U.S. auto sales are on pace to exceed 17 million units this year and could break the record of 17.4 million sold in 2000, according to Autodata Corporation. Backing these figures is the Automotive News Data Center, which reports that sales for the first eight months of 2015 outperformed sales for the same period in 2014. For example, Daimler AG posted a 6.4% increase in sales compared to 2014, Ford Motor was up 2.7% for the first eight months, and General Motors showed a 3.2% increase from the previous year.
Many automakers are running their U.S. plants with three shifts of workers and scheduling overtime, particularly factories that make pickup trucks, SUVs, and crossovers. Of course, the automakers’ success in extending this upswing depends on the ability of their suppliers to keep up with industry growth. For tier one automotive suppliers the pressure to meet demand must be carefully balanced with the ability to maintain and even improve quality. This is where lean manufacturing principles come into play.
Lean manufacturing is a methodology that improves processes through continuous improvement (kaizen) and elimination of waste. It is the North American equivalent of the Toyota Production System. Lean manufacturing offers a proven method to eliminate non-value-added activities and waste from your processes. Overall, it can offer a competitive advantage by lowering operating costs and improving productivity.
Lean manufacturing is supported by five basic principles:
- Identify what creates value from your customers’ perspective
- Specify every step in your processes (Value-stream mapping is an excellent tool for this.)
- Make those processes flow
- Produce only what customers request
- Strive for perfection by continually removing waste
Reducing Waste in Your Processes
Cutting waste in your production processes is one of the most effective ways to increase profitability. Simply put, processes either add value or waste to the production of a good or service. The concept of “seven wastes” was originally developed by Toyota’s chief engineer, Taiichi Ohno, as the core of the Toyota Production System, where waste is known as muda. The seven wastes is a tool to further categorize muda. To eliminate waste, it is important to understand exactly what waste is and where it exists. Develop a strategy for each type of waste to reduce or eliminate its effect, thereby improving your organization’s overall performance.
The seven wastes include:
- Inappropriate processing (over processing)
- Unnecessary inventory
- Unnecessary/excess motion
Ohno later added underutilized people (brainpower, skills, and experience) as the eighth waste that is commonly found in physical production.
Focusing on Processes
Suppliers to the automotive industry are likely well-versed on the concepts of layered process audits (LPAs), since these audits are typically required as a condition of doing business with major automakers. LPAs differ from generic process audits in that they require multiple people, including management, to conduct an ongoing chain of simple verification checks to ensure that a defined process is followed correctly. If implemented properly, LPAs can help transform your company’s culture into one that embraces continuous improvement. This powerful audit management methodology can improve quality and deliver cost savings by boosting problem-solving systems and making continuous improvement nearly routine.
To ensure that your processes are as lean as possible, consider using a powerful lean tool called value-stream mapping (VSM)—essentially a pencil and paper tool that should be used in two stages. The first step is to follow a product’s path from the beginning of production to the end and draw a visual representation of every step in the material and information flow. The second step involves drawing a future-state map of how value should flow. Of course, the most important map is the future-state map. Every process improvement initiative should begin with a clear understanding of current performance and an idea of the waste minimization you can achieve once you reach the desired future state.
VSM allows you to create a solid implementation plan that will maximize your available resources. For a lean manufacturing journey, VSM can serve as the launch pad to begin identifying and improving your processes. VSM is about sparking change—decluttering the process of the nonessential activities that do not add value but instead waste time and resources.
What lean manufacturing tools have you found to be effective in your organization?