Nissan’s European Technology Centre (NETC) and Cranfield University, both based at Cranfield, UK did a three year, three million pound co-development research project called ‘Cogent’ involving the participation of 85 of Nissan’s suppliers. The main objective of the project was to improve the co-development capabilities of Nissan and its suppliers in order to reduce both product development times and costs by a targeted 30% in three years.
They identified that the suppliers’ design and development processes have to be of a very high standard in order to achieve ‘right first time’ designs and hence avoid late engineering changes and duplication of effort. Workshops at several levels of supplier management was conducted in order to develop, communicate and embed their co-development process understanding. (Southey et al. , 2000) Nissan identified that if the design is right first time, with early concurrent input from suppliers and manufacturing associates, then fewer additional costs subsequently occur during the design release, testing, manufacturing and assembly stages.
With the earlier involvement of suppliers up front in the pre-design stage, such engineering change costs have been taken out and hence duplication avoided. At the design and development stage Nissan applies all lessons learnt from previous projects (Southey et al. , 2000). NETC uses the ‘Merlin exercise’ to identify common problems existing between itself and its suppliers. After identifying what problems occurred along the way and how they overcame the obstacles, each individual issue was then uniquely addressed and solutions were jointly developed between Nissan and suppliers.
The major issues revealed on a real development project between Nissan and its co-development suppliers were trust, communication, willingness to share confidential information and cost. Through working through these issues jointly with its suppliers, and through jointly developing an objective (rather than subjective) performance measurement system for design and development processes, Nissan has achieved the following substantial improvements on a recent model replacement program: 30% faster design time ; 40% reduced design budget;34% reduced part cost – across the vehicle (Southey et al. , 2000)
The main focus of COGENT is to improve communication and understanding between the supplier and customer at the very earliest stage so that what follows is a natural co-development environment eliminating waste at every stage. Cogent fast track concentrated on; aligned perceptions, aligned processes and aligned targets. Steps were the same in each workshop 1. Where do we want to be? in terms of world class performance levels of development 2. Where are we now? 3. How do we get there?
Prioritization and improvement plan 4. Implement improvement plan 5. Monitor improvement plan At the end of it every supplier ended up with mutually agreed actions: 6. Implement- review- improve plans 7. Monitor-measure improvements 8. Deliver the project. The following driving forces were identified as reasons to establish co-development and lessons learnt processes with their first tier suppliers: 1- Cost reductions from the capture of ‘cost-down’ ideas prior to design commitment enable the embedding of savings at the conception stage.
2-Cost reductions through the standardization of designs and design processes, between Nissan and its supplier. 3- Aligned customer/supplier design processes lead to reduced design time and more robust design solutions with fewer engineering changes. 4- Co-development and ‘lessons learnt’ capture lead to higher designed-in product quality leading to higher customer satisfaction and reduced risk of product failure.
The embedding of processes which address environmental issues, (e. g. reducing waste and scrap, improving energy management etc.) and attack environmentally harmful or inefficient processes (e. g. changing from toxic paint plant chemicals, recycling paper, specifying reusable packaging etc) leads to lower total costs, lower environmental impact costs and an improved public profile. From analysis of the case study by Southey et al. , (2000), the barriers identified to improving co-development performance were found to be:
Trust, Communication, Geography, Supplier changes, Constancy of design teams, Capturing ‘lessons learnt’, Alignment, Developing common industry standards From the Nissan Cogent program, the following eight elements were also have been found to underpin improved co-development performance (Southey et al. , 2000): 1 Co-development is primarily concerned with alignment of objectives, processes and targets, not with improving suppliers’ design expertise. 2 Internal consistencies within the customer is an important prerequisite for significant co-development improvement. 3 Improving communication and openness between a VM and its suppliers is accelerated by using a third party facilitator.
An objective performance measurement system is the best steering mechanism for setting and achieving improvement targets. 5 Enormous attentions to detail is required in order to remove the potential for stress and mistrust between VMs’ and suppliers’ representatives, and to ensure that agreed processes are repeated and embedded as a common way of working. 6 Co-development performance improvements is best pioneered on a real development project, so that all participants are focused by real targets and deadlines
7 Co-development improvements require enormous amounts of planning and execution time in order to overcome people’s natural fear, mistrust and resistance to change. 8 The intangible elements of a successful co-development program include a strong belief in the principles of co-development, a tight process, great attention to detail to ensure the co-development processes become embedded, and a lot of effort and determination to overcome numerous ‘insurmountable problems’ and people issues. Cogent can still be improved by taking the process to the second tier suppliers
It is not just technical expertise in a variety of disciplines that is needed to rapidly develop a new product, but it is the way that this expertise is applied and integrated. Co development is primarily concerned with alignment. Internal consistency between the customers and suppliers processes is an important prerequisite for significant co development improvement. For the best outcome and performance from the suppliers it is important to maintain a good communication with them. Supplier development is a crucial fact for the benefit of the buyer company.
Supply chain integration and improvisation process of Nissan, which is known as COGENT, has increased the performance level of the company in various issues such as supply cost reduction, raw material and inventory maintenance, cost reduction and transport cost minimization. As COGENT case study describes, Nissan achieved NEXT21 goal by co-development and alignment, improved internal consistency for development, involvement of third party, use of performance measurement system, focusing on a real project and use of detail while interact and use the events as accelerators.