Nidec’s Global Supply Chain Strategy: Building Resilience through Decentralization and Integration

1. Introduction: Responding to Global Supply Risks

In an era characterized by geopolitical tensions and supply chain volatility, the ability to ensure a stable supply of critical components has become a core competitive requirement. The Nidec Group, with 300 locations across 40 countries, addresses these challenges through a dual-pillar strategy: "Made-in-Market" where we develop, produce, and sell our products close to our customers, and "Vertical Integration." This report outlines how Nidec maintains business resilience and quality consistency on a global scale.

2. The "Made-in-Market" Strategy: Minimizing Regional Risks

Nidec has established a robust "Global Four-pole Production System" covering the United States, Europe, China, and the rest of Asia. This strategy aims to complete the entire value chain—from development to production—within the markets where customers operate.

• Regional Autonomy: By producing in close proximity to end markets, Nidec minimizes logistics lead times and mitigates the risks of cross-border supply disruptions, such as tariffs and shipping bottlenecks.

Agile Operations (QCDSSS): Proximity to the market enables rapid response to customer-specific needs based on Nidec’s fundamental principles of QCDSSS (Quality, Cost, Delivery, Service, Speed, and Superiority/Differentiation).

3. Securing Supply Chain Sovereignty through Vertical Integration

To reduce dependence on external vendors and ensure procurement stability, Nidec emphasizes the in-house production of key technologies and manufacturing processes.

• In-house Production of Critical Components: By manufacturing essential devices such as stator cores and fan components internally, Nidec maintains direct control over quality and delivery schedules, shielding the supply chain from fluctuations in external vendor conditions.
• Nidec Semiconductor Solution Center: Nidec has established a dedicated center to monitor and secure a sustainable supply of semiconductors. By building strategic partnerships with suppliers and insourcing key semiconductors (including development and contract manufacturing), the company provides high-value-added "Intelligent Motor" solutions.
• Proprietary Manufacturing Systems: Centered around Nidec Center for Production Technology R&D, Nidec develops and builds its own production lines. This in-house capability allows for adjustments in production capacity and specification changes with a level of speed and flexibility that would be difficult to achieve when relying on third-party equipment.

4. Quality Management

Maintaining uniform quality across 300 global locations requires a group-wide management system. Nidec has established the "Global Quality Management Division" directly under the president. Led by the Chief Quality Officer (CQO), this organization strengthens quality initiatives and ensures a swift response to any challenges. Nidec have enhanced the global management controls to ensure that any quality risk with the potential to have a significant impact on customers is rapidly reported to the CQO.

5. Environment-oriented Development

Nidec is pushing forward with "Environment-oriented Development," balancing global environmental contributions with enhanced product competitiveness by continuously reducing lead usage.

Following the completion of a comprehensive materials database in 2022, Nidec has been actively executing lead-reduction initiatives. Building on previous efforts to adopt lead-free solder, the company has expanded its scope to include raw materials for components, specifically targeting steel materials for maximum impact. Moving forward, these efforts will extend to copper-based materials, promoting broader lead reduction with the understanding and cooperation of customers.

Conclusion

Through extensive global expansion and a commitment to vertical integration, Nidec provides a resilient supply infrastructure capable of withstanding external shocks. By combining rapid regional responsiveness with centralized quality governance, Nidec maintains its position as a stable partner in an increasingly unpredictable global market.