Case 66 of Industrial Engineering ONLINE Course
The waste elimination and productivity improvement that made Toyota the most productive automobile plant in the world (with production being twice that of US plants per worker and at lower cost and at a higher quality) was made possible by further creative application of industrial engineering and scientific management. Both persons who improved Toyota Motors to world class production level have clearly stated this fact in their books (Taiichi Ohno & Shigeo Shingo).
While Japanese called their system, JIT, MIT researchers gave the name "lean" signifying smaller batch quantities and small work-in-process inventories. All engineers and managers have to recognize the productivity, cost reduction and continuous improvement orientation and practice of industrial engineering.
Articles explaining the relation between industrial engineering and lean manufacturing.
But from a production system design perspective lean now became an alternative system. The earlier basic alternatives were job shop, batch production shop, mass production flow shop, group technology cell or cellular manufacturing cell. The two additional production systems are fixed layout production and continuous flow production. Lean production system having mixed model assembly, supplied through a component supermarket in which replenishment of parts occur based on the consumption during the previous period (may be hour, or day or multiples of day) has emerged as an alternative production system that can be installed right at the starting of the production of new product. This is the natural progression of industrial engineering improvement. Improvements done by industrial engineers are communicated to designers and product designers and process designers capture these improvements in the subsequent designs.
The improvements done using industrial engineering in Toyota Motors are now captured by production system designers and production managers as lean production system or lean manufacturing system.
The Lean Revolution in Lantech - 1992-2003
Ron Hicks as Vice President of Operations started the lean revolution in Lantech in 1992. Ron Hicks was an industrial engineer.
He learnt lean from the Japanese trainers at Hennessy Industries of Nashville, Tennessee, a manufacturer of automotive repair tools and garage lifts. Ron Hicks was the vice president of operations there. Before that Hicks was at General Electric Company.
During the interview for Lantech, Ron Hicks explained his manufacturing strategy. He would form cells and manufacture one machine at a time. The batch and queue system can be changed and productivity can be improved. Lantech management decided that Ron Hicks was the best choice for their company and hired him. After joining the company, he eliminated the existing process based departments and created four cells for the four varieties of machines. All activities relating to a machine are done in the same cell in a continuous flow. This is the kaikaku (radical transformation) phase as per the plan of Ron Hicks. The existing arrangement was torn apart and a new system was put in place.
To make the system work, standard work procedures were developed and standard times were specified. The quality of the output has to go up at every stage. To form the cells, many machine tools had to be right sized and number of new tools had to be developed so that multiple tools could be used on the same machines in a flexible manner. Quick changeover (SMEDs) were developed.
But in the initial days, number of problems surfaced. Doubts were expressed on the changes created by Ron Hicks. Jose Zabaneh, a production manager put in his contribution as a determined person to go through many problems and resolve them. Pat Lacaster the CEO gave unfaltering support to the new system. The consultant Anand Sharma was there with the necessary technical skills. By the fall of 1992, the whole Lantech production system had been converted from batches to single piece flow. Thus it was a team effort that created the lean manufacturing system at Lantech.
A clear vision or plan or design, technical mastery over the details, and a passionate will to succeed are essential for any lean transition. Sometimes only a single person may be sufficient to provide the leadership and sometimes a team may do the job like at Lantech. But to sustain the lean system, the lean principles and methods must be developed in all people in the organization.
Benefits of lean transformation: The manpower stayed the same at three hundred. But the number of shipments doubled from 1991 to 1995. The plant had 30% extra space in 1995. The number of defects reported by customers fell from 8 per machine in 1991 to 0.8 per machine in 1995. Production throughput time became fourteen hours from the earlier figure of sixteen weeks. On time delivery of machines reached the level of 90 per cent. The wages were increased to $8.5 from the earlier $7.00.
Then the order taking process was also redesigned to be a lean process. A reengineering team has gone through the process. A cost table was prepared that helped the sales to come up with a quotation quickly. Once the order was received, it was inserted into the schedule in two days. MRP was used for long-term materials ordering from suppliers, but day-to-day scheduling was done on the shop floor.
In 1993, the attention was directed to product development. Lantech set up a project team under a Directly Responsible Individual clearly charged with the success of the product during its lifetime. A team of dedicated specialists consisting of marketing, mechanical engineering, electrical engineering, manufacturing engineering, purchasing, and production engineers and workmen. They were asked to work nonstop on the project. In the process it was found that many people have a broader range of skills than was thought earlier and could learn some skills that were needed during the project. Also, some advance scheduling could release for other important tasks for sometime in between.
The first product that came out of the new development system, the new S series, was developed in one year, compared to the four years that was the standard earlier. The launch was much smoother than in the past and the number of defects reported by customer was very low compared to the previous models during the initial production periods.
Source:
Lean Thinking
James Womack and Dan Jones, 2003 Edition
How to Root Out Waste and Pursue Perfection
by James P. Womack and Daniel T. Jones
From HBR (September–October 1996)
(Important issues covered: Principles of Lean Transformation: Good description. Lean transformation at Lantech. Kaikaku - transformative radical change)
(You can access two HBR articles free every month)
Work of Management - Book by CEO of Lantech
http://www.lantech.com/about/glance.aspx
Manufacturing Cells Support Lean Production at Lantech - Ron Hicks, 1998
http://www.mmsonline.com/columns/manufacturing-cells-support-lean-production
Leaders to Teachers: Lantech’s Plan to Spread the Faith
by Emily Adams, 2001
http://www.tbmcg.com/acrobat/lantech_story.pdf
Updated on 5 August 2021
22 July 2020, 4 January 2020, 20 May 2019, 23 February 2014
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