Inventory Management: Case Study: Nissan Motor Company
Nissan Motor Company Ltd is a Japanese multinational automotive manufacturer headquartered in Nishi-ku, Yokohama, Japan. Since 1999, Nissan has been part of the Renault-Nissan Alliance a partnership between Nissan and French automaker Renault. As of 2013, Renault holds a 43.4% voting stake in Nissan, while Nissan holds a 15% non-voting stake in Renault. Carlos Ghosan serves as CEO of both companies. Nissan Motor sells its cars under the Nissan, Infiniti, Datsun and NISMO brands. Nissan was the sixth largest automaker in the world behind Toyota, General Motors, Volkswagen, Hyundai Motor Group and Ford in 2012 taken together, the Renault–Nissan Alliance would be the world’s fourth largest automaker. Nissan is the leading Japanese brand in China, …show more content…
The financial impact of poor inventory management doesn’t end there. It can also burden companies with direct costs (such as higher interest expenses on inflated working capital) and many indirect costs. For example any cash tied up in inefficient inventory represents funds that the finance department could otherwise allocate to other initiatives of the …show more content…
The primary stimulus behind this research is the experience leading motor manufacturing. Broadminded manufacturing CFOs now realize that inventory optimization is one of the key levers to optimize working capital and cash flows and to improve sales, customer service and profit. Suboptimal inventories can lead to stock-outs that decrease sales by 5 to 15 percent (genpact 10.2014) Inefficient inventory practices can also result in slower order fulfilment, which extends the cash-to-cash cycle and raises the risk of penalty payments if customer service falls short of contractual requirements with other customer’s (Scribd. 11.2014). Inventory turnover measures how fast the company turns over its inventory within a year. It is calculated as cost of goods sold divided by average inventory (Gurufocus 2014) ). Day’s inventory indicates the number of days of goods in sales that Nissan has in the inventory. Nissan Motor's day’s inventory for the three months ended in Sep. 2014 was 56.72
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