LEAN MANUFACTURING OF BOEING

Boeing will be discussed throughout the years and how they became lean to survive in today’s tough market.  Lean manufacturing has aided Boeing in a significant reduction in the amount of energy used, raw materials and non-product output associated with its manufacturing processes. Lean manufacturing was implemented at Boeing in 1993 ^.

With the advent of ‘’Airbus’’, a serious competitor, Boeing was forced to change its ways if they were to survive. This time Lean measures proved fruitful, manufacturing time was reduced by up to 60%, manufacturing floor space was reduced by up to 50%. Leaving more space for other processes and resource productivity was improved by 30-70%.

Ken Curtindale, a mechanic at Boeing, believes lean manufacturing has helped the company, as he no longer has to spend time walking about inefficient plants. Boeings continual investment in lean can be accredited to the fact that Boeing believes that this lean approach helps improve customer responsiveness, reduce costs and systematically improve operational performance on a continual basis.

At the end of the day, a customer’s wants may be distilled to a select few; they want the product to fulfil its function, to work when it’s supposed to, to be as cost-effective as possible, and they generally want it immediately.. Lean manufacturing ultimately sets out to simultaneously target all the above issues, rewarding both customer and manufacturer with hugely significant gains

On a tangible everyday level, the advantages offered by lean manufacturing are great in number and substantial in effect. Order to delivery times are slashed from months or weeks to mere hours. Returns due to product defects are eliminated because quality is built in rather than inspected in. Prices are cut because manufacturing overheads are greatly reduced. Cash tied up in stock is released and storage space requirements are halved. Customers can also easily customize their order as their product will not be manufactured before their order is placed, allowing them to choose exactly which product features are to be assembled.Following is steps pave for the implementation of the multi-faceted vision.

• Define product value from the customer’s point of view.
• Design-in and build-in quality into product.
• Eliminate everything that doesn’t create/add value.
• Make creation of value flow evenly and continuously. River of production which precisely matches the speed of consumption.

          Arguably the most commonly associated aspect of lean manufacturing, products are manufactured in a just in time fashion based on customer demand, only. As mentioned above, quality is also built into and designed into the product following the six sigma strategy. This is manifested by the constant search for waste-cutting potential, quality improvement, inventory shedding, and any other ways to operate better, faster, and easier. So great is the importance of this ethos that it is made a standard for all organisation systems and procedures.

TOYOTA PRODUCTION SYSTEM

The practical expression of Toyota's people and customer-oriented philosophy is known as the Toyota Production System (TPS). Many of these ideas have been adopted and imitated all over the world.

TPS has three desired outcomes:

• To provide the customer with the highest quality vehicles, at lowest possible cost, in a timely manner with the shortest possible lead times.

• To provide members with work satisfaction, job security and fair treatment.

• It gives the company flexibility to respond to the market, achieve profit through cost reduction activities and long-term prosperity.

Toyota members seek to continually improve their standard processes and procedures in order to ensure maximum quality, improve efficiency and eliminate waste. This is known as kaizen and is applied to every sphere of the company's activities.

Just In Time.

• Essentially, 'just in time' manufacturing consists of allowing the entire production process to be regulated by the natural laws of supply and demand.
• Customer demand stimulates production of a vehicle. In turn the production of the vehicle stimulates production and delivery of the necessary parts and so on.
• The result is that the right parts and materials are manufactured and provided in the exact amount needed - and when and where they are needed.
• Under 'just in time' the ultimate arbiter is always the customer.
• Toyota never tries to accommodate changes in demand by making substantial changes in individuals' workloads.
• Within the plant itself, the mechanism whereby production is regulated in this way is known as the kanban.A kanban is simply a message.
• Paperwork is minimised. Efficiency is maximised. And the Members themselves are completely in charge.

Suppliers & TPS

• Just-in-time manufacturing and other elements of the Toyota Production System work best when they are a common basis for synchronising activity throughout the production sequence.  Just-in-time manufacturing can dissolve inventories at parts suppliers just as readily and effectively as it does at Toyota's assembly plants. Product quality improves, too. That's because the Toyota Production System includes measures for illuminating defects whenever and wherever they occur.
• Suppliers who adopt the Toyota Production System also report improvements in employee-management relations. That is mainly because the system provides for an expanded role for employees in designing and managing their own work. It brings together employees and management in the joint pursuit of improvements in productivity, quality, and working conditions. 

How Does GERMANY Do It?

While Germany has many large multinational companies like BMW, Volkswagen, and Siemens that turn in strong performance, its small and medium-size enterprises (SMEs) are an impressive source of strength, both as suppliers to multinational corporations and as exporters in their own right.

These SMEs generally avoid mass markets, but they dominate niche businesses. A 2007 study by the management consultant Bernd Venohr found that more than 1,130 German SMEs held either the number one or two position in the world market for their products, or the number one position in the European market. They are rarely the cheapest producers, yet the superior quality and performance of their products enables them to command premium prices and still boost exports. In the United States, such small and medium firms were hurt most by Chinese competition and the recession.

An important factor in German SME manufacturing success is the Fraunhofer-Gesellschaft (Fraunhofer Society), an independent nongovernmental organization that provides high-quality, short-term, affordable applied research that small and medium-size firms could not otherwise afford. Fraunhofer enables smaller manufacturers to continually upgrade their processes and products, and keep ahead of the competition.

A key feature of Fraunhofer-Gesellschaft is its scale; it is a $2.45-billion enterprise that operates more than 60 research institutes with more than 250 business focus areas and core competencies. The average institute employs between 300 and 400 people, though some are much larger. Overall, it has about 22,000 employees.

The society's mission is to conduct applied research with practical industrial value. It sees itself as a bridge between the latest university insights and industry-specific product and process improvements. It also generates a great deal of knowledge in its own laboratories.

Fraunhofer institutes undertake 6,000 to 8,000 projects annually. Most are small, short-term efforts. Projects rarely last longer than two years and focus on immediate, applicable results. Because Fraunhofer's funding has steadily grown over the years, it has been able work with its industry partners to generate the incremental improvements that translate into sustained competitive advantages.

While Fraunhofer is an independent nongovernmental entity, its distributed structure keeps it focused on practical results. Each Fraunhofer institute is linked with a German university. The institutes pick their own research fields, select their own projects, and decide how to handle project results.

More important, institutes balance their own budgets. That means generating contract research, which accounts for up to two thirds of the Fraunhofer budget. In addition to its scale and distribution structure, there are several other factors that account for Fraunhofer's success:

• ·         Together, Fraunhofer's 60 institutes specialize in more than 250 research areas. Each institute is paired with a university with similar research interests. The institutes themselves are very well equipped. Most operate multiple pilot manufacturing lines and demonstration facilities. The German machine tool industry often provides equipment for testing and training, so the Fraunhofer tool set is current and the firms using it receive valuable feedback.
• ·         Fraunhofer's model is a classic government-industry partnership. The federal and state governments, private contract research, and publicly funded contract research each provide roughly one-third of its funding. The reality is more complex, since a substantial amount of "industry" research can be funded through government grants and incentives.
• ·         Even if the private sector share is sometimes overstated, it is the stability of the funding that is important. German political parties usually consider support of applied research, of direct relevance to their companies, to be a part of the national infrastructure, like water or electricity.
• ·         A great advantage of the German innovation system is the emphasis on vocational education that combines academic studies with factory apprenticeships. This continues to yield a highly trained and technologically adept work force that is the envy of the world. Fraunhofer mirrors this dual system at the highest educational levels. It employs part-time post-docs and master’s and Ph.D. candidates, who acquire practical experience while simultaneously pursuing their studies. Graduates typically spend from three to six years at Fraunhofer before moving on to positions in industry or academia. This ensures a ready supply of well-trained researchers with hands-on experience in critical industrial technologies.
• ·         Fraunhofer holds the rights to thousands of patents and registrations. It ordinarily retains patent and other IP rights upon conclusion of a research project.

           SMEs are often called the Mittelstand, or "middle class," but the two terms are not synonymous. The Mittelstand is a subset of German SMEs with certain distinct characteristics. They are typically family businesses located in small towns and rural areas. Their roots stretch back for many decades, often generations, and they plan for the very long term. As community leaders, their strong sense of social obligation makes them less likely to outsource or move offshore. Companies of the Mittelstand generally focus on niche products and markets, rather than go head to head with multinational giants. In many cases, continual incremental improvements in products and production methods have enabled them to dominate their chosen specialties.

In 2008, roughly one-third of Fraunhofer's R&D projects involved firms with fewer than 250 employees, while 43% were with companies with fewer than 1,000 employees. Without Fraunhofer, it seems that many of these firms would not have remained as competitive in global markets.

Fraunhofer also works with such large, vertically integrated corporations as Siemens, Daimler-Benz, and Volkswagen. Research projects with large companies tend to last longer, involve more institutes, and bring in more revenue than SME contracts. 

Limits and Lessons

German manufacturers have realized many successes. Not only do their multinational companies thrive in an increasingly competitive global market, but their SMEs often dominate their market niches. Yet Germany's innovation system is not a perfect model. It has significant weaknesses, and its strengths may not translate easily to other cultures.

Fraunhofer's most glaring weakness arises from its greatest strength: Its laser-like focus on established industries has kept it from pioneering new technologies. There are no German counterparts for Intel, Apple, Google, Facebook, or the dozens of large bioscience companies spawned in the United States. While Fraunhofer spins off companies, most have remained small.

Fraunhofer established seven institutes in the United States and research subsidiaries in Chile, Austria, Portugal, and Italy. In some cases the model adapts well to the local innovation system, while in other cases it does not. It is worth keeping in mind, however, that Fraunhofer also takes a strategic approach to establishing institutes, funding them partly to learn about technology development in other parts of the world.

While Fraunhofer's approach does not seem to encourage radical, paradigm-shattering change, it nonetheless demonstrates that a high-cost, high-wage country can compete effectively in global markets through the systematic and continuous application of knowledge.

One source of German success is its concentrated efforts to support research relevant to small- and medium–size enterprises that are less likely to move production offshore. Through Fraunhofer, Germany offers skills, equipment, and services that those companies could not afford on their own. As a result, Germany has strengthened its export-oriented manufacturing base and retained good manufacturing  jobs, even though its workers’ wages are among the highest in the world.

What are the implications for the United States? Perhaps the first lesson is that German firms are not “home alone.” They are supported by a dense network of institutes that help them make the  incremental improvements that bring long-term commercial success. A second lesson is that this is seen as an important national mission, the way national defense is here in the United States. It requires a steady flow of resources, concentrat­ed effort, well-funded, well-led institutions, and a sense that these are investments that are important for the country’s future

There are certainly barriers to U.S. adoption of institu­tions to support a manufacturing ecosystem. Ever since the end of World War II, the United States has invested heavily in basic research in the belief that scientific advances would lead to new products and industries. For decades, U.S. research did just that. Yet today, many of those industries, such as wireless and microelectronics, have migrated overseas, taking jobs and innovators with them. The dominant post-war paradigm, namely that technologies invented here would naturally be produced here, has now eroded.

Germany's government has long supported the applica­tion of technology to manufacturing. It launched the na­tion's industrial revolution by investing in British machine tools, and closed the gap with the United Kingdom by encouraging applied research. Its on going support for large-scale practical industrial research for small and large companies has helped keep factories and jobs in Germany.

Despite these advantages, few in the United States would want to adapt a system that would not support the creation of such breakthrough industries as biotechnol­ogy, nanotechnology, and the Internet. Yet if we are to exploit the opportunities in new manufacturing technologies, the United States might consider adapting some of Fraunhofer's best practices to improve the flow of innovation to SMEs, which form the heart of America's manufacturing infrastructure.

One thing is clear. Countries that lose their manufacturing base risk losing their ability to innovate. Against the background of an economic environment which has seen the erosion and offshoring of traditional industries in the face of global competition, the German model, or some parts of it, warrants careful consideration. Above all, we have to pay attention to other countries’ policies and programs and learn from them, just as we have in the past.

THE PORSCHE PANAMERA WITH A SUPPLY CHAIN AND LOGISTICS

Porsche is the name is synonymous with technical perfection and elegant design. Porsche Panamera  is a produce from  the Mega Factories. So it’s no surprise that Porsche would demand the same type of perfection from its logistics processes in its plant. Porsche has a conscientious design from the Micheal Muer, Head of Designer of Mega Factories. The goal of the company is a make the fastest, most precise, modern manufacturing facilities worldwide. This means eliminating all stock, resulting in a perfectly coordinated process chain from delivery all the way through to the finished car.

               The process of the production is very rush of speed to make a top of production. As this case, the company can reduce the leads time. This poses a unique challenge when it comes to harmonizing the IT environment. Systems must support and optimize the processes within any given plant, while simultaneously integrating across the entire corporate structure. The supply chain is fit perfectly into Porsche’s existing system environment, while seamlessly allowing individual solutions to be implemented at the respective location.

               Porsche runs faster the production line. Porsche in Mega Factories has created a masterpiece in logistics. As parts are delivered every hour, the flow of goods is depicted in real-time. No inventories, no waiting times, instead the highest degree of precision and flexibility. The Mega Factories use a robot and forklift as supporting activities, so it can make the production going smoothly. Even if faced with a change on short notice, production will be able to stay in synch.

               Porsche stays at the top production management. The System Application (SAP) Products solutions are crucial to streamlining and speeding up production. Porsche to this high degree of flexibility, Porsche in Mega Factories can react to the market quickly and smoothly. So not only are Porsche’s car models trailblazers, the company is at the top in car manufacturing as well.

             The logistics involved in the production and distribution of prestigious household name commodities utilizing hundreds of thousands of parts across a range of top quality items are simply mind boggling and require both physical and documentary systems and equipment capable of delivering any item, no matter how small and seemingly insignificant, when and where required. Then, German sports car manufacturer Porsche required a modern and efficient automated small parts storage system.

           Lastly, "Excellent service in the spare-parts business contributes greatly to Porsche's future success, because after automobile production and development of components for other manufacturers, this area is one of our biggest sources of revenue," said Stefan Arnold, leader of the Supply Chain Management project at Porsche. "With System Application Products (SAP) software, we've optimized our logistics and improved our service. Spare parts now arrive in the right place at the right time."

USING  M2M TECHNOLOGY  TO IMPROVE  SUPPLY CHAIN PERMORMANCE.

They may not recognize the term, but a lot of logistics and supply chain executives are concerned about “permanent volatility.”

They know, for example, that constant fuel-price swings compromise their ability to manage supply chain costs. They’re keenly aware that rapid globalization requires the frequent readjustment of supply chain strategies and supply chain resources.

It all falls under the banner of permanent volatility.

Leveraging wireless machine-to-machine (M2M) technology—automating information exchanges between pieces of equipment or with a control center—can be a great way to deal with permanent volatility. M2M is not new; in fact, factory control systems like programmable and numerical controllers , the automation of machine tools that are operated by precisely programmed commands encoded on a storage medium have been around for decades. However, there are many new reasons to include the technology.

Besides, M2M technology is a multi-faceted way to address supply chain management’s most pressing challenges and subsequently raise shareholder value in the following:

Fleet tracking

Ä  Monitoring fleet arrivals/departures and flagging exceptions can improve end-to-end visibility and improve planning.

Event-based monitoring of driver behavior

Ä  Documenting speed, idle time, and hard braking of delivery vehicles can reduce fuel and insurance costs, while increasing driver safety.

Field force management

Ä  Overseeing field-force activities from a centralized location can make it possible to practice real-time routing based on traffic information.

Inventory-level monitoring

Ä  Viewing and communicating inventory levels can help companies build automated replenishment programs and share information with suppliers.

Tagging high-value assets and inventory

Ä  M2M systems can help companies keep track of particularly valuable assets, such as computers, data-storage devices, consumer electronics, and ATMs.

Inventory-condition monitoring

Ä  By tracking inventory longevity as issues associated with humidity, temperature, pressure, and light, companies can do a better job of overseeing product shelf life and maximizing the efficiency of medicines.
Preventive maintenance

Ä  Monitoring equipment remotely and proactively improves an organization’s ability to prevent failures and improve scheduled (preventive) maintenance.

Smart warehouses/supply chain facilities

Ä  Through remote metering and control, companies can optimize energy use in warehouses, production facilities, and other locations, thus reducing operating costs.

The following high-level framework could help companies set the stage for a new or enhanced M2M capability:

1.      Understand the unique challenges and business requirements associated with your company’s supply chain.

2.      Develop an M2M strategy, needed to demonstrate how and at what cost this can be made to happen.

3.      Consider what supply chain modifications may be needed to maximize M2M’s contributions.

4.      Pick the right partners. A variety of collaborations across the value chain device,   network, application may be needed to ensure end-to-end coverage.

5.      Develop a detailed implementation plan.

Lastly, remember that today’s M2M goes far beyond the factory floor machines controlling machines. Huge improvements in wireless technology have helped make M2M an increasingly important information-management tool. It’s now a way to reduced costs and risks and add greater amounts of visibility, standardization, and predictability. As much, or more, than any other solution, M2M is a potential antidote to permanent volatility.

SUPPLY CHAIN

Improving Efficiencies and Costs in the Energy Supply Chain

Maintenance, logistics, and materials management professionals in upstream and downstream production are facing challenging times. Price volatility and increasing operating costs are causing energy companies to examine sourcing strategies and the costs associated with vendor managed inventory (VMI), consignment, and integrated supplier programs.

Energy companies have responded to the escalating cost of doing business by looking for savings in the indirect material supply chain. Unfortunately, cutting costs can defeat efforts to develop a more efficient indirect material supply chain that meets changing marketplace requirements. As a result, companies are struggling to optimize maintenance, repair, and operations (MRO) functions. In order to achieve performance goals, improve productivity, and make sound business decisions, it is critical that companies have robust and timely information.

In the MRO industry, three trends address the increased pressure to gather this important information:

Ø  Firsts, critical key performance indicator (KPI) for materials management. 

Today, few organizations have robust visibility into the components of their materials management performance and MRO spend. Because discreet supply chain nodes are not fully controlled and measured by product, it is challenging to separate end-to-end cost management and performance improvements. For a more robust tracking and panoramic supply chain view, a firm can provide Level 1 KPIs (such as total inventory value and inventory accuracy), plus those that demonstrate a more integrated supply chain management perspective (such as warehouse productivity, stock outs, and receiving/shipping accuracy).

Ø  Seconds, C-level focus on supply chain. 

C-level is the executive level of a corporation. MRO has great potential to contribute to business goals. Since significant cost savings can typically be found in the indirect material supply chain, C-level awareness and focus on this part of the business is growing. In order to pave the way for that success, the need to identify and eliminate waste, improve supply chain productivity and standardize effective processes across sites has become important.

Ø  Thirds, drive for external expertise. 

Projects in the energy industry now involve cross-border supply chains, work in small sites, and the use of unconventional extraction methods. As a result of the evolving business environment in the gas and oil sector, many companies are realizing they do not have adequate MRO expertise to accommodate the increased expectations. One approach to address these challenges involves hiring people with extensive MRO oversight skills, or investing the time in training current employees in a range of specific disciplines.