Description
The documentation describing on Operations management covers topics like Contrasting Mass Production and World Class Manufacturing, Salient features of a traditional and a World Class Manufacturing, Characteristics of World Class Manufacturing, Three primary challenges, Implementing World
World class manufacturing
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OPERATION MANAGEMENT PROJECT World class manufacturing
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Index Sr. No. Topic 1. Introduction 2. Contrasting Mass Production and World Class 3. 4. 5. 6. 7. 8. 9. Manufacturing Salient features of a traditional and a World Class Manufacturing Characteristics of World Class Manufacturing Three primary challenges Implementing World Class Manufacturing: Tools to Measure and Record Progress Hierarchy of levels to lead to World Class Operations Information Technology helps in World Class Manufacturing Cases ---- Henkel ---- BMW ---- Honda ---- Volvo ---- Wipro Page No. 4 5 6 7 8 9 10 16 18
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INTRODUCTION World Class Manufacturers are those that demonstrate industry best practice. To achieve this, companies should attempt to be best in the field at each of the competitive priorities (quality, price, delivery speed, delivery reliability, flexibility and innovation). Organisations should therefore aim to maximise performance in these areas in order to maximise competitiveness. However, as resources are unlikely to allow improvement in all areas, organisations should concentrate on maintaining performance in 'qualifying' factors and improving 'competitive edge' factors World Class Manufacturing is a process-driven approach where implementations usually involve the following philosophies and techniques: • • • • • • • • • • • • • • Make-to-order Streamlined flow Small lot sizes Families of parts Doing it right the first time Cellular manufacturing Total preventive maintenance Quick changeover Zero Defects Just-in-time Variability reduction High employee involvement Cross functional teams Multi-skilled employees
Companies engaging in World Class Manufacturing strategies focus on improving operations, strive to eliminate waste and create lean organizations. This often results in higher productivity. But these companies also focus on speed of total throughput from order capture through delivery setting new standards for delivery without the heavy dependence on inventory. Sequential methods of performing work are being replaced with concurrent methods to compress time, and functional and hierarchical divisions of duties are being replaced by team-driven activities. 4
Contrasting Mass Production and World Class Manufacturing
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Salient features of a traditional and a World class manufacturing Attribute Organisation mind set Traditional Manufacturer A mind set organisational performance Organisation Capabilities World Class Manufacturer for A mind set for questioning the only to reset again (journey in the continuous improvement
standards as a basis for standards and setting them
path). Organised for building Organised for building certain products for specified organisational capabilities and markets mind set that could adopt to any future requirements in
Organisation Structure
terms of markets and products Logical building blocks Teams based on the business are the functional areas processes (that cut across and unify several functional areas)
are the building blocks Organisation performance Performance measured Performance measured based measurement based labour on and internal on customer driven parameters such price as such as quality, and on time of machine delivery parameters utilisation, meeting Cost
purchased items, and certain decreasing costs standards Cost is a function of Ever the Quality, (Enterprise reduction trade considerations
off (customer driven); Controls with causes not costs for cost Delivery, reduction driven);
Quick Response, etc. Controls cost for cost
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Characteristics of World class manufacturing • JIT (Just in time): The first is what is known as Just in Time or Lean Manufacturing, the step by step elimination of waste. Waste in this sense is defined as any activity that adds cost but not value to the end product such as excess production, stock, idle work in progress, unnecessary movement and scrap. • TQM (Total Quality management): The second is total quality, a culture of intolerance to defects both in the processes and also information such as bills of material and stock records. Total quality is often these days called Six Sigma which uses total quality and lean manufacturing techniques to attempt to reduce rejects to 3.4 per million parts produced. • Total Preventative Maintenance (TPM): The final principle is the principle of total preventative maintenance where, whenever practical, a preventative maintenance programme means that unplanned stoppages due to equipment failure are minimised. • Employee involvement: Utilization of human resource to the great extent.
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Three primary challenges • Develop the awareness of the need to make the transition to World Class Manufacturing • Develop the ability to search for relevant tools and to apply them effectively
•
Monitor progress so that an improvement programme can be systematically utilised.
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Implementing World Class Manufacturing: Tools to Measure and Record Progress
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HIERARCHY OF LEVELS TO LEAD TO WORLD CLASS OPERATIONS
Peter Stonebreaker and Keong Leong presented a hierarchy of steps, appearing as five levels, that lead to world-class operations (see Figure 1). This series of steps will be used to describe the characteristics of world-class manufacturers. LEVEL ONE: BUSINESS AND OPERATIONS STRATEGY All world-class manufacturers have an explicit, formal manufacturing mission. Within this mission is the operating goal to become world class. They use competitive information to establish organizational goals and objectives, which they communicate to all members of the enterprise. They regularly assess the appropriateness of these objectives to attaining and maintaining world-class status. World-class manufacturing requires an overall willingness to establish closer connections with everyone, from suppliers to workers. It requires an unwavering commitment to self-analysis and improvement. It requires an aggressive approach to technology that can turn visionary strategies into reality. All of these must be reflected in the firm's business and operations strategy if world-class status is to be attained. LEVEL TWO: ORGANIZATION DESIGN, HUMAN RESOURCES,
TECHNOLOGY, AND PERFORMANCE MEASUREMENT The following sections discuss how organization design, human resources, technology, and performance measurement factor into an organization's effort to become a world-class manufacturer. ORGANIZATION DESIGN. World-class manufacturers integrate all elements of the manufacturing system in such a way that the needs and wants of its customers are satisfied in an effective, timely manner. This requires the commitment and the expenditure of efforts and resources by all elements within the system to ensure their proper integration. This commitment extends to outside elements as well, as the world-class manufacturer encourages and motivates its suppliers and vendors to become co-equals with the other elements of the manufacturing system. 10
World-class
manufacturers
work
to
eliminate
organizational
barriers
to
communication and to organize the firm in such a way that the core values needed to reach world-class status take precedence. In fact, most companies that have succeeded in implementing many of the world-class tools—such as just-in-time production (JIT), total quality management (TQM), manufacturing resource planning (MRP II) and total productive maintenance (TPM)—already had the core values well in place. Companies that are already world class are able to quickly absorb other world-class manufacturing concepts as they are developed and publicized. HUMAN RESOURCES. World-class manufacturers recognize that employee involvement and empowerment are critical to achieving continuous improvement in all elements of the manufacturing system. The continuity of organizational development and renewal comes primarily through the involvement of the employee. World-class companies invest comparatively more in their relationships with their workers, providing significantly more training than their competitors. An Industry Week survey found that firms approaching world-class status were three to five times more likely to report "highly effective" human-resources programs than other firms. Some analysts note that combining lean manufacturing principles with employee participation can help firms become world-class manufacturers. TECHNOLOGY. A great deal of emphasis is placed on technology, equipment, and processes by those trying to attain world-class status. World-class manufacturers view technology as a strategic tool for achieving and maintaining their world-class status. A high priority is placed on the discovery, development, and timely implementation of the most relevant technology available and the identification and support of those who can communicate and implement this technology. The most highly competitive firms have made significantly more progress than others in implementing TQM, reengineering, simultaneous engineering, group technology, computer-assisted manufacturing (CAM), material resources planning (MRP), and the use of local area networks (LANs).
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PERFORMANCE MEASUREMENT. World-class manufacturers recognize the importance of measurement in defining the goals and performance expectations for their organization. They routinely adopt or develop the appropriate performance measurements needed to interpret and quantitatively describe the criteria used to measure the effectiveness of their manufacturing system and its interrelated components. Use of the proper measurements allows world-class manufacturers to assess their performance against themselves (internal benchmarking), their competitors (competitive benchmarking), and against other world-class manufacturing firms that are not competitors (generic and functional benchmarking). World-class status is achieved through a relentless commitment to continuous improvement, which cannot be achieved without measurement. LEVEL THREE: INFORMATION SYSTEMS, MANAGEMENT DIRECTION, AND OPERATIONS CAPABILITIES The following sections discuss how information systems, management direction, and operations capabilities factor into an organization's effort to become a world-class manufacturer. INFORMATION SYSTEMS. World-class manufacturers require world-class information systems for collecting, processing, and disseminating data and for providing the feedback mechanism that is necessary for meeting their objectives. Information systems are fully integrated into the business processes of firms that adhere to continuous improvement and TQM strategies. Capturing and analyzing customer feedback and designing, manufacturing, and delivering world-class quality products and services is rooted in superior information systems. Richard Schonberger states that functions within a world-class firm all have a common language and signaling system. World-class firms embrace computerized maintenance management and computer-integrated manufacturing. Additionally, organizational commitment to continuous improvement is supported by the strategic use of information systems.
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MANAGEMENT DIRECTION. Management is responsible for directing the manufacturing organization's journey to world-class status and for creating an organizational culture committed to all that is necessary for achieving continuous improvement. Corporate culture and values are the foundation for superior manufacturing, which in turn reflects and is reflected by the caliber of corporate management. This implies that personal commitment, involvement, and a sense of direction by management are critical to the success of world-class firms. The manufacturing excellence needed for world-class status is nurtured by direction from superior management, which must penetrate the manufacturing function, viewing and managing it as an integral, indivisible part of the firm. It cannot tolerate mediocrity or even average manufacturing performance. Management must seek to describe and understand the interdependency of the multiple elements of their manufacturing system, to discover new relationships, to explore the consequences of alternative decisions, and communicate unambiguously within the organization and with the firm's customers and suppliers. Stimulating and accommodating continuous change forces management to experiment and assess outcomes. They must be able to translate knowledge acquired in this way into some sort of direction, framework, or model that leads to improved operational decision making, while incorporating a learning process into their fundamental operating philosophy. The objective of world-class status tests management's ability to learn, adapt, and innovate faster in the face of an intensely competitive global market. OPERATIONS CAPABILITIES. World-class manufacturers are concerned with whether their operations systems have the ability to meet design specifications, rather than with evaluating the quality and quantity of products after the fact. In order to attain world-class status, the manufacturing firm has to be given the proper resources. With these resources, the firm must have the capability to produce the right quantity, the right quality, at the right time (often just in time), and at the right price. The proper technology must be on hand or readily attainable. In addition, the firm must have the necessary 13
managerial capabilities to compete successfully on a global basis. For many firms, the necessary operational capability involves the ability to provide customers with a large degree of flexibility of either product or volume, or exceptional response time to orders, changes in orders, or new product development. Beyond the firm itself, operations capability implies a superior interactive relationship with all vendors and suppliers. World-class firms have extensively implemented JIT, are heavily involved with programs that contractually commit suppliers to annual cost cuts, and are making efforts to involve the supplier early in the new product development process. LEVEL FOUR: QUALITY World-class manufacturers place an emphasis on quality. Firms in this category are usually in an advanced state of TQM implementation, continually seeking to enhance their business. All quality costs (prevention costs, appraisal costs, and cost of defects —both internal and external) are evaluated and held to the lowest reasonable sum. "Zero defects" is the goal of the world-class manufacturer. In order to achieve zero defects, the world-class firm is educated in and has fully implemented statistical quality control (SQC), sometimes called statistical process control (SPC) or quality at the source. Hence, quality is maintained and elevated through quality planning, quality control, and quality improvement. In conjunction with this effort to improve processes and products, world-class firms utilize an activity called benchmarking. This involves comparing the firm's performance, either overall or in a functional area, with that of other world-class organizations. The use of TQM techniques, according to some analysts, is the most striking differentiator between world-class and non-worldclass firms. Quality has also been found to be the most important competitive differentiator in the eyes of the customer. LEVEL FIVE: CUSTOMER SERVICE World-class manufacturers instill within their organization and constantly reinforce the idea that all who are a part of the organization must know their customers and must seek to satisfy the wants and needs of not only the customers, but also all other stakeholders. The goal of satisfaction is pursued in regards to the product, order processing, delivery, quick response to changes, and service after the sale. After all, 14
the goal of continuous improvement is to improve processes and add value to products and services in such a way as to increase customer satisfaction and loyalty and ensure long-term profitability. LEVEL SIX: WORLD-CLASS MANUFACTURING While world-class manufacturing may be difficult for manufacturers to define, many say they know it when they see it. Whatever it is, it must be from the customer's vantage point. An Industry Week survey found that, among factories approaching world-class status, a higher percentage were likely to belong to public companies; have corporate parents with revenues greater than $1 billion; participate in an automotive industry value chain; and employ 250 or more people at the location. These firms reported large cost reductions over the previous three years, as well as increased revenues, higher capacity utilization, higher sales per employee, and returns on invested capital (ROIC) that exceeded that of other manufacturers. Daniel F. Baldwin states that truly world-class firms are always examining their business processes and continuously seeking solutions to improve in key areas, such as lead time reduction, cost cutting, exceeding customer expectations, streamlining processes, shortening time to market for new products, and managing the global operation. World-class manufacturers are the ones that possess the knowledge and technology to provide products and services of continually improving quality. It is what separates practitioners of the new paradigm from the industrialist dinosaurs
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INFORMATION TECHNOLOGY HELPS IN WORLD CLASS MANUFACTURING The success of Indian manufacturing in meeting global competition will depend on its speed to move itself from a protected domestic to a world-class global manufacturing status. A survey conducted for the purpose of determining world-class status of Indian manufacturing companies and identifies important issues that need to be addressed in order to be a world-class manufacturer. The analysis compares the manufacturing intent to be an agile manufacturer and their information technology (IT) infrastructure in terms of scope of use, extent of use and integration of IT-based systems. The findings of the analysis are somewhat alarming as they show that most of the companies have fragmented (rather than integrated) information management systems which may not enable them to deliver superior value to their customers and lead them to world-class status. They must, therefore, align their IT initiatives towards facilitating agile manufacturing rather than introducing IT to merely automate their conventional operations.
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Eg :Toyota has succeeded in reducing new vehicle development time from four years to between one and two years partly due to heavy investment in CAD tools and electronic parts list systems. For instance in sales we can see that some sales companies are successful at selling new cars while others are good at selling used cars or service. We can also see the difference in profitability between these companies. In the area of logistics we can see one department over here and another over there processing similar data, and that these departments may need to be reorganized and the transactions streamlined. These departments have goals such as “cut lead time to 1/3rd” and “cut prices in half” that are virtually impossible to achieve through our traditional way of doing business. In order to achieve these things we need to approach information technology implementation from a cross-departmental approach. Despite what those in the business will tell you, information technology is not the solution to problems of how products sell or how we move materials from place to place. IT is a tool and an enabler to a world class operating systems, if you've already got one. If you don't work on that first. When information made visible is used to do kaizen according to the proper thinking (TPS philosophy) you can achieve results that traditional thinking could not.
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CASES
'World class' down on the farm: The Peterson Ranch in the Sacramento River Valley has successfully applied worldclass manufacturing concepts and techniques to the farming environment. The characteristics of world-class manufacturing include enhanced throughput, an emphasis on quality, and the involvement of employees. Peterson Ranch management has reduced investment and increased return on investment by minimizing land ownership. The ranch uses a normal, process-bases system of cost accounting focused on producing information for evaluating productivity evaluation, costing, and strategic decision making. Peterson Ranch has implemented vertical integration of operating activities to manage risk. The major steps in nut farming include raising the crop, harvesting, and hulling. The ranch minimizes the highest risk part of the process, raising the crop, by making the harvest crews responsible for harvesting at the appropriate time. Henkel- Case of flexible manufacturing Henkel CAC is in the flexible laminating adhesives business and has offered solventbased adhesives since 1985 and solvent-free adhesives since 2002. According to Manikkam Subramaniam, AGM-IT, formidable challenges await tomorrow's manufacturing industry. He feels next generation factories must be able to manufacture many different products in small quantities, customize them according to strict client requirements or market demands, and deliver them quickly-all without major factory reconfigurations. Looking at what Henkel has done, he recalled, 'Earlier 18
solvent adhesives were manufactured wherein the water increases along with adhesives. Presently, we manufacture solvent-less adhesives, which are used for lamination packaging industry. This has reduced the drying process from the eight to ten hours previously. Now the product can be used immediately. Similarly, we manufacture lot of products, which suit customer requirement. The challenge lies in fulfilling novel ideas of customers and delivering them quality products.’? Henkel CAC is exploring new ways of organizing factories. For one, they use distributed layouts, where they create products of different quality and quantity at dispersed manufacturing workstations, and link those manufacturing cells. Each cell manufactures a specific brand and when production ends, leaves the workstations free to join new or existing cells. This model promotes an efficient flow of materials, regardless of the product manufacturing sequence. The company is also looking at ways to make the process quick and economical. BMW- Case of simulating the assembly line Churning out top- class BMW series X5, X3, Z4, Mini and Rolls Royce models for a cream clientele that demands personalization and class. Using 3 D simulations and computer modeling of a virtual factory, BMW engineers successfully simulate the entire flow of production and present production conditions 'very close to subsequent reality.' BMW admits that 80% of all the processes are currently verified and confirmed through this in-house virtual reality set-up, long before the first production procedures even begin. In order to enable the company to respond flexibly and effectively to fluctuations in the market and individual customer needs, a virtual production network is used to evaluate changes in the mechanical parts, besides going a step further and integrating it with customer feedback processes. BMW has also outsourced the production of certain components to BMW's own facilities in places like Graz in Austria. Collaborating with the manufacturing processes of these 'offsite' or 'imported' components demands a certain dedicated workforce which monitors, collaborates, and places requirement for certain essential components in the assembly line. But more importantly, constant online collaboration 19
between the two important components of the Product Development Process ? Development and Production, is also ensured by BMW worldwide. The first BMW that came out of its Chennai plant was unveiled in February 2007. HONDA – Becoming World Class Honda, a manufacturer of motorcycles, automobiles, and power products Organisation mindset Kaizen • • • • • Saitama – Sayama – Mfg Machinery Factory Plants – HUM, gear-grinding machine, BE HRB600 robot CAD/ CAM systems and NC processing system World’s-first—Honda’s original “Duo Dyna Air Cooling”(DDAC) technology
Organisation Capabilities Adopt to any future requirements • • • Growing numbers of automobile parts – effect on the production of motorcycles – dedicated plant for the production of cars To ensure ample supplies of low-cost, high-quality parts, the company began selling and leasing machines to its associate suppliers Anticipated engineering problems to be settled prior to mass production – creation of prototypes, miniature line inside the plant to conduct trial mass production “Honda Manufacturing Machinery was established as an independent company so that it could create new processing methods based on free thinking and develop useful machinery incorporating those methods,” said Kiyoshi Kawashima, then the senior MD of Honda Motor
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Organisation Structure Unify several functional areas Consolidated preproduction functions with regard to production engineering – Honda Engineering Co.,Ltd.(EG) – Anticipate changes – Develop appropriate production technologies and methods for new product development – Provide the production departments with highly competitive and timely methods – Maintain sophisticated production methods Organisation performance measurement Customer driven parameters • • • • • Expansion to new markets New designs Increased manufacturing capacity Reduced costs Increased automation Cost Customer driven • “One-chuck, multidirectional simultaneous processing” – could perform many steps at once, four-direction horizontal turning machine and five-direction drum-turning machine – for mass production • • Technological partnership with the Swiss company to manufacture ten units Contour-to-numerics conversion => development of CAD/CAM systems and the NC processing systems .
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Volvo Truck Production Volvo Truck Production, an Australian Company, is the manufacturer of Volvo Trucks, Mack Trucks, Renault Trucks, Volvo Buses, Volvo Construction Equipment, Volvo Penta, Volvo Aero and Volvo Financial Services. They manufacture more than 80,000 trucks annually. The company is known for Safety, Quality and Environment. The company has its production based in different locations, one of them is Wacol Factory in Australia. Wacol Factory produces more than 12 trucks a day. The trucks are produced according to the customers’ demand and not made to stock. The normal customer order to delivery used to be around three to six months. In the year 2001, production was almost doubled when Mack production also moved into the Wacol factory and all the functions within the Mack and Volvo organization were merged together. The board found the inventory levels and material delivery system as the main problems because of the amount of shortages and the time spent in the production for parts. In order to implement lean, all the production teams has to work in the same way regarding team meetings, continuous improvements, missing parts, ordering parts etc. This will help in the implementation of lean production with material distribution, pull systems, multifunctional teams and continuous improvements. Therefore the areas of concentration were elimination of waste, pull instead of push, multifunctional teams, decentralized responsibilities and continuous improvement. Decentralized Pull System In order to reduce inventories, the factory adopted pull system instead of push system. The manufacturing parts are divided into three categories : • • • small (bolts, nuts) bulky (tanks, tyres) and ordinary parts
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Kanban : It is a pull method used in lean manufacturing which ensures that material and products are pulled though the factory when they are demanded. Kanban is the Japanese word for card. It is a device / card used by a customer workstation to send a signal to the preceding supplier station that it needs more parts. It is generally used for the ordinary parts. Kanban system helps to : – – Reduce inventories Increase control over the internal material handling
Kanban Loop
1.
The Trolley Several factors are considered when the kanban trolleys are designed. Care is taken that all types of parts must fit in the trolley.
2.
The Kanban card The cards are made with ordinary paper that is plastic laminated and contain information about number of parts authorized, trolley capacity, station number, card number etc.
3.
The Station There are clearly marked areas where the Kanban trolleys should be stored, to that the material handler knows exactly where to deliver them. The station 23
number are assigned at the middle of each station. When the assembly worker picks the last part from a trolley, he puts the corresponding card in a collection box, which is easy to find and access for the material handler. 4. Drop off area The material handler drops off the empty trolleys and puts the collected Kaban cards on a schedule board. The cards are scheduled to use FIFO, since it minimizes both lead time variability and maximum lead time. It is important that the arrival of new cards is relatively smooth in order to avoid long replenishment time. 5. Replenishment (replacement) The warehouse worker picks up the Kanban card that is first in the que on the schedule board and the corresponding trolley. He then enters the station number written on the card on the computer and receives information on what to pick into the trolley. The possibility to pick parts into kits are considered, since there are a plenty of different parts that has to be delivered to each workstation. The kits are designed so that the production workers easily can find the right part. 6. Pick up area When the warehouse worker has refilled the trolley, he puts it at the pick-up area with the card attached. The material handler picks it up and delivers it to the right station together with all the other trolleys that are ready to be delivered
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Wipro: World Class Manufacturing (softwares) World Class Manufacturers are those that demonstrate industry best practice. To achieve this, companies attempt to be best in the field at each of the competitive priorities (quality, price, delivery speed, delivery reliability, flexibility and innovation). Organisations therefore aim to maximise performance in these areas in order to maximise competitiveness. However, as resources are unlikely to allow improvement in all areas, organisations concentrate on maintaining performance in 'qualifying' factors and improving 'competitive edge' factors. The priorities change over time and are therefore reviewed. Companies engaging in World Class Manufacturing strategies focus on improving operations, strive to eliminate waste and create lean organizations. This often results in higher productivity. But these companies also focus on speed of total throughput from order capture through delivery setting new standards for delivery without the heavy dependence on inventory. Sequential methods of performing work are being replaced with concurrent methods to compress time, and functional and hierarchical divisions of duties are being replaced by team-driven activities. How Wipro gained efficiency Wipro first launched its lean initiative in 2004 with a core team of managers. The small group visited lean manufacturing companies and discussed the concept's basic principles before each manager adopted a project in order to implement this new approach to software services. Of the projects, 8 out of 10 showed greater than 10 percent improvement in efficiency. With those results in hand, the core team decided to roll out the approach across the firm. By the end of 2006, Wipro had 603 lean projects completed or in the works (the company typically had 1,100 projects under way at any one time). Organization Mindset: Wipro followed a method of controlled experimentation. They started with a small group and recruited other people from there. The use of lean principles affected the workflow at Wipro. The concept of "kaizen," or continuous improvement, for example, resulted in a more iterative approach to software
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development projects versus a sequential, "waterfall" method in which each step of the process is completed in turn by a separate worker. 5S implementation: 5S, abbreviated from the Japanese words Seiri, Seiton, Seison, Seiketsu, and Shitsuke, are simple but effective methods to organize the workplace. The 5S, translated into English are: housekeeping, workplace organization, cleanup, keep cleanliness, and discipline. They can be defined as follows:
•
Housekeeping. Separate needed items from unneeded items. Keep only what is immediately necessary item on the shop floor. Workplace Organization. Organize the workplace so that needed items can be easily and quickly accessed. A place for everything and everything in its place. Cleanup. Sweeping, washing, and cleaning everything around working area immediately. Cleanliness. Keep everything clean for a constant state of readiness. Discipline. Everyone understands, obeys, and practices the rules when in the plant.
•
•
• •
Implementing 5S methods in the plant helped the company to reduce waste hidden in the plant, improve the levels of quality and safety, reduce the lead time and cost, and thus, increase company's profit. The potential benefits of 5S can be summarized by five English S or PQCDS: Five English S:
• • • • •
Sales - Increase sales (market share). Savings - Save costs. Safety - Provide a safety working environment. Standardization - Standardize the operating procedure. Satisfaction - Employees and customers satisfaction. P - Increase productivity. Q - Improve product quality. C - Reduce manufacturing costs. D - Ensure on-time delivery. S - Provide a safety working environment. 26
PQCDS:
• • • • •
Organization Structure: By sharing mistakes across the process, the customer and project team members benefit individually and collectively from increased opportunities to learn from their errors; the project also moves along more quickly because bugs are discovered in the system earlier in the development process. Wipro also uses tools specific to the software development process based on lean principles. The DSM (design structure matrix), for example, defines connections and pathways for a project's workflow and suggests an order of tasks. A complementary tool, the SCE (system complexity estimator), ranks a software module based on its complexity and compares its actual architecture with its ideal (simplest) architecture in order to learn where a team might need more or fewer skilled members. While most organizations struggle with implementing a new system, fighting the general inertia that many employees experience when faced with yet another new initiative, the goal of lean is to open up the work process and abolish the usual hierarchies. Organization Performance Measurement: The company also employs the more familiar lean technique of value stream mapping (VSM) to identify and decrease wasted time and effort throughout the software development process. In the case of value stream mapping, every member of the team was able to get a sense of the overall picture of what they were doing and spot problems they wouldn't have been able to see before. Performance Measurement also includes increased interaction with the customers, their feedback, requirements and modifications. Effect on Internal Environment: The use of lean principles at Wipro could have qualities of a "Trojan Horse initiative." From the outside, lean accomplishes the shortterm goal of productivity (getting inside the city's gates), but it could also lead to more radical, innovative change (the sacking of Troy). One of the main ideas behind lean is to take parts of a task that don't require human intervention and give them to machines so that humans can focus on the important issues. The same is true in software, where you have the added benefit of being able to give some of your work to a computer, which can process it more reliably and quickly than a human. More time, coupled with a better understanding of the different moving parts of a project, creates feelings of empowerment in workers who haven't traditionally taken part in innovation. Thus Wipro has impacted productivity while also changing the problemsolving capabilities of the organization. 27
doc_630469054.doc
The documentation describing on Operations management covers topics like Contrasting Mass Production and World Class Manufacturing, Salient features of a traditional and a World Class Manufacturing, Characteristics of World Class Manufacturing, Three primary challenges, Implementing World
World class manufacturing
1
OPERATION MANAGEMENT PROJECT World class manufacturing
2
Index Sr. No. Topic 1. Introduction 2. Contrasting Mass Production and World Class 3. 4. 5. 6. 7. 8. 9. Manufacturing Salient features of a traditional and a World Class Manufacturing Characteristics of World Class Manufacturing Three primary challenges Implementing World Class Manufacturing: Tools to Measure and Record Progress Hierarchy of levels to lead to World Class Operations Information Technology helps in World Class Manufacturing Cases ---- Henkel ---- BMW ---- Honda ---- Volvo ---- Wipro Page No. 4 5 6 7 8 9 10 16 18
3
INTRODUCTION World Class Manufacturers are those that demonstrate industry best practice. To achieve this, companies should attempt to be best in the field at each of the competitive priorities (quality, price, delivery speed, delivery reliability, flexibility and innovation). Organisations should therefore aim to maximise performance in these areas in order to maximise competitiveness. However, as resources are unlikely to allow improvement in all areas, organisations should concentrate on maintaining performance in 'qualifying' factors and improving 'competitive edge' factors World Class Manufacturing is a process-driven approach where implementations usually involve the following philosophies and techniques: • • • • • • • • • • • • • • Make-to-order Streamlined flow Small lot sizes Families of parts Doing it right the first time Cellular manufacturing Total preventive maintenance Quick changeover Zero Defects Just-in-time Variability reduction High employee involvement Cross functional teams Multi-skilled employees
Companies engaging in World Class Manufacturing strategies focus on improving operations, strive to eliminate waste and create lean organizations. This often results in higher productivity. But these companies also focus on speed of total throughput from order capture through delivery setting new standards for delivery without the heavy dependence on inventory. Sequential methods of performing work are being replaced with concurrent methods to compress time, and functional and hierarchical divisions of duties are being replaced by team-driven activities. 4
Contrasting Mass Production and World Class Manufacturing
5
Salient features of a traditional and a World class manufacturing Attribute Organisation mind set Traditional Manufacturer A mind set organisational performance Organisation Capabilities World Class Manufacturer for A mind set for questioning the only to reset again (journey in the continuous improvement
standards as a basis for standards and setting them
path). Organised for building Organised for building certain products for specified organisational capabilities and markets mind set that could adopt to any future requirements in
Organisation Structure
terms of markets and products Logical building blocks Teams based on the business are the functional areas processes (that cut across and unify several functional areas)
are the building blocks Organisation performance Performance measured Performance measured based measurement based labour on and internal on customer driven parameters such price as such as quality, and on time of machine delivery parameters utilisation, meeting Cost
purchased items, and certain decreasing costs standards Cost is a function of Ever the Quality, (Enterprise reduction trade considerations
off (customer driven); Controls with causes not costs for cost Delivery, reduction driven);
Quick Response, etc. Controls cost for cost
6
Characteristics of World class manufacturing • JIT (Just in time): The first is what is known as Just in Time or Lean Manufacturing, the step by step elimination of waste. Waste in this sense is defined as any activity that adds cost but not value to the end product such as excess production, stock, idle work in progress, unnecessary movement and scrap. • TQM (Total Quality management): The second is total quality, a culture of intolerance to defects both in the processes and also information such as bills of material and stock records. Total quality is often these days called Six Sigma which uses total quality and lean manufacturing techniques to attempt to reduce rejects to 3.4 per million parts produced. • Total Preventative Maintenance (TPM): The final principle is the principle of total preventative maintenance where, whenever practical, a preventative maintenance programme means that unplanned stoppages due to equipment failure are minimised. • Employee involvement: Utilization of human resource to the great extent.
7
Three primary challenges • Develop the awareness of the need to make the transition to World Class Manufacturing • Develop the ability to search for relevant tools and to apply them effectively
•
Monitor progress so that an improvement programme can be systematically utilised.
8
Implementing World Class Manufacturing: Tools to Measure and Record Progress
9
HIERARCHY OF LEVELS TO LEAD TO WORLD CLASS OPERATIONS
Peter Stonebreaker and Keong Leong presented a hierarchy of steps, appearing as five levels, that lead to world-class operations (see Figure 1). This series of steps will be used to describe the characteristics of world-class manufacturers. LEVEL ONE: BUSINESS AND OPERATIONS STRATEGY All world-class manufacturers have an explicit, formal manufacturing mission. Within this mission is the operating goal to become world class. They use competitive information to establish organizational goals and objectives, which they communicate to all members of the enterprise. They regularly assess the appropriateness of these objectives to attaining and maintaining world-class status. World-class manufacturing requires an overall willingness to establish closer connections with everyone, from suppliers to workers. It requires an unwavering commitment to self-analysis and improvement. It requires an aggressive approach to technology that can turn visionary strategies into reality. All of these must be reflected in the firm's business and operations strategy if world-class status is to be attained. LEVEL TWO: ORGANIZATION DESIGN, HUMAN RESOURCES,
TECHNOLOGY, AND PERFORMANCE MEASUREMENT The following sections discuss how organization design, human resources, technology, and performance measurement factor into an organization's effort to become a world-class manufacturer. ORGANIZATION DESIGN. World-class manufacturers integrate all elements of the manufacturing system in such a way that the needs and wants of its customers are satisfied in an effective, timely manner. This requires the commitment and the expenditure of efforts and resources by all elements within the system to ensure their proper integration. This commitment extends to outside elements as well, as the world-class manufacturer encourages and motivates its suppliers and vendors to become co-equals with the other elements of the manufacturing system. 10
World-class
manufacturers
work
to
eliminate
organizational
barriers
to
communication and to organize the firm in such a way that the core values needed to reach world-class status take precedence. In fact, most companies that have succeeded in implementing many of the world-class tools—such as just-in-time production (JIT), total quality management (TQM), manufacturing resource planning (MRP II) and total productive maintenance (TPM)—already had the core values well in place. Companies that are already world class are able to quickly absorb other world-class manufacturing concepts as they are developed and publicized. HUMAN RESOURCES. World-class manufacturers recognize that employee involvement and empowerment are critical to achieving continuous improvement in all elements of the manufacturing system. The continuity of organizational development and renewal comes primarily through the involvement of the employee. World-class companies invest comparatively more in their relationships with their workers, providing significantly more training than their competitors. An Industry Week survey found that firms approaching world-class status were three to five times more likely to report "highly effective" human-resources programs than other firms. Some analysts note that combining lean manufacturing principles with employee participation can help firms become world-class manufacturers. TECHNOLOGY. A great deal of emphasis is placed on technology, equipment, and processes by those trying to attain world-class status. World-class manufacturers view technology as a strategic tool for achieving and maintaining their world-class status. A high priority is placed on the discovery, development, and timely implementation of the most relevant technology available and the identification and support of those who can communicate and implement this technology. The most highly competitive firms have made significantly more progress than others in implementing TQM, reengineering, simultaneous engineering, group technology, computer-assisted manufacturing (CAM), material resources planning (MRP), and the use of local area networks (LANs).
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PERFORMANCE MEASUREMENT. World-class manufacturers recognize the importance of measurement in defining the goals and performance expectations for their organization. They routinely adopt or develop the appropriate performance measurements needed to interpret and quantitatively describe the criteria used to measure the effectiveness of their manufacturing system and its interrelated components. Use of the proper measurements allows world-class manufacturers to assess their performance against themselves (internal benchmarking), their competitors (competitive benchmarking), and against other world-class manufacturing firms that are not competitors (generic and functional benchmarking). World-class status is achieved through a relentless commitment to continuous improvement, which cannot be achieved without measurement. LEVEL THREE: INFORMATION SYSTEMS, MANAGEMENT DIRECTION, AND OPERATIONS CAPABILITIES The following sections discuss how information systems, management direction, and operations capabilities factor into an organization's effort to become a world-class manufacturer. INFORMATION SYSTEMS. World-class manufacturers require world-class information systems for collecting, processing, and disseminating data and for providing the feedback mechanism that is necessary for meeting their objectives. Information systems are fully integrated into the business processes of firms that adhere to continuous improvement and TQM strategies. Capturing and analyzing customer feedback and designing, manufacturing, and delivering world-class quality products and services is rooted in superior information systems. Richard Schonberger states that functions within a world-class firm all have a common language and signaling system. World-class firms embrace computerized maintenance management and computer-integrated manufacturing. Additionally, organizational commitment to continuous improvement is supported by the strategic use of information systems.
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MANAGEMENT DIRECTION. Management is responsible for directing the manufacturing organization's journey to world-class status and for creating an organizational culture committed to all that is necessary for achieving continuous improvement. Corporate culture and values are the foundation for superior manufacturing, which in turn reflects and is reflected by the caliber of corporate management. This implies that personal commitment, involvement, and a sense of direction by management are critical to the success of world-class firms. The manufacturing excellence needed for world-class status is nurtured by direction from superior management, which must penetrate the manufacturing function, viewing and managing it as an integral, indivisible part of the firm. It cannot tolerate mediocrity or even average manufacturing performance. Management must seek to describe and understand the interdependency of the multiple elements of their manufacturing system, to discover new relationships, to explore the consequences of alternative decisions, and communicate unambiguously within the organization and with the firm's customers and suppliers. Stimulating and accommodating continuous change forces management to experiment and assess outcomes. They must be able to translate knowledge acquired in this way into some sort of direction, framework, or model that leads to improved operational decision making, while incorporating a learning process into their fundamental operating philosophy. The objective of world-class status tests management's ability to learn, adapt, and innovate faster in the face of an intensely competitive global market. OPERATIONS CAPABILITIES. World-class manufacturers are concerned with whether their operations systems have the ability to meet design specifications, rather than with evaluating the quality and quantity of products after the fact. In order to attain world-class status, the manufacturing firm has to be given the proper resources. With these resources, the firm must have the capability to produce the right quantity, the right quality, at the right time (often just in time), and at the right price. The proper technology must be on hand or readily attainable. In addition, the firm must have the necessary 13
managerial capabilities to compete successfully on a global basis. For many firms, the necessary operational capability involves the ability to provide customers with a large degree of flexibility of either product or volume, or exceptional response time to orders, changes in orders, or new product development. Beyond the firm itself, operations capability implies a superior interactive relationship with all vendors and suppliers. World-class firms have extensively implemented JIT, are heavily involved with programs that contractually commit suppliers to annual cost cuts, and are making efforts to involve the supplier early in the new product development process. LEVEL FOUR: QUALITY World-class manufacturers place an emphasis on quality. Firms in this category are usually in an advanced state of TQM implementation, continually seeking to enhance their business. All quality costs (prevention costs, appraisal costs, and cost of defects —both internal and external) are evaluated and held to the lowest reasonable sum. "Zero defects" is the goal of the world-class manufacturer. In order to achieve zero defects, the world-class firm is educated in and has fully implemented statistical quality control (SQC), sometimes called statistical process control (SPC) or quality at the source. Hence, quality is maintained and elevated through quality planning, quality control, and quality improvement. In conjunction with this effort to improve processes and products, world-class firms utilize an activity called benchmarking. This involves comparing the firm's performance, either overall or in a functional area, with that of other world-class organizations. The use of TQM techniques, according to some analysts, is the most striking differentiator between world-class and non-worldclass firms. Quality has also been found to be the most important competitive differentiator in the eyes of the customer. LEVEL FIVE: CUSTOMER SERVICE World-class manufacturers instill within their organization and constantly reinforce the idea that all who are a part of the organization must know their customers and must seek to satisfy the wants and needs of not only the customers, but also all other stakeholders. The goal of satisfaction is pursued in regards to the product, order processing, delivery, quick response to changes, and service after the sale. After all, 14
the goal of continuous improvement is to improve processes and add value to products and services in such a way as to increase customer satisfaction and loyalty and ensure long-term profitability. LEVEL SIX: WORLD-CLASS MANUFACTURING While world-class manufacturing may be difficult for manufacturers to define, many say they know it when they see it. Whatever it is, it must be from the customer's vantage point. An Industry Week survey found that, among factories approaching world-class status, a higher percentage were likely to belong to public companies; have corporate parents with revenues greater than $1 billion; participate in an automotive industry value chain; and employ 250 or more people at the location. These firms reported large cost reductions over the previous three years, as well as increased revenues, higher capacity utilization, higher sales per employee, and returns on invested capital (ROIC) that exceeded that of other manufacturers. Daniel F. Baldwin states that truly world-class firms are always examining their business processes and continuously seeking solutions to improve in key areas, such as lead time reduction, cost cutting, exceeding customer expectations, streamlining processes, shortening time to market for new products, and managing the global operation. World-class manufacturers are the ones that possess the knowledge and technology to provide products and services of continually improving quality. It is what separates practitioners of the new paradigm from the industrialist dinosaurs
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INFORMATION TECHNOLOGY HELPS IN WORLD CLASS MANUFACTURING The success of Indian manufacturing in meeting global competition will depend on its speed to move itself from a protected domestic to a world-class global manufacturing status. A survey conducted for the purpose of determining world-class status of Indian manufacturing companies and identifies important issues that need to be addressed in order to be a world-class manufacturer. The analysis compares the manufacturing intent to be an agile manufacturer and their information technology (IT) infrastructure in terms of scope of use, extent of use and integration of IT-based systems. The findings of the analysis are somewhat alarming as they show that most of the companies have fragmented (rather than integrated) information management systems which may not enable them to deliver superior value to their customers and lead them to world-class status. They must, therefore, align their IT initiatives towards facilitating agile manufacturing rather than introducing IT to merely automate their conventional operations.
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Eg :Toyota has succeeded in reducing new vehicle development time from four years to between one and two years partly due to heavy investment in CAD tools and electronic parts list systems. For instance in sales we can see that some sales companies are successful at selling new cars while others are good at selling used cars or service. We can also see the difference in profitability between these companies. In the area of logistics we can see one department over here and another over there processing similar data, and that these departments may need to be reorganized and the transactions streamlined. These departments have goals such as “cut lead time to 1/3rd” and “cut prices in half” that are virtually impossible to achieve through our traditional way of doing business. In order to achieve these things we need to approach information technology implementation from a cross-departmental approach. Despite what those in the business will tell you, information technology is not the solution to problems of how products sell or how we move materials from place to place. IT is a tool and an enabler to a world class operating systems, if you've already got one. If you don't work on that first. When information made visible is used to do kaizen according to the proper thinking (TPS philosophy) you can achieve results that traditional thinking could not.
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CASES
'World class' down on the farm: The Peterson Ranch in the Sacramento River Valley has successfully applied worldclass manufacturing concepts and techniques to the farming environment. The characteristics of world-class manufacturing include enhanced throughput, an emphasis on quality, and the involvement of employees. Peterson Ranch management has reduced investment and increased return on investment by minimizing land ownership. The ranch uses a normal, process-bases system of cost accounting focused on producing information for evaluating productivity evaluation, costing, and strategic decision making. Peterson Ranch has implemented vertical integration of operating activities to manage risk. The major steps in nut farming include raising the crop, harvesting, and hulling. The ranch minimizes the highest risk part of the process, raising the crop, by making the harvest crews responsible for harvesting at the appropriate time. Henkel- Case of flexible manufacturing Henkel CAC is in the flexible laminating adhesives business and has offered solventbased adhesives since 1985 and solvent-free adhesives since 2002. According to Manikkam Subramaniam, AGM-IT, formidable challenges await tomorrow's manufacturing industry. He feels next generation factories must be able to manufacture many different products in small quantities, customize them according to strict client requirements or market demands, and deliver them quickly-all without major factory reconfigurations. Looking at what Henkel has done, he recalled, 'Earlier 18
solvent adhesives were manufactured wherein the water increases along with adhesives. Presently, we manufacture solvent-less adhesives, which are used for lamination packaging industry. This has reduced the drying process from the eight to ten hours previously. Now the product can be used immediately. Similarly, we manufacture lot of products, which suit customer requirement. The challenge lies in fulfilling novel ideas of customers and delivering them quality products.’? Henkel CAC is exploring new ways of organizing factories. For one, they use distributed layouts, where they create products of different quality and quantity at dispersed manufacturing workstations, and link those manufacturing cells. Each cell manufactures a specific brand and when production ends, leaves the workstations free to join new or existing cells. This model promotes an efficient flow of materials, regardless of the product manufacturing sequence. The company is also looking at ways to make the process quick and economical. BMW- Case of simulating the assembly line Churning out top- class BMW series X5, X3, Z4, Mini and Rolls Royce models for a cream clientele that demands personalization and class. Using 3 D simulations and computer modeling of a virtual factory, BMW engineers successfully simulate the entire flow of production and present production conditions 'very close to subsequent reality.' BMW admits that 80% of all the processes are currently verified and confirmed through this in-house virtual reality set-up, long before the first production procedures even begin. In order to enable the company to respond flexibly and effectively to fluctuations in the market and individual customer needs, a virtual production network is used to evaluate changes in the mechanical parts, besides going a step further and integrating it with customer feedback processes. BMW has also outsourced the production of certain components to BMW's own facilities in places like Graz in Austria. Collaborating with the manufacturing processes of these 'offsite' or 'imported' components demands a certain dedicated workforce which monitors, collaborates, and places requirement for certain essential components in the assembly line. But more importantly, constant online collaboration 19
between the two important components of the Product Development Process ? Development and Production, is also ensured by BMW worldwide. The first BMW that came out of its Chennai plant was unveiled in February 2007. HONDA – Becoming World Class Honda, a manufacturer of motorcycles, automobiles, and power products Organisation mindset Kaizen • • • • • Saitama – Sayama – Mfg Machinery Factory Plants – HUM, gear-grinding machine, BE HRB600 robot CAD/ CAM systems and NC processing system World’s-first—Honda’s original “Duo Dyna Air Cooling”(DDAC) technology
Organisation Capabilities Adopt to any future requirements • • • Growing numbers of automobile parts – effect on the production of motorcycles – dedicated plant for the production of cars To ensure ample supplies of low-cost, high-quality parts, the company began selling and leasing machines to its associate suppliers Anticipated engineering problems to be settled prior to mass production – creation of prototypes, miniature line inside the plant to conduct trial mass production “Honda Manufacturing Machinery was established as an independent company so that it could create new processing methods based on free thinking and develop useful machinery incorporating those methods,” said Kiyoshi Kawashima, then the senior MD of Honda Motor
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Organisation Structure Unify several functional areas Consolidated preproduction functions with regard to production engineering – Honda Engineering Co.,Ltd.(EG) – Anticipate changes – Develop appropriate production technologies and methods for new product development – Provide the production departments with highly competitive and timely methods – Maintain sophisticated production methods Organisation performance measurement Customer driven parameters • • • • • Expansion to new markets New designs Increased manufacturing capacity Reduced costs Increased automation Cost Customer driven • “One-chuck, multidirectional simultaneous processing” – could perform many steps at once, four-direction horizontal turning machine and five-direction drum-turning machine – for mass production • • Technological partnership with the Swiss company to manufacture ten units Contour-to-numerics conversion => development of CAD/CAM systems and the NC processing systems .
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Volvo Truck Production Volvo Truck Production, an Australian Company, is the manufacturer of Volvo Trucks, Mack Trucks, Renault Trucks, Volvo Buses, Volvo Construction Equipment, Volvo Penta, Volvo Aero and Volvo Financial Services. They manufacture more than 80,000 trucks annually. The company is known for Safety, Quality and Environment. The company has its production based in different locations, one of them is Wacol Factory in Australia. Wacol Factory produces more than 12 trucks a day. The trucks are produced according to the customers’ demand and not made to stock. The normal customer order to delivery used to be around three to six months. In the year 2001, production was almost doubled when Mack production also moved into the Wacol factory and all the functions within the Mack and Volvo organization were merged together. The board found the inventory levels and material delivery system as the main problems because of the amount of shortages and the time spent in the production for parts. In order to implement lean, all the production teams has to work in the same way regarding team meetings, continuous improvements, missing parts, ordering parts etc. This will help in the implementation of lean production with material distribution, pull systems, multifunctional teams and continuous improvements. Therefore the areas of concentration were elimination of waste, pull instead of push, multifunctional teams, decentralized responsibilities and continuous improvement. Decentralized Pull System In order to reduce inventories, the factory adopted pull system instead of push system. The manufacturing parts are divided into three categories : • • • small (bolts, nuts) bulky (tanks, tyres) and ordinary parts
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Kanban : It is a pull method used in lean manufacturing which ensures that material and products are pulled though the factory when they are demanded. Kanban is the Japanese word for card. It is a device / card used by a customer workstation to send a signal to the preceding supplier station that it needs more parts. It is generally used for the ordinary parts. Kanban system helps to : – – Reduce inventories Increase control over the internal material handling
Kanban Loop
1.
The Trolley Several factors are considered when the kanban trolleys are designed. Care is taken that all types of parts must fit in the trolley.
2.
The Kanban card The cards are made with ordinary paper that is plastic laminated and contain information about number of parts authorized, trolley capacity, station number, card number etc.
3.
The Station There are clearly marked areas where the Kanban trolleys should be stored, to that the material handler knows exactly where to deliver them. The station 23
number are assigned at the middle of each station. When the assembly worker picks the last part from a trolley, he puts the corresponding card in a collection box, which is easy to find and access for the material handler. 4. Drop off area The material handler drops off the empty trolleys and puts the collected Kaban cards on a schedule board. The cards are scheduled to use FIFO, since it minimizes both lead time variability and maximum lead time. It is important that the arrival of new cards is relatively smooth in order to avoid long replenishment time. 5. Replenishment (replacement) The warehouse worker picks up the Kanban card that is first in the que on the schedule board and the corresponding trolley. He then enters the station number written on the card on the computer and receives information on what to pick into the trolley. The possibility to pick parts into kits are considered, since there are a plenty of different parts that has to be delivered to each workstation. The kits are designed so that the production workers easily can find the right part. 6. Pick up area When the warehouse worker has refilled the trolley, he puts it at the pick-up area with the card attached. The material handler picks it up and delivers it to the right station together with all the other trolleys that are ready to be delivered
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Wipro: World Class Manufacturing (softwares) World Class Manufacturers are those that demonstrate industry best practice. To achieve this, companies attempt to be best in the field at each of the competitive priorities (quality, price, delivery speed, delivery reliability, flexibility and innovation). Organisations therefore aim to maximise performance in these areas in order to maximise competitiveness. However, as resources are unlikely to allow improvement in all areas, organisations concentrate on maintaining performance in 'qualifying' factors and improving 'competitive edge' factors. The priorities change over time and are therefore reviewed. Companies engaging in World Class Manufacturing strategies focus on improving operations, strive to eliminate waste and create lean organizations. This often results in higher productivity. But these companies also focus on speed of total throughput from order capture through delivery setting new standards for delivery without the heavy dependence on inventory. Sequential methods of performing work are being replaced with concurrent methods to compress time, and functional and hierarchical divisions of duties are being replaced by team-driven activities. How Wipro gained efficiency Wipro first launched its lean initiative in 2004 with a core team of managers. The small group visited lean manufacturing companies and discussed the concept's basic principles before each manager adopted a project in order to implement this new approach to software services. Of the projects, 8 out of 10 showed greater than 10 percent improvement in efficiency. With those results in hand, the core team decided to roll out the approach across the firm. By the end of 2006, Wipro had 603 lean projects completed or in the works (the company typically had 1,100 projects under way at any one time). Organization Mindset: Wipro followed a method of controlled experimentation. They started with a small group and recruited other people from there. The use of lean principles affected the workflow at Wipro. The concept of "kaizen," or continuous improvement, for example, resulted in a more iterative approach to software
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development projects versus a sequential, "waterfall" method in which each step of the process is completed in turn by a separate worker. 5S implementation: 5S, abbreviated from the Japanese words Seiri, Seiton, Seison, Seiketsu, and Shitsuke, are simple but effective methods to organize the workplace. The 5S, translated into English are: housekeeping, workplace organization, cleanup, keep cleanliness, and discipline. They can be defined as follows:
•
Housekeeping. Separate needed items from unneeded items. Keep only what is immediately necessary item on the shop floor. Workplace Organization. Organize the workplace so that needed items can be easily and quickly accessed. A place for everything and everything in its place. Cleanup. Sweeping, washing, and cleaning everything around working area immediately. Cleanliness. Keep everything clean for a constant state of readiness. Discipline. Everyone understands, obeys, and practices the rules when in the plant.
•
•
• •
Implementing 5S methods in the plant helped the company to reduce waste hidden in the plant, improve the levels of quality and safety, reduce the lead time and cost, and thus, increase company's profit. The potential benefits of 5S can be summarized by five English S or PQCDS: Five English S:
• • • • •
Sales - Increase sales (market share). Savings - Save costs. Safety - Provide a safety working environment. Standardization - Standardize the operating procedure. Satisfaction - Employees and customers satisfaction. P - Increase productivity. Q - Improve product quality. C - Reduce manufacturing costs. D - Ensure on-time delivery. S - Provide a safety working environment. 26
PQCDS:
• • • • •
Organization Structure: By sharing mistakes across the process, the customer and project team members benefit individually and collectively from increased opportunities to learn from their errors; the project also moves along more quickly because bugs are discovered in the system earlier in the development process. Wipro also uses tools specific to the software development process based on lean principles. The DSM (design structure matrix), for example, defines connections and pathways for a project's workflow and suggests an order of tasks. A complementary tool, the SCE (system complexity estimator), ranks a software module based on its complexity and compares its actual architecture with its ideal (simplest) architecture in order to learn where a team might need more or fewer skilled members. While most organizations struggle with implementing a new system, fighting the general inertia that many employees experience when faced with yet another new initiative, the goal of lean is to open up the work process and abolish the usual hierarchies. Organization Performance Measurement: The company also employs the more familiar lean technique of value stream mapping (VSM) to identify and decrease wasted time and effort throughout the software development process. In the case of value stream mapping, every member of the team was able to get a sense of the overall picture of what they were doing and spot problems they wouldn't have been able to see before. Performance Measurement also includes increased interaction with the customers, their feedback, requirements and modifications. Effect on Internal Environment: The use of lean principles at Wipro could have qualities of a "Trojan Horse initiative." From the outside, lean accomplishes the shortterm goal of productivity (getting inside the city's gates), but it could also lead to more radical, innovative change (the sacking of Troy). One of the main ideas behind lean is to take parts of a task that don't require human intervention and give them to machines so that humans can focus on the important issues. The same is true in software, where you have the added benefit of being able to give some of your work to a computer, which can process it more reliably and quickly than a human. More time, coupled with a better understanding of the different moving parts of a project, creates feelings of empowerment in workers who haven't traditionally taken part in innovation. Thus Wipro has impacted productivity while also changing the problemsolving capabilities of the organization. 27
doc_630469054.doc