Benefits of Lean Production

Manufacturing organizations are facing newfound pressure from both consumers and
competitors. This situation has caused the implementation of Lean manufacturing and 6 Sigma to
balloon. Manufacturers are looking to produce goods in the most efficient way and lean allows
them to do just that. By enacting lean methods a plant can reap rewards like minimizing defects
and uninterrupted production. Lean is defined as doing more with less by employing 'lean
thinking.' Lean manufacturing involves never ending efforts to eliminate or reduce 'muda'
(Japanese for waste or any activity that consumes resources without adding value) in design,
manufacturing, distribution, and customer service processes (Womack 1997). Adopting these
methods will allow plants to operate as productively as possible and all manufacturing
companies should consider these ideas.
AUTOFirm is an Italian automotive group, leader in the European market of luxury and
super sports cars. To increase quality and efficiency AUTOFirm adopted a policy of continuous
improvement to its production system. It adopted lean principles. In 2010 the company began a
revision of its production flow in order to detect any bottlenecks and make any possible
improvements. It detected a number of redundant checks being carried out at multiple
workstations. By eliminating these redundancies the company reduced the number of work-inprogress (WIP) vehicles drastically from 70 to 40. These actions are instrumental in achieving a
lean manufacturing division. By shrinking work in progress numbers a company essentially takes
money out of its inventory and can use it for other needs. Actions such as these improve the
efficiency of a company therefore AUTOFirms actions moved the company toward a leaner
setup and in so doing, reaped various rewards.
AUTOFirms decision to cut down on work-in-progress vehicles uncovered numerous
communication issues with its production team. A high WIP hides faults of production planning
and control, and consequently, with the reduction of WIP other problems were uncovered.
(Bevilacqua, 2015) The WIP reduction caused 55 percent of deliveries to be late during a one
month period of study. This problem forced the company to make further improvement declaring
a need for an external consultant and introduction of single function responsibilities along with
an improvement in communication. Products in the automotive field are considerably complex;
therefore, an efficient, clear and prompt communication is crucial: an inefficient communication
between different functions and between the operators of the same function can cause a bad
management of time, activities and resources. (Bevilacqua, 2015) However AUTOFirm insisted
The aim of this work is to reorganize the existent information system in order to eliminate
wastes and to make the information flow more efficient. The scope is not to develop a
completely new information system, but to introduce a new integrative tool into the existing
one. (Bevilacqua, 2015) AUTOFirms solution was to implement a clear hierarchical
information structure and then divide the entire production process into 5 distinct steps. The
system that the company adopted was called Integration DEFinition Language 0 or IDEF0 and
was met with a strong degree of success. After implementation late orders were again studied.

This time, over a month long period, only 26 percent of orders were delivered late. This change
resulted in a dramatic reduction of late orders, a difference of 29 percent. AUTOFirm managed to
dramatically reduce waste in two areas of the company, fulfilling the core principle of lean
systems.
Ford motor company also implemented a lean system and it likely saved the company
from bankruptcy. In 2006 the situation at Ford was dire, it was losing billions of dollars every
year and a swift influx of new CEOs was not solving the problem. Eventually the baton was
passed to Allan Mulally. He immediately reorganized management and funneled all of Fords
cash into a new research and development scheme called Global Product Development System
or GPDS. After spending months looking for qualified people, GPDS launched with the goal of
providing a high-level strategy to guide and orchestrate the role of each of the functional and
program-based organizations in product-process development (Liker, 2011). The new system
allowed Ford to see how all the various pieces fit together and to coordinate and synchronize the
high level development process. By breaking the company up into specific divisions the
companys goal was to reduce waste by syncing the entire production process. Ford notes It
would do no good to optimize isolated functional activities on their own. At best you end up with
a pocket of excellence, and at worst you create tremendous waste. Similar to AUTOFirm,
Ford also used the GPDS system as a revamped communication system where it served as a
central knowledge repository and critical learning mechanism. Ford used lean to synch the
company together and then focused on ridding itself of inefficiencies. The developers and
engineers also found many opportunities in which they could work simultaneously for longer
periods, and delay key decisions until points in the process that were closer to the customer
with more accurate data. (Liker, 2011) They also held regular TGW (Things Gone Wrong)
meetings between die makers and stamping engineering. This not only caught errors in
design/engineering and provided opportunities to improve both process and standards, but was
also an important organizational tool. These techniques helped Ford open numerous lanes of
communication and as a result products were produced much more efficiently and waste was cut
by a staggering margin. Over a 5 year period they reduced internal tool and die construction
timing by an average of 50 percent. They decreased average labor hours per tool by more than
50 percent and the number of people making dies was cut in half while output of dies doubled
yielding a 400 percent increase in productivity. (Liker, 2011 ) Quality of products was
increased 35 percent and on measures of things gone wrong in the vehicle body by J.D. Power,
Ford went from the worst of any automaker in 2003 to the best in 2008. (Liker, 2011) In
addition, the success of the company was boosting morale, up 30 percent from its 2005 levels.
Both Ford and AUTOFirm reaped substantial benefits from there movement to lean
systems of production. Both ends goals were the same, to minimize waste; however it is
important to note that the companies achieved this by different means. AUTOFirm had its sights
set on shrinking inventory whereas Ford focused on streamlining and synching up the production
system as a whole. AUTOFirm implemented a hierarchal information model where Ford simply

opened up as many avenues of communication as possible. It is important companies recognize

that there is no one size fits all implementation strategy for transitioning to lean. Both Ford and
AUTOFirm used different techniques and they are in the same industry. Minimizing waste can
mean a lot of different things and it is important that companies adopt a strategy that is
customized for them. Other firms should look to AUTOFirm and Ford as a good example but
understand there are a lot of ways to meet the end goal, to minimize waste.

Works Cited

Bevilacqua, Maurizio, Filippo Emanuele Ciarapica, and Claudia Paciarotti. "Implementing Lean
Information Management: The Case Study of an Automotive Company." Production
Planning & Control 26.10 (2015): 753-68. Web.
Liker, Jeffrey K., and James Morgan. "Lean Product Development as a System: A Case Study of
Body and Stamping Development at Ford." Engineering Management Journal 23.1
(2011): 16-28. Web.
Womack, J. P., and D. T. Jones. "Lean ThinkingBanish Waste and Create Wealth in Your
Corporation." J Oper Res Soc Journal of the Operational Research Society 48.11 (1997):
1148. Web.