Why it pays to be lean

In today’s marketplace of cut-throat competition, just-in-time production and minimal inventory levels, companies worldwide are cutting their flab and embracing the mantra of lean manufacturing. The Indian automotive industry too is going lean but is it following a fad or is it really a medium to sustain a profitable existence?
Starting from its humble origins at Toyota soon after World War II, now eulogised as the Toyota Production System (TPS), lean manufacturing techniques are constantly being refined, honed, and improved in all areas as kaizen (continuous improvement) becomes the norm in workplaces all over the country.
Lean manufacturing can be defined as a systematic approach to identify and eliminate waste (muda) in various operations through continuous improvement for doing everything more efficiently, reducing the cost of operating the system and fulfilling the customer’s desire for maximum value at the lowest price.
A number of companies have realised the capability of producing high-quality products more economically even in lower volume and in half the time and space using just a fraction of the normal work in processes inventory. For the enterprises keen to win and retain customer confidence, to realise efficiency and effectiveness in all business processes and to improve the chance of making profit consistently, lean manufacturing has proved to be a very reliable good management practice.
Not surprisingly, the number of companies taking the lean manufacturing train in India is fast increasing. It helps them eliminate waste in turn resulting in on-time delivery and cost cutting. All these are a byproduct of a host of initiatives which include identifying and removing non-value-adding activities across an enterprise. According to C Narasimhan, advisor to Sundaram Clayton Ltd, waste levels, especially in plant and equipment operations in the form of bad quality, time loss due to changeover, downtime, methods and idle capacity are estimated to account for as much as 95 percent of traditional manufacturing processes.
In his special address at the Conference on Lean Manufacturing: Roadmap for Manufacturing Enterprises to achieve Global Excellence, organised by the Confederation of Indian Industry (CII), Tamil Nadu State Council, in Chennai recently, Narasimhan said that elimination of waste is the meeting point of customers. Waste reduction goes a long way in cutting production costs and improving bottomlines. Hence, any management strategy must focus on eliminating waste and the ‘lean’ techniques can be taken beyond the narrow confines of manufacturing. “It should create lean enterprise, not just lean manufacturing set-ups,” he said.

Skill development
According to Gopal Srinivasan, chairman of CII Tamil Nadu State Council, the whole aim of quality practices such as TQM, TPM and lean is sustainability of an organisation’s profitable existence. Sustainability can be referred to the ability to “consume the least to produce the most,” he pointed out. Eliminating waste should start with a clear vision focusing on skill development. In India, every year 12.5 million people join the workforce, of which only 3.5 million have received formal education beyond school level. Of that lot, around 10 percent find employment in IT and ITeS industries, the rest should ideally be absorbed by other sectors.
Though India has produced more number of jobs than China in the last five years, as per the statistics of International Labour Organisation, over 90 percent of them are created in informal sectors where the opportunity for skill development is less. Therefore, Srinivasan said, it is necessary for large organisations to reach skill development initiatives to vendors and their sub-vendors including micro small and medium enterprises that provide employment to over 80 percent of the workforce.

Mind game
Dr N Ravichandran, president (operations) of Lucas-TVS, said the aim of lean manufacturing is to make an organisation flow without stagnation of inventory, machines and people. “Lean is not a technique, product or process but it is a mind game,” he said. The goal is to achieve cost and time reduction as well as quality enhancement in a consistent manner. Companies must realise the difference between activity and achievement. An activity becomes value-added only if a customer is willing to pay for it. It doesn’t matter if the product has been tested a thousand times; all the customer wants is quality, said Dr Ravichandran.
T R Parasuraman, GM and senior advisor (production control and logistics) of Toyota Kirloskar Auto Parts Ltd (TKAP), had a different point of view. He said effecting change in the mindset of senior and middle management is the key for organisational transformation and to achieve excellence in manufacturing. Standardisation, documentation and simplified processes help employees make a system foolproof. By adopting lean manufacturing practices, TKAP could achieve a less than 0.2 percent rejection.
Event chairman Jayakumar Ramdass (also chairman of the Taskforce on Manufacturing and Quality, CII Tamil Nadu), said India’s competitiveness is challenged by various external factors such as oil price fluctuation. Innovative manufacturing techniques are a must to enhance competitiveness. “Over 99 percent of world trade is happening outside India, which implies export is the key for growth. Industry should adopt lean manufacturing practices to achieve zero defects and enhance its export performance,” he added.

The Toyota way in India
The Bangalore-based TKAP, a joint venture between Toyota Motor Corporation and Toyota Industries Corporation of Japan and Kirloskar Oil Engines, has recently begun exporting transmissions for the Innovative Multi-utility Vehicle (IMV) to Taiwan. This is the seventh country to whom this key supplier to Toyota worldwide exports its products, an achievement credited to its maintaining top-notch quality levels.
TKAP manufactures the complete manual transmission assembly which meets global specifications. The transmission unit is a complex one that Maruti still imports from Japan. The fact that Toyota sources it from India is testimony to the quality of the Indian component industry and TKAP. According to T R Parasuraman, general manager and senior advisor (production control and logistics), TKAP could take up the challenge due to the right moves towards global quality including lean manufacturing. It involved focusing on and maintaining standards besides continuously improving manufacturing processes. As part of the Toyota manufacturing system, it began concentrating on manpower development since it believed that good thinking led to good products.
During plant construction stage itself, TKAP began simultaneous recruitment and training programmes. The prime focus was to train the team and group leaders besides creating work standards. A detailed work instructions sheet was created, based on the Toyota way, showing the standardised method with which the work needed to be done at each process taking care of quality and safety, primarily resorting to Haizen (an offshoot of kaizen, which emphasizes on kitting of assemblies to avoid missing operations). At the administration level, TKAP set up grades in groups for staffers with clearly defined roles. Problems of the past were studied to help them take counter measures and prevent their re-occurrence. This helped control process variation by identifying changes or deterioration in machine elements and monitoring variations. While the Indian practice is to avoid stopping the assembly line, the Toyota way is to encourage it, said Parasuraman. As a result, TKAP workers do not hesitate to stop the line in case of quality abnormality.
The TKAP management monitors the changes in man, machine, methods and material as this helps support maintain consistency and productivity. Despite creating standards and procedures, the company banks on continuous improvement to contain occurrence and outflow of defects by following the PDCA – plan, do, check, act – cycle. The mantra is to identify all possible occurrences of defects in the process, take counter measures for occurrence and outflow of defects, check the criticality of process by giving rating and make the critical process foolproof. This process overall has helped prevent rejected products slip in to customers.
The Toyota Production System, on which the lean manufacturing system is based, clearly is making a difference. A key difference in the marketplace, which most manufacturers are keen to implement themselves.