lean manufacturing

1. MMVA ZG537 Lean
Manufacturing
Rajiv Gupta
BITS Pilani
Session 1

2. Session 1
• Module 1
– Introduction to Dr. Rajiv Gupta, faculty for MMVA ZG537
– Introduction to the course
– Overall course guidelines
• Module 2
– Current global challenges and trends
• Competition
• Globalization
• Customer Preferences
• Technology
• Module 3
– Current global challenges and trends
• Government Regulations
• Uncertainty
• Environment
– What It Means
2

3. Session 1
• Module 4
– Evolution of lean manufacturing
• Module 5
– Summary and wrap up
3

4. Session 1
• Begin Module 1
– Introduction to Dr. Rajiv Gupta, faculty for
MMVA ZG537
– Introduction to the course and guidelines for
the course
4

5. Session 1
• End of module 1
5

6. Session 1
• Begin Module 2
– Current global challenges and trends
• Competition
• Globalization
• Customer Preferences
• Technology
6

7. Current Global Challenges
• Competition
• Globalization
• Customer Preferences
• Technology
• Government Regulations
• Uncertainty
• Environment
7

8. Competition
• Shrinking market share
• Lower margins
• Shorter product life cycles
• Higher variety
• Smaller volumes to depreciate fixed costs
• Globalization is an imperative
• Competition for customers as well as
employees
8

9. Globalization
• Goes beyond imports and exports
• Global markets and global sources
• Potential for increased markets
• Increased potential for lower costs, but
increased complexity due to international
regulations and other differences
• Greater risk due to currency fluctuations
9

10. Customer Preferences
• We cannot sell what we manufacture. We
must manufacture what we can sell.
• Need to reduce response and lead times
• Logistics needs to be better integrated
with the entire supply chain
• Need to keep a tight control on costs
• Need to bring new products to the market
faster
10

11. Technology
• Technology has to be harnessed. Don’t let
it control you
• Don’t be seduced by “sexy” gadgets
• Inefficient utilization of technology is
expensive
• Technology includes approaches such as
TQM, TPS, TPM, Six Sigma etc.
11

12. Session 1
• End of module 2
12

13. Session 1
• Begin Module 3
– Current global challenges and trends (contd.)
• Government Regulations
• Uncertainty
• Environment
– What It Means
13

14. Government Regulations
• Within a country, there may be laws
pertaining to inter-state commerce
• Environmental responsibility – green
production
• Labor laws
• Customs and other duties
• Tax laws
• Currency exchange rates
• Other
14

15. Uncertainty
• Growing uncertainty in the global market with
greater access to information
• Uncertainty has an impact on production and
delivery schedules and on the inventory
levels
• Some of the uncertainty is due to increased
climatic events, tsunamis, earthquakes, etc.
• There is also a growing threat due to the
increased incidence of terrorism and piracy
• Logistics systems need to be able to respond
to changing situations and conditions
15

16. Environmental Concerns
• Extended Producer Responsibility (EPR) is
becoming more prevalent
• Reverse logistics is assuming greater importance
as part of a company’s logistical activities
• Fuel emissions and spills and leaks in the ocean
are receiving more focus
• Companies are assuming a more responsible
position in regard to the environment
• Better planning, measurement (emissions), control
and use of sustainable technologies will have an
impact on logistics
16

17. What It Means
• Focus on
– The customer
– Value and waste
– Doing more with less
– The entire purchasing experience
– Flexibility
– Partnerships
– Longer term thinking
• Move away from
– Numbers games
– Fads
– Production focus alone
17

18. Business Formula
Selling price = Cost of manufacturing + cost
of delivery + profit
Profit = Selling price – cost of manufacturing
– cost of delivery
The critical factor is how we view the
formula
18

19. Competitive Priorities
• Price
– Ability to profit in price competitive markets
• Quality
– Ability to offer consistently low defect products
– Ability to provide high performance products
– Ability to provide reliable/durable product
– Ability to anticipate customer preferences
• Delivery
– Ability to provide fast deliveries
– Ability to make dependable delivery promises
– Ability to accommodate customer-generated changes
19

20. Competitive Priorities
• Service
– Make the purchase experience as effortless
as possible for the customer
– Ability to customize the product/service to suit
customer needs
– Ability to provide effective and efficient after-
sales service
20

21. Session 1
• End of module 3
21

22. Session 1
• Begin Module 4
– Evolution of lean manufacturing
22

23. What is Lean?
• A lot of confusion exists about the term
• Term first mentioned in “The Machine That
Changed The World” in the 1980s
• It got further defined in “Lean Thinking” in
1994
• Today it is synonymous with Toyota
Production System
23

24. Evolution of Lean
• Craft manufacturing
• Mass Manufacturing
• Lean Manufacturing
24

25. Craft Manufacturing
• Each product unique
• Long lead times
• Inconsistent quality
• Close interaction between producer and
the customer
• High cost
25

26. Mass Manufacturing
• Advent of the moving conveyor
• Establishment of standardized, interchangeable parts
• Development of standard methods of production
• Increased productivity
• Lower costs
26

27. Mass Production Without
Variety in the 1920s
Schedule
Suppliers
Stamping PaintingSteel
Mill
Foundry Fabrication Sub-assy Fin-assy
Dealers
Customers
From: “Profit Beyond Measure”, H. Thomas Johnson and
Anders Broms, 2000
27

28. Mass Producing Variety in
Batches by the 1970s
100s
0f
suppliers
Stamping
Foundry
Power Train
Body & Frame
Painting
Rework
Whse
Final
Assy
Dealers
Customers
Plan
Forecast
Orders
From: “Profit Beyond Measure” 28

29. Mass Production
• Downsides:
– Worker alienation
– Higher capital costs leading to batch manufacturing
– Distance from the customer
– Management by numbers as advocated by Alfred
Sloan at General Motors – management
disconnected from the shop floor
– Engineering became specialized – lack of
communication among different specialties and with
manufacturing – longer product development time
29

30. Mass Production
• Downsides:
– Due to large expensive equipment that had to
be kept busy to justify the high cost,
production was in large batches, whether, or
not, this was required by the customer
– Due to management by numbers, accounting
became a very important discipline. Inventory
was treated as an asset in accounting leading
to high inventories
30

31. Lean Production
• Evolved as a necessity
– Limited capital
– Limited space
– Need to protect domestic markets
– Focus on people and their capabilities
• Leading to
– The use of general purpose machines to produce a variety
of products in small batches
– Layouts to optimally utilize space
– Focus on quality
– Regular upgradation of people capabilities
31

32. Lean Production
• People policies
– Due to a major economic depression following the
war, Japan faced labor unrest when president Kiichiro
Toyoda tried to fire workers
– As part of the negotiations, workers who remained
were promised lifetime employment and were
permitted the use of company facilities – still in use
today
– Kiichiro Toyoda took responsibility for the situation
and resigned from the presidency of Toyota
32

33. TMMK Production 1990s
Stamping
Engine
Build
Seat
Build Plastics
Dealers
Customers
Body weld Paint shop Final assy
Batched
orders
Single vehicle
order
From: “Profit Beyond Measure” 33

34. Session 1
• End of module 4
34

35. Session 1
• Begin Module 5
– Summary and wrap up
35

36. Summary
• Current business climate poses pressure
on manufacturers to be responsive and
efficient
• Manufacturers need to be able to meet
varied demand while controlling costs
• Lean grew as a response to meet the
requirements of a demanding customer
• Lean manufacturing evolved from craft
and mass manufacturing
36

37. Summary
• Craft manufacturing was close to the customer
but with no standardization and at a high cost
• Mass manufacturing brought about
standardization and low product cost, but with
distance from the customer and alienation of the
workers
• Lean manufacturing brings some of the benefits
of craft and mass manufacturing together
37

38. Session 1
• End Module 5
– Summary and wrap up
38