Lean: a Key Success Factor in Automobile Industry
Lean: A key success factor in automobile industry
Abstract
The concept of Lean Manufacturing is well known and is being applied widely in industry. As industry moves forward in deploying lean concepts, it is important to recognize the potential benefit for attacking waste in above-the-shop-floor processes. While the benefits are significant in production, this typically constitutes less than 30 percent of the total cost of a product. Furthermore, the distributed, collaborative nature of manufacturing today depends extensively on efficient and cost-effective information processes among sites and throughout supply chains.
Keywords: Distributed, Lean, total cost, supply chains
Introduction
The complexity a manufacturing system has to cope with is largely determined by the customer and his or her articulated needs and requirements. In the past, vehicle manufacturers offered the market unique models that had a small variety of attributes and long life cycles. Manufacturing organizations must now provide a high product variety to remain competitive as they are facing increasing customer sophistication and fast- paced technological developments in the industry. On the one hand organizations can foreclose market entry and maintain or increase their market share, increase their prices and serve customer needs better by closely matching customer preferences and offered products.
Costs involved in automotive industry
The auto manufacturing industry is considered to be highly capital and labor intensive. The major Costs for producing and selling automobiles include:
• Labor - While machines and robots are playing a greater role in manufacturing vehicles, there are still substantial labor costs in designing and engineering automobiles.
• Materials - Everything from steel, aluminum, dashboards, seats, tires, etc. are purchased from suppliers.
• Advertising - Each year automakers spend billions on print and broadcast advertising; furthermore, they spent large amounts
Abstract
The concept of Lean Manufacturing is well known and is being applied widely in industry. As industry moves forward in deploying lean concepts, it is important to recognize the potential benefit for attacking waste in above-the-shop-floor processes. While the benefits are significant in production, this typically constitutes less than 30 percent of the total cost of a product. Furthermore, the distributed, collaborative nature of manufacturing today depends extensively on efficient and cost-effective information processes among sites and throughout supply chains.
Keywords: Distributed, Lean, total cost, supply chains
Introduction
The complexity a manufacturing system has to cope with is largely determined by the customer and his or her articulated needs and requirements. In the past, vehicle manufacturers offered the market unique models that had a small variety of attributes and long life cycles. Manufacturing organizations must now provide a high product variety to remain competitive as they are facing increasing customer sophistication and fast- paced technological developments in the industry. On the one hand organizations can foreclose market entry and maintain or increase their market share, increase their prices and serve customer needs better by closely matching customer preferences and offered products.
Costs involved in automotive industry
The auto manufacturing industry is considered to be highly capital and labor intensive. The major Costs for producing and selling automobiles include:
• Labor - While machines and robots are playing a greater role in manufacturing vehicles, there are still substantial labor costs in designing and engineering automobiles.
• Materials - Everything from steel, aluminum, dashboards, seats, tires, etc. are purchased from suppliers.
• Advertising - Each year automakers spend billions on print and broadcast advertising; furthermore, they spent large amounts
References: 1. http://www.investopedia.com/features/industryhandbook/automobile.asp 2. http://ezinearticles.com/?Automobile-Industry-in-India&id=3719913) 3. http://www.team-bhp.com/forum/indian-car-scene/27832-lean-manufacturing-indian-automotive-industry.html 4. elsmar.com/Kaizen 5. www.strategosinc.com/cellular_manufacturing.htm