a key area of opportunity for synergies, and it was the second function to undergo the convergence process, after purchasing. Today, the converged supply chain covers 106 production sites worldwide and 23 logistics platforms located in 17 countries. It supplies finished vehicles to customers in nearly 200 countries.
The benefits of convergence come from two main areas, explains Jean-François Salles, Supply Chain Global Director, Renault-Nissan Alliance, “First we can save money in our transport flows, and second we can better support our shared manufacturing operations.”
So far, the approach has more than delivered on its promise. All the way through the integration process, the supply chain function has beaten its targets for savings and synergies, says Salles. While there is still work to do, he emphasizes that the Alliance doesn’t view convergence as an end in itself: “There needs to be a real benefit from the process. Where it makes sense to do things in two different ways, that’s what we do.”
Today, the common supply chain function is organized in two parts: an Inbound section, which handles supply chain design for new projects, inland and overseas parts consolidation and transport; and an Outbound one, which manages sequencing for production, capacity planning and control of parts, and the onward delivery of vehicles to dealers around the world.
It is a structure designed to keep the organization focused on its end customer, says Salles, who is
responsible for Outbound and Production Control. “Our objective is to answer customer demand in the shortest possible time. To do that, we need very close links with the sales and marketing function, which we achieve through our forecasting and sales and operations planning processes, and with our factories to ensure they have the parts they need.” The supply chain, he says is “a backbone of the company in terms of coordination between manufacturing and sales.”
Becoming ever more customer-centric is a key driver in the Alliance’s ongoing efforts to improve supply, says Salles. “Our customers want quality, the right performance features and on-time delivery. The supply chain is critical in achieving the last of those objectives.” But the supply chain function also has other objectives, he adds, in particular “to be truly people-centric and focus on innovation.”
The focus on its internal people is critical, notes Salles, due to the scale and diversity of the group’s operations. “We have lots of plants and lots of consolidation centers. We operate in so many countries using diverse resources and teams. It’s vital for us that all those teams can work together as one.”
And what about innovation? It is here, Salles suggests, that supply chain and logistics functions across the sector are on the cusp of some truly significant changes. The whole automotive industry, he says, has built its supply chain capabilities on technology that has its roots in the 1970s and 1980s.
“For a long time, our industry was a leader in supply chain management, but a lot has changed in recent years.” Some of that change has been driven by the logistics industry itself, he notes, while other innovation has come from new approaches taken by other sectors. “The time has come for us to review our processes, too.”
That review is under way right now, and it is likely to affect every aspect of the Alliance’s supply chain capabilities. “We are implementing the next generation of tools across our core activities, including our transportation management system, warehouse management system and manufacturing resource planning,” says Salles. Some of those changes have already taken place, he explains, while others are still ongoing.
Innovation in the Renault-Nissan supply chain isn’t just about big IT systems, however. Salles emphasizes that there are plenty of “light, smart solutions” with the potential to deliver real value, citing new track-and-trace technologies and the use of automation and augmented reality in warehouse operations as examples.
The biggest opportunities, however, are most likely to be found in changes to the way the organization uses data. “We generate and receive a huge amount of data every day, on parts, suppliers, costs and material flows. Finding better ways to exploit that data will unlock massive improvement opportunities.”
Achieving that goal will require the Alliance to acquire and develop new tools in a broad range of areas, says Salles, from data analytics to risk management. It will also need to ensure it has enough people with the right talents and skills to use them.
Salles is convinced that the benefits will be worth the effort. “Our flows are so large that it is impossible to spot every source of waste or opportunity for improvement. We have already seen how advanced analytics can reveal valuable information in data that was sitting right under our feet. I know that the more we make use of digital technologies, the more benefits we’ll gain and the more opportunities we’ll find.” — Jonathan Ward
Published: November 2016
Image: Luc PERENOM – copyright Renault, PR