Lean Manufacturing

LEAN

MANUFACTURING FOR COMPETITIVE ADVANTAGE

PREPARED BY: A.AJAY 20048010 G.P.R.E.C. KURNOOL E-MAIL: [email protected]

V.THRINATH BABU 20048046 G.P.R.E.C. KURNOOL [email protected]

ABSTRACT With the opening of world market, the Indian manufacturers can not afford the luxury of producing products not compatible with that of the foreign products. The presence of globally competitive firms and the continuous innovations in the market has given a new impetus to the competition and the quality standards. The Indian manufacturing industries operating in the states not having good infrastructure, are suffering on account of high cost of production which is largely attributed to high inventory level, high cycle time and enormous wastage. It is high time that the manufacturers should try some innovative and new manufacturing strategies/techniques. Lean manufacturing can be the answer for those industries, which can make them competitive by enabling them to cut down the cost of product by reducing the waste as waste has been the bane of manufacturing sector both inside and between the companies. Major organizational changes are required for implementing the lean manufacturing. The effective implementation of lean manufacturing strategy involves the use of Just-In-Time (JIT) concepts, Supply Chain Management (SCM), Cellular Manufacturing System (CMS), Six Sigma quality control, Total Productive Maintenance (TPM) and Kaizen along with some newest techniques such as concurrent engineering and rapid prototyping etc. This paper presents the ways and means of implementing the lean manufacturing concept for meeting the customer's fast changing and focused requirements in today's intensely competitive market.

INTRODUCTION

Since the early 1990s, the process of economic liberalization and globalization has completely changed the industrial scenario all over the world. The Indian industries particularly the manufacturing industries are now have to survive the toughest challenge of the global leaders in this field which includes indomitable Japanese, Americans, Europeans, and Koreans companies. The Indian manufacturers have greatly suffered on account of high inventory level, high delivery time and large wastage till the end of the 1990s. The root cause

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of all these problems lies in managing the old batch production system poorly. With the

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extensive use of fast changing and ever improving technology in market, the manufacturing

,

industries can not afford to enjoy the luxury they have before the pre-liberalization era. The

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Indian manufacturers now have to learn and master the art of producing high quality

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products at low cost with short delivery time with the aim of delighting the customers in an open buyers market. Gone are the days when the satisfaction of the customers happens to be the sole aim of manufacturing. The flooding of market with high level quality products by the foreign firms have raised the competition to such a great height where only the companies with the innovative ideas and high technical and managerial competency will survive. The majority of Indian manufacturing industries lack the competitive skill required in this IT (Information Technology) driven market. The reasonable competitive edge can be gained by following the time tested concepts of Lean Manufacturing. Lean has been the buzzword of the late 1990s. 2. What is Lean Manufacturing? The concept of lean manufacturing originated from Japan. The term "lean manufacturing" owes its origin to an MIT study of Japanese manufacturing techniques published in the book "The Machine That Changed the World ", by Dr .J.M. Womack, D. Daniel Jones and Dr. Daniel Ross in early 1990s. The lean manufacturing is based on US statistician W.E. Deming's principles and it was originally named the "'Toyota Production System". The Toyota Production System (TPS) is developed by Taiichi Ohno. In the late 1970s the success of TPS has forced the American automobile manufacturing industries to adopt this system in order to remain competitive in the world market. The lTS industries have given TPS a new name called lean manufacturing. Lean manufacturing is an approach that quickly detects problems and inefficiencies. It eliminates waste by reducing costs in

manufacturing process. In operations within that process and in utilization of manpower associated with production. The implementation of lean manufacturing system in an organization transforms the existing system into a vibrant and agile one by identifying and eliminating waste, thus increasing the productivity to a significant level. Today 100%of American Auto-industries operate some form of this system. It is the only smart alternative to remain competitive in the market. The benefits of lean manufacturing implementation are shown in Table-l. Table-l Lean Manufacturing Implementation Direct Man power Utilization

15%

Increase

Indirect Man power Utilization

55%

Increase

Inventories

60%

Decrease

Manufacturing cycle time

70%

Decrease

Capacity

50%

Increase

Delivery Time

40%

Decrease

Lean manufacturing is the process of analyzing the flow of materials and information in an environment and continuously improving the process to delight the customer. Lean manufacturing applies the modern elements and technologies of different areas: Process Improvement, Operational Improvement, World Class Manufacturing, and Just-In- Time, Continuous Flow, Concurrent Engineering, Continuous Improvement, Kaizen, and Supply Chain Integration.

3. Understanding Waste and Its Elimination

Waste has been the bane of manufacturing sector that considerably affects the performance of an organization. The much of the success achieved by the industries by virtue of lean manufacturing implementation is attributed to the control of waste. The industries based on customized mass production system are reeling under the pressure of large amount of waste. The central theme of the concepts of lean manufacturing is based on the systematic identification of waste and its subsequent elimination .What is waste in an organization? If it does not contribute in the value of a product it is waste. The non-value added operations such as storage, transportation and inspection in an organization contribute to waste and thus are required to be eliminated. In its most basic form, the lean concept eliminates waste through continuous process improvement. Shigeo Shingo as a part of Toyota production System (TPS) has identified the seven types of waste or muda (referred to as Muda in Japanese). These are: Table-2 Seven Types of Waste 1 2 Over production Unnecessary Inventory

3 Defects

4 Inappropriate Processing

5 Excessive Transportation

6 waiting

7 Unnecessary Motion

Womack have identified three types of activity in an organization .These are shown in Table-3: Table-3 Types of Activities Types of activities Value adding activities

% of total time 5

Example converting iron ore into Scooters.

Non-value adding activities

60

Transferring a product from One size container to another

Necessary non-value adding activities

35

Inspecting every product at the end of a process as the Process uses an unreliable Machine.

Further three more types of waste have been added to the seven original wastes. These are

called information waste. These are (i) Planning, (ii) Scheduling, and (iii) Execution waste. In one of the European study conducted in Germany twenty types of office waste has been found as shown in Table-4. Lean manufacturing enables to cut waste through proper planning and efficient work processes by using the conventional industrial engineering techniques. Table-(4) twenty types of Office Waste

4. Objectives of Lean Manufacturing Category of waste

Types of waste

People

Process

Information

1.

Processing

8.

Strategic

16. Hand off

2. 3. 4. 5. 6. 7.

Motion Assignment Tempering Control Waiting Goal alignment

9. 10. 11. 12. 13. 14. 15.

Checking Work around Boundary Mutation Sub-optimization Repeatability Unbalanced flow

17. Translation 18. Missing 19. Irrelevancy 20. Inaccuracy

The five main objectives of a lean manufacturing system are: 1. To produce the highest possible quality product, 2. at the lowest possible cost of manufacturing, 3. within the shortest possible delivery time, 4. with the aim of just not satisfying the customer but delighting the customer, 5. And ensuring a very good after sales service. 5. Lean Manufacturing Concepts The lean manufacturing system is comprised of six main concepts. These are (A) Waste Elimination Lean thinking Operational flexibility Waste identification and their elimination Genba Kanri (management of the shop floor)

(B) Continuous Improvement system of managing the shop floor

Seiri- Sort (eliminate from workplace anything that does not belong it). Seiton-Set in place (assign one logic place for each machine tool or material that belongs .in the area and have it always. in it’s place) Seiso -Shine (clean the area as never before) Seiketso- Standardize (establish new conditions as the standard) Sitsuke- Sustain (sustain the effort so you do not lose what you have achieved)

Kaizen Total Productive Maintenance (TPM) Seven Quality Control Tools Business Process Reengineering Target Costing Value Analysis (C) Planning, Analysis and Process Mapping Concurrent Engineering Modular Product Concepts Mass Customization New Product development Based on Time to Market Concept Time paced planning Value focused thinking (D) Supply Chain Integration Strategic partnership with suppliers/customers. Development of vendors JIT system. Integrated Supply system. Kanban. Free access to Database. Smooth flow of materials and cash. Horizontal and vertical information system. (E) Quality Improvement and its. Fact Based Management. Total Quality Management

Six Sigma concepts Process controls Process Reengineering Zero Defect Quality Poke yoke (Error proof) Standardization Lean Management Team Jidoka Product R & D Training and development of operators Continuous assessment of everyone in the organization Problem solving/decision making Independent maintenance team Project teams/power teams Small group activities 6. Lean Principles Clearly identify the areas which add and do not add value to the product from the Customer’s point of view and not from the perspective of individual firms, functions and departments. ▪Identify all the steps necessary to design, order and produce the product across the whole value stream to highlight non-value adding waste. ▪Listing of those actions that create value flow without interruption, detours, backflows waiting or scrap. ▪Only make what is pulled by the customer.

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▪Strive for perfection by continually removing successive layers of waste, as they are uncovered. 7. Pillars of Lean Manufacturing

The techniques such as JIT, Supply Chain Integration, Cellular Manufacturing, Kaizen, and Concurrent Engineering has played a leading role in the implementation of lean manufacturing. Because of their importance to the lean philosophy these are popularly referred to as pillars of lean manufacturing. 7.1 Just-In- Time 7.2 Supply Chain Integration 7.3 Cellular Manufacturing 7.4 Kaizen 7.5 Concurrent Engineering 7.1 Just-In- Time JIT management obtains the goal of having a competitive edge through the use of three simple management tools. Integrating and optimizing---Reducing the need for unnecessary functions and systems such as inspection rework loops and inventory. Improving Continuously---Developing internal systems that encourage constant improvement in processes and procedures. Understanding the customer--- Meeting the customer's need and reducing the customer's overall cost of purchasing. Toyota used JIT successfully by - Establishing regular delivery deals with each supplier in exchange of continual Loyalty. - Reduced inventories drastically by as much as 70%. - Reduced material handling considerably. The JIT umbrella contains the other improvement techniques such as Kanban, TPM, and Standardization of processes.

The word kanban means visual record. The kanban or card as it is generally referred to be a mechanism by which a workstation signals the need for more parts from the preceding

station. Kanban is a concept based on visual items like tags, cards, banners, and boxes, trays etc. to ease operations related to production control. Supplies WIP and material handling in general. Toyota started using total productive maintenance since 1970s. Total Productive Maintenance (TPM) is Total, because it is business wide Productive, because it improves equipment performance and Maintenance, because it provides machine system support. TPM is the philosophy and practice of preventing the loss of productive time due to: breakdowns, minor stoppages idling, operating at less than planned for cycle times, changeover/setups, and unacceptable quality. 7.2 Supply chain integration The success of lean manufacturing system depends on developing and maintaining the good supplier base and strategic sourcing. This system is effective only if it is executed all along the production chain, i.e. from the supplier's supplier to the customer's customer. 7.3 Cellular manufacturing Cellular Manufacturing is a practical application of group technology (GT) in which functionally dissimilar machines are grouped together to produce a family of parts. The use of the cells for producing the parts enables to cut down the setup time reduces inventories and increases the through put rate. It eliminates the non-value added activities from the shop floor to a considerable extent. 7.4 Kaizen Kaizen means improvement. When applied to the work place Kaizen means continuing improvement. Kaizen is a system for communicating ideas up and down the company hierarchy; everyone is encouraged to search and exploit the new opportunities and institutional barriers to the information flow are dismantled. Kaizen charges management to prioritize standardize and improve. Standardization and measurement are the keys to kaizen. 7.5 Concurrent Engineering There used to be little interaction while designing a new product amongst the design

production and materials engineers. This traditional work culture of the organization creates and preserves the walls between these departments in the company. Concurrent Engineering (CE) is a product development approach. Its objective is to reduce the system/product development cycle time through a better integration of activities and processes across departments. The basic tenet of CE is the integration of methodologies, processors, human beings, tools, and methods to support product development. 8. How to Implement Lean Manufacturing for Competitive Advantages The time has come when everyone is expected to use innovative ideas so as to compete with global players. If you can not innovate you will perish in the race. Going lean is an ever going continuous process. The results can not be expected overnight. The philosophy of lean manufacturing mainly rests on two things. 1. The elimination of waste. 2. Continuous Improvement The change in everyone’s attitude is necessary for the effective implementation of lean manufacturing in an organization. - The India's leading auto giant Mahindra & Mahindra is a shining example of the success of lean manufacturing. The top management of M&M decided to take strategic decision by implementing lean manufacturing. - Indian Aluminum Company has implemented lean by rationalizing their operations and giving major thrust to export business and optimizing of internal working systems and controls. - Delphi manufacturing Systems Bangalore is a low volume high variety production system using lean manufacturing

system. It is using Computer Integrated Manufacturing (CIM),

Total Quality Management (TQM) and JIT. Training and development of the multifunctional work force with subsequent provision of continuous evaluation is another requirement for its effective implementation. The use of cellular technology requires that the operator should have the necessary skill for managing all the machines of a particular cell. Next important task before the management is to ensure the Production of zero defect products .Mistake proofing (Poka yoke) is the means adopted for this purpose. Though the

Statistical Process Control (SPC) is used to check out the defects whereas the Poka-yoke is required to correct the defects. The use of six-sigma concepts in some World’s top class industries has yielded excellent results. The concept of customer satisfaction is no longer valid; delighting the customer is what companies are looking for. The need is to strive for the continuous improvement in order to remain competitive Genba Kanri is one such technique, which ensures better quality, low cost and fast delivery. The principle in Genba is that management must manage the five' M’s: manpower, machines, materials, methods, and measurements efficiently. 9. Barriers to Lean Manufacturing Implementation The barriers in the Indian context of implementing the lean manufacturing are the following: - Lack of resources. - Lack of expertise. - Initial high cost which includes the cost of resources as well as expertise. - Poor supply chain structure. - Ineffective training and development of work force in the company. - Absence of continuous assessment of every individual in the organization. - Psychological factors such as fear of loosing the job on account of its implementation. - Natural calamities.

10. Conclusion Despite achieving the remarkable success in Japan over the last three decades, one will

find it hard to comment on the worthiness of lean manufacturing in today's highly competitive market. It has still left with lot more potential to maintain the necessary competitive edge. Despite initial hurdles the companies have achieved considerable success by implementing lean manufacturing. The Indian companies will find it hard to compete with the rival foreign firms in case if they are averse to implement it and continue to follow the old concepts based on mass customized production. The need of the modern market i.e. the development of top quality products at lowest possible cost within the shortest possible time can be made possible by following the concepts of lean manufacturing.

References: 1. Journal on Lean manufacturing –Mohan sen (August 2002) 2. www.af.ac.uk 3. www.mfgeng.com 4. http://web.mit.edu 5. www.implementation.com