Thursday, May 18, 2006

R#24: Professor Tom Donnelly on Lean Production

Getting to hear the opinion of industry experts is one of the main reasons that I chose to do this automotive journalism MA. Coventry University has pretty decent links to the car industry – especially on the design side, something that will probably be relatively well known to anyone interested in this subject area. Less well know – certainly I wasn’t aware of this before I got here – is that the university has a large automotive engineering department, and a business school that runs specialised courses on the motor industry.

So, it’s worth mentioning that us lowly journalism students do occasional get to benefit from sage advice in this area of the Coventry academic sphere. The particularly character in question is Professor Tom Donnelly, and he knows a vast amount about the business side of car manufacturing. It’s not a topic I’m massively well versed on, so it was interesting to hear Donnelly’s expert opinion last week, focusing particularly on the principles of lean production.

Lean production, as I understand it, is where quality and cost meet – striving for the best possible product at the best possible price through the best possible production methods. This means eliminating waste and aiming for a “Just In Time” delivery process. I shall attempt to explain.

Donnelly stresses that this is a ‘philosophy and a logistics system’, much practiced by the Japanese manufacturers, and especially Toyota. Its importance is based on the superior nature of Japanese production, as seen in the management of quality and output, and it’s relevant in all manufacturing, not just the car industry.

Toyota’s position as the world’s most profitable car maker comes from two main things – its successful imposition of the long game and its mastery of lean production. In many ways the two are related; Toyota is prepared to work at things a long time, and under this system improvements are incremental, not radical. This suits the lean production philosophy, which suggests there is no point in something you can’t actually implement; production schedules should be ‘coherent’, and you ‘don’t bring in changes at the last minute.’

Key is the elimination of waste. If a product is made right in the first place you don’t have to spend time and money rectifying faults before it even gets to the customer. Donnelly claims that in the early 90s Mercedes had 40% of its workforce in repair bays, performing remedial work on cars after they came off the production line; contra to this, on a visit to a Toyota factory in Japan he asked his guide what the fault tolerance was for a particular section – and she replied that there wasn’t one, they expected everything to be 100%.

Avoiding waste also means cutting costs, no matter how marginal the savings. But, it’s important that this is only done if it doesn’t detract from existing levels of quality. Waste is found in inefficient work areas – badly designed, untidy, all these things are wasteful. So Toyota engages in continual product improvement, and makes sure that its working environments are optimised. And it avoids any kind of blame culture – if something goes wrong learn from the mistakes and make sure they don’t happen again.

But waste works in other ways, too. There is waste in keeping excessive inventories of parts. While obviously it’s sensible to have a certain margin of safety should a delivery of otherwise essential nuts and bolts get delayed, stock piling grommets when know exactly how many are required to assemble a set number of cars ties up money unnecessarily. I noted recently that TVR instructed TVR Power in Coventry – the company’s tuning division [and exactly who needs a tuned TVR?] – to arrange the sale of stockpiled spares for discontinued models in an effort to free up some capital. Care to consider the relevance to their current predicament…

This ties into “Just In Time”. The ultimate solution to a waste free production process is a build to order system; a customer orders a car, that car is built – the product is ‘pulled’ by the order, not ‘pushed’ from an existing stockpile. Building nothing more than what’s needed can eliminating all waste. While virtually impossible to achieve in practice, the Just In Time principle gets pretty close, as it’s based on the notion of only holding the parts you need to build the cars you currently have planned, without forecasting too far into the future. Since absolute pull is unachievable, some forecasting is inevitable – the important issue is to be able to react to drops in demand, rather than being geared up to carrying on producing vehicles that nobody wants. That would be a waste.

The actual manufacturing practice does play a part in this, but lean production does not mean super complicated robots and no workforce. The idea is to find the point of greatest efficiency, where humans and machines work in balanced ‘harmony’ – people are often more adaptable than robots, especially complex ones. Simple robots and well trained workers make a formidable team. Beyond this preventative maintenance to minimise downtime is vital; if the robots and other tools never break there’s no wasted production capacity. And engage the workforce – train them well, and make them accountable on the basis of this training.

Much of this is risky – particularly any serious application of the Just In Time principle, which requires the cooperation of all suppliers, and all of their suppliers…and so on. But as Tom Donnelly points out, if you’re in any doubt about the money to be made when it works, just ask Toyota.

Professor Tom Donnelly was lecturing on Lean Production at Coventry University on 8th May 2006.


Links:


Cov Uni - CBS - Professor Tom Donnelly @ Coventry University

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Picture is from this page. Guess they got it from Google Images, too!

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