LEAN MANUFACTURINGLEAN MANUFACTURING FORFOR

COMPETITIVECOMPETITIVE ADVANTAGEADVANTAGE

PREPARED BY:

A.AJAY V.THRINATH BABU20048010 20048046G.P.R.E.C. G.P.R.E.C.KURNOOL KURNOOLE-MAIL: krishna_19860@yahoo.com thrinath_18@yahoo.co.in

INTRODUCTION

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.

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

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

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

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

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

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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 Waste1 2 3 4 5 6 7

Over production Unnecessary Defects Inappropriate Excessive waiting UnnecessaryInventory Processing Transportation 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 % of total time Example

Value adding activities 5 converting iron ore into Scooters.

Non-value adding activities 60 Transferring a product from One size container to another

Necessary non-value adding 35 Inspecting every product atactivities 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

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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 ConceptsThe lean manufacturing system is comprised of six main concepts. These are

(A) Waste EliminationLean thinking

Operational flexibility

Waste identification and their elimination

Genba Kanri (management of the shop floor)

(B) Continuous Improvement system of managing the shop floor

Category of waste People Process Information

1. Processing 8. Strategic 16. Hand off

2. Motion 9. Checking 17. Translation

3. Assignment 10. Work around 18. Missing

Types of waste 4. Tempering 11. Boundary 19. Irrelevancy

5. Control 12. Mutation 20. Inaccuracy

6. Waiting 13. Sub-optimization

7. Goal alignment 14. Repeatability15. Unbalanced flow

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 MappingConcurrent 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 TeamJidoka

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. .

▪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