Two heads are better than one

In an effort to combat the affects of the recession, Renault and Nissan have taken a number of steps to strengthen their alliance, including changes to manufacturing, logistics and purchasing. “Seeking synergies is no longer optional, but mandatory,” said Carlos Ghosn, Present and CEO of both carmakers.

 

As of June 1st the Alliance has set up a dedicated team of experts from both companies (six from Nissan, five from Renault) who will apply their understanding of both companies to promote greater standardisation. The team will focus on a number of areas including purchasing, global sourcing, and global logistics.

 

Manufacturing and logistics are expected to account for €363m ($508m) of a total of €1.5m in synergy-led savings, with the two companies sharing facilities and optimising existing plant capacity. The Alliance plans to cross-manufacture 11 vehicles by the end of 2009.

 

This sharing will extend to complete knockdown (CKD) centres, bringing further savings through inbound and outbound logistics, as well as standardising logistics flows, particularly in Europe.

 

Combined logistics purchasing over the ten years of the Alliance has enabled Renault and Nissan to save several hundred million euros – including €71.5m per year for inbound logistics and €25m for outbound – but the full potential of savings has yet to be exploited, according to the Alliance’s Senior Vice President, Global Supply Chain, Michel Faivre-Duboz.

 

 “It is difficult to say that we can standardise the supply chain, as it is fully linked to the life of each company, but it is clear that logistics is something that we could share more,” he told Automotive Logistics.

 

The Alliance is aiming to generate €157m in purchasing synergies and since April the Renault-Nissan Purchasing Organisation has handled 100% of the Alliance’s purchasing requirements. Asked about how closely this was linked to Global Supply Chain, Faivre-Duboz said that logistics remains a separate department within RNPO.

 

“We buy all of the operations for inbound or outbound, but there is a strong relationship between the supply chain and purchasing organisations. We are considered and want to be considered as a single entity for the relationships we have with our LSPs.”

 

Faivre-Duboz also went on to recognise the problems those LSPs were facing but saw many using the downturn to diversify.

 

“I would say that LSPs are suffering from low volume, but they are more flexible than a captive parts supplier,” he said. “It seems many are taking advantage of this crisis to diversify their exposure to the automotive industry, and to have a more balanced portfolio.”