Change leadership by Carlos Ghosn at Renault and Nissan.
Renault nissan alliance Answer 1: Building strong ties with the suppliers is considered as a tradition in Japan but it also increases the dependency over the suppliers as well which is not a healthy sign for any business especially when the company is competing in a highly competitive industry.
The Japanese way of business has to offer some highly attractive points which are remarkable in their own grounds and can help in creating a strong base for your business.
However, there are some drawbacks as well or it can be said that there are some areas that are obligatory to follow and not following them is considered as a taboo in Japan. One of such taboo is breaking ties with the suppliers or cutting the relationships and limiting them to some extent.
Well this has been the reason why the supplier and manufacturer relationship in the old Keiretsu system was not affected and was providing to be burden on Nissan.
It was restricting the company to flourish as the dependency over suppliers was high and the bargaining power of the suppliers was also very high which was resulting in increased cost.
The company that was already facing bundle of issues must have to react towards these issues. The RNA decided to operate in a different manner which was totally different and create new relationships with the suppliers under new rules but leveraging the Japanese method Keiretsu.
This new method or this style of Japanese business has some very attractive features that can be discussed and described to understand the Japanese way of doing business more closely. Besides that it will also help in understanding the major attractive points of the Keiretsu approach.
Therefore, understanding the new method and the definition that occurred is very important before enlisting its benefits. This was a new approach to deal with the suppliers in order to create more strong ties and use suppliers in order to formulate an advantage.
However, this approach also leveraged the script of the old keiretsu system. This system allowed the company to assess multiple benefits and encourages in investing more regularly in the suppliers relationship and focus on sustaining it. Under the new system the review system was established which was aimed at conducting reviews of the suppliers and their performance before and after their selection in order to completely monitor their performance and to examine and the interval of improvements.
These reviews were also shared with the suppliers under the new system in order to keep them intact.
The major benefit that this approach allowed was the suppliers identified the loopholes and became more focus towards the delivery of quality products. Furthermore, the suppliers were under the confidence that sustaining relationships is also in favor of them so they focus on delivering the most quality products that will help the firm in creating competitive advantage.
The suppliers were aware of the fact that these relationships are also in favor of them as well so they were not resilient towards investing in these relationships and improving or showing continues improvement on factors like quality, price and delivery.
This system helped in building strong ties with the suppliers and utilizes them in creating advantage rather than becoming dependent over suppliers. The Japanese method allows building strong relationships with the suppliers and helping in creating cross functional coordination with them.
Manufacturers can collaborate with the suppliers and help them in optimizing or enhancing their process of manufacturing and develop more strong and competitive products. On the other hand the suppliers can also seek guidance from the manufacturers to develop new parts or materials or can even optimize on the existing parts.
If a firm is committed towards innovation, the Japanese way of business allow the firm to collaborate with its suppliers to continuously stay connected and enhance on the production areas in order to provide more effective parts.
Keiretsu system allows the manufacturers to work more closely with the suppliers and stay connected which allow the suppliers to understand the need of the manufacturers more appropriately and closely and deliver the output in more effective manner.Renault nissan alliance Answer 1: Building strong ties with the suppliers is considered as a tradition in Japan but it also increases the dependency over the suppliers as well which is not a healthy sign for any business especially when the company is competing in a highly competitive industry.
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Nissan case study Essay Words | 8 Pages. supplier in Within this definition are two distinct types of engagement. The first is externalised, supplier development, where the customer measures performance, and provides incentives for the supplier to improve.
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