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‘Study of Production Control Systems in Automobile Industries’
Team Members Lekha Shah Mahavir Das Priyanka Gupta Ruchika Guwalani Sagar Shah
Roll Numbe rs 111126 111128 111139 111146 111148
Section – A Name of Course: Operations Management -1 Name of Instructor – Dr. Rajesh K. Jain
Date - 23/08/2011
Objective: To study and compare the ‘Kanban’ Production Control System of the leading automotive industry, Toyota with production control systems
To analyse its advantages and limitations
Introduction: “The key is not to prioritize what's on your schedule, but to schedule your priorities.” - Stephen R. Covey The word ‘Kanban’ in Japanese means ‘a signal that is used to trigger an action’. In business, it is basically a scheduling system that tells you what to produce, when to produce it, and how much to produce, with the help of signals. It can indicate the authorization to move materials or products from the supplying location to the consuming location. They can also be used to signal the authorization to produce additional products.
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B. When the purchase was made. the store only stocked what it was sure could sell and customers only took what they needed. the store would restock itself. They help to create a demand-driven system by proponents of Lean production and manufacturing that lead to faster turnarounds in production and lower inventory levels. Kanban is one means through which JIT is achieved. the card is detached and sent up the supply chain as a request for another part. the idea was to stock the shelves and stores such that customers are able to get what they need. say A. It is closely linked to lean and just-intime (JIT) production. Just before the part A is installed. 3 | Page . Therefore. Also.The Kanban concept popularized in 1950’s when Toyota introduced its use to standardize the flow of parts in their production lines. Kanban uses the ‘rate of demand’ to control the rate of production. In fact. Note: Any part is only manufactured or placed in order list only if there is a Kanban card for it. Thus. This card has an inventory number that’s attached to a part. in the needed amount at the correct time. Toyota wanted to ensure that inventory was based on actual customer orders rather than managerial or other random forecasts. Consumption drives demand for more which is indicated by Kanban cards. passing demand from the end customer up through the chain of all processes. they began studying supermarkets.
a trigger reaches the factory production line where it is ordered or again ‘pulled’ from another unit in the flow to replace it. Recently. When a product is sold. That trigger or that signal is actually the Kanban system which defines a powerful technique to be used in lean enterprises. It is used to control when and how much of an item is made or moved. The concept of lean manufacturing is a continuous flow of products through the entire process chain.Eg. Lean Logic: Lean Logic may be explained by quoting that ‘nothing will be produced until it is demanded’. 4 | Page . keeping in mind that more inventories means more ‘wastage’. there has been a significant decrease in the usage of Kanban cards due to widespread of Electronic Kanban systems which can send signals electronically. Related Work: Sometimes. else it shall be a waste (no value from customer’s perspective).: A red card lying in an empty parts cart would easily convey to whomever it would concern that more parts are needed. Kanban systems are confused with Lean Manufacturing Systems.
Types of Kanban systems: There are 8 types of Kanban systems available and what one needs to do is to choose. size buffer stocks (the number of Kanbans). Some of the Kanban systems are shown below: One card systems 5 | Page . implement. and operate Kanban systems. It shows the need to integrate the system with your planning systems. the process relies on signals of Kanban between different points in the process. To meet JIT objectives.In a pull environment. Thus. which tell production when to make the next part. choose containers and signalling mechanisms. design. each operation required to produce a product is considered to be the customer of the previous operation and items cannot be processed without a ‘customer order’. The Kanban (pull signal) is treated like the customer order. This type of system belongs to a category of materials management systems called "pull" systems. Just in Time: A production strategy that is constantly trying to improve a business' profits by reducing in-process inventory and cost incurred. all items are made or moved “just in time”.
So. Kanban Accumulator In this method Kanban signals are allowed to accumulate at the supplying work centre until the production batch size is reached. Input / Output Control Kanban (Two variants) Sometimes called the ConWIP (constant work in process) system. this type imposes input/output control. Empty containers can also act as a signal. via a buffer stock or to produce some more (a process batch). where the signal travels directly from the end of a line or section to the preceding section or raw material stores. thus ensuring that work in process cannot build up. In this case the supply chain is treated as one unit rather than a series of linked operations. as one transfer batch is completed (output) another is launched on the first operation (input). 6 | Page . at the supplying work centre.In the above diagram: A signal is sent back from the consuming process to supplying process (or supplier). In this case buffers can be depleted or exhausted depending on the accumulation rules. This is a signal either to send some more (a transfer batch).
They can also deal with larger batch sizes.Dual Card System (2 Card System) (Two variants) First used by Toyota. Variable Quantity (fixed frequency) System In some situations it is more convenient to replenish items used. variableroute. by fixed frequency deliveries (or collections). from the "produce" signal. 7 | Page . The first method separates the replenishment (send some) signal. caused by long changeovers. there are in fact now two types of two card system. and situations. (I need some. rather than respond to fixed quantity replenishment requests. The Kanban says make it now. which is produced by a scheduling system such as MRP. where a supplier visiting your point of use will top up stocks to a predefined maximum level. which is produced from the Kanban system. These methods can deal with higher mixes. This method forms the basis of supplier "top up at point of use" systems. POLCA System This is mentioned for completeness only and is said to be prescribed for high-mix. The purpose of each of the cards is as follows: • • The scheduling system says which job is next. where scheduling is necessary.) The second variant of this method generates the second card as a result of one or more replenishment requests in a similar way to Kanban accumulators above.
Removal of material from the Finished Goods Kanban acts as a signal for more of that product to be manufactured. The demand for the product over a specific length of time is then determined. The goal is to order parts at the point when the number of parts on hand reach the amount that will be used up during the time it takes to order and get the needed parts delivered. Secondly. because of variability in lead time. Kanban systems can be classified as: • Raw Material Kanban – tells suppliers when to send how much of a particular item to a particular place. that is the amount of time it takes for the parts to be ordered and delivered. The Process: All of the parts used to manufacture a particular product are identified as well as the number used in each product. the amount of reordered parts occurs is usually a bit more 8 | Page . the lead time is calculated. • Finished Goods Kanban – determines the amount of a product to be kept on hand at any given time. The number of parts used in the product is multiplied by the number of the products demanded over the length of time that it takes to order and receive the parts. • In-Process Kanban – determines the amount of WIP (Work In Process) that can be kept between any two operations in a process. Usually.On the basis of the stage of process.
23 billion which was larger than combined earnings of GM.5 million vehicles per year from 56 manufacturing plants across 6 continents and 200000 employers. Toyota has annual sales of $120 billion. Common signals used as Kanbans include two bin resupply systems and card systems. Chrysler and Ford. Total annual profit on March 2003 was $8. Profit margin is 8. The main objectives of the Toyota Production System (TPS) are to design out overburden and inconsistency. Data and Analysis Today.than the amount of parts needed to cover order lead time. There are seven kinds of waste that are addressed in the TPS: 9 | Page .3 times higher than industry average. and to eliminate waste. It is the producer of nearly 5.
poka-yoke and Kanban systems. Speeding up value adding operations becomes next priority after elimination of waste. waiting (of operator or machine) 4. inventory (raw material) 7. over-production 2. 10 | P a g e . motion (of operator or machine) 3. processing itself 6. It uses the Value Chain Mapping approach to eliminate waste in the supply chain process. or diverts the value chain. conveyance 5. slow down. It aims at eliminating waste that stops. correction (rework and scrap) The Toyota Production System is based on lean manufacturing and employs JIT. It took idea of reducing inventory by implementing “pull” system.1. “Pull” system was implemented by Kanban cards. Poka Yoke or Jidoka is a special mechanism to automatically indicate if something goes wrong in the process.
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557.00010.162 3.756 LCV: 13.031 Fiat Daimler AG Chrysler Key Cars 2.918 4.743.000.988.940.065 5.000 4.192 7.681 Total: 77.000.000.0007.982.351 8.605.716.286 8.000 5. 12 | P a g e .000.Top motor vehicle manufacturing companies by volume 2010 Total motor vehicle production Group Key 1.945 2.524 2.432 Heavy Bus: 518. Heavy Buses Toyota GM Volkswagen Hyundai Motor Ford Nissan Honda PSA Suzuki Renault 3.341.000.000.0008.578.370.000 6.000 2.0009.000.000.862 Cars: 60.410. August 2011.000 3.000.892.488 Light Commercial Vehicles Heavy Commercial Vehicles.000 Cars Light Commercial Vehicles Heavy Commercial Vehicles.343.476. OICA.465 1.510.057 3.000.764.993 Reference: "World motor vehicle production by manufacturer: World ranking of manufacturers 2010". Heavy Buses HCV: 3.643.021 1.
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Energy efficiency was made an important component company’s environmental strategy.A Kanban control system uses a signaling device to regulate JIT flows. The authority to produce or supply additional parts comes from downstream operations. FIAT production system: FIAT is a European market car where in competition environment suggests decreasing production costs. It was referred to as the ratio between energy output and input in the use of technology that maintained high quality cars and increased level of productivity. The cards or containers form the Kanban pull system. FIAT is also a good example of an automobile industry where uncertain energy prices can negatively affect predictable earnings. It is now able to reduce pollutants quite cheaply and conveniently. 14 | P a g e . without reducing quality of the automobile. Therefore production planners of FIAT undertook the following steps: 1.
insufficient utilization) -Avoid system losses (leakages.2. control) Technical Building Service (TBS): -Ensure defined production conditions and the allocation of necessary energy and media for production -Machines through certain technical equipment and control .e. considered as complex and dynamic control system consists of: Production: -Machines and Employees for value creation and transport /handling -Planning and Control as task of production management (e.g. producing at night to save costs) Production Machine -Avoid standby-losses 15 | P a g e .g. air conditioning. planning. -Avoid unnecessary demand (too high temperatures. Production System. unfavorable design) -Increase Resource Productivity Factory/Production System: -Avoid unnecessary waste of energy (standby-losses. power engineering.g. heating and refrigeration. production program. processes without value creation) -Avoid of peaks (high peaks can be responsible for up to 50% of energy costs) -Better utilization of base-time (e.
trimming (Power Train plants) 16 | P a g e . engines) around the countries • FIAT is promoting different projects for increasing the energy efficiency at manufacturing plants. and most of them have been leaving to CRF • CRF.welding.-Increase machine efficiency (same output with less input or more output with same input) FIAT industries operates many assembly plants and a multitude of other plants manufacture car parts (e. milling.g. mounting Electrical Motors Predictive Maintenance (PM) – mechanical processes: drilling. for the first period (2009 -2010) will focus the efforts on: Manufacturing processes . painting.
The Fiat Production system. proves to be a savior of time and energy. The system does have advantages and disadvantages and some of these are: Advantages: • • Low fixed stock (number of Kanbans in system) Low lead-time 17 | P a g e .Gap Identification: After studying the Production Systems of Toyota and Fiat and trying to search for some relationship in their success pattern. on the other hand. because of its very apt implementation in the Toyota Production System. can be reduced by adopting lean manufacturing and lean logic. With reference to the data collected for the analysis in this study. Discussion: Kanban has a mixed response across the organsations of the world. others think that despite the advantages. It took at most care of every possible leakage and loss. there are some circumstances where they can be positively harmful. The flow of inventory is made just in time with the use of the two-card Kanban system. the lead time. Also. which has been properly implemented in Toyota Production System in the 1950s. The difference could be explained as there is still scope to improve the Quality Control mechanism of the Fiat Production System. that is the amount of time taken by the parts to be ordered and delivered. we came to know that Kanban system. Some consider it advantageous. we see that there has been a remarkable difference in the sales of both these manufacturing giants. is very efficient in terms of energy utilization and resource allocation. the current production methodology of Fiat is efficient but still it can be made better by proper inventory control by employing signaling techniques like the Kanban Systems. Secondly.
Thus improves the profitability. A Kanban system may not necessarily work well in design-to-order environments. they react. avoiding Stand-by Losses and unnecessary demand. the total sales for Fiat is much lower as compared to Toyota. Kanban and Poka-yoke for better supply chain and inventory management. As a result there is a reduction in lead time. records level of on time delivery performance. we saw that despite of employing innovative methodologies like promoting Energy Efficiency. to trigger a strategic review. The lack of a proper and structured supply chain.• • Quality problems visible Highly stable Disadvantages: • • • • • Inflexible (transfer batch is fixed) Can cause stoppages Highly stable. 18 | P a g e . Pull systems do not plan. So there’s a need to document the design parameters so as to recognise when the environment has subsequently exceeded the design. But if we look at Toyota. Results and Implications: After studying the Production Systems of Toyota and Fiat. improvement in product quality. It doesn’t work very well in environments where the product routings vary too much. they employ lean manufacturing and methods like JIT. inventory management and quality control could be the reason. and in special or unique production environments Periodic Strategic Reviews Fluctuating or exceptional demand will kill the Kanban system stone dead unless one can see it coming.
Kanban could be a profitable method to apply in large organizations which involve large scale production and it is not technically feasible to manually control and regulate the various processes of inventory management. supply chain etc. References: 19 | P a g e . Toyota is a perfect example of successful Kanban implementation.Kanban implementation may not be effective in all scenarios. More important is the proper implementations of Kanban taking into account the existing conditions and requirement.
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ifm. Date: 17.pdf.07.com/dlDocs/kanban. http://en.07. Date: 17.ac.html.eng.2011 21 | P a g e .org/wiki/Just-in-time_(business). Date: 17.07.2011 http://www.moseys.wikipedia.uk/dstools/process/kanban.07.com/lean-articles/taking-the-mystique-out-of-kanbansystems.2011 http://www.cam.2011 http://www. Date: 17.handsongroup.
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