Lean Manufacturing for Competitive Advantage

Description
Lean Manufacturing for Competitive Advantage

Lean Manufacturing for Competitive Advantage

C.Narasimhan Sundaram-Clayton Limited

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Presentation overview

Lean : A competitive weapon What is lean? Experience from SCL 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
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Business Model: Dell
Cost advantage:
Supply Chain Manufacturing Operations Direct Model Information Flow

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

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

2-3 % points
• Lean cost structure • Leveraged partner model • Asset efficiency

5-10 % points
• Direct across segments • No retail, distribution mark-up • Enables cross sell opportunities • Real time feedback on price/promotions • Act on market changes within hours • Maximize profits

Strong information flow Direct access to customers Lean operations, supply chain
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Southwest: One Kind of Airplane

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Walkman re-invented

Product obsession

Consumer obsession

20th Century Walkman 20 songs
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21st Century iPod 20,000 songs
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Observes: People sharing music Insight : Young people love unlimited access to music Barriers : Storage devices, Cost



October 23, 2001

i-

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
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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!!
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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
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Banking

Banks

ATM’s in cities

Low cost technology for rural India by TeNet Group
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Key Success Factors

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

LEAN – The only way to go!!
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What is Lean?

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Many Names, but the same Concept
Toyota Production 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 Pull system

Synchronous Flow Manufacturing End-Lining Operations Continuous Flow Manufacturing
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LEAN defined…

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

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

Nothing / Nobody is perfect. Even NATURE!!!
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Why Lean ?
Typically 95% of Total Lead Time is Non Value Adding !!
Total Lead Time NVA Time VA Time

Set-up Startup time time

Others Rework Machine time downtime
( batch production, inventory )

Waiting for material time

Focus is on reducing NVA Time to improve overall efficiency
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Company-wide Lean ?
Asset utilization Manpower utilization Low cost automation Balance to TAKT time working Lean inventory

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Benefits of Lean

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.

Increase Profits
Reduce Costs and Increase Sales.

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?
From 1998 onwards our customers demanded - Daily supplies with zero defect - Supplies in matched vehicle sets - Continuous price reduction To meet the above requirement, SCL needed to - Respond in short lead times - With less inventory and investment - Eliminate waste and reduce cost Since lean manufacturing addresses above requirements, SCL decided to implement Lean Manufacturing in the production system
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Our objective
To reduce lead time from customer order to delivery of products To meet the customers changing requirement To reduce inventory by implementing pull system and Just-in-time supplies To achieve zero defect To improve productivity

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Case 1: Dual Brake Valve
Table 6 Table 7

Cell 1

Table 1

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
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Cell 2
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Case 1: Dual Brake Valve
Improvement - Phase I

Major actions:

Man-machine balancing Improvement in pace and rhythm of working
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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
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Productivity improved by 500%

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Case 1: Dual Brake Valve

Process ratio Before – 2.6% Now – 35%

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Case 1: Results
Effect of improvement
No 1 2 3 4 5 6 7 Description Number of cells Number of operators/ shift Output/ hours (Nos) Output/ hour/ opr./ cell Employee productivity Space Space productivity 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.
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Case 2: Results

Sl. No Description UOM

Before

After Improvement

1 2 3

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
BENEFITS
Sl No 1 2 3 4 5 CN_ISB_Aug06 Description Frontage Floor area Cost Electrical load Plant running cost(Excluding consumables) UOM m m2 Lacs kw Rs/hour Before 9 54 21 45 225

6m

After 6 30 17 30 150

Improvement 33% 45% 20% 33% 33%

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Case 4: Zero Changeover
Horizontal Single model 1996 Vertical Single model 2000 Vertical Multi model 2003

2.5
No of spindle - 36 Hydraulic control

1
No of spindle - 36 Hydraulic control CNC Control

1
No of spindle - 2

BENEFITS
Sl No Description 1 2 3 4 5 Modle Frontage Floor space Cost m m2 m Single 2.5 5 19 54

UOM Horizontal Vertical Vertical Improvement
Single 1 3.3 18 54 Multi 1 3.3 14 3

60% 34% 26% 94%
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Tool change time min

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Case 5: Low cost automation
BEFORE AFTER

Manual deburring
40

Auto deburring setup
SMS Reduction (Manual Vs Auto)

30 15

Time in Sec

30 20 10 0

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M anual

Auto

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Results
Sales Vs Manpower
Sales
400
364 412

1000

875

Sales (Rs in crores)

808

Number of Employees
751 663 229

290

302 644 621 618

750

235
199 200

625

180 00-01
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500 01-02 02-03 03-04 04-05 '05-06
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Year

Number of employees

345

Results
Sales to Gross fixed assets
4.5

UOM : times
4.1

4.0
3.6

No of times

3.5

3.4

3.0
2.7

2.5
2.2

2.4

2.0 00-01
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01-02

02-03

Year

03-04

04-05

'05-06
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Results
Inventory turn
36

UOM : times
35

31

No of times

30
28

24

24
21

18 01-02
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02-03

03-04

04-05

'05-06
40

Year

Results
VAPCO
7.0

UOM : times

6.0

6

No of times

5.0
4.4

4.0

3.7 3.2 3.2

3.0 01-02
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02-03

03-04

Year

04-05

'05-06
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Results
Suggestions / employee
40
38 38 38 39

UOM : Nos/employee
40

35

Nos
30 25 01-02
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02-03

03-04

04-05

'05-06
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Year

Results
Sales Vs Floor space
400

Sales
15908

412

17000

15450 302 14710

Sales (Rs in crores)

Floor space
290

14500

235
200

229 12680 12680

13250

180 01-02 02-03 03-04 04-05 '05-06

12000

Year
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Floor Space (Sq. mt)
43

345

364

15750

Where this has got us @ SCL
Lowest cost producer of Air Compressors (for HCVs) in the world 100% on-time-delivery to customers for the LAST 3 years 100% improvement in employee productivity 75% improvement in inventory turns 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
Lean Manufacturing is a broad system strategy, but successful implementation is in the details. Lean Manufacturing is an Organization-wide Change process. Successful Implementation requires commitment & involvement across all levels. Lean solutions are usually no cost / low cost. “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 18,000 15,000 12,000 9,000

Real GDP *
US

6,000 5,000 4,000 3,000 2,000

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

Japan China

Germany Italy France S Korea

India @ 8% UK India @ 6% Mexico Canad a

1,000 0 2003
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2005

2007

2009

2011

2013

2015

2017

2019

2021

2023

2025

Source: ACMA

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Opportunity for India
Largest diamond cutting and polishing centre Largest producer of milk, tea and pulses Largest livestock population for food processing 2nd largest two wheeler manufacturers 2nd largest jewelry market 2nd largest in cotton textile trade 3rd largest leather producer after China and Italy Weak in Manufacturing
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Miles to go….
India needs a Manufacturing Revolution Currently (largely) limited to Auto industry But this represents only 10% of Indian mfg.

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

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Roadmap for World Class Organisation
World Class Organisation Lean Manufacturing Total Productive Maintenance New Product Development Standardisation Daily & Policy Management Restructured Manufacturing System Quality System 5S Work Practice Total Employee Involvement
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CULTURE

VALUE ADDING ZERO DEFECT PERPETUTITY VISUAL FACTORY PDCA OWNERSHIP ADHERENCE DISCIPLINE TEAM WORK
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12 Steps to Lean Implementation
STEPS Step 1 : Value stream mapping MEASURES Process ratio in percentage
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

Ratio between cell bottleneck time and takt time

Step 3 : Single piece flow Layout changes Layout changes Step 4 : Spider man system Step 5 : Process stability Quantity
Loss elimination through TPM

1 WIP at each stage Pitch 2 hours Variation +/- 5% Variation +/- 5% Percentage of missed cards per shift 1 Takt Rejection Step 3 status Every part every shipping window QP process (QP1, QP2 and QP3) 52

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

Step 8 : SMED Step 9 : Poka yoke Step 10 : Operator ownership Step 11 : Production levelling Step 12 : SOP
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Value Stream Mapping
Month/weekly/daily plan Production Control Supplier
Supplier SCL-Foundry

Marketing

Monthly/Weekly Daily Fax Monthly schedule

Customer

Introduce supermarket Flap assembly automation

ily Da Or

Takt time 51 Sec.
Demand/month 30000 1020 nos /day
OX OX

Milk run

4X Daily

r de

Reduce spider man Pitch to 30 minutes.

Combine operation of flap assembly and body greasing UB m/c 1 C/T=85s FIFO CO=900 Uptime=85.4% I 2 shifts 24 LB m/c C/T=300s CO=0 Uptime=100% 2 shifts 1 C/T=87s CO=900 Uptime=85% 2 shifts Introduce Rabbit chase in Assembly 1& 2 for single piece flow Leak check FIFO Plating & deburr 2(shared) I 1 48 C/T=45s CO=0 Uptime=100% 2 shifts Rejection 4% Ultrasonic Cleaning I 125 1 C/T=14s CO=0 Uptime=100% 2 shifts Introduce Conveyor for Assembly 2

1X daily

Inspection stores

FIFO

Assembly 1 5

Assembly 2 12 I 24

I 24

Shipping Packing 1(shared)

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

I 16

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 Value added Time Production lead time = 10236s 29575s = 34.6%

Date - 26.12. 2005
.034 day 300s CN_ISB_Aug06 .017 day 902s

Introduce crow foot arrangement for mounting bolt tightening

Process Ratio
Automation of four bolt tightening 0.028 day 0.015 days 130s

Introduce low cost automation in assembly 1 and 2 0.09 days 100s 300 s 240s 53

0.132 day 164s 8100s

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

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

Time to build on our strengths !!
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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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