STRATEGIC SUPPLY CHAIN ASSESSMENT FOR NISSAN SOUTH AFRICA by STEFAN JOHANNES VAN WYK A project submitted in partial fulfilment of the requirements for the degree BACHELORS IN INDUSTRIAL ENGINEERING at the FACULTY OF ENGINEERING, BUILT ENVIRONMENT, AND INFORMATION TECHNOLOGY UNIVERSITY OF PRETORIA SUPERVISOR: Prof Kris Adendorff October 2014 Table of Contents I. Executive Summary ............................................................................................................ ii Aim of Project .................................................................................................................... ii Project Overview ................................................................................................................ ii Conclusion .......................................................................................................................... ii II. Glossary ............................................................................................................................. ii 1. Introduction ..................................................................................................................... 1 1.1 Background ................................................................................................................... 1 1.2 Need Requirement ........................................................................................................ 1 2. Project Aim ........................................................................................................................ 2 3. Project Approach, Scope & Deliverables ........................................................................... 3 3.1 Project Approach .......................................................................................................... 3 3.2 Project Scope ................................................................................................................ 4 3.3 Deliverables .................................................................................................................. 5 4. Literature Review & Problem Investigation ...................................................................... 6 4.1 Introduction to the Supply Chain Assessment ......................................................... 6 4.2 Business Strategy Analysis ...................................................................................... 7 4.3 Supply Chain Metrics Alignment ............................................................................ 9 4.4 Supply Chain Models and Frameworks................................................................. 11 4.5 NSA Supply Chain Assessment ............................................................................ 12 5. Pilot Project ...................................................................................................................... 46 5.1 Need Requirement ...................................................................................................... 46 5.2 Pilot Project Scope, Aim & Deliverables ................................................................... 46 5.3 NSA Stock Yard Operational Excellence ................................................................... 47 6. Conclusion ........................................................................................................................ 75 7. Reference List .................................................................................................................. 76 8. Appendices ....................................................................................................................... 80 8.1 Appendix A: Industry Sponsorship Form ................................................................... 80 8.2 Appendix B: Linear Programming Models ................................................................ 81 8.3 Appendix C: Ashman’s D, bimodality test ................................................................. 97 8.4 Appendix D: PLAN Maturity Models ........................................................................ 98 8.5 Appendix E: SOURCE Maturity Models ................................................................... 99 8.6 Appendix F: DELIVER Maturity Models ................................................................ 100 8.7 Appendix G: PLAN Process Map (CBU & CKD) ................................................... 101 8.8 Appendix H: SOURCE Process Map (CBU) ........................................................... 102 8.9 Appendix I: SOURCE Process Map (CKD)............................................................. 103 8.10 Appendix J: DELIVER Process Map (CBU) ......................................................... 104 8.11 Appendix K: DELIVER Process Map (CKD) ........................................................ 105 List of Figures Figure 1: SWOT Analysis .......................................................................................................... 7 Figure 2: Process-Product Matrix .............................................................................................. 9 Figure 3: Supply Chain – Product Matrix ................................................................................ 10 Figure 4: The Supply Chain Operations Reference Model ...................................................... 11 Figure 5: A suggested Forecasting Framework ....................................................................... 14 Figure 6: Reconciliation Processes .......................................................................................... 16 Figure 7: High Level Overview of NSA MRP Ordering ......................................................... 19 Figure 8: Demand Planning Cost as a Percentage of Revenue ................................................ 34 Figure 9: Cash-to-Cash Cycle Time in Days ........................................................................... 36 Figure 10: Unplanned Machine Downtime.............................................................................. 37 Figure 11: Annual Inventory Turns ......................................................................................... 38 Figure 12: Infiniti Model Range .............................................................................................. 48 Figure 13: High Value Nissan Vehicles................................................................................... 48 Figure 14: High Value Parking Lot Requirements .................................................................. 49 Figure 15: Parking Lot Requirements - High Value Months ................................................... 50 Figure 16: Normal Curve and Standard Deviation .................................................................. 51 Figure 17: SVE_I Demand over 14 Months ............................................................................ 52 Figure 18: SVE_I off Peak Demand Figure 19: SVE_I Peak Demand ................ 52 Figure 20: SVE_I Pits & Staging Area .................................................................................... 57 Figure 21: SVE_II off Peak Demand Figure 22: SVE_II Peak Demand ............... 57 Figure 23: Create Module ........................................................................................................ 62 Figure 24: Process Module ...................................................................................................... 63 Figure 25: Dispose Module ...................................................................................................... 64 Figure 26: SVE_II Staging Area .............................................................................................. 67 Figure 27: LINDO Results Screenshot .................................................................................... 74 List of Tables Table 1: Maturity Model – Gap Analysis(PLAN) ................................................................... 13 Table 2: Maturity Mode – Gap Analysis (SOURCE) .............................................................. 21 Table 3: Maturity Model – Gap Analysis (DELIVER) ........................................................... 29 Table 4: Key Benchmarks for PLAN....................................................................................... 33 Table 5: Percentage Error and the Impact on Forecast Accuracy ............................................ 35 Table 6: Key Benchmarks for DELIVER ................................................................................ 39 Table 7: Improvement Opportunities ....................................................................................... 42 Table 8: Project Prioritisation Criteria ..................................................................................... 43 Table 9: Scale of Importance for Pairwise Comparisons......................................................... 43 Table 10: Random Indices ....................................................................................................... 44 Table 11: Summary Information -High Value Parking Lot Demand ...................................... 49 Table 12: Normal Curve and Standard Deviation Table ......................................................... 51 Table 13: Summary Information for SVE_I Demand .............................................................. 52 Table 14: Summary Information for SVE_II Demand ............................................................ 57 Table 15: Summary of SVE_II Operating Models Simulated in Arena .................................