Supply Chain Management and Lean Production Through-out the World The system of interconnected businesses used to push a product from supplier to consumer is defined as a supply chain. Supply chain management focuses on managing the supply chain in an effort to improve the quality and time it requires to manufacture a product. To implementing supply chain management, a helpful lean production practice called Just-in-time can be used to remove any waste present along the supply chain.
The marriage of lean production and supply chain management creates lean supply chain management, which provides a much leaner and more economical supply chain for the product to flow through. Much uncertainty about what supply chain management entails is present in today’s society. Many people treat supply chain management as being synonymous with logistics, which is the management of the flow of goods from the origin to the consumers (Lambert, 2008, p. 1). However, supply chain management encompasses much more than the purchasing or management of goods to the consumer.
Supply chain management (SCM), as defined by Lambert (2008), is the “management of relationships across the supply chain, which includes a network of interconnected businesses involved in providing a product or service to the consumer. ” A supply chain is defined as a system of organizations, as well as people and information, which are directly involved with the manufacture and delivery of a product (Phelps, Smith, Hoenes, 2004; “Supply Chain,” 2008). The supply chain includes the transformation of raw materials at the site of the supplier to finished goods that can be used by the consumer.
This paper reviews some of the advantages and potential disadvantages of lean production in the Japanese automotive industry. According to the experts, 2006 saw Toyota become the world’s largest automobile manufacturer in the world, knocking General Motors (GM) off the top spot. It is a big leap from the situation in 1950, when Toyota produced 11,706 units per annum compared to GE’s 8,000 units per day. Heavy operating losses have forced GM to downsize, whereas Toyota has its highly efficient manufacturing system to thank for its ongoing rise.
Adopting practices of lean production in the automotive industry reaps considerable financial and environmental rewards, but poses difficulties in making an impact on buyers in the prestige market. I’ll try weigh up the virtues of lean production in terms of the environment and costs against the potential negative impact of lean production on brand image. Thus provokes thought on how the best of both goals might be achieved. The differences between these two production systems are very clear, in fact it can be said that they are the total opposite of each other in terms of their approach to, and methods of, production.
One of several aspects of the Toyota production system that differ from the GM system is that Toyota puts a flow into the manufacturing process, while GM has lathes located in the lathe area, milling machines in the milling area Toyota places a lathe, milling machine and a drilling machine in the actual sequence of the manufacturing process. This means that instead of having one worker per machine, one worker oversees many machines or processes. GM, however, has a group of workers skilled only in lathe operation, a group skilled only in milling.
The GM plant layout will have 50 or more lathes in one location. When machining is completed the items are collected and taken to the subsequent drilling process and after that the milling process. In the US there is a union for each job function, with many unions in each company. Lathe operators are only allowed to operate lathes and a drilling job must only be taken to a drilling operator. As a result because the operators are single skilled a welding job required at the lathe section cannot be done there but must be taken to a welding operator.
As a consequence there are a large number of people and machines and for GM; mass production is the only way to achieve cost reduction under such conditions. When large quantities are produced, the labor cost per car and depreciation burden are reduced. This requires high performance, high speed machines that are both large and expensive. This type of planned mass production is a system in which each process makes many parts and forwards them to the next process. This method naturally generates an abundance of waste.
There is a lot of research based on, and around lean production starting with Womack (1990) in their groundbreaking studies to Christopher’s (2006) research about bringing lean into the future through newly developed terms such as agile manufacturing, flexible manufacturing and supply chain resilience. Lean manufacturing and the linkages and the relationships that it involves are complex in many respects and there is a lot of emphasize on communication and information flows in order for lean manufacturing to work.
The relationships between suppliers and buyers within the supply chain had in the past been adversarial with many buyers not willing to divulge certain information about their business. The link between the suppliers and the buyer was hampered as a result. This approach was linked with western manufacturing, USA and Europe, and related to their management culture. Whereas the Japanese way be deemed more open with a greater focus on the sharing of information and knowledge and also involving suppliers in many different areas of the business especially new product development.
The link between buyer and supplier in the lean world of Japan is far more important and needed in order for the supply chain management under lean manufacturing to be successful. “China, in short, has evolved economically at a time when the global automobile industry has never needed it more. China is both an attractive market for automobiles, and an attractive supplier of parts, subassemblies and, soon, completely-assembled automobiles and other vehicles.
From 1977, when China lacked even the vocabulary to negotiate joint venture agreements, to today, when every major automobile manufacturer in the world is working alongside Chinese companies, China’s bargaining power with and expectations of joint venture partners has increased exponentially. “Since automobile parts are integrally tied in to the automobile industry, their evolution, joint-venture participation and growing role connected to joint ventures. More importantly, most of the profits generated in today’s global automobile business are being made in the parts industry, rather than final assembly.
Parts companies’ progress in consolidation, in R&D and emerging brand strength make them highly sought-after as joint venture partners in China and elsewhere in the world. ” The greater choice of suppliers in international markets makes it possible to reduce costs and improve the quality of procured materials. In relation to production, the generation of economies of scale can be realized either through the concentration of all production activities or through the construction of a number of plants according to the needs of specialization.
Production in decentralized plants can facilitate the attainment of several objectives, including lower costs, learning curve economies, the establishment of a company in foreign markets, the introduction of new products, and technical leadership. The age of customization in manufacturing has given way to mass production. While there were many benefits to mass production, there were some aspects of mass production that were less than desirable. One of the primary negative aspects of mass production was the inventory. Organizations had to maintain inventories in order to ensure continuous production.
Inventory includes: raw materials, component parts, subassemblies, and finished goods, and the various products and supplies required in the production and distribution process. Inventory can be a liability as well as an asset: excessive, finished (goods) inventory requires large warehouses. The research, therefore, set a number of questions that encompasses the companies’ dentition of lean manufacturing and whether that company had implemented lean before. For example, the key questions asked in the semi-structured questionnaires were as follow: Is this company independently managed or it is owner-managed?
What are the major drivers of your business? What is your dentition of lean manufacturing? What has motivated the company to implement lean manufacturing? Where has lean been implemented in your organization (piecemeal or whole)? What were the criteria for choosing that speci? c area? How many people were involved in the exercise? What training if any, did the staff undertake? What were the difficulties encountered in training and how were they overcome? What were the direct and indirect costs involved in the implementation lean manufacturing? (E. g. labor costs and consultancy fees. The above questions were signi? cant for enabling the retrieval of the relevant and accurate information on lean manufacturing utilization within these companies. For instance, by asking questions about a company’s major business drivers, how such a company views and perceives the concept of lean manufacturing and where lean has been implemented, and at whatever cost; the study was able to deduce a number of things. First and foremost, it could be veri? ed instantly based on information provided as to whether such a ? rm understood and was actually practicing lean or not.
This was signi? cant for the retrieval of information on the factors that are critical to lean implementation due to the following. By knowing about the management type of such a company, it was found to be useful in determining its motives to adopt the lean concept. The study wanted to ? nd out relationships between lean adoption and the management style. Again it wanted to determine as to whether the type of management style actually in? uenced or deterred the absorption of the lean concept. The interviews were structured to last not more than 15 minutes.
The intention was to gather as much information as possible in a limited time without demoralizing the interviewee. It was believed that way; answers to pertinent questions could be provided resolutely. Finally, the overall information obtained from the interviews, and summaries of both the informal meetings and observations, were compared with that from the literature survey in way of analysis. Results were validated through workshops in the companies concerned. At the same time, expert opinions were sought to verify and validate the actual ? ndings.
Research results and discussions this research investigation has realized four key main factors that are fundamental, hence critical for the implementation of lean manufacturing. They include; leadership and management, ? nance, skills and expertise, and culture of the recipient organization. Of these identi? ed factors, it has been hypothesized that leadership and management commitment are the most critical ones in determining the success of a lean project. Strong leadership ethics and committed management support is the cornerstone to the success of implementing any idea within an organization.
Improvements are not focused only on large lean projects, but more are small improvements led by shop floor-team members so there is strong ownership of the process and results. Over time continuous improvement by identifying and solving problems, strengthens the company, which can be regarded as a learning organization. We must reemphasize that a Lean organization is made up of people and people are highly variable from person to person and even the same person over time. So, every action of every person every day doesn’t support the ideal of the company culture.
What does stand out at Toyota is the ability to recognize problems accurately and honestly and solve them with great rigor. Toyota provides an example of a learning organization that is real and successful. It is successful for the owners of the business and for the team associates. It starts with the assumption that people are the most important resource and need to be nurtured and developed and challenged. Human resource management is one of the most visible and important functions in the company because humans are the only competitive resource that cannot be copied.
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