Lean Manufacturing

for
Competitive Advantage

C.Narasimhan
Sundaram-Clayton Limited

CN_ISB_Aug06 1
 Presentation overview

¾ Lean : A competitive weapon

¾ What is lean?

¾ Experience from SCL

¾ Advantage India

CN_ISB_Aug06 2
 Lean: A Competitive Weapon

CN_ISB_Aug06 3
 Zara: Fastest turnaround time
Freshly baked clothes: Consumers will regard clothes as
perishable commodity…

Short lead time

Small batch quantities

More variety

CN_ISB_Aug06 4
 Business Model: Dell

Cost advantage:

Supply Chain Manufacturing Operations Direct Model Information Flow

4-5 % points 2-3 % points 2-3 % points 5-10 % points

• Low inventory • Proprietary • Lean cost structure • Direct across • Real time feedback
advantages segments on price/promotions
• Efficient cash • Leveraged partner
conversion • Efficient gains to model • No retail, distribution • Act on market
scale operations mark-up changes within hours
• Stronger vendor • Asset efficiency
relationships • Cont’d cost reduction • Enables cross sell • Maximize profits
opportunities
• Pass savings to
customer

Strong information flow

Direct access to customers

Lean operations, supply chain

CN_ISB_Aug06 5
 Southwest: One Kind of Airplane

CN_ISB_Aug06 6
 Walkman re-invented

Product obsession Consumer obsession

20th Century Walkman 21st Century iPod

20 songs 20,000 songs
CN_ISB_Aug06 7
 Observes: People sharing music
Insight : Young people love unlimited access to music
Barriers : Storage devices, Cost

• October 23, 2001

i- dea
Jan 9, 2001: launches i-tunes

CN_ISB_Aug06 8
 i-dea grows

CN_ISB_Aug06 9
CN_ISB_Aug06 10
 Mumbai’s Dabbawala’s
5,000 tiffinwals’s 175,000 lunches

1 error in 16 million transactions = 99.999999% times correct

Only for Rs.150 / month

CN_ISB_Aug06 11
 Aravind Eye Hospital
Dr.G.Venkataswamy

Alternate health care model

supplementing Governmental efforts

Started 1976 with 11 beds, Currently 4 hospitals with 3590 beds

67% of outpatients visit & 75% of surgeries free of cost

Free eye camps

Free cataract surgeries
World class ophthalmic products available at affordable costs
Institute for research that contributes to the development of eye care
Development and implementation of efficient and sustainable eye care programs

World’s most productive eye hospital!!

CN_ISB_Aug06 12
 Telecom revolution in Rural India

STD/ISD/PCO Phones in post Mobile phones

stations offices in villages

MeTel – Low cost

e-mail for rural India

CN_ISB_Aug06 13
 Banking

Banks ATM’s in cities Low cost technology

for rural India
by TeNet Group

CN_ISB_Aug06 14
 Key Success Factors

¾ Create Value for the customer - Innovate

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

LEAN – The only way to go!!

CN_ISB_Aug06 15
 What is Lean?

CN_ISB_Aug06 16
 Many Names, but the same Concept
Toyota Production System Pull system

Just-In-Time
Lean Manufacturing
JIT/TQC/EI/TPM
Short Cycle Manufacturing
One-Piece-Flow
Cellular Manufacturing Demand Flow Manufacturing

Stockless Production Focused Flow Manufacturing

Agility Value Adding Manufacturing

Group Technology Time Based Management

Synchronous Flow Manufacturing End-Lining Operations

Continuous Flow Manufacturing
CN_ISB_Aug06 17
 LEAN defined…

¾ Philosophy which seeks to provide more and more value to

the customer (package of cost, quality & delivery) with less
and less resources by eliminating waste (Muda)

Overriding Principle :
by
Adding Value, Removing Waste
^

CN_ISB_Aug06 18
 MUDA

¾ Waste ( MUDA ) is anything that does not add value to

the product from the customer’s perspective (e.g. excess
inventory, over production, over investment, excess
handling, etc.)

Overproduction
Inventory
Transportation
Extra Processing
Defects / Rework
Unnecessary Motion
Unnecessary Waiting
CN_ISB_Aug06 19
 Things to remember about waste

¾ Waste is really a symptom rather than a root cause of the

problem

¾ Waste points to problems within the system(at both process

and Value-stream levels)

¾ Find and address cause of waste

The element of production that add no value to the

product. Waste only adds cost and time.

CN_ISB_Aug06 20
 Why Lean ?

Nothing / Nobody is perfect. Even NATURE!!!

CN_ISB_Aug06 21
 Why Lean ?

Typically 95% of Total Lead Time is Non Value Adding !!

Total Lead Time

VA Time
NVA Time

Set-up Others
( batch
time Startup production,
time Rework inventory )
time Machine Waiting for
downtime material time

Focus is on reducing NVA Time to improve overall efficiency

CN_ISB_Aug06 22
 Company-wide Lean ?

¾ Asset utilization

¾ Manpower utilization

¾ Low cost automation

¾ Balance to TAKT time working

¾ Lean inventory

CN_ISB_Aug06 23
 Benefits of Lean

¾ Turn Sales Orders into Profits as Quickly as Possible

Decrease the time period from buying or fabricating
components until you get paid by the customer for the
finished product.

¾ Increase Profits
Reduce Costs and Increase Sales.

¾ Use Limited Resources Wisely

People, Equipment, Buildings, etc.

CN_ISB_Aug06 24
 Some experiences from SCL

CN_ISB_Aug06 25
 Why SCL went for Lean?

¾ From 1998 onwards our customers demanded

- Daily supplies with zero defect
- Supplies in matched vehicle sets
- Continuous price reduction

¾ To meet the above requirement, SCL needed to

- Respond in short lead times
- With less inventory and investment
- Eliminate waste and reduce cost

¾ Since lean manufacturing addresses above requirements, SCL

decided to implement Lean Manufacturing in the production system

CN_ISB_Aug06 26
 Our objective

¾ To reduce lead time from customer order to delivery of

products

¾ To meet the customers changing requirement

¾ To reduce inventory by implementing pull system and

Just-in-time supplies

¾ To achieve zero defect

¾ To improve productivity

CN_ISB_Aug06 27
 Case 1: Dual Brake Valve
Table 6 Table 7 Cell 1

Table 1 Table 2 Table 3 Table 4 Table 5

Table 1 - Upper body sub-assembly and primary piston assembly

Table 2 - Lower body sub-assembly and upper body & primary

piston assembly

Table 3 - Upper and lower body assembly and exhaust flap assembly

Table 4 - Testing
Table 5 - Final assembly

Table 6, 7 - Intermediate testing

2 cells for the same product,

Cell 2
Productivity – 3.3 units / operator / hour
CN_ISB_Aug06 28
 Case 1: Dual Brake Valve

Improvement - Phase I

Major actions:

¾ Man-machine balancing
¾ Improvement in pace and rhythm of working
CN_ISB_Aug06 29
 Case 1: Dual Brake Valve

Improvement Phase-II

Introduced circuit work method

Major improvement
1. Circuit work method introduced – to eliminate
Productivity improved
imbalance
by 500%
2. Low cost automation
3. Multi process operation introduced
4. On the job training (OJT) to workmen
CN_ISB_Aug06 30
 Case 1: Dual Brake Valve

Process ratio
Before – 2.6%
Now – 35%

CN_ISB_Aug06 31
 Case 1: Results

Effect of improvement
No Description UOM Before After

1 Number of cells Nos 2 1

2 Number of operators/ shift Nos 12 3
3 Output/ hours (Nos) Nos 40 60
4 Output/ hour/ opr./ cell Nos 3.3 20
5 Employee productivity % 501%
6 Space Sq. Mts 25 18
7 Space productivity % 39%

CN_ISB_Aug06 32
 Case 2: Lean machine

3500MM ™HIGH FRONTAGE

™MORE WALKING
DISTANCE
™DIFFICULT
MAINTENANCE
™MORE COMPLEX

BEFORE

LEAN
3. Low Machine Frontage , Less CONCEPT
Walking Distance

™ L0W FRONTAGE
™ LESS OPERATOR WALKING DISTANCE
™ EASY MAINTENANCE
™ LESS COMPLEXITY

60
0M
M.

CN_ISB_Aug06 33
 Case 2: Results

Sl. No Description UOM Before After

Improvement

1 Frontage Mtr 3.5 2.4 31%

2 Floor space Sq. M 10.5 5.3 50%
3 Cost Rs. Lacs 30 20 33%

CN_ISB_Aug06 34
 Case 3: Process Plant

Year - 2000 Year - 2003

9m 6m
BENEFITS
Sl No Description UOM Before After Improvement
1 Frontage m 9 6 33%
2 Floor area m2 54 30 45%
3 Cost Lacs 21 17 20%
4 Electrical load kw 45 30 33%
5 Plant running cost(Excluding consumables) Rs/hour 225 150 33%
CN_ISB_Aug06 35
 Case 4: Zero Changeover

Horizontal Vertical Vertical

Single model Single model Multi model
1996 2000 2003

2.5
No of spindle - 36
1 1
Hydraulic control No of spindle - 36 No of spindle - 2
Hydraulic control CNC Control
BENEFITS
Sl No Description UOM Horizontal Vertical Vertical Improvement
1 Modle Single Single Multi
2 Frontage m 2.5 1 1 60%
3 Floor space m2 5 3.3 3.3 34%
4 Cost m 19 18 14 26%
5 Tool change time min 54 54 3 94%
CN_ISB_Aug06 36
 Case 5: Low cost automation

BEFORE AFTER

Auto deburring setup

Manual deburring
SMS Reduction (Manual Vs Auto)

40
30
30
Time in Sec

15
20

10

M anual Auto
CN_ISB_Aug06 37
 Results

Sales Vs Manpower
1000
Sales 412
400

364
875
Sales (Rs in crores)

345

employees
Number of
Number of Employees
808

751 750
290 302
663
644

621
229 618 625
235

199 200

180 500
00-01 01-02 02-03 03-04 04-05 '05-06
Year
CN_ISB_Aug06 38
 Results

Sales to Gross fixed assets

UOM : times
4.5

4.1

4.0

3.6
No of times

3.5 3.4

3.0
2.7

2.5 2.4

2.2

2.0
00-01 01-02 02-03 03-04 04-05 '05-06
Year
CN_ISB_Aug06 39
 Results

Inventory turn UOM : times

36 35

31

30
No of times

28

24
24

21

18
01-02 02-03 03-04 04-05 '05-06
Year
CN_ISB_Aug06 40
 Results

VAPCO
UOM : times
7.0

6.0
6
No of times

5.0

4.4

4.0
3.7

3.2 3.2

3.0
01-02 02-03 03-04 04-05 '05-06
Year
CN_ISB_Aug06 41
 Results

Suggestions / employee UOM : Nos/employee

40
40
38 38 38 39

35
Nos

30

25
01-02 02-03 03-04 04-05 '05-06
Year
CN_ISB_Aug06 42
 Results

Sales Vs Floor space

400 Sales 412 17000

15908
364
345 15750

Floor Space (Sq. mt)

15450
Sales (Rs in crores)

302 14710
Floor space
290 14500

235 229 13250

12680
200 12680

180 12000
01-02 02-03 03-04 04-05 '05-06
Year
CN_ISB_Aug06 43
 Where this has got us @ SCL

¾ Lowest cost producer of Air Compressors (for

HCVs) in the world

¾ 100% on-time-delivery to customers for the LAST

3 years

¾ 100% improvement in employee productivity

¾ 75% improvement in inventory turns

¾ 40% improvement in space productivity

CN_ISB_Aug06 44
 Praise from the Expert

This summer in India I visited a remarkable air brakes

plant belonging to the TVS Group that is one of the leanest
operations I have ever seen outside of Toyota

- Mr Jim Womack
President and Founder
Lean Enterprise Institute
April 2002

CN_ISB_Aug06 45
 To summarise

¾ Lean Manufacturing is a broad system strategy, but successful

implementation is in the details.

¾ Lean Manufacturing is an Organization-wide Change process.

¾ Successful Implementation requires commitment & involvement

across all levels.

¾ Lean solutions are usually no cost / low cost.

¾ “World Class” companies are implementing the Principles of Lean

Manufacturing.

CN_ISB_Aug06 46
 Advantage India

CN_ISB_Aug06 47
 Has the potential to become one of the top 5
economies by 2025 …..
USD billions

Real GDP *
21,000
US
18,000
15,000

12,000
India would be the Third largest
9,000
Economy (after China & US) by 2050
6,000 “Goldman Sachs Report”
Japan

5,000 China

4,000

3,000 India @ 8%
Germany
UK
2,000 India @ 6%
France
Italy Mexico
Canad
1,000
S Korea a

0
2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025
Source: ACMA

CN_ISB_Aug06 48
 Opportunity for India

¾ Largest diamond cutting and polishing centre

¾ Largest producer of milk, tea and pulses

¾ Largest livestock population for food processing

¾ 2nd largest two wheeler manufacturers

¾ 2nd largest jewelry market

¾ 2nd largest in cotton textile trade

¾ 3rd largest leather producer after China and Italy

¾ Weak in Manufacturing

CN_ISB_Aug06 49
 Miles to go….

¾ India needs a Manufacturing Revolution

¾ Currently (largely) limited to Auto industry

¾ But this represents only 10% of Indian mfg.

¾ Revolution needs to now spread to others- textiles,

machinery, durables, electronics, electricals……

CN_ISB_Aug06 50
 Roadmap for World Class Organisation
World Class Organisation CULTURE

Lean Manufacturing VALUE ADDING

Total Productive Maintenance ZERO DEFECT

New Product Development PERPETUTITY

VISUAL
Standardisation
FACTORY
Daily & Policy Management PDCA

Restructured Manufacturing System OWNERSHIP

Quality System ADHERENCE

5S Work Practice DISCIPLINE

Total Employee Involvement TEAM WORK

CN_ISB_Aug06 51
 12 Steps to Lean Implementation
STEPS MEASURES
Step 1 : Value stream mapping
Mapping the process flow for a Process ratio in percentage
product / product family

Step 2 : Balance to takt time

Ratio between cell bottleneck time and takt time
Match the pace of production
to the pace of sales

Step 3 : Single piece flow 1 WIP at each stage

Layout
Layout changes
changes

Step 4 : Spider man system

Pitch 2 hours

Step 5 : Process stability Quantity Variation +/- 5%

Loss elimination through TPM

Step 6 : ProcessLoss elimination

stability Qualitythrough TPM Variation +/- 5%

Step 7 : Pull system Percentage of missed cards per shift

Paced withdrawal

Step 8 : SMED 1 Takt

Step 9 : Poka yoke Rejection

Step 10 : Operator ownership Step 3 status

Step 11 : Production levelling Every part every shipping window

Step 12 : SOP QP process (QP1, QP2 and QP3)

CN_ISB_Aug06 52
 Value Stream Mapping
Month/weekly/daily plan Monthly/Weekly Daily
Production Marketing Fax
Control Monthly schedule Customer
Supplier
Supplier SCL-Foundry Introduce supermarket

Da
Takt time

ily
Or
Flap assembly
4X 51 Sec.

de
Milk run automation

r
Daily Reduce spider man
Pitch to 30 minutes. Demand/month
Combine operation of flap 30000 1X daily
assembly and body greasing
1020 nos /day
UB m/c Introduce Rabbit chase
in Assembly 1& 2 for OX OX
1 single piece flow

C/T=85s Shipping
FIFO Leak check FIFO Plating Ultrasonic FIFO Assembly 1 Assembly 2
Inspection CO=900 & deburr 2(shared) Cleaning Packing
stores Uptime=85.4% 5 12 1(shared)
I I 1 I 1 I
2 shifts I
24 I 24
24 48 125 C/T=14s C/T=60s
16 C/T=51.42s C/T=240s
C/T=45s C/T=300s
LB m/c CO=0 CO=0 CO=0 CO=0
CO=0 CO=0
Uptime=100% Uptime=95% Uptime=95% Uptime=100%
Uptime=100% Uptime=100%
C/T=300s 1 2 shifts 2 shifts 2 shifts 2 shifts
2 shifts 2 shifts
CO=0 Rejection 0.2%
Uptime=100% C/T=87s Rejection 4% Reduce work content
2 shifts CO=900 Introduce Conveyor to balance takt time
for Assembly 2
Uptime=85% Value added Time 10236s
2 shifts Introduce crow foot Process Ratio = = 34.6%
Production lead time 29575s
arrangement for mounting
Date - 26.12. 2005 bolt tightening Automation of four
Introduce low cost automation
bolt tightening
in assembly 1 and 2
.034 .017 0.132 day 0.028 day 0.015 days
0.09 days
day day
300s
CN_ISB_Aug06 902s 164s 8100s 130s 100s 300 s 240s 53
 Miles to go….

¾ For too long, we have seen our national advantage

through the lens of wage cost only….

¾ Time to exploit others

• Technology & Processes
• Human competence
• Innovativeness

Time to build on our strengths !!

CN_ISB_Aug06 54
 “It isn’t enough to be going fast in the right direction.
If you’re not going fast enough, you can still get run over.”

CN_ISB_Aug06 55
 Thank you

CN_ISB_Aug06 56