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How International Corporations WorkA French Corporation You have two cows. You go on strike because you want three cows.An Italian Corporation You have two cows, but you dont know where they are. So you break for lunch.A Swiss Corporation You have 5000 cows, none of which belong to you. You charge others for storing them.A German Corporation You have two cows. You reengineer them so they live for 100 years, eat once a month, and milk themselves. An Indian Corporation You have two cows. You worship them !!!!!!
An American Corporation You have two cows. You sell three of them to your publicly listed company, using letters of credit opened by your brother-in-law at the band, then execute a debt/equity swap with a general offer so that you get all four cows back, with a tax exemption for five cows. The milk rights of the six cows are transferred via an intermediary to a company secretly owned by the majority shareholder who sells the rights to all seven cows back to your listed company. The annual report says the company owns eight cows, with an option on one more. Sell one cow to buy a new president of the United States, leaving you with nine cows. No balance sheet provided with the release. The public buys your BULL !!!!!!!!!!A Japanese Corporation You have two cows. You redesign them so they are one-tenth the size of an ordinary cow and produce twenty times the milk. You then create clever cow cartoon images called Cowkimon and market them World-Wide.
Toyota Production System (TPS)(Lean Production System)Lean production system is the western jargon for a system rooted in ToyotaProduction System.A production control system based on many years of continuousimprovements, with the objective: "making the vehicles ordered bycustomers in the quickest and most efficient way, in order to deliver thevehicles as quickly as possible."(TPS) was established based on two concepts:6."jidoka" (translated as "automation with a human touch") means that whena problem occurs, the equipment stops immediately, preventing defectiveproducts from being produced7. "Just-in-Time," in which each process produces only what is needed bythe next process in a continuous flow.
Why study Toyota? Total annual profit on March 2003 was $8.23 billion- larger than combined earnings of GM, Chrysler and Ford. Profit margin is 8.3 times higher than industry average. Toyota shares rose 24% from their 2002 values. Market capitalization was $105 billion as of 2003 – higher than total of Big 3. In 2003, sold more vehicles than Ford and Chevrolet. The company has made profit every year over the last 25 years and has approximately $20-$30 billion in cash on a consistent basis.
JIT Philosophy Getting the right quantity of goods at the right place and the right time Concept of inventory reduction Founded on eliminating waste : Waste is anything that does not add value A broad JIT view is one that encompasses the entire organization
Elements of JIT Manufacturing JIT Manufacturing is a philosophy of value- added manufacturing Achieved by Inventory reduction - exposes problems Kanban & pull production systems Small lots & quick setups Uniform plant loading Flexible resources Efficient facility layouts
KANABANThe word Kan means "visual" in Japanese and "ban" means "card". SoKanban refers to "visual cards".Lets say one of the components needed to make widgets is a 42" stem-bolt and it arrives on pallets. There are 100 stem-bolts on a pallet. Whenthe pallet is empty, the person assembling the widgets takes a card thatwas attached to the pallet and sends it to the stem-bolt manufacturingarea. Another pallet of stem-bolts is then manufactured and sent to thewidget assembler.A new pallet of stem-bolts is not made until a card is received.This is Kanban, in its simplest form.
Computing the Number of Kanbans: an aspirin manufacturer hasconverted to JIT manufacturing using kanban containers. They wish todetermine the number of containers at the bottle filling operation which fillsat a rate of 200 per hour. Each container holds 25 bottles, it takes 30minutes to receive more bottles, safety stock is 10% of demand during LT. Solution : D = 200 bottles per hour T = 30 minutes = .5 hour C = 25 bottles per container S = 0.10(demand)(T) = 0.10(200)(.5) = 10 bottles DT + S (200)(.5) + 10 N= = = 4.4 kanban containers C 25
Waste RemovalTypes of wastes include: Overproduction: Producing items for which there are no orders, which generates such wastes as overstaffing and storage and transportation costs because of excess inventory. Waiting: Workers having to stand around waiting for the next processing step, tool, part etc. Or no work because of stock-outs, lot processing delays, equipment downtime, and capacity bottlenecks. Unnecessary transport: Carrying WIP long distances, creating inefficient transport, or moving parts in and out of storage facility. 12
Over-processing or incorrect processing: Taking unneeded steps to process the parts. Inefficient processing due to poor tools and product design, causing unnecessary motion and producing defects. Excess inventory: Excess raw material, WIP or finished goods causing longer lead times, obsolescence, damaged goods. Unnecessary movements: Any wasted motion employees have to perform during the course of their work, such as looking for, reaching for, or stacking parts, tools etc. Walking is a waste. 13
Defects: Production of defective parts or correction. Repair or rework, scrap, replacement production, and inspection mean wasteful handling, time and efforts. Unused employee creativity: Losing ideas, skills, improvements, and learning opportunities by not engaging or listening to your employees. 14
Eliminating Waste First step in removing non-value added steps from a process is to map the process. Map the value stream following the actual path taken by the part in the plant. Walk the full path yourself (genchi genbutsu). One can draw the path on a layout and calculate the time and distances traveled (spaghetti diagram). Traditional cost saving focuses on value-added items and try to improve those. TPS focuses on the entire value stream to eliminate the non-value adding items. 15
Role of Inventory Reduction Inventory hides problems
5S Principles• Seiri => means Organization :separate things that are necessary from those that are not keeping thenumber of unnecessary items as low as possible, at a convenient location.• Seiton => means Neatness:how quickly one can get the things needed and how quickly one can putthese things away.• Seiso => means Cleanliness:which is the concern of everyone in the organization.• Seiketsu => means Standardization :continually and repeatedly maintaining one’s organization, its neatness andcleanliness.• Shitsuke => means Discipline : instilling the ability to do things the waysthey are supposed to be done -> creates a workplace with good habits.