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In the context of lean, Value is defined as something that customer is willing to pay
for. Value adding activities transform materials or information into something that a
customer desires. Therefore waste can be said as anything that does not add value
to customers purchase. Waste can occur in any process right from purchasing of
raw material to sale of the product. Elimination of this waste is the major
fundament of lean value analysis.

here are the general forms of wastage that tend to occur in the process of
manufacturing defective products, overproduction, inventories, excess motion,
process steps, improper transportation and longer waiting times. the value chain is
not only for the manufacturing companies also for the service industries or instance
consider an airlines, the value added part is the flight itself which doesn¶t contribute
more to the business but the non value adding parts of the process such as airport
parking, mode of transport to airport, checking times, security checks, baggage
allowance, time taken to board the flights and other things like that these actors
play major part in a customer to choose their flight so if the if airlines focus more
on these factors they can improve their business and fly their plane faster. In order
to do this the airlines organisation need to apply lean to their business.

It is not difficult to understand or implement lean, in order to understand lean first

one need to understand the difference between value added and non value added
processes and value and waste. While looking at an entire supply chain it might be
difficult to locate them so the best way to do it is break the chain into individual
components identify them and apply lean in order to reduce waste in each part of
the process.

In this paper we are going to see how general motors¶ can apply lean analysis to
reduce its wastage and improve its business. From the early 20th century there are
three big global automobile companies which compete with each other general
motors, ford and Chrysler. Within few years Toyota entered the marked and
captured the market to become no1 and general motors lost its market share as
well as the profit in which wastage has played major part. the major difference
between Toyota and general motors¶ is both of them implemented lean in their
organisations but general motors¶ failed adapt to it where as Toyota successfully
did.

The general motors¶ company is an American based multinational automobile

company located in Detroit. At present it is the world¶s second largest automaker.
GM has its business spread around 31 countries globally and it markets it cars and
trucks through Buick, Cadillac, Chevrolet, GMC, Opel, Vauxhall and Holden. "The
company was first founded on September 16, 1908, in Flint, Michigan, as a holding
company for Buick, and then controlled by William C. Durant. GM's co-founder was
Charles Stewart Mott, whose carriage company was merged into Buick prior to GM's
creation."

In few years after the establishment the company grew stronger and became world
leader in automobiles but over the past two decades its sales have been gradually
diminishing and it is losing its market share this is mainly due to the improper
implementation of value chain analysis in its supply chain.

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General motors¶ has applied lean production in many phases of its supply chain
here are the lean production techniques it had applied.

Saturn Kanban Implementation

Saturn's Spring Hill, Tennessee automotive manufacturing plant receives more than
95 percent of its parts in reusable containers. The containers also serve as symbol
for the staff to indicate the requirement of parts wherever needed. This "Kanban"
type system helps environment by eliminating tons of packaging wastes, reducing
storage space, cost and energy. Saturn has also implemented a new supplying
technique called as "electronic Kanban" which helps suppliers to deliver components
just in time. Saturn has also implemented lean production systems to reduce paint
solvent usage.

Fairfax Assembly Paint Booth Cleaning

At GM's Fairfax assemble plant; cleaning of the paint booths is done every
alternative day to prevent stray drops of paint and other dusts from attaching to
the new paint jobs. After observation it has been found that if the cleaning is done
thoroughly it is adequate to clean every alternative day while proper cleaning is
required only once a week thus by reducing the cleaning costs. And it also helps by
enabling colleagues to use the solvent continuously without allowing it to dry there
by reducing the wastage.

Application of Lean Methods to Administrative Processing in the Purchasing Group

GM has not only applied lean procedures to it manufacturing processes but also its
administrative department. upon applying lean thinking GM has found that its
request for quote is a paper based system which requires a paper from 3/4 of an
inch to 6 inches thick which uses tons of paper every year, not only the paper
costs the printing, packing, storing and mailing costs are also very high. After
implementing the lean thinking GM has decided to uses electronic based RFO in
which requests can be made in the form of electronic mails which saves paper,
printing costs and also saves a lot of time. By implementing electronic RFO, GM
saves nearly 2 tons of paper every year.

Lean Enterprise Supply Chain Development

In 1990's GM has learned that GM has to bear the wastage from suppliers,
transport costs and delays so in order to prevent these kinds of wastages GM has
appointed a separate engineer panel which works along with suppliers to deliver
goods at planned time intervals with less wastage and transport costs. GM also
encourages its suppliers to use recyclable or reusable containers and usage of
biodegradable chemicals during manufacturing.

Steering Column Shroud PICOS Event

"GM conducted a PICOS rapid improvement event with a key supplier to enhance
the cost competitiveness and on-time delivery of steering column components. The
GM team used value stream mapping and the "five whys" to assess the existing
process for steps that cause long lead times and delays. The assessment revealed
that the supplier shipped the steering column shrouds (or casings) to an outside
vendor for painting prior to final assembly with the steering column, adding
significant flow time to the production process." using this technique the team has
found that the die that has been used to paint the shrouds creates flaws that needs
to cover so the process of dyeing has to be done more that once so the team has
improved the quality of die and the mould the part using resin of the desired colour.
By applying lean techniques, not only saving the business costs GM has also helped
environment by reducing the amount of VOC emissions from painting process and
also by eliminating hazardous wastes.

Thermoplastic Colour Purging PICOS Event

GM team has found that the resin colours have been changed regularly to produce
a new batch of parts as a relist many of the plastic parts have to be disposed. So
the team has found a solution by streamlining the die setup and colour change over
process as a result the team was able to reduce the wastage.

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So far we have seen how general motors¶ has implemented lean in its supply chain
here are the other major phases in its supply chain where it needs to apply lean in
order to decrease its wastage

‡ It has to have a proper look at its production as sometimes they produce too
much or too soon which results in poor information flow and excess inventory
so they have to regulate the production according to the requirement.

‡ The waiting time needs to reduce in events such as machine breakdown,

system downtime, equipment changeover, request for quote and orders etc.

‡ The movement of paperwork from one step to other needs to be minimised

and usage of electronic means increased.

‡ Over and incorrect processing needs to be minimised that is usage of higher

technologies for works that requires simple process.

‡ Excess inventory needs to be cut down that is production which is not

according to forecast or production that is more that the customer demand.
 ‡ Frequent errors in paperwork, product quality, delivery performance and
defects in products needs to be reduced as they bring customer
dissatisfaction and affect the brand name.

‡ The creativity and ideas of all the staffs right from grade c need to be
considered as all of them are part of the business and their ideas can do a lot
of good to the business.

‡ Flexibility of the colleagues needs to be improved as it makes the task easier

and multi talented colleagues can help cover the tasks when there is a staff
shortage.

‡ Cash flow needs to be more and regulated

If general motors¶ can consider all these factors in their supply chain and apply
lean then they could save lot of time and money.



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So far we have seen the lean recommendations for GM now we are going to discuss
about the impact of these recommendations on GM¶s business at present and in
future.

Here are major benefits that occur to GM by applying lean

SPEED AND RESPONSIVENESS TO CUSTOMERS:

By implementing lean the lean systems not only makes the supply chain efficient
but also faster. As the lean gets applied on to the supply chain its culture takes
over the entire chain to increase its velocity in each and every link of the chain. The
response times would be very fast and the decisions would be made at rapid pace
that doesn¶t mean that decisions are made without proper considerations because
there will be lot of experienced brains involved in taking the decision and the
habitat of taking decisions in shorter time becomes a bias. So slower response
becomes a exception. So at GM which is suffering with a brand name that their
production and service response times are quite high this would be a great deal of
help.

REDUCED INVENTORIES:

In lean systems inventory is considered as waste. It might be considered as

unusual but at lean systems it is considered that manufacturing can take place
efficiently with fewer raw materials, proper workforce and finished goods inventory.
Many companies like Toyota had achieved good results by applying this principle.
When this lean principle is applied it enables the company¶s to directly produce into
the trailers and maintain no other finished goods inventory as the quality check will
be made in each and every parts of the production than after the product is
completed. This type of production has many advantages as the goods are directly
loaded into the trailer there is no needs of storage space, as the product is moved
to the next phase of supply chain that is transport very less time is consumed and
next production can be started immediately. The main aim of lean is to eliminate
the waste in process but it cannot be eliminated completely but minimised same in
the case of bottle necks though all the bottle necks will be considered and
eliminated before the start of the process it is usual for them to occur at any stage
but still it is good for lean to be applied before the bottle neck that after it occurs
which disturbs the whole process. This is the major problem for GM as they never
accept the fact that they lost their market due to improper application of lean as
they try to apply lean after the damage is done which is too late. So GM needs to
apply lean well in front of the start of the process.

REDUCED COSTS AND TIME:

In 1998 Toyota used 50% less staff and time to manufacture a car that GM has
used this implies the improper use of lean at GM, these needs to be corrected. The
traditional concept of mass production reduces cost and time. The costs and time in
each and every part of the production cycle needs to be concentrated and
minimised. This is possible by usage of flexible staff, machinery and spare parts as
this doesn¶t require employing special staff and ordering of new machinery and
spare parts which requires more budget and time. The reduction of costs needs to
be done with proper care keeping in the mind regarding the customers who prefer
luxury than price of the product.

IMRPOVED CUSTOMER SATISFACTION:

For a global company like GM customer satisfaction is very important. This

satisfaction can be achieved my time maintenance in service and delivery. Not only
the service the launch of new products into markets needs to be made at proper
times and their delivery needs to be done according to the plan. By applying lean
the time requirement and expenses for development of a new product will be
minimal. Lean also promotes usage of less capital-intensive machines, tools,
fixtures and the training required for the staff gets easier. Some may argue that
this reduces the quality of the product but if proper planning is made this cannot
occur not only that the brand loyalty increase as the services and deliveries are
made in time.

Supply chain as competitive weapon:

It might be argued by some people that how can supply chain be a competitive
weapon but the case of Toyota is a perfect example. Within 2 decades of
establishment Toyota has up beaten GM in world market which was the leader of
the world automobile industry for over 6 decades. This is achieved mainly due to
the proper application of lean. Profits can be achieved when the production costs
are decreased and customer satisfaction is increased both of these are possible
when the wastage in the process of supply chain is reduced. By applying lean an
organisation like GM can produce automobiles at reduced costs and deliver them at
proper times which increases their profits and brand name which is their
competitive advantage.

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Here is the porter¶s template for an automobile industry

In the above template the each and every phase of the supply chain is considered
into account. each component of the table indicates the phases of the table where
lean needs to be applied in order to reduce the wastage of goods and time.

In the tabular form below the wastages that occur in the process are indicated and
the remedies for them are provided.

TYPES OF WASTE DANGER SIGNALS RESPONSE TO DANGER

SIGNAL



Over production When the production is Plan before production
more than the customer and regulate the
demand then the storage production according to
space increases  demand

Waiting time The work gets delayed Try to get the repair
due to the machine down quickly and try to get
or equipment changeover overtime to get work
done quicker

Unnecessary transport Large amount of Try to use electronic

paperwork or goods means where ever
moving within the possible and reduce the
industry wasting time movement of goods by
mass movement at a
time

Over processing Heavy machinery or high Try to use simple

technology is used for processes and use the
simple tasks high technology for
proper tasks

Excess inventory When the supply is looks Regulate the production

greater than the demand and produce according to
or order the demand

Excess motion of people Staff looks to be moving Regulate the work by

within the production unit organising the process of
quite a lot work so that tools are
available to all the staff
when required without
longer reaching times
Defects The completed product Quality checks needs to
has defects in its body be performed in each
parts that needs to step of production so that
resent to the particular final product doesn¶t
department have any defects

Unused employee When the staff ideas are Collect the ideas from the
creativity wasted without staff and communicate
consideration them to the higher
authorities

Over employment When employees look Try to use some of the

adequate for the required employees for other
task  tasks.

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Lean is a cooperative process for survival and for corporate success. Supply chains
no matter whether they are big or small need to apply lean to improve which has
been proved in the case of many supply chains. The concepts of lean apply to each
component of the supply chain whether they are service oriented or manufacturing.
All the departments in the supply chain like product development, human resource,
finance, purchasing, distribution and markets can benefit by application of lean.

Considering the case of general motor¶s they have clearly lost their way due to the
improper application of lean or no application of lean. GM has tried to implement
and adapt to the lean principles for years but they failed, for instance in 1984 GM
started an innovative program called NUMMI (New United Motor Manufacturing,
Inc) whose mission is to implement the Toyota manufacturing system in the U.S
NUMMI that is the GM unit. They have succeeded in implementing the parts and
elements of lean in the company but the lean was not properly adopted by the GM
before their business decline has started. So it is not too late for GM to understand
and apply lean in its supply chain and make sure the organisation gets adapted to
lean to gains positive results.


  

‡ Bruce Tompkins, principal, Tompkins Associates (lean thinking for supply

chain)

‡ H.M Wee and Simon Wu (supply chain management an international journal,

volume 14 November 5, 2009)

‡ Steve Schifferes ( The triumph of lean production , globalisation reporter,

BBC news, Georgetown, Kentucky)

‡ Ann All (did lean manufacturing contribute to Toyota recall?, January 29,
2010)

‡ Addis, C (Taking the wheel Pittsburgh university press 1999)

K   

‡ www.news.bbc.co.uk

‡ www.tomkinsinc.com

‡ www.1000ventures.com

‡ www.valuechaingroup.com

‡ www.epa.gov/lean/studies/gm.htm

‡ www.whitepapers.zdnet.com

‡ www.itbusinessedge.com

‡ www.provenmodels.com

‡ www.edbarrows.com/resources/briefs/valechain.pdf