Case Studies Production and Operations Management

JIT AND INDIA Indian Indian Instit Institute ute of Materi Materials als Manage Managemen mentt (IIMM) (IIMM) is a forum forum for purch purchase ase and mater material ials s relat related ed employ employees ees and and they they have have freque frequent nt meetin meetings, gs, semina seminars rs and annual conventions to share knowledge. In one one of thei theirr annu annual al conv conven enti tion ons s the the topi topic c was was impl implem emen enta tati tion on of JIT JIT for for competitive advantages. Leading personalities personalities of the Indian industries talked lots of positive points and benefits due to the JIT purchase and JIT manufacturing methods. Many presented calculations and statistics of savings in costs and time and how it helps in reduce the price of the end products and hence competitive advantage. Most of the audience were impressed about the theory and thought of practical appl applic icat atio ion n in thei theirr resp respec ecti tive ve comp compan anie ies. s. Howe Howeve ver, r, few few of the the exec execut utiv ive e partic participa ipants nts were were more more worrie worried d about about pract practice ice and less less inter interest ested ed in ideal idealist istic ic theories. One Mr. JItend JItendra ra Joshi Joshi of LML’s LML’s Banga Bangalor lore e office office was impre impress ssed. ed. He has been been arra arrang ngin ing g Engi Engine ne Bloc Block k cast castin ings gs,, tyre tyre tube tube sets sets,, machi achine ned d comp compon onen ents ts,, speedometers etc from southern region to LML, Kanpur Unit. He has 15 years’ of experience in facing lots of problems in arranging the long distance supplies. He mustered courage to get up and ask few questions against the JIT and summary of question to Mr. Sudhakar (the speaker) were as follows: Mr. Joshi said JIT cannot be fully implement able in Indian conditions due to following genuine constraints. (a) The interinter-sta state te dis disput putes es like like ‘Kaver ‘Kaverii Disput Dispute’, e’, “Borde “Borderr dis disput putes’ es’ at times times disturb the arrangements. arrangements. (b) On and off terrorism, political agitatations, agitatations, holidays due to local, regional and national leaders’ deaths also disturb work environment. (c) Spread Spread of vendors all over India and vastness vastness of coverage coverage do not enable to know correct position of WIP of vendors. (d) Transpo Transport rt bottlenec bottlenecks, ks, heavy rains, floods floods (coastal (coastal areas), areas), workers’ workers’ strikes cause anxiety and worry. (e) (e) Part Partne ners rshi hip p prob proble lems ms,, fina financ ncia iall and and qual qualit ity y cons constr trai aint nts s are are not not easi easily ly attended or solved. These questions were like a mini speech on anti JIT and the atmosphere in the auditorium got charged up Mr. Sudhakar, the speaker, gave half hearted replies to questions for which Mr. Joshi and his friends were not satisfied. Finally Mr. Sudhakar said: “The system which operate successfully in Japan may not work equally well in other countries.” Only when Mr. Joshi took his seat as he felt he has made his clear on

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practical problems than merely going through the theory. Suddenly he seems to have won the admiration of the gathering. Prof. Rao who was chairman of the technical session gave his concluding remarks. He appreciated the ideology of JIT but advised executives to take it up step by step and ensure ensure pragmatic pragmatic views views and do not overdepend overdepend on JIT to fail. This This he told as Indian Industrial Environment Environment is yet to mature to take care of JIT systems in totality. QUESTIONS

1. Explain Explain why JIT purch purchase ase works works well in the develop developing ing countri countries es 2. Do you agree agree with Mr. Joshi’s Joshi’s views views on constrain constraints ts to JIT? Explain Explain the correct correct problems in northern and eastern India. 3. Write how you feel the the JIT systems systems can be be adopted in India with an example.





PLANT LOCATION LOCATION PROBLEMS Location of a plant has direct relevance to raw materials, market, human resources, civic amenities transportation etc. etc. However, in some countries countries the problem becomes becomes complicated due to (i) Inter-State competitions and tussles, (ii) Regional development and (iii) Political pressures and biased decision. Around 1970 Government of India mooted the idea of expanding steel production under public sector units to be established at suitable locations. A committee of eminent personalities was formed to go through claims of (i) Vijaynagar Steel plant near Bellary in Karnataka, (ii) Salem Steel in TN and (iii) Vishakapatam steel plant in A.P. Since it was under PSU the political pressure was going on and if it was under private sector, there would not have been any kind of political pressure. The most important raw materials for steel plant are iron core power and coal. Again in iron ore the iron percentage should be preferably more than 60% and ash content in coal should be less than 30%. These factors enable production of iron and steel at competitive price. From experts’ reports the following brief was available: (a) Vizag Vizag – The Iron Iron ore is rich rich with 65% Iron Iron and coal can be arrange arranged d from MP and Bihar and Vizag is well connected by broad gauge railway line to all important cities and the place has sea port and airport. Hence this place has more natural advantage than other cities.

(b) Salem – Iron ore was having 60 to 65%. Iron content and hence be economically exploited. The coal is in lignite form which is low quality coal. Hence this needs to be converted as coke for use. The place has broad gauge line and Madras sea port and airport are nearby. This place was considered second preference. (c) Vijayn Vijaynaga agarr – Bellary Bellary belt has Iron ore of 60% iron iron but coal coal has to come from AP (Singa (Singaren renii Colliery). The place had meter gauge railway line and hence not well connected to all India net work. The seaport and airports were far away and hence this place was not found suitable. As per the expert committee report steel plant work started Vizag and Salem and these plants came up as per the plan and are doing well. However, to everyone’s surprise the them PM, Smt. Indira Gandhi, did foundation stone laying in 1971 at Toranagallu in Bellary district for Vijaynagar steel plant also. This ultimately proved to be an election gimmick to please the votes, though the PSU unit did not come up ther theree at all. all. This This is a clea clearr exam exampl plee how how poli politi tici cian anss try try to foo fool gull gullia iabl blee vote voters rs by way way of inaugurations/foundation inaugurations/foundation stone laying. Steel plants are quite huge with township having about 50,000 to 1,00,000 people. Hence requirements of housing, electricity, water, hospitals, education, institutions, entertainment facilities are very essential. The investment is huge and this helps to develop the surrounding area quite well and there is abundant scope for ancillary units, engineering services and employment inside and outside the steel plant. Both Vizag and Salem got these advantages and production standard as per the plan and these industries





air. Though PSU was not started a private enterprise JInal Group took interest and applied for license to the Central Government. By the year 1990 they obtained license and Vijaynagar Steel plant with foreign technology and decided to make only sheet products, which fetch higher prices. They also kept bare minimum workforce and executives to make it economical right from inception. By this time broad gauge lines were formed and nearest seaport was Goa and hence some problems were taken care. This unit became operative in about 3 years and is also running profitably. QUESTIONS

1. What are are essentia essentiall factors factors for for locating locating a Steel plant and why? why? 2. Explain how how political political pressures pressures and pulls effect effect decision making and delays in starting industries. industries. 3. Explain Explain how how it was was possibl possiblee to make make Vijaynag Vijaynagar ar plant plant visible. visible. 4. Technolog Technology, y, HR, natural natural facilities facilities play play vital role role to start new enterpris enterprise. e. Explain Explain your views. views.





MANUFACTURING GOES VIRTUAL On November 12, 2003, the 100,000 th Audi A3, manufacture manufactured d by the German Luxury Luxury car major Audi AG, rolled off the Ingolstadt assembly plant only six months after the A3’s market launch. Only four months into production, Audi was turning out the A3 at maximum capacity, the so-called ‘watershed’ of 680 vehicles per day. For Audi AG, the A3 represents a major milestone, with the entire manufacturing simulated from the start to the the finish. In fact, Audi began to break new ground ground from the moment planning planning on manufacturing process and production went ahead. With the aid of simulation and assurance of production processes and plant in the virtual world, problem areas were identified many months ahead and dealt with before series of production started. The result: No need for expensive and time-consuming modifications in the production plants, noticeably shorter planning time and right from the start of production, Audi was producing cars to the highest quality standards and ultimately recorded the most rapid and successful production start up in its history. Audi officials attribute these successes to what they call the Digital factory principle. Today, Audi is able to assure reliable production at an early stage and simulate all the products processes at one and the same time. Projects currently in process are the ‘virtual press shop’, ‘virtual tool-making’, ‘virtual body shop’, ‘virtu ‘virtual al paint paint shop’, shop’, ‘virtu ‘virtual al logist logistics ics’. ’. In parall parallel el with with this, this, Audi Audi is undert undertaki aking ng virtua virtuall produc productt develo developme pment nt,, i.e. i.e. the simula simulatio tion n and assura assurance nce of a comple complete te Audi Audi model model and its technolo technology gy in cyberspace. Using these vehicles data, the digital factory can be set up to produce a new model even in the conceptual stage. The principles

Audi Audi AG’s AG’s Digita Digitall Factor Factory y valida validates tes the concep conceptt of Virtua Virtuall Manufa Manufactu cturin ring, g, which which first first came came into into prominence in the early 1990s as a result of the US Department of Defence Virtual Manufacturing initiativ initiative. e. Both the concept concept and the term have now gained gained wide internation international al acceptance acceptance,, and have somewhat broadened in scope. Virtual Manufacturing refers to the use of reality and related technologies to simulate the prototyping and manufacture of a proposed product before a commitment is made to its physical production. Global virtual manufacturing extends this definition to include and emphasise the use of Internet/Intranet global communications networks for virtual component sourcing, and multi-site multi-organization virtual collaborative design and testing environment. Here, we will emphasise on the manufacturing aspect. Automation technologies, such as CAD/CAM and CAE, shortened the time required to design products substantially. Virtual Manufacturing will have a similar effect on the manufacturing phase. In fact, the evolution of CAD systems beyond simple on-line drafting tools, the maturity of FEA for simple systems, coupled with the desire to reduce the cost of actual production is driving the development





manufacturing operations, simulate the ergonomics, and develop control code for the automation. With virtual manufacturing, one can predict the performance of a manufacturing process or a system without building the process or the system given set of manufacturing conditions. In addition to shortening the time required to bring products to market, Virtual Manufacturing will also reduce the cost of tooling, eliminate the need for multiple physical prototype, and reduce material waste, because you can “get it right the first time.” In short, it will provide a manufacturer the confidence of knowing that they can deliver quality products to market on time and within budget. The project manager of the digital factory at Audi, “The number of model versions is complexity and scope of development work, but less time is available for development. A near model needs to be on the market as fast and in as great a volume as possible, right from the start. Without virtual planning methods, it would not be possible to realize several model projects every year.” Virtual Manufacturing is one element, albeit it is a large and significant one, needed to fully address the issues involved in creating a workable on-line product development system. From a business perspective, it is clear that small improvements in manufacturing manufacturing can have dramatic and profound effects in terms of of cost and quality. quality. For example, if it were possible possible to reduce, reduce, even slightly, slightly, the thickness thickness of a given material, say the metal used to form the hood of an automobile, while at the same time maintaining, or even improving, its structural integrity, then, the potential cost savings would be enormous.

The evolution

Prior to the digital revolution of the late 70s; the realization of the designer’s styling concepts, the definition of body sheet-metal, and the design and construction of stamping and assembly tooling relied entirely on physical models. Other models were used for the construction of assembly and checking fixtures. It took a while before the automotive and aerospace industries accepted CAD. Even then, it was used used more more like like an ‘elect ‘electron ronic ic pencil pencil’’ than than a design design syste system, m, simply simply compu computer terizi izing ng the existi existing ng methodology. It took years for design to evolve to the point where the CAD drawing was an output rather than the input to the process. Today, the process has evolved much further to a situation where 3-D geometry is now the basis of the design process. It is not surprising to see the design department in a typical automotive OEM using digitals tools to model vehicle shapes of new vehicles concepts. Here, sketching tools emulate paper, pen and paint. Photorealistic modelers give the designer an almost true to life view of the new model. In fact, today, vehicle component design is done entirely in A CAD. Digital assembly of the vehicle insures that the parts will fit and function together. Standard parts and steels are used from the CAD library. The finished design is inspected and adjusted in 3D CAD environment before build begins. Even here, assembly systems, manual work stations, conveyors, piping, and safety work envelopes are maintained within a CAD facility layout of the entire plant.







Benefits •

Reduced time-to-market

•

Reduced cost of tooling

•

Elimination of multiple physical prototypes

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Reduced material waste

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Confidence in the process

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Lowe overall manufacturing cost

•

Improved quality

Discrete event simulation of the plant includes things like the conveyor speeds, production throughput, and machine downtime. These parameters assist in understanding causes of bottlenecks and the impact of new technology in the plant. Tool are in place

The current scenario can be summarized this: •

The realistic simulation of products and process generally begins with a three dimensional model. Finite Finite Element Element Modelling Modelling and dynamic dynamic simulatio simulation n tools tools are helping helping reduce the cost while while improving the performance of manufacturing tooling.

•

The advantages of concurrent engineering are already felt

•

The concept of ‘virtual prototyping’ of products, if not yet manufacturing processed, is widely accepted. Rapid prototyping tools are helping streamline the tooling development process further, by eliminating steps in the manufacturing process.





operating systems. With all the tools conducive to virtual manufacturing in place, it may not be overoptimistic to claim the virtual manufacturing will soon be a business requirement for all manufacturing companies. QUESTIONS

1. Explain Explain the the methods methods adopted adopted to to speed speed of new new model model develop development ment 2. Compar Comparee how there there are delays delays in produ product ct developm development ent in develo developin ping g countr countries ies and speed at developing countries 3. What is the the current current scenario scenario to produc productt developm development ent 4. If you were were M.D. of Maruti Maruti Udyog Udyog Ltd. what what steps steps would would you take to improv improvee new product product development in terms of time and cost.

Case Studies Production and Operations Management

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