In the wake of cost-cutting decisions from its new Renault management, Nissan Motor Co. Ltd. is taking steps to trim U.S. logistics costs.
Nissan has taken management control of Distribution and Auto Service Inc. of Los Angeles, which moves vehicles out of factories, cargo ships, ports and service centers across North America.
Nissan is a minority owner of Distribution and Auto Service.
Until now, the Los Ang eles company has dictated the cost of its handling and logistics services to Nissan's U.S. subsidiaries. Now Nissan will dictate its prices to Distribution and Auto Service.
The company has operated as a separate service company f or Nissan and other North American automakers.
HASSAN IS CEO
Last month, Nissan put a new management board in place, including Emil Hassan, senior vice president for quality, purchasing and logistics for Nissan North America Inc. in Smyrna, Tenn. Hassan also will be chairman of the Los Angeles company.
Martin Richards, executive vice president of the service company, has been promoted to president and has been named to the board.
Also named to the four-man board were Jed Connelly, vice president and general manager of Nissan Division; and Katsumi Ishii, Nissan North America finance vice president.
'The service was not an issue,' Hassan said. 'The service was fine. The issue w as getting that service for the price we need to pay.'
Hassan, who oversees Nissan's North American logistics, said Distribution and Auto Service now will be treated the same as other suppliers: Nissan will give it a target price and the company will be responsible for hitting it.
'In the past, they have operated on strictly a service cost-plus basis,' Hassan said. 'We would tell them what we wanted, and they would do whatever we asked.'
That meant that no matter how great the inefficiency or how unwise the request, Distribution and Auto Service would carry out the order and send Nissan the bill. If a Nissan sales region wanted the supplier to expedite a shipment of cars, Nissan would pay the bill.
But by putting executives from Nissan sales, finance and manufacturing operations on the Distribution and Auto Service board, the supplier can turn down a request for cost reasons.
'Now,' Hassan said, 'they will be able to tell a regional office that asks for something, `No, that way is too expensive. Let's do it this way instead.' '
Hassan's shakeup supplements Renault's global cost-cutting plans for Nissan . Carlos Ghosn, appointed Nissan COO by Renault, announced a strategy of corporate improvements on Oct. 18 in Tokyo.
Hassan wants to trim 20 percent from total logistics costs over the next three years.
Despite his new duties, ho wever, Hassan said he will continue to spend most of his time on his larger job as senior vice president of Nissan North America. Richards will handle day-to-day operations at Distribution and Auto Service, with Hassan participating mainly by telephone.
'This activity was already a part of what I do in logistics,' Hassan said. 'If anything, my involvement there will be easier now that I'm CEO. Sometimes it's easier to do things directly than to go throug h different layers.'