BMGI Automotive Industry Event - Executive Summary

LEAN AS A STRATEGIC DRIVER FOR BUSINESS - EVENT SUMMARY

Lean as a Strategic Driver for Business

Ecosystem

Summary of the event conducted on 23rd April 2012

at Radisson, Pune

If Toyota is credited to have introduced Toyota

Production System and hence contributed to Lean

manufacturing principles, why is it in the shape that

it is today? Lean thinkers from the senior leadership in

Volkswagen, John Deere and VIP Bags discuss this

amongst the key questions an organization faces in its

Lean journey in an insightful panel discussion in BMGI’s

event “Lean as a Strategic Driver for Business

Ecosystem”

On the evening of 23rd of April 2012, more than 40

delegates from the Automotive & Auto ancillary

organizations came together in Pune for the event which

featured representation of over 25 different

organizations. More than 50% of the participants were

from the senior leadership and were decision makers.

Apart from the panel discussion, the event showcased

four themes where Lean was applied beyond the shop-

floor.

The first theme for the evening – Lean enabling

Business Growth was showcased in two ways – one

where the organization decides to adopt Lean

methodology and the other by aligning the organization

to the customer need.

The first speaker, Mr Kiran Bhojraj, Corporate Quality

Head from John Deere, presented how his organization

strategically chose Lean for growth and how it

augmented John Deere’s capacity by 15% with a

savings of close to INR 5 Crores within 6 months –

all this at zero cost.

It was reported that the key reasons for over 50%

increase in demand for tractors in a span of 5 years

were: scarcity of farm labour, increasing non-agricultural

application of tractors amongst others.

Mr Bhojraj shared that this meant John Deere had to

cater to higher demand, face increased customer

expectations and product complexity to meet varying

applications within its existing capacity and decide

between expansion of its facility, outsourcing, adding

more resources or even balancing its existing production

line.

John Deere

decided to adopt

the Lean

methodology as

this not only

encompassed all

the options listed

above but also

aligned with its

operating system.

It was stated that a roadmap for implementing Lean was

designed with a vision and steering committee with

cross functional teams was formed. BMGI’s SCORETM

methodology was adopted to work on the opportunities

identified for improvement.

The areas that needed improvement as identified by

John Deere included reduction of cycle time in the Paint

Shop, reduction of cycle time in Engine Machine shop,

reducing stuffing time per container in logistics, improve

line balancing in the transmission assembly area and

reduce lead time for vehicle audit.

Mr Shree Phadnis, Country

Deployment Champion,

Business Excellence, SKF

India, the second speaker shared the second way of

Lean enabling business growth by aligning with the

customer using lean and innovation. It was recounted

that aligning with the customer is the first principle of

lean. Mr Phadnis emphasized Innovation is a method to

meet the customer need and the context was set.

The delegates were taken through a transformation story

at SKF where a drying operation cost less, saved energy

and provided higher productivity.

In a presentation packed with knowledge and passion,

Mr Phadnis recounted the initial situation where the

elastomer drying process consumed high energy and

was low on productivity. It was informed that, with the

goal to reduce the energy consumption and the

increasing the productivity, the team at SKF carried out

a functional analysis of the drying process and mapped

Mr Kiran Bhojraj, Corporate

Quality Head, John Deere


Event Date: 23rd

April 2012, Radisson, Pune Page 2 of 4

the functional significance of each stage of the operation

against the cost of that stage.

Mr Phadnis established that the operations with low

functional significance but cost high are the candidates

for elimination while the operations with high functional

significance but cost high cost are the opportunities for

improvement by reducing cost.

The outcome of the analysis is that specific operations

are selected to be “trimmed” which led the team to the

desired solution.

The second theme - Lean enabling

cultural transformation was

showcased by Mr S N Dilip, Head -

Manufacturing, Apollo Tyres who

took us through the journey

undertaken by Apollo Tyres to build a culture of lean and

a mind-set of continual improvement within its

employees.

Mr Dilip was proud as he recounted the awards his plant

had won – which included three consecutive (to date)

inter-plant process excellence awards. The Lean journey

at Apollo links one of the pursuits of lean “eliminating

waste from the process” and the management behaviour

with the business model.

Mr Dilip

stressed

that one of

the key

points

contributing

to a change

in culture is

by creating

a fear-free

environment where the focus is on “what is wrong”

and not “who is wrong”. He further shared this would

enable the work force to understand that developing

solution as a key rather than critical judgment and result

in a higher employee involvement. Mr Dilip lay emphasis

on the fact that a culture change cannot be done

overnight and it is a continuous effort from the

management’s part.

The third theme: Lean for designing organizational

DNA was explored through a panel discussion. The

panellists comprised of Dr Christoph Graumann,

Director of Manufacturing, Volkswagen India, Mr

Shailendra Jagtap, Director of Manufacturing, John

Deere and Mr Suhas Kshirsagar, Corporate Quality

Head, VIP Bags with the panel being moderated by Mr

Naresh Raisinghani, CEO & Executive Director,

BMGI.

Mr Raisinghani posed the first question: If Toyota is

credited to have introduced Toyota Production

System and hence contributed to Lean principles,

why is it in the shape that it is today?

It was felt by the panel that Toyota could be getting

ahead of itself in its journey of process excellence - the

typical improvement cycle would be: Improve – Stabilize

– Improve, but, it could be possible that in Toyota’s

pursuit for improvement, they could be going too fast. It

was felt that it is not about the short term failure but

when you look at Toyota, one has to look at the entire

journey and the culture it has been able to inculcate and

spread. Also, the panel construed that it may not be

about Toyota alone but it could be a story of any other

organization as well – this is being spoken about

because the organization is Toyota which has

contributed so much to Lean principles.

The second question, Mr Raisinghani had for the panel

was in line with something that was brewing earlier as

well: Lean or Innovation? Which is a better strategy

for an organization?

There was convergence amongst the panel members

where each panellist felt there needs to be a synergy

between Lean and Innovation. To start with, it was

argued that while innovation could create a great

product or a business model, in order to put it into

action, one has to have lean methodology to support

bringing the product to the market in a profitable

Mr Shree Phadnis, Country Deployment Champion, Business Excellence, SKF

Mr S N Dilip, Head – Manufacturing, Apollo Tyres


Event Date: 23rd


manner. It was insisted if value is not specified, a value

stream with zero wastes would only create a product

that is not useful to the customer. The panel correlated

the definition of innovation (which is, to make a product

that meets the need of the user) to the first principle of

lean (define value). It was also felt that Innovation is

successful only if there is a foundation which could be

built using the principles of Lean. For the practice of

innovation to be nurtured, the basis is built through

Lean, the panel concluded

Mr Raisinghani’s third question was a bit direct to the

panellists: How is Lean related to their respective

organizational strategy?

It was put forth by one of the panellists that Lean helps

in Continuous improvement and everything that is done

in the panellists’ organization would be based on Value

Stream Mapping. Lean was said to be embedded in their

strategy quite well in the manner that identification of the

opportunities for improvement would be through

identifying wasteful activities. Another panellist stated

that Lean is embedded into his organization strategy by

constantly listening to the customer needs. This was

illustrated by an example: a vehicle meant for ploughing

is used in a country like India for more than just

ploughing – like drawing water, moving people, etc., -

and hence the strategy of building products that augur

well with the intended use. The third panellist pointed

that while his own organizational strategy uses basic

tools and concepts which may be concepts under Lean;

they don’t term the methodology as “Lean”. He

elaborated that execution happens with the concepts

that are Lean which seeks to involve the entire supply

chain.

The final question was: “What are the top 4 or 5 things

that are absolute must an organization should keep

in mind when going Lean?”

All the panellists stated two important things an

organization should keep in mind and collectively came

up with about 5 things. The first point to keep in mind, it

was stated, is to have an open culture and an open

environment where people should be able to go to their

bosses and report problems. The second, it was

recounted, was to make the problem obvious as

problems are nothing but opportunities for improvement

and take the buffers out of the value stream. The third

was to integrate lean into the operating culture with the

top management commitment. The fourth was to keep it

simple so that the workforce not only understands how

the principle translates to the organizational context but

also how it is applied. The fifth, the panel concluded,

was to create a strong structure of deployment where

the do’s and don’ts for deployment are clearly

communicated.

There were a few interesting questions from the

participants. One of them were: As suppliers to major

OEMs, the organizations have to embrace each

customer’s operating systems (Toyota Production

System, Volkswagen Production System, etc.,). How

should they manage this? The response from the

panel was that while the names of the operating systems

were different, it was the principles and the concept that

mattered. The panel emphasized that the focus needs to

be on the principle and the concept alone.

The fourth and the concluding theme was

that of taking Lean beyond the shop

floor. The panellist Dr Graumann and

his team from Volkswagen presented

their unique work of implementing lean

principles in designing their central kitchen which

reduced 63% of the time taken to cook, 25% of the

built up area and 70% of the raw material storage.

Dr Graumann explained, the existing kitchen was built to

cater to about 2500 meals per day against a projected

requirement of 7000 meals per day. He further stated

that there was no scope for capacity enhancement in the

current haphazard setting. He recounted that the

manner of work was not up to the worldwide standards

of Volkswagen.

Dr Christoph Graumann, Mr Shailendra Jagtap,

and Mr Suhas Kshirsagar in conversation


Event Date: 23rd


Dr Graumann

and his team

went about

applying the

lean principles

and explained

how they

mapped the

value stream

for the food items (rice, breakfast, tea), etc., which

included drawing a spaghetti diagram, calculated the

takt time for the meal, classified the food items into

product families and the current utilization of the kitchen

equipment.

One of the key findings the team was to have found was

that the rice was stored for 40% of its lead time and in

22 locations along its throughput.

Dr Graumann pointed out the conceptual changes that

were brought about were dedicating “cooking lines” for

cooking Rice, Vegetable and other food items. The

concept of “flow” and “pull” were incorporated in the

design stage. The entire focus of the team was to

improve the “value creating ratio” of the process.

About BMGI

Breakthrough Management Group International (BMGI),

a global consulting firm with a strong focus on delivering

results, partners with organizations in various stages of

their business life cycle to transform their business

performance. BMGI enables businesses drive growth

and improve profitability. Headquartered in the US,

BMGI has developed a loyal clientele that today exceeds

200 active clients. Engagements with our automotive

clientele have help them achieve breakthrough results.

BMGI has delivered cumulative benefits to its clients

worth several billion dollars with an ROI of 5:1 to 20:1.

Dr Christoph Graumann, Dir of

Manufacturing, Volkswagen India