Traditional Manufacturing V/s Lean Manufacturing

(In flowchart symbols)

Process Alternative process

Predefined Process Decision

Manual Operation
Manual Input

A Project on Lean Manufacturing

Submitted to Prof. Salma

By

Dhaval Shah 49

Sohil Jewani 41

Murtuza Bhanpurawala 37
 Lean Manufacturing

Acknowledgement

INDEX

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Sr no. TITLE Page No.

1) Introduction 04
2) What is LM? 04
3) Concept of Waste 05
4) Key Lean Principles 05
5) Four Pillars of LM 06
6) Implementation of LM Systems 07
7) Advantages of LM 08
8) Traditional verses LM 08
9) Hurdles / Obstacles on the Lean Path 09
10) Conclusion 10
11) Case Study: 1) Mahindra & Mahindra Ltd. 11
2) Toyota Motor Company

17) References 12

INTRODUCTION:

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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 results in increase inventory cost, which in turn elevates cost of
production. And the high cycle time lead to reduced customer satisfaction. Manufacturer
cannot 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 is 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

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

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1) Just In Time (JIT) concept

2) Supply Chain Integration
3) Cellular Manufacturing and
4) Kaizen Support LM

1. JUST IN TIME CONCEPT:

The JIT concept requires the raw materials for each step 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 reduces
product cost by storing the elimination of waste; no rejection, 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:

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

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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.

1) Manpower
2) Material
3) Method
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 Continues improvements & Self-motivation and
development.

HOW DOES KAIZEN WORKS?

Kaizen is top-to-bottom program. 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 program consists of the 4I’s.

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

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.

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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.
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.

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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 MASS LEAN PRODUCTION
PRODUCTION

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Business Strategy Product-out strategy focused on
exploiting economies of scale of
stable product designs and non-
unique technologies
Customer Makes what engineers want in large
Satisfaction quantities at statistically acceptable
quality levels; dispose of unused
inventory at sale prices
Leadership Leadership by executive command
Organization Hierarchical structures that
encourage following orders and
discourage the flow of vital
information that highlights defects,
operator errors, equipment
abnormalities, and organizational
deficiencies.
External Relations Based on price
Information Information-weak management
Management based on abstract reports
Cultural Culture of loyalty and obedience,
subculture of alienation and labor
strife
Production Large-scale machines, functional
layout, minimal skills, long production
runs, massive inventories
Operational capability Dumb tools that assume an extreme
division of labor, the following of
orders, and no problem solving skills
Maintenance Maintenance by maintenance
specialists
Engineering "Isolated genius" model, with little
input from customers and little
respect for production realities.
TRADITIONAL MASS
PRODUCTION
Production schedules Forecast — product is pushed
are based on… through the facility
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Lean Manufacturing
Customer focused strategy focused on
identifying and exploiting shifting
competitive advantage.
Makes what customers want with zero
defect, when they want it, and only in
the quantities they order
Leadership by vision and broad
participation
Flat structures that encourage initiative
and encourage the flow of vital
information that highlights defects,
operator errors, equipment
abnormalities, and organizational
deficiencies.
Based on long-term relationships
Information-rich management based on
visual control systems maintained by all
employees
Harmonious culture of involvement
based on long-term development of
human resources
Human-scale machines, cell-type layout,
multi-skilling, one-piece flow, zero
inventories
Smart tools that assume standardized
work, strength in problem identification,
hypothesis generation, and
experimentation
Equipment management by production,
maintenance and engineering
Team-based model, with high input from
customers and concurrent development of product
and production process design
LEAN PRODUCTON
Customer Order — product is pulled
through the facility
 Lean Manufacturing

Products manufactured Replenish finished goods Fill customer orders (immediate

to… inventory shipments)

Production cycle times Weeks/months Hours/days

are…

Manufacturing lot size Large, with large batches moving Small, and based on one-piece flow
quantities are… between operations; product is between operations
sent ahead of each operation

Plant and equipment By department function By product flow, using cells or lines for
layout is… product families

Quality is assured… Through lot sampling 100% at the production source

Workers are typically One person per machine With one person handling several
assigned… machines

Worker empowerment Low — little input into how High — has responsibility for identifying
is… operation is performed and implementing improvements

Inventory levels are… High — large warehouse of Low — small amounts between
finished goods, and central operations, ship often
storeroom for in-process staging

Inventory turns are… Low — 6-9 turns pr year or less High — 20+ turns per year

Flexibility in changing Low — difficult to handle and High — easy to adjust to and implement
manufacturing adjust to
schedules is…

Manufacturing costs Rising and difficult to control Stable/decreasing and under control
are…

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.

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 Lean Manufacturing

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.

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).

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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
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

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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 improved 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 Total Net Profits Market

Sold Revenue Capture
General 8.59 million $184.63 billion $4.44 billion $23.30 billion
Motors
Ford 7.42 million $180.59 billion $3.46 billion $32.01 billion
Daimler 4.19million $152.44 billion $7.41 billion $ 34.23 billion
Chrysler
Toyota 6.0 million $121.41 billion $4.26 billion $102.30 billion

REFERENCES:

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

“PRODUCTION SYSTEM” by James L. Riggs.

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 Lean Manufacturing

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

Web addresses:

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

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

History of lean manufacturing

It is a popular fact that JIT system started in the initial years after the World War
II in Japan for the Toyota automobile system. Toyoda family in Japan decided to
change their automatic loom manufacturing business to the automobile business. But
they had few problems to overcome. They could not compete with the giants like Ford in
the foreign markets. Therefore Toyota had to depend upon the small local markets. They

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also had to bring down the raw materials from outside. Also they had to produce in small
batches. They haven’t had much of capital to work with. Therefore capital was very
important. With these constrains Taiichi Ohno took over the challenge of achieving the
impossible. With his right hand man Dr. Sheigo Shingo for next three decades he built the
Toyota production system or the Just-In-Time system.

Although the concept was mastered in Japan for the Toyota production system, the
roots of this concept goes into the sixteenth century. Eli Whitney’s concept of
interchangeable parts said to be the very initial beginning of this concept. But first or at least
famous implementation of something similar to JIT happened a century later in
manufacturing of Ford Model T (in 1910) automobile design. Manufacturing was based on
line assembly. Every part moved without interruptions to the next value adding point. Parts
are manufactured and assembled in a continuous flow. Even Henry Ford may not have
understood the basics behind his system. But it saved lots of money and made Henry Ford
a richest on the planet at that time. Although very successful in the initial years, Ford
system had it drawbacks. One of the major drawbacks was that its inability to the change.
This was due to the push strategy implemented in the Fords system. They relied on keeping
machine busy without thinking about the final outcome. They had huge stocks in the form
of finished goods and in the form of Work In Progress. This led to the inflexibility of the
system. Also this wasted money unnoticed. Another major drawback of the system was the
poor handling of the human resource. This led to have a less motivated set of people in the
organization.

But in Japan, they studied the system very well and saw the problems that
Ford system had. But the core concept of the Ford system was obeyed. This is the
continuous flow of value system. Anything distracting it treated as a waste. Various
pioneered work from people like Deming and Juran in the field of quality improvement was
used in the system. This bought built in quality to the system. More importantly Ohno and
Shingo understood the drawbacks in the push system and understood the role played by the
inventory. This led to Pull system rather than the push system, where the parts are
produced only when they are pulled by the process before that. This is similar to the

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concepts in the super markets. When the shells are being emptied (that is when people buy
the product), they are refilled with new ones.

This system developed in Toyota from 1949 to 1975 virtually unnoticed by the others
even within Japan. But in the oil crisis in 1973 Japan economy suffered and most of the
industries had losses. But Toyota overcame these problems. They stood out from the rest.
This was the eye opener for other Japanese firms to implement this system. But this
system got popular in the western world with the book “The machine that change the
world” written by James Womack in 1990. This book was aimed to give the history of the
automobile with the plant details of some of these manufacturers. He gave the name
“Lean Manufacturing to this system”. This was the eye opener for the western world about
this system. Thereafter the concepts were practiced all over the world. Experiences and
knowledge vastly improved the system.

This system developed in Toyota from 1949 to 1975 virtually unnoticed by the others
even within Japan. But in the oil crisis in 1973 Japan economy suffered and most of the
industries had losses. But Toyota overcame these problems. They stood out from the rest.
This was the eye opener for other Japanese firms to implement this system. But this
system got popular in the western world with the book “The machine that change the
world” written by James Womack in 1990. This book was aimed to give the history of the
automobile with the plant details of some of these manufacturers. He gave the name
“Lean Manufacturing to this system”. This was the eye opener for the western world about
this system. Thereafter the concepts were practiced all over the world. Experiences and
knowledge vastly improved the system.

But there were many people who just tried to use the tools in lean
manufacturing without understanding the meaning of them. They eventually failed. But
there are number of places this system is working well. The complete elimination waste is
the target of the system. This concept is vitally important today since in today’s highly
competitive world there is nothing we can waste.

Even today this system adds to its history. Therefore there will be a lot to add to this chapter
in the coming years.

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