Term Paper: Automotive Industry

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Lean Principles for Process Delivery

Project Plan for Apply Lean Principles to Automotive Refurbishment and Service Lifecycle Management Processes

Lean manufacturing's greatest benefits are from eliminating waste from the many processes that auto manufacturers, their supply chains, aftermarket and refurbishment partners rely on to anticipate, respond to, fulfill, and serve customers. The focus on making processes more lean and efficient is the catalyst of competitive advantage, as through greater process efficiency, there is a higher level of collaboration and learning through an organization over time (Likert, 2003).

As an integral component of the automotive supply chain, automotive refurbishment and service lifecycle management play critical roles related to lifetime customer value, quality management and compliance, the development of higher levels of collaboration across distribution channels and supply chains, all contributing to consistent profitable performance as a business (Hammant, Disney, Childerhouse, Naim, 1999). For an automotive refurbishment or service lifecycle management -based business to attain its' long-term financial and growth objectives it's clear there needs to be a high level of sychronised with other members of the automotive supply chain to the process level. This has led to an increasingly higher level of adoption of Business Process Management (BPM) techniques for streamlining processes while crystallizing them down to their most elementary aspects, in effect defining the best practice of the given process over time, then automating it (Kim, Sohn, Roemer, Yassine, 2006). Re-architecting processes first, then applying information technologies including BPM and Service-Oriented Architectures (SOA) to foster and support higher levels of collaboration across supply chain partners is becoming an evolving best practice as well (Bae, Seo, 2007) (Adamides, Karacapilidis, Pylarinou, Koumanakos, 2008). Creating platforms that enable high levels of collaboration and synchronizing of processes throughout a supply chain often across organizations and trading partners is leading to the development of learning organizations over and above merely ones that collaborate with one another (Likert, 2003). Fostering the development of knowledge of the primary differentiator requires a significant concentration supply chain wide first on lean manufacturing core concepts, and second, on specific process areas that make the most impact on attaining higher levels of knowledge within an organization (Johnson, Sun, Johnson, 2007).

Intent of this Proposal

The definition of the fundamentals of lean process flows taken from a manufacturing context, the definition of a project plan framework for ascertaining the extent to which dominant processes are lean or not within the organization, and defining a plan for the acceleration of growth of the organization are the three objectives of this proposal. The definition of the fundamentals of lean is followed by a suggested self-rating research instruments respondents within the organization can use to ascertain the level of maturity of profiled processes. The self-rating scale or research instrument has been derived from research completed by the Massachusetts Institute of Technology (MIT) Lean Aerospace Initiative, which has applicability to lean process definition in the automotive industry as well (Bennett 2003). AMR Research, a consultancy that specializes in supply chain research in the automotive, aerospace and defense, discrete manufacturing, high tech and retailing industries, has devised the concept of the Demand Drive Supply Network (DDSN) which is defined by O'Marah (2004), which includes a maturity model that designates the level of demand chain synchronization at both a process and information level (Barrett, 2007). The combining of these two concepts of DDSN and its respective maturity model form the foundation of the analysis of results from the self-administered framework presented in this paper. In addressing how these analytical constructs lead to accelerating growth of an organization, the selection of process to profile and improve is critical to the accomplishment of that objective. For purposes of this discussion the quote-to-order process is profiled. Finally, recommendations are made as to how manufacturers can attain lean transformation based on the collective insights gained from working with manufacturing customers to attain their lean manufacturing objectives. In addition, AMR Research's Demand Driven Supply Chain (DDSN) Maturity Model applied to manufacturing lean production processes maturity.

Process-Centric Lean Best Practices Starts With Lean

The five primary elements to consider when implementing lean manufacturing are manufacturing flow, organization, process control, metrics, and logistics (Mondragon, Lyons, Michaelides, Kehoe, 2006). These elements represent the variety of aspects needed to sustain a successful lean supplier enablement and manufacturing implementation program and are briefly defined here. Manufacturing flow by definition addresses physical changes and design standards. Organization identifies people's roles/functions, training in new ways of working, and communication. Process control is directed at monitoring, controlling, stabilizing, and pursuing ways to improve the process. Metrics addresses visible results-based performance measures, targeted improvement, and team rewards/recognition. Logistics provide the definition for operating rules and mechanisms for planning and controlling the flow of material. Clearly there is a need for intensive coordination and synchronization of these activities to attain lean objectives within a supply chain, and more broadly, throughout t a manufacturing organizations' network of suppliers, resellers, partners and dealers (Harland, 1996). In addition to the quote-to-order process, the forecasting process has been extensively analyzed by both industry practitioners and academicians as these two specific processes require high levels of supply chain collaboration (Jain, 2002). The heavy reliance on collaboration across the enterprise is critical for both these process areas of forecasting and quote-to-order to be profitably executed over time (Singh, Goodie, and Popplewell 2007). Implicit in what this specific team of researchers found (Singh, Goodie, and Popplewell 2007) is the observation that the higher the level of integration of forecasting and quote-to-order processes across a given supply chain the higher the level of Return on Investment (ROI) attained across supply chains. When automotive manufacturers are segmented as having lean manufacturing strategies in place that contribute to a DDSN model set of dynamics occurring, there is a correspondingly higher level of market valuation created over time as well (O'Marah, 2004),

Attaining best practices in these and other process areas that are integral to lean manufacturing's supply and value chains begins with embracing a lean enterprise vision for the enterprise first. In attaining this vision of a lean enterprise, manufacturers and their suppliers inevitably begin pursuing higher levels of supply chain visibility, greater levels of collaboration with customers, and increasingly greater levels of real-time integration of manufacturing flow, organization, process control, metrics and logistics throughout sourcing, pricing, manufacturing, and service systems. All of these advantages are combining to deliver higher product quality levels in the process. A lean enterprise is one that aligns itself to the goal of being as responsive and as accurate as possible in all responses to customers and eliminating the many forms of waste, both for resources and time (Oliver, Delbridge, Jones, Lowe, 1994).In defining lean processes, the catalyst for changing processes centers on reducing the many forms of waste and concentrates on how to create a greater value by removing all barriers to accomplishing manufacturers' and suppliers' lean objectives. There are seven types of waste lean manufacturing can assist in alleviating in making manufacturers more efficient and centered on better serving their customers, attaining their goals in the process:

Waste of overproducing: Producing components that are neither intended for stock nor planned for sale immediately.

Waste of waiting: Refers to the idle time between operations.

Waste of transport: Moving material more than necessary.

Waste of processing: Doing more to the product than necessary and the customer is willing to pay.

Waste of inventory: Excess of stock from raw materials to finished goods.

Waste of motion: Any motion that is not necessary to the completion of an operation.

Waste of defects and spoilage: Defective parts that are produced and need to be reworked.

Overcoming the Barriers to Accomplishing Lean Process Improvement and Optimisation

The greatest challenges in implementing a process-driven lean strategy is attacking those processes that cause one of the seven types of waste first, and second, creating a more synchronized supply chain, fulfillment, and service chain series of strategies. When one considers the work completed by AMR Research, Gartner, and the research completed by MIT's Lean Aerospace Initiative (Bennett, 2003) in addition to MIT's Center for Transportation and Logistics it becomes clear that the same barriers to change are more process- than customer-centric and require a change in how manufacturing is perceived - not as a cost but as a means of better serving customers. From the accumulated work of the sources mentioned, here are the major barriers to manufacturers being able to transform themselves into a lean enterprise:

Need for greater levels of ownership at the CEO-Level to force change to existing processes. What is consistent across industry advisory firms is the fact that all three rank the lack of urgency and lack of support for lean initiatives at the C-level as the major reason why so many companies fail to become lean enterprises. As the self-scoring survey in this paper will show, the lack of support and vision at the top of an organization actually encourages more siloed-based approaches to managing lean initiatives at the lower levels of the organization.

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