Lean Manufacturing For Competitive Advantage_125579398.pdf 3c4e4c

Lean Manufacturing for Competitive Advantage

C.Narasimhan Sundaram-Clayton Limited

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Presentation overview

¾ Lean : A competitive weapon ¾ What is lean? ¾ Experience from SCL ¾ Advantage India

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Lean: A Competitive Weapon

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Zara: Fastest turnaround time Freshly baked clothes: Consumers will regard clothes as perishable commodity…

Short lead time Small batch quantities More variety CN_ISB_Aug06

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Business Model: Dell Cost advantage: Supply Chain

4-5 % points • Low inventory • Efficient cash conversion • Stronger vendor relationships • savings to customer

Manufacturing

2-3 % points • Proprietary advantages • Efficient gains to scale operations • Cont’d cost reduction

Operations

Direct Model

2-3 % points

5-10 % points

• Lean cost structure • Leveraged partner model • Asset efficiency

Information

Flow

• Direct across segments

• Real time on price/promotions

• No retail, distribution mark-up

• Act on market changes within hours

• Enables cross sell opportunities

• Maximize profits

Strong information flow Direct access to customers Lean operations, supply chain CN_ISB_Aug06

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Southwest: One Kind of Airplane

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Walkman re-invented

Product obsession

20th Century Walkman 20 songs CN_ISB_Aug06

Consumer obsession

21st Century iPod 20,000 songs 7

Observes: People sharing music Insight : Young people love unlimited access to music Barriers : Storage devices, Cost

•

i-

October 23, 2001

dea

Jan 9, 2001: launches i-tunes

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i-dea grows

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Mumbai’s Dabbawala’s 5,000 tiffinwals’s

175,000 lunches

1 error in 16 million transactions = 99.999999% times correct Only for Rs.150 / month CN_ISB_Aug06

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Aravind Eye Hospital Dr.G.Venkataswamy

Alternate health care model supplementing Governmental efforts Started 1976 with 11 beds, Currently 4 hospitals with 3590 beds 67% of outpatients visit & 75% of surgeries free of cost Free eye camps Free cataract surgeries World class ophthalmic products available at affordable costs Institute for research that contributes to the development of eye care Development and implementation of efficient and sustainable eye care programs

World’s most productive eye hospital!! CN_ISB_Aug06

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Telecom revolution in Rural India

STD/ISD/PCO stations

Phones in post offices in villages

Mobile phones

MeTel – Low cost e-mail for rural India CN_ISB_Aug06

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Banking

Banks

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ATM’s in cities

Low cost technology for rural India by TeNet Group 14

Key Success Factors

¾ Create Value for the customer - Innovate ¾ Reduce development time - Speed to Market ¾ Improve Asset Productivity – Man & Machines ¾ Reduce Inventory ¾ Reduce Cost ¾ Offer world-class Quality & Service ¾ Reach customers across the depth of the Country

LEAN – The only way to go!! CN_ISB_Aug06

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What is Lean?

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Many Names, but the same Concept Toyota Production System

Pull system

Just-In-Time Lean Manufacturing JIT/TQC/EI/TPM Short Cycle Manufacturing One-Piece-Flow Cellular Manufacturing Stockless Production Agility Group Technology

Demand Flow Manufacturing Focused Flow Manufacturing Value Adding Manufacturing Time Based Management

Synchronous Flow Manufacturing End-Lining Operations Continuous Flow Manufacturing CN_ISB_Aug06

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LEAN defined…

¾ Philosophy which seeks to provide more and more value to the customer (package of cost, quality & delivery) with less and less resources by eliminating waste (Muda)

Overriding Principle : by

Adding Value, Removing Waste ^ CN_ISB_Aug06

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MUDA ¾ Waste ( MUDA ) is anything that does not add value to the product from the customer’s perspective (e.g. excess inventory, over production, over investment, excess handling, etc.) Overproduction Inventory Transportation Extra Processing Defects / Rework Unnecessary Motion Unnecessary Waiting CN_ISB_Aug06

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Things to about waste ¾ Waste is really a symptom rather than a root cause of the problem ¾ Waste points to problems within the system(at both process and Value-stream levels) ¾ Find and address cause of waste

The element of production that add no value to the product. Waste only adds cost and time. CN_ISB_Aug06

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Why Lean ?

Nothing / Nobody is perfect. Even NATURE!!! CN_ISB_Aug06

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Why Lean ? Typically 95% of Total Lead Time is Non Value Adding !! Total Lead Time NVA Time

Set-up Startup time time

VA Time

Others Rework Machine time downtime

( batch production, inventory )

Waiting for material time

Focus is on reducing NVA Time to improve overall efficiency CN_ISB_Aug06

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Company-wide Lean ? ¾ Asset utilization ¾ Manpower utilization ¾ Low cost automation ¾ Balance to TAKT time working ¾ Lean inventory

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Benefits of Lean

¾ Turn Sales Orders into Profits as Quickly as Possible Decrease the time period from buying or fabricating components until you get paid by the customer for the finished product.

¾ Increase Profits Reduce Costs and Increase Sales.

¾ Use Limited Resources Wisely People, Equipment, Buildings, etc.

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Some experiences from SCL

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Why SCL went for Lean? ¾ From 1998 onwards our customers demanded - Daily supplies with zero defect - Supplies in matched vehicle sets - Continuous price reduction ¾ To meet the above requirement, SCL needed to - Respond in short lead times - With less inventory and investment - Eliminate waste and reduce cost ¾ Since lean manufacturing addresses above requirements, SCL decided to implement Lean Manufacturing in the production system CN_ISB_Aug06

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Our objective ¾ To reduce lead time from customer order to delivery of products ¾ To meet the customers changing requirement ¾ To reduce inventory by implementing pull system and Just-in-time supplies ¾ To achieve zero defect ¾ To improve productivity

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Case 1: Dual Brake Valve Table 6

Table 1

Cell 1

Table 7

Table 2 Table 3

Table 4

Table 5

Table 1 - Upper body sub-assembly and primary piston assembly Table 2 - Lower body sub-assembly and upper body & primary piston assembly Table 3 - Upper and lower body assembly and exhaust flap assembly Table 4 - Testing Table 5 - Final assembly Table 6, 7 - Intermediate testing

2 cells for the same product, Productivity – 3.3 units / operator / hour CN_ISB_Aug06

Cell 2 28

Case 1: Dual Brake Valve Improvement - Phase I

Major actions:

¾ Man-machine balancing ¾ Improvement in pace and rhythm of working CN_ISB_Aug06

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Case 1: Dual Brake Valve Improvement Phase-II

Introduced circuit work method Major improvement 1. Circuit work method introduced – to eliminate imbalance 2. Low cost automation 3. Multi process operation introduced 4. On the job training (OJT) to workmen CN_ISB_Aug06

Productivity improved by 500%

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Case 1: Dual Brake Valve

Process ratio Before – 2.6% Now

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– 35%

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Case 1: Results Effect of improvement No

Description

1 2 3 4 5 6 7

Number of cells Number of operators/ shift Output/ hours (Nos) Output/ hour/ opr./ cell Employee productivity Space Space productivity

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UOM Before After Nos Nos Nos Nos % Sq. Mts %

2 12 40 3.3 25

1 3 60 20 501% 18 39%

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Case 2: Lean machine 3500MM

™HIGH FRONTAGE ™MORE WALKING DISTANCE ™DIFFICULT MAINTENANCE ™MORE COMPLEX

BEFORE LEAN CONCEPT

3. Low Machine Frontage , Less Walking Distance ™ L0W FRONTAGE ™ LESS OPERATOR WALKING DISTANCE ™ EASY MAINTENANCE ™ LESS COMPLEXITY

60 0M M. CN_ISB_Aug06

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Case 2: Results

Sl. No Description UOM

Before

After Improvement

1 2 3

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Frontage Mtr Floor space Sq. M Cost Rs. Lacs

3.5 10.5 30

2.4 5.3 20

31% 50% 33%

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Case 3: Process Plant Year - 2000

Year - 2003

9m

6m BENEFITS

Sl No

Description

UOM

Before

After

Improvement

1

Frontage

m

9

6

33%

2

Floor area

m2

54

30

45%

3

Cost

Lacs

21

17

20%

4

Electrical load

kw

45

30

33%

5

Plant running cost(Excluding consumables)

Rs/hour

225

150

33%

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Case 4: Zero Changeover Horizontal Single model 1996

Vertical Single model 2000

2.5

1

No of spindle - 36 Hydraulic control

1

No of spindle - 36 Hydraulic control

BENEFITS Sl No Description

Single

Multi

m

2.5

1

1

60%

Floor space

m2

5

3.3

3.3

34%

4

Cost

m

19

18

14

26%

5

Tool change time min

54

54

3

94%

Modle

2

Frontage

3

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No of spindle - 2 CNC Control

UOM Horizontal Vertical Vertical Improvement Single

1

Vertical Multi model 2003

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Case 5: Low cost automation BEFORE

AFTER

Auto deburring setup

Manual deburring

SMS Reduction (Manual Vs Auto)

Time in Sec

40

30

30

15

20 10 0

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M anual

Auto

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Results Sales Vs Manpower Sales

412

1000

400 364

345 808

Number of Employees 751

290

663

644 621

229

235 199

750

302

Number of employees

Sales (Rs in crores)

875

618

625

200

500

180 00-01

01-02

02-03

03-04

04-05

'05-06

Year CN_ISB_Aug06

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Results Sales to Gross fixed assets UOM : times

4.5

4.1

4.0

No of times

3.6 3.4

3.5

3.0 2.7 2.4

2.5 2.2

2.0 00-01 CN_ISB_Aug06

01-02

02-03

Year

03-04

04-05

'05-06 39

Results Inventory turn

UOM : times

36

35

No of times

31

30 28

24

24 21

18 01-02

02-03

03-04

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04-05

'05-06 40

Results VAPCO UOM : times

7.0

No of times

6.0

6

5.0 4.4

4.0

3.7 3.2

3.2

01-02

02-03

3.0

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03-04

Year

04-05

'05-06 41

Results Suggestions / employee

UOM : Nos/employee

40

40 38

38

38

39

01-02

02-03

03-04

04-05

Nos

35

30

25

Year CN_ISB_Aug06

'05-06 42

Results Sales Vs Floor space Sales 15908

Sales (Rs in crores)

345

17000

412

364

15750

15450

Floor space

302 14710

290

14500

229

235

Floor Space (Sq. mt)

400

13250 12680

200

12680

180

12000 01-02

02-03

03-04

04-05

'05-06

Year CN_ISB_Aug06

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Where this has got us @ SCL ¾ Lowest cost producer of Air Compressors (for HCVs) in the world ¾ 100% on-time-delivery to customers for the LAST 3 years ¾ 100% improvement in employee productivity ¾ 75% improvement in inventory turns ¾ 40% improvement in space productivity

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Praise from the Expert

This summer in India I visited a remarkable air brakes plant belonging to the TVS Group that is one of the leanest operations I have ever seen outside of Toyota - Mr Jim Womack President and Founder Lean Enterprise Institute April 2002

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To summarise ¾ Lean Manufacturing is a broad system strategy, but successful implementation is in the details. ¾ Lean Manufacturing is an Organization-wide Change process. ¾ Successful Implementation requires commitment & involvement across all levels. ¾ Lean solutions are usually no cost / low cost. ¾ “World Class” companies are implementing the Principles of Lean Manufacturing.

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Advantage India

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Has the potential to become one of the top 5 economies by 2025 ….. USD billions 21,000

Real GDP * US

18,000 15,000 12,000

India would be the Third largest Economy (after China & US) by 2050 “Goldman Sachs Report”

9,000

6,000

Japan China

5,000 4,000 3,000 2,000

UK India @ 6%



Italy 1,000 0 2003

India @ 8%



S Korea

2005

2007

2009

2011

2013

2015

2017

2019

2021

2023

Mexico Canad a

2025

Source: ACMA

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Opportunity for India ¾

Largest diamond cutting and polishing centre

¾

Largest producer of milk, tea and pulses

¾

Largest livestock population for food processing

¾

2nd largest two wheeler manufacturers

¾

2nd largest jewelry market

¾

2nd largest in cotton textile trade

¾

3rd largest leather producer after China and Italy

¾

Weak in Manufacturing

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Miles to go…. ¾ India needs a Manufacturing Revolution ¾ Currently (largely) limited to Auto industry ¾ But this represents only 10% of Indian mfg.

¾ Revolution needs to now spread to others- textiles, machinery, durables, electronics, electricals……

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Roap for World Class Organisation World Class Organisation Lean Manufacturing

VALUE ADDING

Total Productive Maintenance

ZERO DEFECT

New Product Development

PERPETUTITY VISUAL FACTORY

Standardisation Daily & Policy Management Restructured Manufacturing System Quality System 5S Work Practice Total Employee Involvement CN_ISB_Aug06

CULTURE

PDCA OWNERSHIP ADHERENCE DISCIPLINE TEAM WORK 51

12 Steps to Lean Implementation STEPS Step 1 : Value stream mapping

Mapping the process flow for a product / product family

Step 2 : Balance to takt time Match the pace of production to the pace of sales

Step 3 : Single piece flow Layout changes Layout changes

MEASURES Process ratio in percentage

Ratio between cell bottleneck time and takt time

1 WIP at each stage

Step 4 : Spider man system

Pitch 2 hours

Step 5 : Process stability Quantity

Variation +/- 5%

Loss elimination through TPM

elimination Step 6 : ProcessLoss stability Qualitythrough TPM Step 7 : Pull system Paced withdrawal

Variation +/- 5% Percentage of missed cards per shift

Step 8 : SMED

1 Takt

Step 9 : Poka yoke

Rejection

Step 10 : Operator ownership Step 11 : Production levelling Step 12 : SOP CN_ISB_Aug06

Step 3 status Every part every shipping window QP process (QP1, QP2 and QP3) 52

Value Stream Mapping Month/weekly/daily plan Production Control Supplier

Supplier SCL-Foundry

ily Da r de

51 Sec.

Reduce spider man Pitch to 30 minutes.

Demand/month 30000

Combine operation of flap assembly and body greasing UB m/c

Inspection stores

I 24

C/T=85s FIFO CO=900 Uptime=85.4% I 2 shifts 24

1 C/T=87s CO=900 Uptime=85% 2 shifts

902s

C/T=14s CO=0 Uptime=100% 2 shifts

8100s

I 16

Assembly 2 12

Value added Time Production lead time

Automation of four bolt tightening

=

10236s 29575s

= 34.6%

Introduce low cost automation in assembly 1 and 2

0.015 days 130s

I 24

Shipping Packing 1(shared)

C/T=60s C/T=51.42s C/T=240s CO=0 CO=0 CO=0 Uptime=100% Uptime=95% Uptime=95% 2 shifts 2 shifts 2 shifts Rejection 0.2% Reduce work content to balance takt time

Process Ratio

0.028 day

0.132 day 164s

5

1

I 125

Assembly 1

FIFO

Introduce Conveyor for Assembly 2

Introduce crow foot arrangement for mounting bolt tightening

.017 day

OX OX

Ultrasonic Cleaning

C/T=300s CO=0 Uptime=100% 2 shifts

Rejection 4%

Date - 26.12. 2005 .034 day 300s CN_ISB_Aug06

48 C/T=45s CO=0 Uptime=100% 2 shifts

LB m/c C/T=300s CO=0 Uptime=100% 2 shifts

Leak check FIFO Plating & deburr 2(shared) I 1

1X daily

1020 nos /day

Introduce Rabbit chase in Assembly 1& 2 for single piece flow

1

Customer

Takt time

Or

Milk run

Introduce supermarket Flap assembly automation

4X Daily

Marketing

Monthly/Weekly Daily Fax Monthly schedule

0.09 days 100s

300 s

240s 53

Miles to go…. ¾ For too long, we have seen our national advantage through the lens of wage cost only….

¾ Time to exploit others • Technology & Processes • Human competence • Innovativeness

Time to build on our strengths !! CN_ISB_Aug06

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“It isn’t enough to be going fast in the right direction. If you’re not going fast enough, you can still get run over.”

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Thank you

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