MMVA ZG537 Lean

Manufacturing
Rajiv Gupta
BITS Pilani
Session 1
 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
 Session 1
Module 4
Evolution of lean manufacturing
Module 5
Summary and wrap up

3
 Session 1
Begin Module 1
Introduction to Dr. Rajiv Gupta, faculty for
MMVA ZG537
Introduction to the course and guidelines for
the course

4
 Session 1
End of module 1

5
 Session 1
Begin Module 2
Current global challenges and trends
Competition
Globalization
Customer Preferences
Technology

6
 Current Global Challenges
Competition
Globalization
Customer Preferences
Technology
Government Regulations
Uncertainty
Environment

7
 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
 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
 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
 Technology
Technology has to be harnessed. Dont let
it control you
Dont be seduced by sexy gadgets
Inefficient utilization of technology is
expensive
Technology includes approaches such as
TQM, TPS, TPM, Six Sigma etc.

11
 Session 1
End of module 2

12
 Session 1
Begin Module 3
Current global challenges and trends (contd.)
Government Regulations
Uncertainty
Environment
What It Means

13
 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
 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
 Environmental Concerns
Extended Producer Responsibility (EPR) is
becoming more prevalent
Reverse logistics is assuming greater importance
as part of a companys 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
 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
 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
 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
 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
 Session 1
End of module 3

21
 Session 1
Begin Module 4
Evolution of lean manufacturing

22
 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
 Evolution of Lean
Craft manufacturing
Mass Manufacturing
Lean Manufacturing

24
 Craft Manufacturing
Each product unique
Long lead times
Inconsistent quality
Close interaction between producer and
the customer
High cost

25
 Mass Manufacturing
Advent of the moving conveyor
Establishment of standardized, interchangeable parts
Development of standard methods of production
Increased productivity
Lower costs

26
 Mass Production Without
Variety in the 1920s
Schedule

Suppliers

Steel Stamping Painting

Mill

Foundry Fabrication Sub-assy Fin-assy

Dealers

From: Profit Beyond Measure, H. Thomas Johnson and

Customers
Anders Broms, 2000
27
 Mass Producing Variety in
Batches by the 1970s
Forecast
Plan

Stamping
Orders

Foundry
100s
Final Dealers
0f
Power Train Assy
suppliers Whse

Body & Frame

Customers
Painting

Rework
28
From: Profit Beyond Measure
 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
 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
 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
 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
 TMMK Production 1990s

Single vehicle Batched

order orders
Stamping

Body weld Paint shop Final assy Dealers

Engine Seat
Plastics
Build Build Customers

From: Profit Beyond Measure 33

 Session 1
End of module 4

34
 Session 1
Begin Module 5
Summary and wrap up

35
 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
 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
 Session 1
End Module 5
Summary and wrap up

38