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Chapter 2 Process Improvement in Manufacturing Industry This chapter critically evaluates the available literature concerning the development of production systems and process improvement in the automotive industry

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Chapter 2
Process Improvement in Manufacturing Industry

This chapter critically evaluates the available literature concerning the development of production systems and process improvement in the automotive industry. The chapter is divided into 4 sections: section 2.1 introduces and differentiates the different types of production systems in the automotive industry, and elaborates in detail how they were developed and improved over the past century. Section 2.2 defines the Toyota Production System (TPS) and Lean Production, and explores their development. Section
2.3 gives a more accurate definition of the Japanese Kaizen, distinguishes it from other improvement methods and introduces its two implementing practices. Section 2.4 introduces the different perspectives on comparing the different long-term effects of the two improvement practices and describing their mutual relationship in continuous improvement.

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The Improvement of Production Systems in Manufacturing Industry
“Dissatisfaction is the mother of improvement.”
Shingo (1987, p18)

In manufacturing industry, improvement is a logical next step to change the performance of a production system from the status quo to a new stage (Evans, 1993; Handyside, 1997). In order to meet the new production goals and sharpen competitive advantage, focusing on improvement is becoming more important (Liker, 2004) and therefore it is always required in manufacturing industry (Womack and Jones, 1996). The importance of making improvements in manufacturing industry has also been emphasised by several previous studies (Skinner, 1969; Schonberger, 1982b; Womack et al., 1990; Bartezzaghi, 1999; Fullerton and McWatters, 2001; Pavnaskar et al., 2003;
Schonberger, 2006; Colledani et al., 2010).

Achieving continuous improvement through small increments is a ‘world class’ manufacturing practice (Hayes and Wheelwright, 1984) to increase production efficiency (e.g., low cost/high quality) (Womack and Jones, 1996). The improvement of production systems can be a key competitive weapon (Prado, 1997; Hill, 2000, pp., p55; Liker and Meier, 2006). In particular, bringing improvement in all aspects is essential

for meeting the production challenges (Bessant and Caffyn, 1997) and a central topic to ensure the competitiveness of the production system (Colledani et al., 2010).

In case of automotive industry, manufacturing systems have been advanced from the Craft Production to Mass Production, and during the last a few decades to Lean Manufacturing (Figure 2.1).

Figure 2.1 The timeline for improvement in the production systems in the automotive industry (Taylor and Brunt, 2001; Clarke, 2005; American Society of Mechanical Engineers, 2008; Patty and Denton, 2010)

The improvement in Craft Production
Upto the middle of 18th century, manufacturing was small-scale and fundamentally involved manual work, with or without the aid of tools (Patty and Denton, 2010). This type of manufacturing is called Craft Production (Slack et al., 2007). Craft Production is based on a pre- industrialised shop floor production system (Miltenburg, 2005). It is characterised by highly skilled and experienced workers; the use of highly skilled and experienced workers was probably the single most important characteristic at the time (Womack et al., 1990). Hence, improvement was mostly made through apprenticeship training to enhance a worker’s skills and experience (Clarke, 2005).

Craft Production has the advantage of producing unique, highly customised and flexible products (Womack et al., 1990). Nevertheless, the use of general-purpose tools, stationary assemblies and extremely decentralised shop floor (Dennis and Shook, 2007) prevented Craft Production from producing high volumes of products quickly (Hobbs, 2004). Especially in the automotive industry, the production of hand-built cars was time- consuming and costly (Ford, 1926). In Europe, before the onset of Mass

Production, no more than 1000 cars could be built per year, and no two were exactly alike, since each of these cars were built individually and separately to order (Koren, 2010); quality was also inconsistent (Taylor and Brunt, 2001).

Therefore, the main challenges before Craft production was how to build products at lower cost, with consistent quality and at a high speed (Farahani et al., 2011). Just improving workers’ skills and experience was not enough to meet such challenges. Dedicated tools/machines needed to be introduced to boost productivity (Taylor and Brunt, 2001).

Figure 2.2 The Morgan Motor, a modern British craft car producer (The Morgan Motor, 2010)

Craft Production, on later stage, was replaced by the machine-intensive Mass Production system which could make products in larger volume, more quickly and with consistent quality (Hobbs, 2004). Modern Craft Production continues to survive (e.g., Figure 2.2), but is generally limited to niche markets for luxury goods (Dennis and Shook, 2007).

The improvement in Mass Production
Mass Production upgraded the production processes and effectively minimised numerous major problems of Craft Production (Sorensen et al., 2006). It was based on many of Fred Winslow Taylor’s innovations (i.e., standardised work, reduced cycle time, time and motion study, etc.) from the classic text: the Principles of Scientific Management (Taylor, 1911).
Mass Production separated planning from production and let the shop floor employees do only short cycle, repetitive tasks (Dennis and Shook, 2007). Thus, in contrast to

Craft Production, Mass Production is a high-quantity production system (APICS Dictionary 9th Edition, 1998). It uses large and dedicated machines and has a continuous flow of materials (Anderson, 1994). It can produce goods in high volume, in a faster manner (Slack et al., 2007) and with significantly lower costs (Hobbs, 2004) than Craft Production (Womack et al., 1990).

In the case of automotive industry, the Mass Production system (e.g., Figure 2.3) was introduced at the beginning of the 1900s (Williams et al., 1993). In early 1901, Oldsmobile developed the first high-quantity assembly-line to build cars – the Curved- Dashs (Eckermann and Albrecht, 2001). The assembly-line was nevertheless improved substantially by Ford Motors (Patty and Denton, 2010).

(a) A Curved-Dashs by the Oldsmobile in 1901 (Chevedden and Kowalke, 2012, p20)
(b) Ford’s Model-Ns’ production brefore the introduction of a moving assembly-line (Cabadas, 2004, p19)
Figure 2.3 The early Mass Production system

(a) Model-Ts were being produced on a moving assembly-line (Cabadas, 2004, p23)
(b) An example of the standardised parts of the Model-Ts (Collins, 2007, p140) Figure 2.4 The moving assembly-line and standardised parts

In the last leg of 1913, Ford Motors introduced a moving assembly-line at the Highland Park Plant to pace up the production process, and also used interchangeable and

standardised components to ensure quality (Ford, 1926, pp., p83) (Figure 2.4). By 1915, the Highland Park Plant produced around 500,000 Model-Ts per annum (Nersesian, 2000, p. p50). Later, the production line made a total number of 15 million Model-Ts in 19 years (1908-1927); on average approximately 800,000 per year (Williams et al., 1993; Sorensen et al., 2006). The concept of the moving assembly-line and standardised components became the basis of contemporary automotive production (Ohno, 1988a, pp., p93). Womack et al. (1990) complemented Ford’s development of the moving assembly production line and the use of standardised interchangeable components, saying they were some of the great achievements of the automotive industry.

Nevertheless, Mass Production also has major issues. Firstly, the use of dedicated machinery eventually resulted in a notable drop in the average skill level of the workforce, as many skills were made redundant by the machinery (Encyclopaedia Britannica, 1998; Koren, 2010). As a result, skilled workers became less important, and the improvements achieved by Mass Production were mainly achieved from the use of more efficient machinery (Dennis and Shook, 2007, p. p2).

The second effect was that most Mass Production machines were large, only served a single-purpose and were very expensive to purchase (Womack et al., 1990). As Bowden and Higgins (2004, p386) argued, “Fordist production methods were characterised by the use of high cost, specially designed machines… Thus, the end result was high volume production of standardised products”. In comparison to Craft Production, the investment costs of Mass Production had gone up dramatically.

The third effect was that most of these Mass Production machines were expensive to run (Womack et al., 1990), which resulted in complexity on the shop floor (Jones,2001). The Mass Production machines “relied on a seemingly endless supply of natural resources, such as ore, timber, water, grain, cattle, coal, and land” (Clark and Brody, 2009, p465) (Figure 2.5). It required “expensive and complicated forecasting, planning, scheduling and supplier coordination” to keep the machines running (Jones, 2001, p19). For example, Ford used to produce everything for the Model-Ts using a vertically integrated system on its highly centralised shop floor, “this operation extended from the iron ore mines all the way to the finished product” (Murman et al., 2002, p88). Accordingly, as Henry Ford (1926, p82) recalled, “our organization, Ford’s Highland Park Plant, has not enough resources/spaces to make two kinds of motor car under the same roof”.

In about 1928, showing iron ore carriers in the northern end of the slip at the right and storage bins at the left of the slip. Further left are the blast furances, foundry, and power plant.
Figure 2.5 The Rouge plant, world’s largest single-company industrial concentration (Lewis, 1987, p172)

The fourth effect was that almost all of those Mass Production machines were only made for a single-purpose. As a result the changeover time of these machines was very long (Batchelor, 1994). As Miozzo and Walsh (2006) commented, the long changeover time was even taken as a fixed constraint. Thus, the machines were only used to make one type of product at a time to avoid the necessity of changeover (Womack et al., 1990). In this way, low product variety was another main characteristic of Mass Production (Kamrani and Nasr, 2008, p. p228). For example, Ford used to only mass-produce black Model-Ts in its Highland Park Plant (Leseure, 2002) (Figure 2.6).

On an assembly-line, every car was made with exactly the same parts. Each car was not made special or different
Figure 2.6 The black Model-Ts (Rausch, 2007, p18)

As fifth effect, in order to maximise the use of the expensive machines, most mass- produced products were made-to-stock, which increased costs (Slack et al., 2007). For instace, with the purpose of taking benefits from the large economies of scale and scope (Hobbs, 2004), Ford mass-produced its cars to meet the needs of the vast market in the 20th Century, but it ended up with massive waste in overproduction (Whaples and Betts, 1995; Murman et al., 2002, pp., p88; Datta, 2004).

Thus, the drawbacks of Mass Production highlighted the necessity for improvements which could optimize the balance between machines and workforce skills. What was needed was a more cost-effective production system which had the flexibility to produce a wide variety of products, with high quality, at low cost (Ohno, 1988a, pp., xiii).

The improvement in Lean Production
The latest manufacturing system, the Toyota Production System (or later Lean Production, as coined by Krafcit, 1988), was being developed in Japan from the 1940s (Murman et al., 2002; Hobbs, 2004; Toshiko and Shook, 2007). It was basically used to make products to meet the Japanese small-lot production pattern (Ohno, 1988a) and “was a direct challenge to the older paradigms” (Lillrank, 1995, p973).

Lean Production “combines the advantages of Craft Production and Mass Production” (Womack et al., 1990, p13) and is considered to be another revolution in productivity in manufacturing industry (Slack et al., 2001; Holweg, 2007). Lean Production has the ability to achieve machine and workforce improvements (Shingo and Bodek, 1988; Yoneyama, 2007; Takeuchi et al., 2008). It primarily relies on a multi-skilled and highly experienced workforce to improve machinery to make a variety of products at high speed, with high quality, and most importantly, reducing the waste of overproduction (Denton, 1995).

Lean Production “offers significant advantages over other production methods, dramatic improvements in productivity and quality that no other system can match” (Scarbrough and Terry, 1998, p224). Lean Production has therefore, gained wide recognition for the advantages that it offers compared to Mass Production and Craft

Production (Salvendy, 2001; Bicheno, 2004). The following Table 2.1 sums up the characteristics of the three types of production systems.

Craft Production Mass Production Lean Production
Focus Task Product, Result Customer, Process
Skill level High skilled Low skilled Multi-skilled
Overall aim Mastery of craft Reduce cost and increase
efficiency Eliminate waste and add
value
Operations Single items Batch and queue Synchronised flow and pull
Tools required General purpose Dedicated General purpose
Teamwork Moderate Low High
Production plan Make-to-order Made-to-stock
Plan-push Made-to-order
Demand-pull
Defect rate Various High Low
Quality check Integration (part of the craft) Inspection (a second stage,
after production) Prevention (built in by
design and methods)
Warehouse size No / very small Very large No / small
Buffers Large Large No / very small
Production Volume High variety low quantity Low variety high quantity High variety high quantity
Business strategy Customisation Economies of scale and
automation Flexibility and adaptability
Improvement Master-driven continuous
improvement Expert-, result-driven
periodic improvement Workforce-, process-driven
continuous improvement
Table 2.1 The characteristic comparison of each production system in the automotive industry (Krafcit, 1988; Womack et al., 1990; Evans, 1993; Taylor and Brunt, 2001; Murman et al., 2002)

Lean Production
Lean Production system is derived mostly from Toyota which is widely known as the Toyota Production System (TPS) (Emiliani, 2006). It is implemented in the automotive industry (Shingo, 1989) to achieve ‘Lean’ in everything (Krafcit, 1989) with an “absolute minimum” use of warehouse for storage, “bufferless assembly lines”, “utility workers” and a “tiny” repair area (Krafcit, 1988, p45).

The definition of Lean Production
The term Lean Production was initially adopted by the International Motor Vehicle programme (IMVP) in 1979 (Krafcit, 1988; Womack et al., 1990). The IMVP is the oldest and largest international research consortiums from the Massachusetts Institute of Technology (MIT) that intended to understand the challenges facing the global automotive industry (Krafcit, 1988; Lewis, 2000; IMVP, 2008). In the later part of 1980s, the IMVP published two classic books in this field: The Machine that Changed the World (Womack et al., 1990) and Lean Thinking (Womack and Jones, 1996) to compare the automotive industry in Japan and the West.

Over the years, the term ‘Lean Production’ or just ‘Lean’ has become more widely cited and it has been defined differently (Lewis, 2000; Shah and Ward, 2007):
“Lean Production means moving towards the elimination of all waste in order to develop an operation that is faster, more dependable, produces higher-quality products and services and, above all, operates at low cost” (Slack et al., 2007, p466).
Other definitions of Lean Production focuses on its philosophy of production:

“Lean Production is a philosophy of production that emphasizes the minimization of the amount of all the resources (including time) used in the various activities of the enterprise. It involves identifying and eliminating non-value-adding activities in design, production, supply chain management, and dealing with the customers.” (APICS Dictionary 9th Edition, 1998, p49)
The current research adopted the definitions of Lean Production which emphasised continuous improvement and the elimination of waste. Krafcit (1988), a researcher in MIT for the IMVP programme, articulated the following definition:
“This TPS plant has been in the midst of a sustained, corporate-led drive to continuously improve its efficiency, to reduce costs in every facet of the operation, and to relentlessly improve quality.” (Krafcit, 1988, p41)
The definition given by Handyside (1997) in a major study of Lean Manufacturing shop floor:
“True lean manufacturing is simply concerned with the constant and never-ending elimination of waste” (Handyside, 1997, p163).

A more recent definition given by Radnor et al. (2012):

“Lean as a management practice based on the philosophy of continuously improving processes by either increasing customer value or reducing non-value adding activities (muda), process variation (mura), and poor work conditions (muri)”(Radnor et al., 2012, p365).

The development of Lean Production
Lean Production started in Japan and was developed initially in the automotive industry (Womack et al., 1990; Womack and Jones, 1996; Jones, 2001). It was particularly, pioneered and exemplified by Toyota (Hines et al., 2004), and thus it has been given the name: Toyota Production System (or TPS) (Shingo, 1990; Toyota, 1995).

The TPS remained unknown outside Toyota till the late 1970s, since it was never intended for adoption beyond Toyota in the first place (Schonberger, 1982b; Emiliani, 2006; Schonberger, 2006). Bodek (2004, p28) concluded that “the Toyota Production System had given Toyota a great competitive advantage and they did not want to share this information with other automotive companies”. This was corroborated by Sako (2004) who concluded that the TPS was kept as a secret within Toyota until they decided to share it with their suppliers in the 1970s. Schonberger (1982b) also revealed that there were only a few journal articles describing the TPS in the late 1970s. Particularly in the West, no English paper was published that mentioned the TPS or JIT until 1977 (i.e., Ashburn, 1977; Sugimori et al., 1977). Taylor and Brunt (2001, p20) reiterated the point and reported that “in the early 1970s, the TPS was documented for the first time, though it took another decade before these principles were published in books and articles”.

In the beginning of 1980s, many Western academics started studying Toyota’s success and taking note of the benefits of their seemingly revolutionary production system (e.g., Hayes, 1981; Schonberger, 1982a; Schonberger, 1982b; Schonberger and Gilbert, 1983; Cusumano, 1988). To be precise, according to The Asian Productivity Organization (2013), two of these academics were James Womack of the MIT and Daniel Jones of the University of Cardiff in Wales. It was these authors who were widely credited for adopting the term ‘Lean Manufacturing/Lean Production’ from Krafcit (1988) to describe the TPS to the West (Womack et al., 1990; Womack and Jones, 1996).

In the 1990s, the classic book The Machine that Changed the World was published (Womack et al., 1990). It adopted the term ‘Lean Manufacturing/Lean Production’ to describe the TPS (Krafcit, 1988; Engström et al., 1996; Fujimoto and Takeishi, 2001). This book combined disjointed Lean principles together and introduced them in a systematic fashion (Karlsson and Ahlstrom, 1996). Today, describing the TPS as Lean Production is widely accepted and both names have been used interchangeably in many recent publications (e.g., Okino, 1995; Rinehart et al., 1997; Fujimoto and Takeishi, 2001; Liker, 2004; Liker and Meier, 2006; Schonberger, 2006; Dennis and Shook, 2007; Pil and Fujimoto, 2007).

The philosophy of Lean Production
Lean Production is a management philosophy (Womack et al., 1990; Womack and Jones, 1996; Bicheno, 2004). “Lean Production is ‘Lean’ because it uses less of everything compared with Mass Manufacturing – half the human effort in the factory, half the manufacturing space, half the investment in tools, half the engineering hours to develop a new production in half the time” (Womack et al., 1990, p13).

Figure 2.7 The different Lean tools and techniques, adopted from Feld (2001, p5)

Lean Production is made of many tools and techniques for minimising the amount of all resources applied in various activities (Fujimoto and Takeishi, 2001; Scaffede, 2002; Pavnaskar et al., 2003; Shah and Ward, 2003; Liker, 2004; Morgan and Liker, 2006) (e.g., Figure 2.7). These include product design (e.g., product design for simplification and error-proofing) (Shingo, 1986; Got? and Odagiri, 1997) and manufacturing (e.g., automation with human touch and single-minute exchange of die) (Shingo and Dillon, 1985), supply chain management (e.g., just-in-time delivery) (Turnbull et al., 1989; Turnbull et al., 1992; Sako, 2004), shop floor management/continuous improvement (e.g., 5S practice, visual management, Kaizen, etc.) (Handyside, 1997; Imai, 1997), customer and supplier focus (e.g., quality mapping to increase customer value, modular sourcing, supplier association, supplier collaborations, etc.) (Hines and Rich, 1997; Howard, 2005; Schonberger, 2006), and employing multi-skilled workers and cross- functional teams (Morris et al., 1998; Delbridge et al., 2000).

Figure 2.8 The eight disciplines of the Lean enterprise model (Morgan and Liker, 2006)

These tools and techniques can again be divided into 8 disciplines (Figure 2.8) and classified accordingly into four main categories to build a Lean Production organisation (Peters, 1989; Salvendy, 2001). Ahlstrom and Karlsson (1996) summarised these findings and created the following conceptualisation to show the major compositions of a Lean Production organisation (Figure 2.9).
Figure 2.9 The conceptualisation of Lean Production (Karlsson and Ahlstrom, 1996, p26)

Continuous Improvement in Lean Production
As a successor to Craft Production and Mass Production, Lean Production has been improved considerably to have many small and simple manufacturing machines but multi-skilled and experienced workforce (Womack et al., 1990). still, in manufacturing industry, having many machines and a skilled workforce does not make an outstanding production system. According to many past studies (e.g., Kono, 1982; Bessant et al., 1994, pp., p18; Bhuiyan and Baghel, 2005), what made Lean Production better than the previous systems was the inherent feature of achieving continuous improvement. As

Womack et al. (1990) pleaded, the implementation of continuous improvement is one of the basic features of Lean Production for striving towards perfection.

Continuous improvement has always been conspicuous as a powerful tool for maintaining the competitiveness of organisations through Lean Production and one of the fundamentals that support the implementation of other Lean tools and techniques (Toshiko and Shook, 2007). Ahlstrom (1998, p331) concluded that “the final Lean Production principle is continuous improvement: perfection is the only goal”. Liker and Hoseus (2008, p63) indicated that “without continuous improvement the tools of Lean Production would be useless”. Imai (1986, pxxxii) emphasised that continuous improvement is “the unifying thread running through the philosophy, the systems, and the problem-solving tools developed in Japan over the last 30 years”.

Continuous improvement is defined as “a continual quest to make things better in products, processes, customer service, etc.” (Bessant and Caffyn, 1997, p7). It involves company-wide (Bodek, 2002), high frequency changes (Chartered Quality Institute, 2011) and is synonymous with ‘innovation’ (Bessant et al., 1994; De Jager et al., 2004). Continuous improvement does not necessarily require large capital investments (Imai, 1986; Imai, 1997; Terziovski and Sohal, 2000) and is not necessarily based on advanced methodologies (Rapp and Eklund, 2002), it hardly results in a big leap or generates a dramatic change (Bhuiyan and Baghel, 2005).

The origins of continuous improvement
Continuous improvement is commonly cited as one of the key methods of Lean Production (Lillrank, 1995) and a modification to Taylorism (Tamura, 2006). It was derived from a unique Japanese culture (Recht and Wilderom, 1998; Yoneyama, 2007; Liker and Hoseus, 2008) that permeates the mindset and behaviour of the Japanese from an early age (De Mente, 1976). In all likelihood, the uniqueness of these characteristics may have handicapped non-Japanese companies seeking to implement continuous improvement (Onglatco, 1985).

However, it has also been argued that the antecedents of continuous improvement did not originate in Japan, nor it is a new Japanese phenomenon. This postulate was also identified in many studies (e.g., Kono, 1982; Imai, 1986; Cusumano, 1988; Schroeder

and Robinson, 1991; Bessant et al., 1993; Recht and Wilderom, 1998; Dinero, 2005; Holweg, 2007), in which the authors discussed that continuous improvement was not peculiar to the Japanese. Many Western organisations were indeed the precursor of the modern improvement programme (e.g., incentive-driven suggestion systems in the West), as their implementations can be traced back to the 1800s (Bhuiyan and Baghel, 2005), or much earlier (Holweg, 2007).

Some early examples of the same include employee suggestion programme in the British Navy in 1770 (Graban and Swartz, 2012); the awards scheme for improvement in William Denny & Brothers, a Scottish shipbuilding company, in 1890 (Schwerin, 2004); the implementation of a suggestion-box improvement programme in the US National Cash Register Corporation in 1894 (Bessant et al., 1993); the idea of making improvements from the ‘hundred-headed brain’ from the Lincoln Electric (Schroeder and Robinson, 1991); and later Henry Ford’s insistence on making improvement in Ford’s Highland Park Plant (Ford, 1926). The early examples of quality control activities also proceeded rapidly in the West, explained by the development of the British Standard BS 600 for quality control in 1935 (Morrision, 1958); the American equivalent – America’s Z1 Standards – Guide for Quality Control in 1941 (Ishikawa, 1990); and the establishment of the American Society for Quality Control (ASQC or ASQ) in 1946 (American Society for Quality, 2012).

Figure 2.10 The PDCA Cycle (Deming, 1986)

It is also pertinent to mention, the Shewhart Cycle or the Plan Do Check Act (PDCA) Cycle (Figure 2.10), as a critical model and a major practice of improvement (Bakerjian and Mitchell, 1993), was originally developed by Walter Shewhart, an American physicist, engineer and statistician, in the 1930s (Shewhart, 1931). It was promoted within manufacturing industry (Shewhart, 1986) and established itself as most popular approach consequent to William Deming’s publications (e.g., Deming, 1950; Deming, 1982; Deming, 1986). This four-step process has now been universally adopted for problem- solving and formed the basis of Japanese continuous improvement (Bessant et al., 1994; Choi, 1995; Handyside, 1997, pp., p126-127; Bond, 1999; Watson et al., 2003) (Figure 2.11).

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