Lean Manufacturing in the Aeronautical Industry
Jesus Zurita Ares
One of the most exciting industrial rivalries is the one that Airbus and Boeing maintain in the sector of the commercial aircraft manufacturing. Year after year, they struggle to win the prestigious first place in the world's largest commercial aircraft manufacturer. For that reason they have to be competitive in prices and costs. But, what are they doing to be better and cheaper than the other? They know that both of them have in their portfolio high quality products which fit with their customers’ needs. So, they have to use different techniques in order to increment their profits and profitability. In particular, they have started using a set of techniques called Lean.
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But how can they grow the business while cutting costs without investing in manufacturing? Well, both of them have turned its effort to a philosophy more than a method called Lean Manufacturing. But, what it is Lean? The Lean philosophy dates back to the 1950s, when the Toyota Motor Company in Japan started a revolutionary way of producing cars. The famous Japanese businessman Taiichi Ohno developed an integrated process that efficiently managed equipment, materials and its workforce throughout the production cycle. With a smaller market, Toyota couldn’t compete against mass production of American car manufactures’. So, Toyota changed the objective and focus itself on delivering more reliable, higher-quality products faster and cheaper (Jenkins, …show more content…
The first who started with this methodology was Boeing. After the problems that it had with manufacturing in the 90s, they saw the necessity of changing its way of working. The problems were that while sales and profits were firm and the order backlog were solid, Boeing's manufacturing operations look weak next to those of Airbus. From the beginning, Airbus' designs and operations were newer and more efficient than those from its competitor. A gap like that can be disastrous, as Boeing learned in 1997. With unprecedented demand for new planes, Boeing tried to increase its production. But parts supply problems and a shortage of workers forced the company to shut down its 747 and 737 assembly lines. Some customers changed to Airbus, and Boeing's commercial airplane division was smacked with a $1.6 billion loss, even though it sold a record $24.5 billion worth of jetliners (Holmes, 2001). But that has completely changed. Boeing's mid-'90s shift to Lean is already reaping tangible dividends. The first step was sending executives to Japan to study JIT (Just in Time: error free production, and process flow). Consultants were hired from Shingijutsu Co., a group of former Toyota executives (Hall & McArthur, 2008). Then, the Chicago based conglomerate started using this philosophy to restore its tarnished reputation in manufacturing. Following are explained some examples extracted from Jenkins
There are many people that benefit from Lean Six Sigma which include mainly customers, suppliers, employees, and also stockholders. Lean Six Sigma is a way for businesses to improve, to reduce waste and to become more successful. In the future, more and more organizations will adopt or practice some of the Lean, Six Sigma, or both in order to stay competitive in today’s market. In some cases, blending both Lean and Six Sigma can be costly and difficult; however the end result can create an organization that focuses on quality, accuracy, and speed to meet the goal which is profitability.
The article, “Where Process-Improvement Projects Go Wrong,” by Satya L. Chakrvorty, WSJ.com, January 25, 2010 (http://online.wsj.com/news/articles/SB1000), offers a great example of how and why many Six Sigma and other process improvement projects fail. He examines what happened at an aerospace company that initiated a number of process improvement projects, half of which ultimately failed.
Complete administration of cost is done by lean internal operational functions adopted by the Tesco. Record of accepted salespersons and organizing scheme are upgraded regularly and endlessly. Effectiveness and efficiency of such operations are maintained by these policies adopted by Tesco.
The methodology of Lean Six Sigma is the merger of two business tools that includes Lean Manufacturing and Six Sigma. Six Sigma focuses on improving current business processes and performance while Lean Manufacturing focuses on the improvement of the processes of an organization by using highly skilled employees to increase speed and quality. Combining the two methodologies creates an organization that focuses on quality, efficiency and speed to lower operational costs and increase profits. By following the Lean Six Sigma methodology, many companies have attempted to create a lean, waste-free environment ultimately at the expense of the employee and occasionally at the expense of the organization.
Persoon, T.J., Zaleski, S., & Frerichs, J., (2006) Improving preanalytic processes using the principles of lean production (Toyota Production System). Am J Clin Pathol. 2016 Oct;3(9):278-78. 2006 Jan;125(1):16-25.
According to Christopher and Towill (2001), there are mainly three ways to combine lean and leagile. The first hybrid approach is the Pareto rule, which means that the dominant 20% of products should use leanness and make to stock. While the remaining 80% products with less share of revenue should use agility. The second hybrid approach is about using lean approach for the base level of demand, while for the peak season or flexible demand, manufacturer can use agility
There is a lot of literature on the concept of continuous improvement (CI). Studies show that CI is very important to creating competitive advantages in highly competitive industries such as the automobile industry (Bhuiyan & Baghel 2005; Li et al. 2009; Schaeffer, Cadavid, & Backström 2010). These studies suggest that manufacturing firms use CI to eliminate waste in all organisational systems and processes (Bhuiyan & Baghel 2005; Li et al. 2009). Currently, manufacturing firms use lean manufacturing, six sigma, lean six sigma, and the Kaizen methods of CI methodologies to reduce wastages, simplify the production line, and improve quality (Swink & Jacobs 2012).
The 777 would be manufactured differently than previous Boeing aircraft. Various efforts would be undertaken to increase demand and reduce manufacturing costs of the 777 in an attempt to create positive cash flows sooner. To increase demand, the 777 would be the first fly-by-wire Boeing aircraft, a feature Boeing’s competitors already added to their aircraft. Boeing also made an effort to get their large customers involved in the design process from the beginning in an effort to increase its competitive advantage and long-term demand for the 777. As a cost saving measure, the design and manufacturing teams would work together to create a detailed simulation of the manufacturing process that would reduce the cost of “improvements” that were often made during manufacturing thereby reducing the overall manufacturing cost. Furthermore, Boeing would invest in more training for its engineers on the new CAD system. This new manufacturing process would lead to large capital outflows in the short-run. The challenge for Mr. Shrontz is determining whether these capital investments will lead to an increased return on equity for Boeing.
Toyota is a pioneer of the LEAN manufacturing principle. Lean, as a process, is a way to add value to customers while minimizing waste (LEI, 2011). It can also be thought of in terms of flow, which is how Toyota likes to think of it. It is simply a process of decision making where the problems tend to be thought of in terms of flow, reducing starts and stops or unnecessary motion increases flow, reducing waste.
The lack of standardization, mutual adjustment and direct supervision in the organization was the opposite of lean. For example, the managerial style for ramp and gate operations was described as “hands-off”. Before the organizational changes that took part in the 2000’s the different parts of the Mintzberg model--the technostructure, support staff, strategic apex, middle line and operating core--did not communicate by design. In addition, relations between the strategic apex and labor force were historically poor, with a timeline of 50 plus years of union/company tension and routine
Toyota Motor Corporation is one of the largest automakers in the world. At its annual conference in Tokyo on May 8, 2008, the company announced that activities through March 2008 generated a sales figure of $252.7 billion, a new record for the company. However, the company is lowering expectations for the coming year due to a stronger yen, a slowing American economy, and the rising cost of raw materials (Rowley, 2008). If Toyota is to continue increasing its revenue, it must examine its business practice and determine on a course of action to maximize its profit.
Manufacturing businesses and business leaders need to increase their focus on key success factors such as: innovation, productivity improvement, investment in people & skills, and funding. Innovation is not just about retention and development, or the latest technology. It’s also about practical and efficient problem solving and business transformation. In the manufacturing industry, this can be achieved by: refining or exploring new supply and distribution channels, establishing new business offerings, developing leaner organizational arrangements, improving processes, providing a better customer experience, and accessing green, clean technology – high on the agenda for environmentally conscious customers (Performance, 2011)
The JIT production hit the West in the 1980’s. It was basically the same concepts as Ohno's, but with different names such as: World Class Manufacturing, Stockless Production, and Continuous Flow Manufacturing. James Womack’s book “The Machine That Changed The World” gave a new buzzword to manufacturing, “Lean Manufacturing”. Essentially this is based on the same principles of JIT and Toyota Production.
From this initiative, Toyota managed to widen its competitive edge by employing fewer employees in the car production with a small number of flaw products. The main idea is to fulfill the internal or external customer’s wants. Through lean thinking, it is hoped that nonmanufacturing company’s can provide value to the customers with minimum cost, effort and can save time. Thus, it will lead to improved performance and optimum utilization of the company’s additional capacity and resources. Lean Thinking Category Waste Health Care Examples.
In the new global economy, with the improved information technology, and the increased competition, a study by Levy (2007) shows that, many companies have attempted to recognize and implement lean production (LP) systems, established by Toyota, that involve goals such as just-in-time (JIT) delivery, low inventories, zero defects, flexible production in small batches and close practical cooperation with suppliers. Therefore, this paper will present how Kellogg’s has been able to manage its lean production in a very efficient way to create long term value products and competitive advantage.