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Executive Summary
Bajaj – introduction
Problems faced by Bajaj
A Strategic plan for success - The Project 110%
Overview of Lean Manufacturing
Bajaj - Moving towards Lean Manufacturing
Tools and techniques employed
Metrics used to measure result
Results and Benefits
Challenges
Limitations
Some other successful implementation of lean
Conclusion
References
Executive Summary
Bajaj Auto Ltd. – About the company
Bajaj Auto is ranked as the world's fourth largest two- and three- wheeler manufacturer
and the Bajaj brand is well-known across several countries in Latin America, Africa,
Middle East, South and South East Asia. It is based in Pune, Maharashtra, with plants
in Chakan(Pune), Waluj (near Aurangabad), Pantnagar in Uttaranchal and one in
Indonesia. The combined manufacturing capacity is about 4 Million vehicles. The
Product range covers motorcycles, un-geared scooters and 3-wheelers.
2 Wheeler Models
Commercial Vehicles
The key objectives of the manufacturing model of 80’s & 90’s were - Economies of Scale
and High utilization of Investment. Some of the characteristics of this model -
Batch Flows with high Set-Up time on high cost machines / equipment.
Model specific dedicated assembly lines.
Narrow, specialized labour skills.
Quality through lot inspection, high rejection rates.
High raw material inventory in stores and high WIP on shop-floors .
Big stores and big material handling containers.
Supplier base with low-end processes, most work done in-house.
In late 90s, Bajaj Auto did ‘The Project 110%’ that involved the re-organization and a
fundamental re-design of the core business processes.
Lean manufacturing does not center on placing small stockpiles of inventory in strategic
locations. Lean manufacturing strives to eliminate waste. The true foundation of lean is
5S, creating a clean stable work environment by engaging employees to make
improvements in their work areas.
The elimination of waste is the goal of Lean, and three broad types of waste: muda, muri
and mura. Firstly, muri focuses on the preparation and planning of the process, or what
work can be avoided proactively by design. Next, mura then focuses on how the work
design is implemented and the elimination of fluctuation at the scheduling or operations
level, such as quality and volume. Muda is then discovered after the process is in place
and is dealt with reactively. It is seen through variation in output. It is the role of
management to examine the muda, in the processes and eliminate the deeper causes by
considering the connections to the muri and mura of the system. The muda and mura
inconsistencies must be fed back to the muri, or planning, stage for the next project.
With a muri or flow based approach (as used in the TPS with suppliers).
Sort out as many of the visible quality problems as you can, as well as downtime
and other instability problems, and get the internal scrap acknowledged and its
management started.
Make the flow of parts through the system or process as continuous as possible
using work cells and market locations where necessary and avoiding variations in
the operators work cycle
Introduce standard work and stabilize the work pace through the system
Start pulling work through the system, look at the production scheduling and
move toward daily orders with Kanban cards
Even out the production flow by reducing batch sizes, increase delivery frequency
internally and if possible externally, level internal demand
Improve exposed quality issues using the tools
Remove some people (or increase quotas) and go through this work again.
Resultant changes and focuses on –
The strategy employed by Bajaj was to massively outsource the manufacture of parts to a
core group of suppliers, short-listing and grooming them to be its single-source suppliers,
thus cutting down heavily on variable costs. The move also improved manpower
productivity by five times since 2002, and reduced Bajaj’s suppliers from 800 to 185.
Today, just 15 vendors supply 75% of the components used at its Pantnagar facility in
Uttarakhand. At Chakan, 50 suppliers cater to 100% of its requirements.
“Build technology inside and parts outside,” sums up the firm manufacturing philosophy.
The project 110% was supported by Project 110% IT. Bajaj Auto implemented SAP
ERP.
The move towards Lean Manufacturing was first tried on the Chakan plant by means of
the IT enablement.
A new plant was built in the Pantnagar (Uttarakhand) to avail new business opportunities
(excise duty cut off for 10 years). This gives them an opportunity to overcome the
limitations faced by Chakan plant.
IT Enablement
Measure
Overall equipment effectiveness (OEE) is a set of performance metrics that fit well in a
Lean environment.
Achievements
Bajaj Auto started its Total Productive Maintenance initiative ten years ago with its
manufacturing plants. In March 2007, it achieved a milestone of having all its
manufacturing facilities awarded as ‘TPM Excellence Category –1’ winners by
JIPM (Japan Institute of Plant Maintenance). Last year, TPM and quality initiatives at
vendor plants gathered further momentum. Since inception of Bajaj Auto’s Vendor
Quality and Vendor TPM awards, the tally of Quality and TPM award winners is as
follows:
In other words:
Over 50% of BAL’s vendors have achieved a status of supplying zero defect
components to the Company’s plants for six straight months at least once during
last four years (‘Bronze’).
Almost 40% achieved zero defect supplies for 12 straight months (‘Silver’).
25% have had zero defect supplies for 24 straight months (‘Gold’).
Three vendors have supplied zero defect components for more than 36 straight
months (‘Platinum’).
Lean manufacturing strategies can save millions of dollars and produce excellent results.
Advantages include lower lead times, reduced set-up times, lower equipment expense,
and of course, increased profits. It gives the manufacturer a competitive edge by reducing
costs and increasing quality, and by allowing the manufacturer to be more responsive to
customer demands.
Challenges/Limitations
Lean was so successful at the Gillette plants in Mass., when P&G bought it, the only way
to squeeze more profits was to move the entire operation to Mexico.
The best example is the case of EDO providing IED jammers in Iraq. Early on casualties
were large and EDO contract performance was terrible. EDO then got acquired by ITT
who implemented their Lean process to the EDO jammers. Results: No deaths to soldiers
in vehicles protected by EDO/ITT jammers since.
Other companies besides Toyota and Honda (and now GM, Ford and Chrysler who can't
afford NOT to do it, albeit much less effectively) who use Lean manufacutring are
Boeing, Lockheed Martin, Honeywell, Emerson and many others.
Conclusion
References
http://www.beyondlean.com/5s.html
http://www.sae.org/manufacturing/lean/column/leandec01.htm
Appendix
Theory of Constraints and Lean