Lean Manufacturing

SEMINAR ON

“SUPPLY CHAIN MANAGEMENT”

AUTHOR

AMBARISH A. WALIMBE

(B.E. MECHANICAL)

(PGD TOOL DESIGN AND CAD/CAM)

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Lean Manufacturing

ABSTRACT:

With ever shrinking time to market, companies are constantly seeking new ways of

producing customized parts cost effectively. Could this be done without resorting to the

traditional manufacturing processes? This is the age of new manufacturing. With accelerating

technological changes as increasing compactions at both local and global market place, only

those companies, which are both flexible and agile, will survive in the future.

The dawn of new century begins with it, new rules of competitions, concepts such as

supply chain management, flexible manufacturing and lean organizations have become

preconditions for companies that seek to compete in the long term.

This paper explains about “Lean Manufacturing - an Advanced Manufacturing

Technique for Auto Industries”. Lean manufacturing system is modern production strategies

that uses less resource such as human effort, production space, investment in equipment and

machine, time for developing new products and services and performs the process as rapidly as

possible. Lean manufacturing combines with best features of craft production (high quality,

individual custom made product) while mass production (manufacturing at great quantities to

satisfy broad customer needs at lower prices ) outcome of lean thinking is- zero inventory, zero

down time, zero delay and zero defects.

Lean principles have been employed successfully worldwide in the auto industries and

being increasingly employed in many other industrial sectors.

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Lean Manufacturing

INTRODUCTION:

Despite enjoying nearly ten years of globalizations, most of the Indian automobile

manufacturer steel follow the customize mass production (batch mode) system. Consequently

they suffer from abnormally high inventory levels, high cycle times and enormous wastage. It

result in increase inventory cost, which in tern elevate cost of production. And the high cycle

time lead to reduced customer satisfaction. Manufacturer can not afford the comp lances that

they enjoyed in the pre liberalizations era. Why? Because the global village is continuously

spreading with new players and innovations, taking the competitions and quality standards to a

new height.

Given this scenario, it is high time the automobile manufacturer quit the traditional path

and plunged in to something more innovative and productive. The lean manufacturing

technique is a tried and tested system that carries many promises for the Indian automobile

manufacturer.

Over the past 10 years or so, lean manufacturing has been receiving an increasing

amount of attention as one source for productivity improvements and cost reductions in

manufacturing. Hailed by its proponents as a breakthrough means to analyze and improve

production and the factory floor environment, lean manufacturing is abroad collection of

principles and practices that can improve corporate performance. The argument is that lean

manufacturing offers revolutionary rather than evolutionary efficiency improvements.

What is lean manufacturing?

Lean manufacturing a production strategy that aims at high levels of production using

lesser effort, time and material. It is a combination of Japanese’s concept and technique that

works together to improve the productivity of the organization, and consequently elevate the

organization to a competitive position. It is an integrated business approach adopted to

eliminate non-value added activity from the customer delivery cycle in the operation. This

approach enables the companies to response quickly and profitably and changes in customer

demand.

Many people wrongly confine “lean” to the shop floor; actually lean is the way of

thinking, and attitude. The technique of lean can be applied to every situation in a company, by

finding out what the customer want, eliminating, waster from process and making the value

flow continuously according to the customers pull. The idea is to create a culture in which

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Lean Manufacturing

people in an organization are continuously improving their productivity every day, in every

way.

The concept of waste:

It is essential to be able to understand an identify what we mean, by wastage in an

organization. Simply if it doesn’t add value, it is waste. According to Boeing the term “waste”

indicates unnecessary complexity in work, processes, redundant labor, excessive production,

unimaginative use of space, loss of energy, high rate of defect, unnecessary use of material,

loss of time and unrequited transportation.

A western has been the bone of manufacturing sector that directly affects the bottom

line. Though unavoidable, it is possible to cut to waste through proper planning and efficient

work process. Through the implementations of the lean manufacturing system, the company

intends to organize the system by identifying and eliminating the waste the ultimate aim being

to increase productivity, customer satisfaction and revenue.

Key lean principles:

Eliminations of the waste is the fundamental principle of lean manufacturing and to

achieve this following principles should be practice.

LM’s essences lies in producing with as few people as little inventory and as little

waste as possible.

Lean ensures that each production stage processes exactly “what”, “how much” and

exactly “when” the next stage wants it.

Lean allows enormous variety in product without the kind of change over cost that

customizes mass production involves.

Lean embraces every fact of organization – sourcing, manufacturing, marketing,

accounting and strategic planning.

FOUR PILLARS OF LM:

Four pillars namely,

1) Just In Time (JIT) concept

2) Supply Chain Integration

3) Cellular Manufacturing and

4) Kaizen Support LM

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Lean Manufacturing

1. JUST IN TIME CONCEPT:

The JIT concept requires the raw materials for each steps in a process to reach the

shop floor at exact time and not earlier. This leads to a huge fall in the inventory cost. The goal

JIT is achieved by using techniques like standardizations of processes, TPM and Kanban.

Throughout lean manufacturing and ultimately through JIT. The manufacturing unit can

achieve following goals.

1. Reduce set time.

2. Guaranty that material will be there without excess handling.

3. Guaranty of machine availability and reliability.

Advocate of JIT claims it is a revolutionary concept that all manufacturers have to

adopt in order to remain competitive. Also known as Kanban is continuously reduce product

cost by storing the elimination of waste; no reject, no delay, no stock piles, no idleness and no

useless motion.

To achieve low cost high quality, on time production, the JIT system removes stock

accumulations between successive operations. It does so by organizing around a production

quantity of “1” which means the ideal lot size for each part is 1. Because no safety stock is

allowed, no part can faulty. The responsibility for eradicating defective work and equipments

failures is placed on individual operations. Output Quotas are inviolable and fluctuations in

daily schedules are minimizing to maintain nearly uniform flow rate. Results from applying

these principles, along with a concentrated effort to improve productivity, have frequently been

spectacular.

2. SUPPLY CHAIN INTEGRATION:

The lean system can be effective only if it is executed all along the production chain i.

e. from the supplier’s supplier to customer’s customer. Every link along this chain is affected if

a single member does not deliver. It is a long process involving several interfaces, and so

manufacturers need to take steps towards strategic sourcing and organizing the supply base.

3. CELLULAR TECHNOLOGY:

In the traditional batch mode or assembly line manufacturing process, the lay out of

shop floor is done according to the activities. Not so in the lean manufacturing system, where

manufacturing cell is designed to process parts of the product in separate fixed areas, thus

eliminating non value-added activities. Ultimately, the layout creates a single-piece flow. This

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reduces the order flow time, work-in-progress, material handling cost, and so on, thus elevating

customer satisfaction and profits

4) KAIZEN:

Lean manufacturing produces optimum results only if it is implemented as an on going

improvement process, involving everyone at every level.

Kaizen technique is another essential for lean manufacturing system. Masaki Imai, the

founder of kaizen institute, expounds kaizen as “Continuous Improvement, without

spending much money……… using common sense”. It doesn’t cost money but it changes

the way people do the job. It is about making the most about 5-M of the organization i.e

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Lean Manufacturing

1. Manpower 2.Material 3.Mathod 4.Machine 5.Measurement

The practice of this technique is based on strong assumption that every individual or

group of individuals always carries a hidden capacity to keep on improving the output in terms

quality and quantity. The goals of kaizen are:1) Continues improvements & Self-motivation

and development.

HOW DOES KAIZEN WORKS?

Kaizen is top-to-bottom programme. It is responsibility and interest of the top

management to inspire the human resource of the organization and inform them about what’s,

Why’s, and How’s of kaizen. The basic steps to incorporate kaizen as an enterprise-wide

programme consists of the 4I’s.

1. Inspire 2.Inform 3.Implment 4.Improve

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Lean Manufacturing

IMLPEMENTATION OF LEAN MANUFACTURING SYSTEM:-

After understanding the concept and basic principle of lean manufacturing it is

important to see how it is implemented because theory without practice is sterile and practice

without theory is futile. The process of going ‘lean’ starts with attitude level, not at the

shop floor level.

FOR IMPLEMENTING LEAN MANUFACTURING:

First requirement is a clear vision in top management second would be the cultivation

of the right attitude or work culture, which would perhaps be more important than superb

products, good ideas or technical innovations. The third need for championship mentality and

team work. So far the implementation of lean manufacturing is the company particularly for

the small scale manufacturing units. The arrangement has to bring about the following

TECHNICAL CHANGES:

1) The first step towards the lean production is to make such process of consistent and

predictable production.

2) Standardize the process sequence for all this similar looking / type / category parts,

which may have minor difference in size. This will help in shop layout for continuous

material flow.

3) Make the fixture, holders, tolling, adaptable to all parts with zero or minimum setup

change time.

4) Simple and autonomous machines.

5) Preventive maintenance of machine for zero break downs during production.

The management should also bring about the following ADDITIONAL CHANGES:

1) Converting skill and will into military drill.

2) Pre-emptying future problems at planning stage.

3) Catching defect upstream.

4) Checking to be done to ensure safe future production.

5) Responsibility to be passed on downwards.

6) Use of statistical tolls and imbible statistical thinking particularly cause and effect and

frequency distribution.

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Lean Manufacturing

7) Satisfy customer expectations. Lean manufacturing works in association with Total

Productive Maintenance (TPM). TPM aims at zero accidents, zero breakdowns and

zero defects. TPM again is enhanced by the calculation of Overall Equipment

Effectiveness. (OEE)

OEE = Availability * Performance Rate * Quality.

Advantages of LM:

1) since LM involves the JIT inventory levels (raw material, WIP, finished goods) can be

brought down to nearly nil, thus reducing cost

2) LM uses simple multitask machinery where by product of different design can be

produced on the same machine.

3) Transition between various designs takes only a few minutes. This enables increase in

flexibility and better response to customer requirements.

4) It also reduces customer lead time, cost of production and wastage.

5) Lm is an effective competitive tool, not in then least due to dramatic saving in

productivity and cycle time to WIP inventory. LM helps to unleash the power of the

work force, ultimately taking the organization to, a competitive position.

Hence LM about making the company trim, fit, strong and swift.

TRADITIONAL MANUFACTURING VERSES LM:

Sr.

no.

Major Aspects Traditional

manufacturing

Lean Manufacturing

1. waste Maximum Minimum

2. Approach to Efficiency Individual process Overall System

3. Philosophy Output-centered Market Centered

4. Scheduling Push Pull

5. Production Stock JIT

6. Lead time Long Short

7. Batch Size Long Batch & Queue Small Continuous Flow

8. Inspection Sampling 100% at source

9. Shop floor Layout Activity based Cellular Manufacturing

10. Empowerment Low High

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Lean Manufacturing

11. Inventory turns Low High

12. Flexibility Low High

HURDLES / OBATACLES ON LEAN PATH:

An organization that wants to get lean may face a few problems that require serious

thought. Obstacles in transformation to lean enterprise:

1) Top management lacks strategic understanding of lean.

2) Lack of specific skills or knowledge regarding lean enterprise.

3) Culture, ego, organizational inertia.

4) Management reluctance to empower employees.

5) Fear of change of loss of organizational power.

6) Internal system causing hurdles.

7) Old engineering concepts.

8) Inflexible accounting methods.

Manager to coach is difficult change and it is to be expected that there would be initial

difficulties. People would go through stages of refusal, anger, bargaining and finally

accepting the change but stay firm against initial resistance and battle would be own

CONCLUSION:

With increased from foreign competitors especially China all the businessman in India,

need to rethink about these business on a war footing. With the adoption of LM the working

space requirements have been reduced productivity, gains have been of order of 30-40% the

inventories of raw material and components work in process and finished goods have came

down. There, reducing the working capital needs and interest burden. The quality of total

service has noticeably improved leading to “delighted customers, loyal customers”. Thus,

beating the competition.

It may be noted that the most important part required for implementation of LM is the

commitment from top management and championship mentality in the minds of our

manufacturers.

It is precisely for Indian industries that LM is an essential tool to respond quickly to

customer, to work effectively and to reshape their business.

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Lean Manufacturing

CASE STUDY: 1) MAHINDRA & MAHINDRA LIMITED.

Most of the hurdles on the lean path can be overcome through effective forecasting and

planning, as it is done by “Mahindra & Mahindra”.(one of the largest player in the Indian

automotive industry).

The Mahindra group follows a policy of non-retrenchment. Once upon a time, at

Mahindra & Mahindra, Kandivali, 1134 employed produced 75 engines per day. After they

went lean, they progressed to a production of 128 engines a day with 770 people. The rest

of the employees were transferred to their Nasik plant. Today the plant at Kandivali has

around 7800 workers in the automotive sector. Although the issue of the human resource

may be delicate. The problem can be easily overcome, if handled with care and sensitivity.

Despite the difficulties associated with the implementation of ‘lean’, several companies

have implemented it successfully and moved ahead. Mahindra & Mahindra selected the

route of operational excellence to fight their competition. Regarding their success with the

lean mode of operation, Mr. Rajan Narayan, (M & M’s Vice -President) says that they have

achieved an improvement in the work culture, productivity and revenue at Mahindra &

Mahindra solely due to the lean way.

Mahindra & Mahindra are not the only ones who have opted for the ‘lean’ method.

Bajaj Auto Ltd., Pune, Lucas – TVS Ltd., Chennai and LML Ltd., Kanpur and are few of

the companies that seem to the trading to the ‘lean’ route successfully.

CASE STUDY: 2) TOYOTA MOTOR COMPANY

By 2010, Toyota wants to make a millions vehicles and rule over a third of Indian

passenger car market by following lean way only.

From laggard to leader:

Rarely does Toyota ever enter a new market first. Invariably, it allows competitors to

lead and waits for the market initial characteristics to be revealed before firming up its own

strategy. Far from suffering from it, Toyota has actually been able to read market better and

because of that overtake the early entrants in the market share. For example, it didn’t get

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into the Indonesian market until 1973; two years after General Motors entered the country

through a tie-up with Isuzu. But today Toyota leads the market with a 28% share. Even in

Vietnam, the Japanese major has been able to combat fierce competition and raise its

market share to 36% from 29% over the last two years. The only exception to its successful

run in Asia seems to be Thailand, where its market share has dropped from 36% to 28% ,

and could slide further in 2001, but few doubt Toyota’s ability to bounce back.

But the battles that Toyota really wants to win are in China and India, where it has only

recently entered. Both the markets are growing. The Chinese for example, are expected to

buy 9 lakh cars a year by 2005. Toyota got an improval to manufacture in China only last

year and will have to beat General Motors, which has set the biggest foreign automotive

plants (at cost of $2 billion).

TOYOTA’S STACK UP:

(FINANCIAL YEAR 2000-2001)

Company Vehicles Sold Total Revenue Net Profits Market

Capture +

General Motors 8.59 million $184.63 billion $4.44 billion $23.30 billion

Ford 7.42 million $180.59 billion $3.46 billion $32.01 billion

Daimler

Chrysler

4.19million $152.44 billion $7.41 billion $ 34.23 billion

Toyota 6.0 million $121.41 billion $4.26 billion $102.30 billion

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REFERENCES:

1) “LEAN THINKING” by James P. Womack & Daniel T. Jones.

2) “PRODUCTION SYSTEM” by James L. Riggs.

3) “QUALITY CONTROL SYSTEM” by J. R. Taylor, Tata McGraw Hill

Publication.

4) MM Industrial Magazine (May 99 & Aug. 2000).

5) “LEAN OPERATIONS”, teaching notes of ‘Defense System Management

College’, Massachusetts Institute of Technology, U.S.A.

6) “BUSINESS TADAY” Oct 2001.

7) “Mechanical Engineering”, March 2001.

Web addresses:

http://lean.mit.edu/public/index.html.

http://www.toyota.com/html/about/opertions/manufacturing/manu-locations/tmmk.html.

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A

Paper

On

"LEAN MANUFACTURING"AN ADVANCED MANUFACTURING TECHNIQUE FOR AUTO INDUSTRIES

Submitted

By

Mr. SHAIKH SIRAJ GAFUR Mr. SAVGAVE AMOL C.

BE (Automobile) BE (Automobile)

E mail: siraj_motors@yahoo.com Email: amolauto21@rediffmail.com

Under The Guidance of

Prof. S. M. SAWANT

Head of Automobile Engineering Department.

RAJARAMBAPU INSTITUTE OF TECHNOLOGY,

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Lean Manufacturing

RAJARAMNAGAR

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Lean Manufacturing

CONTENTS

Sr.No. TITLE Page No.

1) Abstract 01

2) Introduction 02

3) What is LM? 02

4) Concept of Waste 03

5) Key Lean Principles 03

6) Four Pillars of LM 04

7) Implementation of LM Systems

07

8) Advantages of LM 08

9) Traditional verses LM 08

10) Hurdles / Obstacles on the Lean Path 09

11) Conclusion 10

12) Case Study: 1) Mahindra & Mahindra Ltd. 11

2) Toyota Motor Company

17) References 12

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