Lean production is a concept that has evolved from JIT concepts over the past several
the 1980s, in spite of the well-documented advantages and benefits resulting from JIT.
There is strong evidence that many manufacturers, eager to take advantage of the documented
advantages, attempted to implement JIT without first understanding the fully integrated approach and impacts of such a highly integrated system. This condition led to many disappointing implementations or outright failures of JIT during that period. As is often the case when fundamental concepts are not fully understood, the JIT concepts were viewed by many manufacturers as invalid or inappropriate for their particular production environment. In the meantime, the development of highly integrated production systems was rapidly evolving. MRP was recognized to be an effective engine to drive an integrated enterprise-wide information system that is today called ERP. Purchasing and logistics activities were similarly being integrated with fundamental internal materials management principles into an enterprise-wide
approach, today called supply chain management. Similarly, the fundamental concepts of JIT evolved to an enterprise-wide perspective called lean production. What was originally called JIT is still called JIT in the lean production approach, for it implies for the need.
Lean production, on the other hand, implies understanding and correctly
implementing the major enterprise-wide changes required to truly eliminate or significantly reduce waste in the system. It is the system-wide philosophical approach used to integrate the system toward an ultimate goal of maximized customer service with minimal system waste. Many of the changes were discussed in the earlier discussion of general JIT approaches and are forced on the organization by one simple principle. The principle is that removal or reduction of excessive inventory or capacity between activities in a process, regardless of the reason that inventory or capacity existed, serves to force a tighter coupling of the activities in the system. In other words, the organization must be managed as a system instead of a set of relatively disjointed activities. Since the time that lean manufacturing was introduced, many manufacturers have successfully implemented at least some of the concepts. Many were companies that were unsuccessful in their first attempt under the original JIT system. In many cases, the major difference between their early failure and later success is primarily that people now understand the forced system perspective more completely and are making the appropriate organizational changes to make it work.
If the global economy slips into a deep slump, American manufacturers including motorcycle maker Harley-Davidson Inc. HOG that have embraced flexible production face less risk of veering into a ditch. Harley-Davidson has fine-tuned its operations for smooth riding should the economy slip back into a slump.
Until recently, the company's sprawling factory here had a lack of automation that made it an industrial museum. Now, production that once was scattered among 41 buildings is consolidated into one brightly lighted facility where robots do more heavy lifting. The number of hourly workers, about 1,000, is half the level of three years ago and more than 100 of those workers are "casual" employees who come and go as needed.
This revamping has allowed Harley to quickly increase or cut production in response to shifting demand. "This is a big bang transformation," said Ed Magee, a Louisiana-born ex-Marine officer who runs the York plant, one of the Milwaukee-based company's three big U.S. production facilities.
The efficiency gains mean Harley should be able to raise its operating profit margin for the motorcycle business [excluding financing operations] to nearly 16% this year from 12.5% in 2009, Harley no longer needs peak production levels to achieve strong profits, he said.
Like Harley and others, Caterpillar Inc., CAT a maker of construction machinery, now relies more on "flexible" workers, including part-timers and people working for outside contractors. Caterpillar generally doesn't have to pay severance costs when it lets such workers go during slow periods. Flexible workers accounted for about 16% of its global workforce as of June 30, up from 11% at the end of 2009, when many of those workers were cut because of slumping orders.
Harley got more serious about cutting costs when Keith Wandell became chief executive in 2009 amid a severe slump in motorcycle sales. On his first visit to the York plant, Mr. Magee recalled, Mr. Wandell declared the layout and working methods unsustainable. Harley began scouting sites for new plant to replace York and settled on Shelbyville, Ky. The company notified the International Association of Machinists and Aerospace Workers, or IAM, which represents York workers, that the plant would close and move to Kentucky unless they approved a new contract giving Harley more control over costs. Union members voted overwhelmingly to make concessions, and Harley stayed in York.
Instead of 62 job classifications, the plant now has five, meaning workers have a wider variety of skills and can go where needed. A 136-page labor contract has been replaced by a 58-page document.
Kim Avila, 49 years old, who has worked here for more than 17 years, said she saw the concessions as the only chance to preserve jobs. The pace of work is faster now, but she said managers and workers have more mutual respect and work together more smoothly. In the paint department, where she works, people used to do the same chore all day but now rotate through several tasks to avoid body strain and boredom. They are encouraged to fix some minor flaws in the finish themselves rather than kicking them to another department.
Some items formerly made in York, such as brackets and screws, come from outside suppliers. Production fluctuates depending on day-to-day sales, so the company doesn't have to stock up well ahead of the spring peak-selling period and guess which models and colors will be popular.
Similar changes are in the works at Harley plants in Kansas City, Mo., and near Milwaukee, Wis. In all, the restructuring will cut costs of doing business this year by at least $275 million, Harley estimates. "They've done a phenomenal job in reducing costs," said James Hardiman, an analyst.
The transformation has been trying at times. Harley's Mr. Magee likened it to having "open-heart surgery as we were running the marathon" in that Harley had to maintain production in York as it rebuilt the plant. New software installed recently to guide production temporarily left the plant "constipated," one manager confided.
Robots now do most of the welding and metal slicing. They slide flat sheets of steel into an 80-ton press that molds metal into fenders. A computer takes snapshots of each frame or gas tank moving along the line, relaying that information to the painting equipment so it can prepare needed hues.
Automation has its limits. People, some wearing biker garb such as muscle shirts or U.S. flag head scarfs, still do quality-control and assembly work. To check for leaks, workers plunge gas tanks into water basins and watch for bubbles. It's the same method used for a century at Harley. Mr. Magee shrugged. "It works," he said.
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