Modern Production Systems in the Automotive Industry.

1. PRODUCTION SYSTEMS IN THE AUTOMOTIVE INDUSTRY Dr. Miguel Gaston Cedillo Campos [email_address] http://gastoncedillo.com

6. The automobile industry is experiencing powerful consolidation processes 2004 = 12 1964 = 50 1970 = 37 1980 = 30 1990 = 19

7. The product range has been massively expanded Model versions 1950 1984 1984 2005 Mercedes Benz 2 models 5 models 26 models Example of optional extras for C-Class: 1,635,000,000,000,000 (quadrillions) Possible combinations ( Condition: Customer chooses 15 out of 80 optional extras )

8. The start-up curve has intensified since the mid-90s Run-up time (Job#1 up to full volume) 1993 1998 2002 2000 Time E-Class (93-02) Run-up Development and preparation 15 months S-Class (since 98) Development and preparation 8 months Run-up C-Class (since 00) Run-up Development and preparation 6 months E-Class (since 02) Run-up Development and preparation 3.5 months

10. Motivation for implementation production system Imitation design Imitation technology Introduction of ESP/ABS in all vehicle classes Mercedes S-Class W140 (1991) SSangYong Chairman (1998) Opel Frontera (1998) JianlingMC Landwind (2005)

11. Current Automotive News- Pressure of Market MONTREUX, Switzerland Toyota's sales growth in Europe in the next seven years will be far more rapid than it was in the U.S. in the 1990s. That was the prediction of Takis Athanasopoulos, Toyota Marketing Europe’s executive vice president. Toyota aims to achieve European sales of 1.2 million in 2010. Last year the company sold around 800,000 units in Europe. “That growth rate will be twice as fast as we achieved in the U.S., where it took us 14 years to reach 1.2 million unit sales”, said Athanasopoulos. During the 1900s Toyota slowly built up North American sales to win 11 percent of the U.S. auto market. Toyota’s goal is to increase its market share in Europe to 8 percent as part of is “2010 Global Vision” strategy to become the world’s largest automaker. Athanasopoulos said Toyota’s strategic focus on quality will help boost growth. “That strategy already has driven us from being a niche importer to a major player”, he hold the Automotive New Congress in Montreux. … after conquest of the U.S. market, Toyota forces the same procedure in Europe.

12. Current Automotive News- Increasing / decreasing market share +14.3 88 +16.6 77 Porsche … +2.6 1 104 +6.5 1 076 Mazda 11 +9.4 1 209 +4.5 1 105 BMW Group 10 +4.1 1 766 -8.8 1 695 Fiat Group 9 +4.2 2 489 -0.7 2 388 Renault-Nissan 8 +8.7 3 242 +3.3 2 983 Honda 7 +2.7 3 375 +0.6 3 286 PSA Peugeot-Citröen 6 +8.3 4 719 -4.1 4 356 DailerChrysler 5 -0.6 4 984 -1.2 5 016 Volkswagen 4 +0.9 6 798 -3.4 6 736 Ford 3 +10.8 7 518 +10.0 6 783 Toyota 2 +1.8 8 241 -3.8 8 093 General Motors 1 % of change 2004 % of change 2003 OEM

15. Method of implementation production systems The focus of production systems is to define the methods which help to reach the target

16. Historical development of production systems 1900 1950 1990 2000 MIT-study: Comparison of Production Methods (catchword “lean”), Industrial companies in Europe and USA were startled. New: Consistent implementation of Integrated production systems Success by continuity? No effective great success Because of missing basic principles Continuous Improvement (plus specific “ western elements”) Dr. Shigeo Shingo Frederick Taylor Europe and USA Taylorism (mass production) Japan Toyota Production System Development First attempt Taiichi Ohno Henry Ford

17. Historical development of production systems This study was published in 1990 in the USA. Everybody was startled … The term “ Lean Production ” was born. Later it was developed to “ Lean Management ”. Lean Production was often connected with dismissal. In many companies the real sense of Lean Production was not understood.

18. Development of Production Systems 1902 Sakati Toyoda First application of automatic production stop (quality problems) 1945 Kiirdirio Toyoda Development of Just in Time philosophy, reducing set-up Time. 1960 Kiirdirio Toyoda Development of quality, visual management, standards, stability, implementation principles of JIT. 1995 Production systems of supplier and another OEMs (MB, Chrysler, Ford, Audi, Skoda …) 1940 Taichi Ohno Implementation of “standardized worksheets”. 1956 Development of Toyota Production System Just in Time (e.g. Pull, Kanban) 2000 Continuous “development” and introduction of Adapted Production Systems. JAPAN EUROPE USA 1982 NUMMI* Joint-Venture GM-Toyota First implementation of the principles of Lean Management in USA. * New United Motor Manufacturing Inc.

19. Development of Production Systems © M. Gaston Cedillo (2001)

20. Development of Production Systems © M. Gaston Cedillo (2001)

22. Definition of production system Toyota Production System is an integrated production philosophy, which has the objective, to work with the existing equipment, materials and staff so efficient as possible. The target of Toyota Production Systems (TPS) is to reduce … … systematically, durable and totally. MUDA = waste MU DA

23. Definition of production systems Description of processes, methods and rules in plant Production System Basis for continuous improvement of products and production processes Basis order for plant Basis for education and promotion of employees Standards which can be continually improved Instruction for Employees and Managers, How to work Basis for daily work

27. Five guiding ideas Five guiding ideas Proactive Thinking Future actions are designed Reasoned and foresighted. Economic Thinking Prevention of any kind of inefficient use of resources, operate economically. Potential Thinking Development and usage of all available resources. Sensitive Thinking Detection of the environment through all available senses to react adaptable. Holistic Thinking Consideration of the effect on the whole lot.

30. Principles of Toyota Production System (TPS) Think Globally Act Locally Distributor Dealer TQM Manufacturing plant Supplier GLO-cal

31. Vision and target of TPS TPS improves … S = Safety Q = Quality D = Delivery C = Cost E = Employees (motivation) … and reduces or eliminates Waste (muda) Inflexibility Invariability Q uality C osts D elivery Process control

32. What is WASTE?

33. As a result Demand of clients Daily demand (average) = Production target Time Quantity

34. Basic rules for Production system (6s) Seiri Seiton Seiso Separating out no longer required part Clearing required parts Cleaning (Cleaning means checking / testing)

35. Basic rules for Production system (6s) Seiketsu Shitsuke Shukan Maintaining ordered situation Discipline (Repeating instructions, standardize the improvement) Acclimatization (practical repetition of what was learned))

36. Basic rules for Production system (6s)

40. Solving problems in nature

48. A supply chain orientated business diagnostic Dyadic structure Supply chain structure Network structure Problem solving 5 Single business model Single business model Single business model Single business model Single business model Single business model Single business model

53. Standards in daily life What about your next holidays with individual technical checks before departure. Your next business trip … Do you dream of this job?

56. Documented activities Standardized process / Working Sheet

67. Standardized processes Different demands -> different processes Layout in production Number of pieces Time 1 2 3 4 5 6 4 employ 3 employ 1 2 3 4 5 6 2 employ 1 2 3 4 5 6 Number of pieces Number of employees 100 200 300 0 2 3 4

68. Standardized processes Different demands -> different processes Flexible Capacity System (FCS) Flexibility ! Number of pieces Time Number of employees Number of pieces 0 100 200 300 2 3 4 Normal production Overtime Extra shift work Work time account Outsourcing

70. Standardized processes Material flow Min. Log. part for worker => No need for action High Log. part for worker => No need for action Min. Log. Part for worker => No need for action If there’re many parts at station in the assembly line, optimize the cycle (one piece flow reducing variants) and / or reduce the size of boxes Example 1 Example 2 Example 3 4 parts, 12 square meter Conclusion 9 parts, 16 square meter 10 parts, 12 square meter

71. Process of implementation

73. Process of implementation TRANSITION LEAN 1. Performance gap identification 2. Build change capacity 3. Build performance system and performance organization 4. Mobilization and increase of the sharing force 5. Reception, expansion, refine

76. Connection between subsystems JUST IN TIME Production in plant Waste Standardization Work structures / Teamwork Quality and robust processes / products Continuous improvement

77. Mercedes-Benz Production System Structure Results Number of techniques Principle of production Sub-system Management / Leadership 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1 1.1 2 1 3 4 5 Work structures / Compositions and Teamwork Standardization Quality and robust process / Products Just in Time Continuous improvement 12 3 6 8 5 8 2 8 12 4 2 4 6 2 10 12 10 24 14 10 92 Detailed MPS-Techniques and Tools S = Safety, Q = Quality, D = Delivery, C = Cost, E = Employees Participation / Cooperation & development of staff Clear tasks and roles Structures of Teamwork Job safety & environmental awareness Standardized processes and techniques Visual management Rapid identification of problems and problem solving Stable processes / Products & Preventive quality management Customer orientation (In house & external) Category of production Pull production Line production Pulse production Elimination of waste 92

79. Principles of Just in Time (JIT) Production smoothing Pull production Continues flow manufacturing Cycle time production

80. Principles of Just in Time (JIT) Production smoothing Pull production Continues flow manufacturing Cycle time production

81. Principle of “Pearl Necklace” KLUG, Florian (2005). Synchronised automotive logistics: An optimal mix of pull and push principles in automotive supply networks. [On Line] http://www.bw.fh-muenchen.de Classical principle of control Allocation body to customer order at start body shop Principle of control “Pearl Necklace” Allocation variants in body shop and paint shop to customer order at the beginning of assembly line Body shop Paint shop Selector Assembly line Customized body shop production Order Mr. Miller - 32h + 8h - 8h + 4h Body shop Paint shop Selector Assembly line V6 V1 V2 V1 V2 V6 … … V6 V1 V2 V6 V1 V2 V2 V1 V6 Blue Yellow Red Order Mr. Miller Neutral body shop Production and painting

82. Principle of Pearl Necklace Assignment of parts and aggregates Sequence Fixed data X-10 X-5 Classical principle of control Principle of control “Pearl Necklace” OEM Powertrain Requirement Planning Body shop Paint shop Assembly line Supplier Planning Assembly Warehouse Daily volume Fixed data Shift volume Fixed data X-10 X-5 X-4 X-2 X OEM Powertrain Sequence Planning Body shop Paint shop Assembly line Supplier Planning Assembly Warehouse Sequence Fixed data X-4 X-2 X

83. Principle of Pearl Necklace Supply Plant Rastatt (mercedes A-Class) (700 cars = Approx. 16h) 40 engines kept in reserve 120 engines in sequence Assembly line 540 engines in sequence Trailer yard Fixed planning Body shop Paint shop Assembly line Final acceptance X X Sequence Fixed data Plant Rastatt Plant UT X-10 Planning Assembly line Sequencing

84. Principles of Just in Time (JIT) Production smoothing Pull production Continues flow manufacturing Cycle time production

85. Classical job shop production Job shop production Process A Process B Process C Process D Zz z Stocks

87. Visual results of job shop production

92. KANBAN Pull system Customer Manufacturing plant Vehicle Assembly Supplier Supplier Supplier

100. KANBAN Route train Synchronized processes in one piece flow reduces stocks Substitution big boxes for small boxes which are shipped to line by route trains

101. Principles of Just in Time (JIT) Production smoothing Pull production Continues flow manufacturing Cycle time production

102. Typical types of assembly lines 1. Square 2. U-Form 3. Line 4. Special form Starting point Optimize set-up costs and man, material flow Optimize set-up costs and conveyor technique Without work holder With work holder Requirement Rough planning Detailed planning Realizing

103. Design production Focus on production subjects / objects Focus on production subjects: Operation of many machines Unready products Machine 1 (to turn) A B C D Machine 2 (to mill) Machine 3 (to drill) Threading Ready products Focus on production objects: Operation of many processes Unready products Machine 1 (to turn) A B C D Machine 2 (to mill) Machine 3 (to drill) Threading Ready products

107. Design production U-Line Before: Processing the waves “block likely” with buffer wagons (20 side shafts/wagon)

108. Effects on the material provision Previous state Characteristics: * Two boxes at the line * High stocks at the line * Much space Big carrier (GLT) Assembly line

109. Effects on the material provision New state Reading points: in – and outbound supermarket Range on line approx. 2h – reaction time for logistics Set definition Line Supermarket Samall carrier ( KLT ) Commission from supermarket into empty container

112. Types of strategic logistics Coordination Delivery Time Quality of Service Order Fulfillment Cost Cost LEAN (Reduction of waste) Synchronization Order Fulfillment Delivery Time Service Level Cost AGIL KEY PERFORMANCE INDEX ELEMENTS TYPE

113. Strategic Logistics Assembly to Order ACTIVIDADES DE VALOR AGREGADO Make to Stock Buy to Order Design to Order Pull Make to Order Push Pull Ansamblado Venta Consumidor Enfoque clave Push Push Pull Push Pull Pull Diseño Suministro de componentes Almacenamiento de productos Producción

114. Strategic logistics Supply chain classification based on product type and product life cycle

116. Principles of Just in Time (JIT) Production smoothing Pull production Continues flow manufacturing Cycle time production

118. Cycle time There are three main areas of application for the cycle time 1. Base for the employee correlation 2. Output control 3. Tool and capacity planning Final shift report User Time User Time Tact 1 – 2 12 – 1 11 – 12 10 – 11 9 – 10 8 – 9 7 – 8 6 – 7 Estimated Actual Time A B C A B C

121. Cycle time Bullwhip effect Increase across a single business Smart design reduces bullwhip

122. Thank You ! Discussion … Further Questions ?