Japan manufacturing revolutionized the automobile industry. Japan transformed the automobile industry by applying ideal perfection conditions of zero defect products, reduced inventories, and the generation of endless product inventories. How did Japan accomplish this breakaway? Lean production was the answer. Lean production allowed the Japanese to reduce human labor by ½, manufacturing production space by ½, capital investment by ½, required engineering hours by ½, and reduced production time by ½. US automobile companies were on the defensive and rather than compete head to head in quality and competitiveness with their Japanese counterparts they sought refuge in the political system.
Government aid to home-owned companies is counter-productive over the long term. The political system weakened US automobile companies by artificially boasting their US car value short-term through trade tariffs and barriers. The Japanese believed consumers would select the best quality products, at the cheapest price. In the 80s this was true, but in the 90s and 20th century consumers paid higher price for quality comfort, power, prestige, and brand. Profit, volume, engineering quality, and diversity characterized Japanese vehicles. Americans wanted Japanese vehicles and were willing to pay the price for them. The political system would not be able too save American jobs through tariffs.
Japanese companies used financing to expand companies in North America and Europe. The political system would produce Japanese cars on America soil with American workers as the only viable solution. US automobile industry would have too compete head to head against the Japanese car industry on their own. Cars had become a global commodity and the market would determine their value in the global market. The political barriers did little to stop Japanese marketing success, product introduction, market dominance; by 1980, it was inevitable that the Japanese automobile industry would over take and dominate the US car market. Political invention could not stop the raw forces of global economics.
Womack believes that US manufacturing capability is equal with Japan and competitions gap between the two countries could be reduce, if America adopts lean production. Every mass producer needs a lean producer across the road. Mass producers change when they see a concrete lean producer. The problem is North America and the English have not made rapid movement towards lean production. The secondary problem is mass producers in the West need a better system of industrial financing. Bottom line, mass producers need a crisis, to truly change. Investor and bankers need to help when the crisis comes. Corporate culture needs to change removing excess workers immediately. Lean production benefits the company and the consumer by lowering the amount of high wage effort to produce a product and lean product methods keep reducing operations through continuous improvement.
Lean production combines craft manufacturing with mass production techniques. Each year 50 million cars are produced and 8 out of the 50 million cars are excess. Craft uses highly skilled workers and flexible tools. The mass producer may be either skilled or unskilled and is characterized by his high volume of product. The power of assembly line design is the “complete interchangeability of part”. A part is integrate, predesigned, preassembled and like a lego snapped, screwed, twisted into place by a human or machine dexterity. The simplicity of attaching the parts together is the secret. Maintenance and repair also benefits from the easy of attachment in the part design. Eiji Toyoda and Taiichi Ohno liked interchangeable design. Toyoda and Ohno bought tools that allowed stamping, pressing, cutting of car parts with absolute precision. The tools were used in high volume product environments and they represented low or no cost setup.
Korea has been rapidly adopting lean production and claim it will surpass Japanese automobile industry by 2008. In 1979, Korea’s first automotive company started production of the pony. Hyundai licensed design rights from Mitsubishi. Korea MITI authorized incorporation of three other companies Daewoo, Kia, and Dong A.
Japan reacted too the Korean competition by cutting prices. Korea MITI mandated a five year shutdown for Kia and Dong A and assigned Hyundai to build smaller cars and Daewoo the larger cars. Hyundai delivered an winning design car, the Excel. The Excel is licensed from Mitisubishi's Colt design and used to create high volume exports to the US. The strategy: “It would compete by underpricing the Japanese entry level cars, based on low wages and high volume”. Excel sales grew to 350,000 per year. Hyundai would bring a new plant online with a capacity of 300,000 cars per year. Kia would come back into the market and being build a car modeled o the Mazda 121. Japan would focus on maintain the market for high quality cars. In 1988, Korean cars represented 4% of the market or 50,000 cars a year imported into the US. In 1989, Hyundai would open a 100,000 car/year plant in Bromont Quebec and the transplant company would produce the Sonata. Korea ambition started with high defects in their cars, swings in the sales, and poor reputation. MIT graduates Korean engineers and they brought knowledge, home. Lean production leverages this skill to produce some of the best designed cars in the world. The result is endless diversity of product, cheaper price, and better quality.
Japan must build a global presence by creating a international personnel system. Workers need to be given language skills and exposure to management in different regions of the world. Japan must abandon their narrow national perspective and create innovators in a post national, multi-regional corporate form.
Brazil must adopt lean production and move their country towards world-class production. Brazil must open its country to imports. This will help producers balance trade ledgers. Brazil will need to integrate production systems with Argentina.
The rise of Lean production starts with Toyota. The new emerging Toyota faced many problems: 1. Small domestic markets 2. Crowded cities and high energy prices 3. Japanese workers were no longer willing to be treated as a variable cost or as interchangeable parts. 4. Company unions strengthened themselves. In 1946, MITI following promptings from American political entities strengthened the rights of unions which imposed severe restrictions on the ability of the company owners to fire workers.5. The Japanese economy was starved for capital and foreign exchange. 6. Outside motor vehicle producers were anxious to establish operations in Japan. Japan was losing its advantage of lower wage work force, faced the possibility of no new product offerings, and nothing new in production techniques.
Ashton Marton introduced the stamp and die technique of taking sheet metal and forming into parts. The process started with a large roll of sheet steel. A blanking press converted the steel sheets into blanks the size of the part. The blanks are then inserted into a massive stamping press with matched upper and lower dies and the 2D sheet of metal is transformed into a 3D shape. The dies could be changed, so the same press line could make many parts. There were problems in changing the die. First, the die weighted many tons each. Second, the workers had to align the dies with absolute precision to prevent melt down of the metal. Third, the die change took a day duration and the workers had to follow methodical replacement processes. Ohno’s idea was to develop simple die changing technique reducing the die change to two – three hours. Ohno perfected his technique for quick die change reaching an astonishing 2-3 minute change duration. Ohno needed skilled and motivated work force; the work force need to take initiative and anticipate problems for they happened. One problem could bring the complete factory to a halt. In 1940s, US credit tightened too much and it slowed down world economic growth. In response, Toyoda reduced labor by firing ¼ of the employees and then resigned taking responsibility for the company’s failure. Toyoda became members of the Toyota community. Toyoda offer life time employment and then worked to get the most from his human resources. Employees contributed because they did not want to start over in a new company and lose their seniority level wages.
Principles of Lean Production: 1. Ease of assembly requires design engineering commitment and investment 2. Automation accounts for 1/3 of the the productivity gains 3. Smaller work space means less inventory near the worker 4. Lean Production seeks perfect assembly and quality on the first time where workers identify defective parts immediately and send them to quality circles for inspection and determination where the the quality team initiates corrective action and repair at the root cause. 5. Lean production defines standards upon which vendors must adhere. Standardization improves interchangiability of parts, size, and performance helping assure universal quality is maintained. Standardization creates more determinism in the process, reduces confusion, and aligns expectations of the assemblers with the vendors. 6. In Lean production, a worker has the power to stop the production line, but this rarely happens because workers are given the power to voice problems, defects, and improvements. The anticipation and initiative prevent problems from forming on the line and keep vulnerability too a minimum. 7. Lean production is characterized by more productivity per hour, less space per worker, smaller inventories, more team involvement from functional departments, more job rotation, more training of new production workers. 8. The polling system means that a worker builds to his basket, just in time delivery, no waste of excess labor, no wasted parts caused by defect, and no excess inventories. 9. Quality circles keep improving the assembly process in a continuous cycle.
Lean production techniques: Lean production starts with a Large project leader, the leader of the team, who designs and engineers the new product. The LPL is a position that carries great power. The LPL is the supercraftsman direction the process to complex for one person to handle. Teamwork in lean production means forming tight knit cohesive groups of individuals from different functional departments of the company to build a product. The LPL judges performance of the individuals. The individuals performance will determine their next assignment.