Three-Year Nissan Recovery Plan to Strengthen Financial Control Capability Achieved in Two
In 70 years, Nissan Motor Co., Ltd. has grown from a local Japanese manufacturer of trucks and cars into the world’s 33rd largest corporation with an instantly recognised brand around the world.
- Region
- Canada
- Japan
- Mexico
- USA
- Alliance partner
- SAP
- Solution
- Application Development & Integration
- Business Intelligence
A turbulent time in the 1990s prompted management to conduct a detailed study and develop the Nissan Revival Plan (NRP). Capgemini won the confidence of Nissan management to assist them to strengthen Nissan’s financial controlling capability - an important element of the overall plan.
In the two years since the NRP was launched, Nissan has transformed itself into a dynamic company with record profits.
Client Profile
Nissan Motor Co., Ltd. was created in 1933 as the result of a merger between two Yokahoma manufacturers. The first vehicles were small trucks and cars to support the growing Japanese automotive market.
Today it is one of the world’s largest corporations, manufacturing 2.6 million vehicles, generating sales of ¥6.2 trillion yen (approximately $56 billion US dollars), and employing 125,000 people.
Business Issues
Few industries capture the imagination of the ordinary person in the street as much as automotive. In just over a century, the car has turned from a luxury item to a necessity for masses in the developed world.
Factors such as intense competition, huge investment, passion for innovative design and a quest for efficiency are business realities for automobile manufacturers. If there were just one word to epitomise the sector, it would be volatility. Simply put, survival depends on being agile, fit and lean.
After enjoying decades of strong growth, Nissan faced serious decline towards the end of the 1990s. At the beginning of that decade Nissan accounted for four out of the top ten cars in Japan. By the mid-90s, Nissans had disappeared from the list. By the end of the decade, only 42% of those surveyed described Nissan as an innovative company.
In response to these issues, senior management gathered an international team of 200 executives to carry out a detailed study that resulted in the Nissan Revival Plan (NRP). This was a 3-year business plan to return the company to profitability and strong brand recognition, while aligning itself to international accounting standards. Among many of the critical elements of NRP was a revolutionary improvement in Nissan’s financial controlling capability on a global, group-wide basis.
The short-term requirement was an immediate need to facilitate tracking of NRP results against Key Performance Indicators. Long-term requirements were:
- monthly financial reporting using International Accounting Standards (IAS)
- regulatory financial reporting (monthly, quarterly and half-yearly) integrating Japanese GAAP standards with IAS
- non-consolidated closure within 3-5 days and full consolidated closure within 10 working days
- integrated and flexible management reporting by indices such as company, function, region, segment, product line, major account, etc.
Naturally, capabilities across multiple currencies (Japanese Yen, US Dollar and
euro) in a process that facilitated global planning and decision-making were fundamental
pre-requisites.
Nissan recognised the value of partnership to deliver the NRP. In a competitive
bid tender, Capgemini was selected as program manager to help Nissan drive financial
control aspects of NRP.
Solution
Nissan was looking for a range of skills, in strength and depth, in its partner. Capgemini had a global profile, local presence in Nissan’s key markets, expertise across strategic, process and technology consulting, together with credentials on financial transformation projects in complex global organisational structures. In addition, Capgemini was already a partner to IBM, Nissan’s incumbent supplier for IT services.
Short-Term Approach
A series of Nissan workshops studied key performance elements in the NRP and
how they should be measured. Once these had been defined, Capgemini designed and
developed in three months a web-based system to facilitate NRP-tracking. The system
was installed in time for the following financial year. The solution represented
the first such system in Japan, and was well received by Nissan management.
Long-Term Approach
Separate workshops followed to scope financial accounting systems and processes.
SAP® R/3® was selected as the ERP platform to adopt. Modules included FI/CO, AM,
AP/AR, MM, SD, PS and IM, with actual modules adopted varying by region. Software
packages from Hyperion and Cartesis were selected to facilitate query and MIS
reporting elements. Consolidation leading practices and methods were incorporated
into the supporting technology.
Teaming: A Key Element
The project team, comprising stakeholders from Nissan’s organisation, technicians
from IBM and consultants from Capgemini, worked together as a single cohesive
unit to deliver these solutions.
Capgemini provided overall project management and developed detailed designs. A global SAP template was created for rollout to the three key regions: Japan, North America and Europe. The approach leveraged industry-standard methodologies and ensured flexibility and adaptability to the solution. The analysis and high-level design phases lasted about six months.
Capgemini’s methodology, DELIVER, was adapted to manage tasks and activities via a detailed plan. Clear roles and responsibilities with milestones allowed Nissan management to retain a clear view of project status at all times.
Results
A prototype of the system was piloted in North America. The system was then implemented in the United States and is continuing to be deployed in Mexico, Canada and Japan. The phases from build to deployment spanned a period of eight months to coincide with Nissan’s financial year-end. The global rollout to all Nissan subsidiaries in other regions is currently an ongoing activity.
“Without Capgemini, this project would not have happened”, commented Ron Petty, Chief Financial Officer for Nissan North America. “We needed the leadership, expertise, and knowledge of Capgemini to deliver in the period that we had committed to.”
Benefits
Nissan Recovery Plan was intended to re-establish a firm financial foundation on which to base a strategy of lasting profitable growth for Nissan. Two years after launching the NRP, Nissan announced that it had achieved all the commitments made – a full year ahead of schedule.
In conjunction, Nissan’s CEO posted the company’s best-ever full-year earnings and the fourth consecutive record half-year operating profit. This is the fruit of the NRP. It has enabled Nissan to turn the corner and move decisively towards establishing itself as a world-class, competitive and profitable global automotive company. Nissan is now poised for growth, because of the success of NRP.
An effective partnership with Capgemini and others has helped Nissan to face an exciting future in a volatile environment, confident in the knowledge that Nissan’s financial controlling capabilities will soon be transformed around the globe.
Written in co-operation with Nissan North America, Inc.
