International Journal of Research in Advent Technology, Vol.2, No.6, June 2014 E-ISSN: 2321-9637
Lean Manufacturing Practices in Indian Automobile Industry: Issues and Challenges Er. Rajesh K Mehta1 Prof. (Dr) K. K. Chhabra2 1
Research Scholar, Department of Mechanical Engineering, Pacific College of Engineering, Pacific University, Udaipur (Rajasthan) Email: Mehta.rajesh072@gmail.com 2 Director, Pacific College of Engineering Pacific University, Udaipur (Rajasthan)
Abstract- Lean Manufacturing is a systematic approach to identifying and eliminating waste through continuous improvement. Lean is about doing more with less: Less time, inventory, space, people, and money. Lean is about speed and getting it right the first time. The Lean Manufacturing approach is meant to transform non-value added activity into value added activity. Lean manufacturing has its effect on the employees and the customers alike. . A lean organization understands customer value and focuses its key processes to continuously increase it. The ultimate goal is to provide perfect value to the customer through a perfect value creation process that has zero waste. Currently, in India about 150 companies in the automobile industry use lean manufacturing but it is really at its nascent stage. Most of the automobile industries follow any particular method or combination of several lean methods to address their own unique needs and circumstances, although the methods generally remain similar. This paper aims to study Issues and Challenges pertaining to Lean Manufacturing Practices in Indian Automobile Industry. Keywords: Lean, Automobile, Industry, Waste Elimination, Cost Reduction, Production. 1.
INTRODUCTION
The Indian Automobile industry includes twowheelers, trucks, cars, buses and three-wheelers which play a crucial role in growth of the Indian economy. India has emerged as Asia's fourth largest exporter of automobiles, behind Japan, South Korea and Thailand. India is expected to top the world in car volumes with approximately 611 million vehicles on the nation's roads by 2050. The auto industry produced a total 1.81 million vehicles, including passenger vehicles, commercial vehicles, three wheelers and two wheelers in February 2014 as against 1.73 million in February 2013, registering a growth of 4.41 per cent over the same month last year. The increase continues to be on account of growth in two wheelers production. Moreover, the overall domestic sales during April–February 2014 grew marginally by 2.68 per cent over the same period last year.
2.
OBJECTIVES & RESEARCH METHODOLOGY The present paper aims to study Issues and Challenges pertaining to Lean Manufacturing Practices in Indian Automobile Industry and to understand basic concept of Lean Manufacturing Practices. This paper is based upon review of literature and secondary data collected from various websites, journals, magazines, newspapers and reference books. Literature review has shown prior research work done in this area.
3. LIMITATIONS There are limitations to this review of the literature. Research was also limited to peer-reviewed business, organizational psychology, and management journals, online journals to identify the different dimensions of Lean Manufacturing Practices in Automobile Industry with the help of review of literature. 4. CONCEPT OF LEAN MANUFACTURING Jim Womack, Daniel Jones and Daniel Roos (1991) Lean manufacturing is the systematic elimination of waste.[1] Dankbaar (1997) Lean Manufacturing will be the standard manufacturing mode in the 21st century.[2] As per Hayes and Pisano (1994) Lean uses less, or the minimum, of everything required producing a product or performing a service. The basic ideas behind the lean manufacturing system, which have been practiced for many years in Japan, are waste elimination, cost reduction, and employee empowerment.[3] Dennis (2007) the foundation of the lean system is stability and standardization.[4] Kosuge, Holm, Modig, & Ahlstrom (2009) Lean has its own uniqueness as an initiative for improvement.[5] 5. LITERATURE REVIEW Liker and Wu (2000) stated that lean is a philosophy of manufacturing that focuses on delivering the highest quality product on time and at the lowest cost.[6] Shah and Ward (2003) remarked that lean manufacturing has become an integrated system composed of highly inter-related elements and a wide variety of management practices, including Just-inTime (JIT), quality systems, work teams, cellular
34
International Journal of Research in Advent Technology, Vol.2, No.6, June 2014 E-ISSN: 2321-9637 manufacturing etc [7] Hines, Holweg, & Rich ( 2004) highlighted that lean has undergone a significant evolution and development and has attracted more attention to be applied in the service sector.[8] Taj (2005) expressed that Lean Manufacturing as manufacturing without waste.[9] Bhasin & Burcher (2006) viewed that Lean is not only tools and techniques, but it should be viewed as a philosophy. It is a 'way of thinking' and not a mechanism to action these thoughts.[10] Wilson (2010) remarked that lean system strives to make one piece at a time, this is true one piece flow.[11] Monica Sharma and Rambabu Kodali (2012) discussed the findings of the empirical study of proposed framework of manufacturing excellence (ME) in the Indian industry. The study included companies from five major sectors, namely automobile, process, machines and equipment, electronics and components and textile.[12] Bijay Nayak (2013) stated that lean manufacturing and value management have their respective strengths and weaknesses. When applied in a planned and focused manner, the respective strengths and weaknesses of these methodologies are complimentary.[13] Abdulaziz Banawi and Melissa Bilec (2014) developed a framework and integrated three different approaches – Lean, Green and Six Sigma – in a systematic approach with the goal of improving the quality and environmental impacts of the construction process.[14] 6.
LEADING INDIAN AUTOMOBILE COMPANIES The majority of India's car manufacturing industry is based around three clusters in the south, west and north. Hero Honda: Largest two-wheeler manufacturer in the world. Bajaj Auto: Second-largest two-wheeler manufacturer and largest three-wheeler manufacturer in India. TVS Motor Co. Third-largest two-wheeler manufacturer in India; has established a manufacturing facility in Indonesia. Honda Motorcycle & Scooter India (Pvt) Ltd. (HMSIL): Has recently entered the Indian market through its own subsidiary (in addition to its joint venture Hero Honda). Suzuki Motorcycle India Pvt. Ltd: The Company started its India operations in February 2006 through this fully-owned subsidiary. 7. SWOT ANALYSIS OF INDIAN AUTOMOBILE INDUSTRY A. Strengths • Domestic Market is large • Government provides monetary assistance for manufacturing units • Reduced Labor cost B. Weaknesses • Infrastructural setbacks • Low productivity
•
Too many taxes levied by government increase the cost of production • Low investments in Research and Development C. Opportunities • Reduction in Excise duty • Rural demand is rising • Income level is at a constant increase D. Threats • Increasing rates of interest • Too much competition • Rising cost of raw materials 8.
INDIAN AUTOMOBILE INDUSTRY: ROAD AHEAD According to a research report, sale of passenger vehicles is expected to double in the next four years and growth anticipated is higher than the 16 percent achieved in the past 10 years The passenger vehicles production in India is expected to reach 10 million units by 2020–21. The industry is estimated to grow at a compound annual growth rate (CAGR) of 13 per cent during 2012–2021. In addition, the industry is projected to touch US$ 30 billion by 2020–21, according to data from Automotive Component Manufacturers’ Association (ACMA).The cumulative foreign direct investment (FDI) inflows into the Indian automobile industry during the period April 2000 to January 2014 was recorded at US$ 9,344 million, an increase of 4 per cent to the total FDI inflows in terms of US$, according to data published by Department of Industrial Policy and Promotion (DIPP), Government of India.[15] The vision of AMP (Automotive Mission Plan) 2006– 2016 expects India, “to emerge as the destination of choice in the world for design and manufacture of automobiles and auto components with output reaching a level of US$ 145 billion; accounting for more than 10 per cent of the GDP and providing additional employment to 25 million people by 2016”[16] Figure No: 1 Projected Size of Indian Auto Component Industry by 2016
Source: IBEF & ACMA
9. ISSUES AND CHALLENGES Most of barriers in the successful implementation are lack of lean understanding and employees’ attitude. Lack of lean understanding is identified as the main
35
International Journal of Research in Advent Technology, Vol.2, No.6, June 2014 E-ISSN: 2321-9637 barrier to implement LM system successfully. Interestingly, all organizations recognize the main barrier is the lack of lean understanding. This is because LM requires new knowledge and cultural change during the transition. LM should be applied comprehensively and holistically in principles and concepts. the biggest obstacles in the application of latest IT/Robotics driven technologies in Indian Automobile Industry. Even in the implementation of advance level training, there may environment of hesitation and procrastination among employees. Old ways of working are really big hurdles in successful implementation of LMS. The application of lean can open possibilities for the practical development of sustainable processes with a health working environment. Stabilizing the work environment begins by learning to make and keep commitments. Stabilizing the work environment through the implementation of lean may result into substantial performance improvement.
10. CONCLUSIONS AND SUGGESTIONS Application of Lean tools and techniques can increase engagement and satisfaction levels of employees. However, when taking all of these components into consideration it may be surprising to note that one of the biggest contributors towards waste is simply a lack of employee involvement. It is better to motivate and involve employees through proper training and open group discussions. To implementing lean, organizations have to choose the best lean tools and techniques. While designing the system for Lean Manufacturing, the organizations select and use the various Tools and techniques for achieving zero wastage goal of Lean Manufacturing. The Training and Education Programme may be very beneficial to the employees to learn and understand technical and facilitation/team leadership competencies in lean manufacturing. Training is an invaluable tool for creating awareness towards LMS. Through training programs, organizations can communicate the importance of LMS and the organization’s commitment to that culture. Management should clearly communicate its plan and vision related to LMS implementation to the workforce and should ask for volunteers to form the lean implementation team. To reduce the waste of waiting, the organizations should reduce queue size, point of use storage, deployment of visual systems, improving planning and load. If Indian Automobile Industry wants to develop an LMS oriented working environment, they should create a more democratic culture where employees are encouraged to take responsibility for decisions and resolve conflict on lower levels, which
gives them the opportunity to increase their level of satisfaction and professional development. ACKNOWLEDGEMENT The authors would like to thank Prof. (Dr) Karunesh Saxena, Director, FMS, MLSU, Udaipur (Rajasthan) for providing his perceptive suggestions. We also express our gratitude to the staff members of the libraries of Pacific University, Udaipur, RGPVBhopal, SGSITS & IET-Indore, Vikram University, Ujjain, UEC-Ujjain for providing information related to Lean Manufacturing Practices in Automobile Industry. REFERENCES [1] Jim Womack, Daniel Jones and Daniel Roos (1990), “The Machine that Changed the World,” Rawson Associates, NY Pub-Simon and Schuster, 2008, p.p.352. [2] Dankbaar, B., (1997), “Lean Production: Denial, Confirmation or Extension of Socio-Technical Systems Design?” Human Relations, 50(5), pp 567-585. [3] Hayes, R.H. and Pisano, G.P.,(1994) “Beyond World Class: The New Manufacturing Strategy”, Harvard Business Review, January-February, p.p. 77-86. [4] Dennis, P. (2007), Lean Production Simplified: A Plain Language Guide to the World's Most Powerful Production System. New York: Productivity Press. [5] Kosuge, R., Holm, M., Modig, N. & Ahlstrom, P. (2009), Adoption of the Lean Concept At A Toyota Car Dealer: Identifying the Key Factors. Proceedings of 2009 European Operation Management Association (Euroma). [6] Liker, J.K. and Wu, Y.C., (2000), “Japanese Automakers, US Suppliers and Supply-Chain Superiority”, Sloan Management Review 42, pp 81-93. [7] Shah, R. and Ward, P.T., (2003), “Lean Manufacturing: Context, Practice Bundles, and Performance”, Journal of Operations Management 21, pp 129-149. [8] Hines, P., Holweg, M. & Rich, N. (2004), “Learning to Evolve: A Review of Contemporary Lean Thinking”. International Journal of Operations & Production Management, 24, pp 994-1011. [9] Taj, S., (2005), “Applying Lean Assessment Tools in Chinese Hi-tech Industries,” Management Decision, 43(4), pp 628-643. [10] Bhasin, S. & Burcher, P. (2006), Lean Viewed As A Philosophy. Journal of Manufacturing Technology Management, 17, pp 56-72. [11] Wilson, L. (2010), How To Implement Lean Manufacturing. New York: McGraw-Hill. [12] Monica Sharma and Rambabu Kodali (2012),“ Validity and Reliability of Proposed Framework of Manufacturing Excellence in the Indian
36
International Journal of Research in Advent Technology, Vol.2, No.6, June 2014 E-ISSN: 2321-9637 Industry", Journal: Production Planning and Control, Volume 23, Issue 5, May 2012, p.p. 333353 . [13] Bijay Nayak (2013),“Lean Manufacturing and Value Management Convergence of Divergent Tools�, SAVE International, USA,p.p.1-18. [14] Abdulaziz Banawi and Melissa Bilec (2014),"A Framework to Improve Construction Processes: Integrating Lean, Green and Six Sigma", Journal: International Journal of Construction Management, Volume 14, Issue 1, January 2014, p.p. 58-71. [15] www.ibef.org/industry/india-automobiles.aspx accessed on 10 March, 2014. [16] www.siamindia.com/ accessed on 20 April 2014.
ABOUT THE AUTHORS Er. Rajesh Kumar Mehta is a research scholar, pursuing his doctoral research from Mechanical Engineering Department, Pacific College of Engineering, Pacific University, Udaipur (Rajasthan). He has completed his ME in Industrial Engineering and Management from RGPV, Bhopal. He is also an MBA in Marketing Management from IGNOU, New Delhi. He completed his Bachelor of Engineering in Mechanical Engineering from RGPV, Bhopal (M.P.) He did his Diploma in Mechanical Engineering from M.P. Board of Technical University, Bhopal (M.P.) His areas of specialization and interest are Industrial Engineering & Production Management/ Production Engineering/ Marketing Management / O.R. He has authored several research papers in International and National journals of repute. He actively takes parts in presenting his research papers in International and National level Conferences/Seminars/workshops.
Dr. K.K. Chhabra is Director of Pacific College of Engineering, Pacific University, Udaipur (Rajasthan) He is ME, PhD, FIE & has about 39 years of diversified experience - 37 years teaching, research & extension and two years of experience in academic administration as Director. As an academician Dr. Chhabra published more than 30 papers in National / International Journals & Proceedings. He is a Fellow of Institute of Engineer (India) in Environment Engineering Division and member of several professional bodies. He remains Secretary and Chairman of the Institution of Engineers (India) Udaipur local Centre. Indian Society of Agricultural Engineers awarded him a "Commendation Medal" in Energy in Agriculture. His areas of interest includes Operations Research; Production, Energy Conservation and Maintenance Management.
37