Lean- automobile

1. LEAN PRACTICES SUBMITTED BY: AMALESH DEKA RAJEEV SHARAN ALOK LIEVENS DFT (AP-08)/ NIFT BANGALORE AUTOMOBILE INDUSTRY

2. Introduction- Lean The purpose of lean is to remove all forms of waste from the value stream . Waste includes cycle time, labor, materials, and energy. The chief obstacle is the fact that waste often hides in plain sight, or is built into activities.

3. Benefits Lean manufacturing delivers an insurmountable competitive advantage over competitors who don't use it effectively .

4. Benefits Lower production cost  higher profits and wages Cost avoidance flows directly to the bottom line. Supports ISO 14001 and "green" manufacturing Reduction of material waste and associated disposal costs  higher profits Shorter cycle times: make-to-order vs. make-to-stock

5. Bottom Line and the Language of Money The first comprehensive implementation of lean manufacturing yielded: Stock appreciation of 63 percent per year, for 16 years (not counting dividends) 7.2 percent annual wage growth

6. Implementation of fundamental lean principles at Automobile Industry

7. Lean Implementation at Toyota’s Existing Supply Chain and Customer Responsiveness Initiatives

8. Enterprise Resource Planning System (ERP)

9. Enterprise Resource Planning System (ERP) SAP Automotive ERP Suit Main means of information flow between Toyota and its counterparts worldwide. Tighter collaboration links With SAP, gain: Outstanding strategic, Operational, Financial, Marketing positions

10. E-Marketplace iStarXchange Initiative with i2 Technologies Inc. Allow subscripted members able to view a single catalogue to: view information on parts checking the prices and availability conduct transaction online forecasting supply and demand delivery cycle Improved forecasting Enhancing the planning Enhance deployment and replenishment of the inventory

11. Trade Matrix system Initiative with i2 Technologies Inc Automates with equipment manufacturer and suppliers in terms of : site’s inventory management warehousing Logistic and shipping

12. Main SAP Automotive Suit ERP System Main means of information flow between Toyota Australia and its counterparts worldwide. Tighter collaboration links between TMCA and TMC Logistic and shipping Overall Value Chain

13. BEA Web-logic Integration 8.1 Integrated within the SAP automotive suit Main IT Backbone of TMCA Based on Open Standard Allow connection to their numerous partners in the value chain via an assortment of systems in Australia Integrate the systems and processes that connects Toyota Australia and its trading partners

14. BEA Web-logic Integration 8.1 Functions: Electronic proof of delivery Online accounts payable status for suppliers Fleet management integration The Toyota Vehicle Order Processing System (TVOPS) Advance Shipping Notice for vehicle deliveries Vehicles inventory synchronization

15. BEA Web-logic Integration 8.1 Customized BEA Application

16. SAP

17. Electronic “ Kanban ”-Card System Identical in function to the physical “ kanban ” cards used by Toyota in Japan 4 main purpose: Sole means of requesting new parts Send for every order shipment Send to a specific supplier plant Establishing the mix and volume criteria for assessing if an order was correct

18. Electronic “ Kanban ”-Card System “ Kanban ”= Card (Japanese)

19. Electronic “ Kanban ”-Card System

20. Australian Automotive Network eXchange (AANX) Four major car manufacturers in Australia are involved Numerous service providers and non-key suppliers Provides IP based Extranets for the automotive industry in Australia Operates as a virtual point network (VPN) Allows users to send date to each other in a reliable and secure manner

21. Australian Automotive Network eXchange (AANX) Main components : A network that is based on available Internet technology Operated by agreed and standardized service levels. Demonstrating proactive management of trading partner connections Practice the best standard of security and privacy for transactions and interoperability between service providers

22. Australian Automotive Network eXchange (AANX) AANX Framework

23. Supplier Website Toyota Supplier.com www.toyotasupplier.com TMCA focused on core competencies in high-end design engineering and system integration Toyota Australia needs highly focused core competency oriented suppliers.

24. Supplier Website Small and diverse companies though have the ability to display such potential to add Innovation Flexibility and Strength to TMCA’s supply base. Supplier-centric web site Provide opportunities to expand TMCA supplier network .

25. Supplier Website Access Flow From Toyota Australia Suppliers web site

26. Agent Oriented Domestic Marketplace Will be able to support a broader base of services given further growth in e-Market infrastructure Baseline interaction and directory services Specialty market services , such as: Dynamic trading ; Cooperative supply chain integration and management Enables and facilitates the relationship between business participants Suppliers and service providers; and Supporting systems

27. Agent Oriented Domestic Marketplace Many-to-many relationships supported between TMCA and these business partners. Enables both TMCA and suppliers to leverage economies of scale in their trading relationships Allows access to a more liquid marketplace Further allows the use of dynamic pricing models e.g. Auctions (one of the services provided in the proposed e-marketplace) Improve the economic efficiency of the market where uncertainty about prices and demands are common.

28. Agent Oriented Domestic Marketplace Many-to-many relationships supported between TMCA and these business partners. Enables both TMCA and suppliers to leverage economies of scale in their trading relationships Allows access to a more liquid marketplace Further allows the use of dynamic pricing models e.g. Auctions (one of the services provided in the proposed e-marketplace) Improve the economic efficiency of the market where uncertainty about prices and demands are common.

29. Agent Oriented Domestic Marketplace Logical concept of the Domestic e-Marketplace

30. Agent Oriented Domestic Marketplace Logical concept of system Integration .

31. Real Time Inventory Tracking Module To be incorporated into the BEA system, which comprises of 4 agents Forecast Agent Inventory Agent Order Agent Multi - Tier Visibility Agent

32. Real Time Inventory Tracking Module

33. Agent Based Supply Chain An agent-based transport and logistics coordination system (collaborative e-market), are designed to accomplish transport and logistic coordination tasks among different automotive manufacturers in Australia. Consist of 4 generic roles agents in supply chain: Distribution Hub Agent Logistics Coordinator Agent, Manufacturer Agent Transporter Agent.

34. Agent Based Supply Chain

35. Integration

36. Ford’s Lean Implementation at Supply Chain and Customer Responsiveness Initiatives

37. Existing Supply Base As the company had grown over the years, so had the supply base In the late 1980s: there were several thousand suppliers of production materials in a complex network of business relationships Suppliers were picked primarily on the basis of cost, little regard was given to: overall supply chain costs complexity of dealing with such a large network of suppliers.

38. Existing Supply Base As the company had grown over the years, so had the supply base In the late 1980s: there were several thousand suppliers of production materials in a complex network of business relationships Suppliers were picked primarily on the basis of cost, little regard was given to: overall supply chain costs complexity of dealing with such a large network of suppliers.

39. Existing Supply Base Beginning in the early 1990s: Shifted toward longer-term relationships with a subset: tier 1 tier 2 below suppliers. Ford made its expertise available: just-in-time (JIT) inventory total quality management (TQM) statistical process control (SPC)

40. Ford Production System Ford 2000 initiative produced five major, corporation wide reengineering projects One was Ford Production System (FPS) Aimed at making Ford manufacturing operations: Leaner more responsive more efficient

41. Ford Production System Aspired to level production and move to a more pull-based system, with: synchronized production continuous flow Stability throughout the process

42. What was Ford’s intentions when reengineering its production system, and how were they going to do this?

43. Exhibit 2 Moving from Push to Pull Process Push Pull Design Design strategy Please everyone Mainstream customer Vehicle More is better wants minimal combinations Marketing Pricing strategy Budget-driven Market-driven Vehicle purchase Higher Lower Incentives Manufacturing Capacity planning Multiple material/ Market-driven and and supply capacity constraints, (no constraints FPV/ Driven by program CPV* + 10% for Budget vehicle, +15 for components Schedule and build Maximize production Schedule from make whatever you customer-driven order can build bank, build to schedule

44. Exhibit 2 Moving from Push to Pull Process Push Pull Dealer network Dealer ordering Orders based on Orders based on Allocations and customer demand Capacity constraints Order to delivery Longer (60 + days) Shorter (15 days or times less ) Inventory High with low Low with rapid turnover turnover Dealership model Independent Company-controlled dealerships, dealerships (Ford negotiations with Retail Network) company

45. One Important Part of FPS was Synchronous Material Flow (SMF) Ford defined as “a process or system that produces a continuous flow of material and products driven by a fixed, sequenced, and leveled vehicle schedule, utilizing flexibility and lean manufacturing concepts.” One key to SMF was In-Line Vehicle Sequencing (ILVS): used vehicle in-process storage devices (such as banks and ASRSs) and computer software to assure that vehicles were assembled in order sequence

46. Order to Delivery The purpose of OTD: reduce to 15 days from 45 to 65 days Pilot studies in 1997 and 1998 identified bottlenecks throughout Ford’s supply chain: Marketing material planning vehicle production transportation processes

47. Ford’s Approach to Implementing an Improved OTD Process O ngoing forecasting of customer demand from dealers A minimum of 15 days of vehicles in each assembly plant’s order bank to increase manufacturing stability R egional “mixing centers” that optimize schedules and deliveries of finished vehicles via rail transportation A robust order amendment process to allow vehicles to be amended for minor color and trim variations without the need to submit new orders

48. Ford Retail Network July 1, 1998, launched first Ford Retail Network (FRN) in Tulsa, Oklahoma under the newly formed Ford Investment Enterprises Company ( FIECo ). Two primary goals: to be a test bed for best practices in retail distribution and drive those practices throughout the dealer network to create an alternative distribution channel to compete with new, publicly owned retail chains such as AutoNation.

49. Enterprise Model Comparison Order Mgmt Dealers Customers Bill of Material Outbound Logistics Plan/Site Operations Inbound Logistics Suppliers Ford Retail Network Supply chain Leadership OTD FPDS FPS FPS CFOP DTD Ford Breakthrough Objectives/Key Initiatives

50. The End Any questions?