Addenda

Addendum 1:

Lean Production and Agility

Lean: Lacking in fat, not using any more resources than necessary

Agility: Nimbleness, responsiveness to demand

“Lean production” and “agility,” two words re-coined in the early 1990s, were perceived by many as almost magical answers to puzzling questions about American and European eroding automotive manufacturing prowess against that of the Japanese. The case for that feeling was justified in some areas. In other areas, different pictures emerge that create questions regarding that conclusion.

Lean production integrates several concepts that intend improved organizational and methods philosophies. The dynamic work team, product design for ease of manufacture (lean design), just in time inventory (kanban), continuous improvement (kaizen = unrelenting and imaginative search for better ways and waste elimination), and agility are key among those concepts. Lean design, continuous improvement, and the dynamic work team concepts are like motherhood and apple pie, and will elicit little argument from anyone except possibly organized labor.

Lean design incorporates the concept of “simultaneous engineering.” S.E. is the process whereby product engineering and manufacturing engineering are brought together at the earliest time practical to insure that the product detail is developed around the most effective way to produce it. This concept is particularly advantageous when an organization is free of paradigms that could encumber the imaginative search for the best solution, whatever it may be. Machine tool purchasing policies and practices can fall into that category. It’s clear that the low price paradigm, “auction process,” discussed earlier has distorted the process for the search for the best manufacturing solution in some procurement organizations.

The dynamic work team, an important advantage of lean production, is defined loosely as one made up of all levels of staff, multi-disciplined, with those actually adding value to the product given the maximum number of tasks and responsibility. They are provided access to a high level of management information and real time data to manage output and achievement of their goals. The key implied meaning contains some of the attributes of the reasons we work, passion, resourcefulness, and a kind of “find a way” Yankee ingenuity. Organized labor has serious difficulty with this concept, for reasons discussed earlier, and could be an obstacle in the achievement of real leanness.

Other aspects of lean production such as “just in time inventory” and “agility,” which obviously have an important place in production, do not fit all circumstances into which they are force fit.

Just in time (JIT) inventory typically means that long term commitments and special relationships with suppliers exist that are counter to the small isolated population concept discussed in chapter two. The idea of minimized inventory certainly is a good thing especially if it could be achieved while maintaining the highest level of competition for value in the supply of that inventory at the same time. Some would question whether JIT actually works or is the safe inventory level burden simply shifted to the supplier?

Agility relates to all aspects of a manufacturing enterprise. Simply stated it is the ability to be nimble and effective in influencing market trends and demands by staying a step ahead of competition, or responding effectively to competitive challenge. Offering continuously competitive customer perceived exciting variety and dynamic value is essential. The products incorporate emerging technology both in the offerings themselves and in the technology to produce them.

Customer perceived variety and its competitive position in automotive products are increasingly being strategically planned to be achieved above the platform level. The number of platforms within many auto company’s portfolios are being reduced significantly based on designs that permit ready adaptations of variations of the upper body and trim, to name some.

Examples: a very popular retrograde small utility vehicle on an existing traditional small car platform and new SUVs on existing truck platforms or on auto platforms. Recently, a decision was announced that would reduce the number of platforms between two cooperating and partially jointly owned auto companies from 29 to 13. The same kinds of efforts are occurring throughout the global auto industry. Obviously there are some changes required to existing platforms for new vehicles and subsequent generation platforms will come along as well.

These changes are being made to improve costs and competitive position expecting that the total final production volume is shifted, not reduced. So rather than production volumes going down on platform components, because of variations going up, production is actually going up on the fewer number of base platforms. Platform/chassis, components include suspension, axles, steering, brake systems, engines, transmissions, and differentials (drive train). The vast majority of the machined components in an automobile reside in the base platform.

Higher platform volumes on fewer variations of those platforms will achieve automotive product variation. Agility will have the importance ascribed to it for the various final product models identified above the platform level. It will not at the platform level and below because the high volumes should make dedication with reasonable flexibility a more practical and leaner approach. Terms such as mass production, economies of scale and dedication, thought by some to be archaic, are in fact as important as ever in the high volume arena (platforms as the example). Flexibility to accommodate typical changes or improvements, even later generations in the high volume dedicated systems is normal; however, a machine meant for crankshaft production will never make cylinder heads.

The main goal in consolidation of platforms is increased speed of new product to market, nimbleness in shaping the market with exciting new products and in response to market demand. The very risky but successful example of the retrograde styled vehicle to get a competitive advantage may not have been tried if it had required a new platform as well. The byproducts of cost savings, particularly engineering, and risk reduction in new products are significant.

Nonetheless, we must look at agility or flexibility in the manufacturing of the thousands of different components in the platform.

Agility, when applied as a manufacturing philosophy, has been defined to have a more far-reaching meaning. When it is applied to a more specific component part production machining system the classic definition applies. In general it can be interpreted to mean that it would be nice to have the ability to quickly convert a set of hardware from the production of one component part to a different one. The intent being to satisfy changing demand between component parts and/or to redefine that part easily to respond to competitive pressure or to convert to the next generation product quickly, inexpensively and dependably. That hardware choice should not in any way restrict the product designer in his efforts on succeeding component generations. Of course that capability should not add to the cost or complexity of normal operation beyond its perceived flexibility value.

Agility without other complications is very desirable for obvious reasons. The problem is that it would have to be a magical solution if it could be practically applied to all machined components regardless of their production rates, their forecasted life expectancy, or their similarity, and not negatively affect their cost and quality.

At the two extremes of the concept, the term takes on somewhat different meanings. In a job shop type of setting where short run, on demand, production is the rule, serious flexibility is not only nice to have but a requirement to be successful. The capital investment in flexible machine tools, machining centers, can be expected to pay dividends.

In a high production environment the reasoning is not nearly as clear since there are numerous factors involved that impact the economics and other effects of the decision to incorporate agility.

For example, the projected stability of the design of the component to be produced and the forecast production volume requirements in relation to the useful life of the hardware are key factors. In other words will the equipment be worn out or approach technological obsolescence before its flexibility can be effectively utilized? A machine tool system producing 150 components per hour (normal in an American automotive environment) two shifts per day will make 500,000, (allowing for some inefficiency) identical, complex machine cycles in one year. An engine and transmission combination will typically have a production life of from five to ten years. During that time, of course, significant improvement changes will be incorporated.