15335250<br />INTERNATIONAL INSTITUTE OF PLANNING AND MANAGEMENT<br />AHMEDABAD<br />SUBMISSION<br />ON<br />Case Study<br />ON<br />BMW <br />Submitted To:<br />Professor Sudipt Laik <br />Submitted By:<br />Pratik K S Negi<br />SS/09-11/ISBE/HR<br />Q- Illustrate the theories and principles of lean production and JIT applied in the BMW case?<br />Solution to the case<br />First we will try and understand the what is lean production and JIT<br />LEAN PRODUCTION<br />Lean manufacturing or lean production, which is often known simply as "
, is a production practice that considers the expenditure of resources for any goal other than the creation of value for the end customer to be wasteful, and thus a target for elimination. Working from the perspective of the customer who consumes a product or service, "
is defined as any action or process that a customer would be willing to pay for.<br />Lean is centered on preserving value with less work<br />Lean manufacturing is a variation on the theme of efficiency based on optimizing flow; it is a present-day instance of the recurring theme in human history toward increasing efficiency, decreasing waste, and using empirical methods to decide what matters, rather than uncritically accepting pre-existing ideas. Lean is the set of "
that assist in the identification and steady elimination of waste<br />right3371850<br />Lean is about doing more with less: less time, inventory, space, labor, and money. "
, shorthand for a commitment to eliminating waste, simplifying procedures and speeding up production.<br />Lean Manufacturing (also known as the Toyota production System is, in its most basic form, the systematic elimination of waste – overproduction, waiting, transportation, inventory, motion, over-processing, defective units –<br /> and the implementation of the concepts of continuous flow and customer pull.<br />Five areas drive lean manufacturing/production:<br />cost<br />quality<br />delivery<br />safety, and<br />Morale.<br />Just as mass production is recognized as the production system of the 20th century, lean production is viewed as the production system of the 21st century.<br />Benefits of Lean Production<br />Establishment and mastering of a lean production system would allow you to achieve the following benefits:<br />Waste reduction by 80% <br />Production cost reduction by 50% <br />Manufacturing cycle times decreased by 50% <br />Labor reduction by 50% while maintaining or increasing throughput <br />Inventory reduction by 80% while increasing customer service levels <br />Capacity in current facilities increase by 50% <br />Higher quality <br />Higher profits <br />Higher system flexibility in reacting to changes in requirements improved <br />More strategic focus <br />Improved cash flow through increasing shipping and billing frequencies <br />However, by continually focusing on waste reduction, there are truly no end to the benefits that can be achieved.<br />Characteristics of a Lean Enterprise<br />Integrated single piece continuous workflow<br />Close integration of the whole Value Chain from raw material to finished product through partnership oriented relations with suppliers and distributors<br />JIT (Just in Time) Processing: a part moves to a production operation, is processed immediately, and moves immediately to the next operation<br />Short order-to-ship cycles times; small batch production capability that is synchronized to shipping schedules<br />Production is based on orders rather than forecasts; production planning is driven by customer demand or "
and not to suit machine loading or inflexible work flows on the shop floor.<br />Minimal inventories at each stage of the production process<br />Quick changeovers of machines and equipment allow different products to be produced with one-piece flow in small batches<br />Layout is based on product flow<br />(TQM)Total Quality Control -Active involvement by workers in trouble shooting and problem solving to improve quality and eliminate wastes.<br />Defect prevention rather than inspection and rework by building quality in the process and implementing real time quality feedback procedures.<br />JIT (Just in time)<br />The philosophy of JIT is simple: inventory is waste. JIT inventory systems expose hidden causes of inventory keeping, and are therefore not a simple solution for a company to adopt. The company must follow an array of new methods to manage the consequences of the change. The ideas in this way of working come from many different disciplines including statistics, industrial engineering, production management, and behavioral science. The JIT inventory philosophy defines how inventory is viewed and how it relates to management.<br />
Just-in-time (JIT) is an inventory strategy that strives to improve a business's return on investment by reducing in-process inventory and associated carrying costs
JIT can improve a manufacturing organization's return on investment, quality, and efficiency.
Quick notice that stock depletion requires personnel to order new stock is critical to the inventory reduction at the center of JIT. This saves warehouse space and costs. However, the complete mechanism for making this work is often misunderstood
Main benefits of JIT include:<br />Reduced setup time. <br />Cutting setup time allows the company to reduce or eliminate inventory for "
time. The tool used here is SMED (single-minute exchange of dies).<br />The flow of goods from warehouse to shelves improves<br /> Small or individual piece lot sizes reduce lot delay inventories, which simplifies inventory flow and its management.<br />Employees with multiple skills are used more efficiently. <br />Having employees trained to work on different parts of the process allows companies to move workers where they are needed.<br />Production scheduling and work hour consistency synchronized with demand. <br />If there is no demand for a product at the time, it is not made. This saves the company money, either by not having to pay workers overtime or by having them focus on other work or participate in training.<br />Increased emphasis on supplier relationships. <br />A company without inventory does not want a supply system problem that creates a part shortage. This makes supplier relationships extremely important.<br />Supplies come in at regular intervals throughout the production day. <br />Supply is synchronized with production demand and the optimal amount of inventory is on hand at any time. When parts move directly from the truck to the point of assembly, the need for storage facilities is reduced.<br />Now after understanding the JIT and Lean Production How BMW was Incorporated the same in their functionality<br />right1360170Industry- Automotive industry<br />Founded-1916 <br />Founder-Franz Josef Popp<br />Headquarters- Munich<br />Key people-Norbert Reithofer, Joachim Milberg (Chairman of the supervisory board<br />Products- Automobiles, motorcycles, bicycles<br />Revenue- €50.68 billion (2009)<br />Operating income- €289 million (2009)<br />Profit- €204 million (2009)<br />Employees- 96,230 (2009)<br />Subsidiaries-Rolls-Royce Motor Cars<br />Website- bmw.com<br />The fundamental usages by the BMW US factory have moved on what the case describes all about. And they term it Post (JIT)<br />The basic emphasis is given to suppliers. Effort is made not to underestimate the role of suppliers<br /> <br />Vehicular delivery on time (day of ordering to delivery date)<br />Flexibility - $300 million capital (overhauling the 8 year old body shop)<br />Following changes are under way<br />Redesigning the vehicles for variation in metal sheets<br />Upcoming 3 series will have 2 variations instead of 16<br />Z3 model will have 8 body variations instead of 12<br />VIN number modification (LEAN Production concept used)<br />Will be assigning the VIN number later as to give customer chance of making changes in the design (customer centric approach)<br />Will give BMW more time for scheduling<br />Computerized system for the dealers<br />Computer ordering system for giving customer the date of delivery, integrating all the workshops and data banking in the Munich center.<br /> <br />Scheduling glitches (LEAN Production used)<br />The Spartanburg Plant (doubling the vehicular stacking capacity)<br />Mechanism to <br /> 1. Temporary shelve half shifts worth of cars at once<br /> 2. Solving scheduling glitches caused by vehicles out of sync<br /> 3. more parts to stand along the assembly line<br /> 4. Reducing load on worker<br />Supplier Side -------- (JIT concept used) <br />Computer system that tracks orders from the dealerships around the world to the part makers in South Carolina and Germany.<br />Production change from supplier side few hours prior to the parts are needed in BMW line.<br />Now -------- suppliers are accustomed locking the production line weeks before the delivery<br /> Challenge starts with the production forecasting<br />Normally manufacturer would be able to forecast the production needs and notify suppliers 6months in advance, 60 % accuracy <br />If (6 weeks prior ---- will give 80% accuracy)<br />Plans to attain (JIT concept used) <br />If (done 4 days ahead ---- will give 100 % results)<br /> For the same (steps have to be taken)<br /> <br /> 1.. lock 100% percent accurate production plan<br /> 2.. advantage of suppliers to liberate suppliers to make last minute changes<br /> 3. Sales orders processed nightly and communicated to the factory planning department<br />Cross-functioning (JIT concept used) <br />Indicator champion—job post champion -- sorting issues in various department to solve schedule problems ex ( one departments functions impacting other)<br />Brand identity ( LEAN Manufacturing )<br />Customized manufacturing -- customization is less in US then in Germany,<br />Customers should get what exactly they want but (will not go the way of 20 day car)<br />Precise schedule will result in the more stable supplier base, by reducing product complexity that will allow the production of new products.<br />That is BMW will bring about changes that will<br />(Every last minute change will bring about any desired output from the<br />Customer will be handled minutely)<br />Thanking you<br />Pratik K.S Negi<br />ISBE (SS 09-11/HR)<br />