ENGR 344 Cost Reduction in Manufacturing

A brief history of Manufacturing and developments leading to the present

Cost Reduction

Questions

1. What does cost-reduction (aka lean) mean? 2. When and where did lean originate? What is the history of lean? 3. Where does lean apply in business today? What professions? 4. Who is responsible for lean in companies today?

Cost Reduction

Historical Milestones
1712, Thomas Newcomen develops steam engine 1775, Boring machine developed by Wilkinson (England) to produce

cylinders for James Watts steam engine

1785, Concept of interchangeable parts in guns by LeBlanc (France),

however Eli Whitney (cotton gin, 1794) credited for IP concept in 1798

1800s gasoline engine, industrial revolution mechanization,

technology as the primary driver

Cost Reduction

Lean Historical Milestones

Early 1900s, Henry Ford creates efficient assembly lines mass

production Model-T referenced as first example of lean production with simple design and interchangeable parts
1913 Ford implements a continuous-flow (moving) assembly line,

slashing cycle times. For separates skilled trades from assemblers to speed up training.
1920 Ford produces more than 2 million vehicles per year and cuts

costs by 2/3

Cost Reduction

(mises.org)

Lean Historical Milestones

In the 1920s, Ford Motor Companys operation embodied the key

elements of scientific management (Frederick W. Taylor, 1856-1915): standardized product designs mass production low manufacturing costs mechanized assembly lines specialization of labor interchangeable parts
1926 Toyoda Loom Works, evolution of Jidoka 1937 TMC born (looms trucks for military finally automobiles)

Cost Reduction

Lean Historical Milestones

Fords centralized management approach (and desire to mass produce

everything) led to the decline of FMC in the 1930s GM became the auto leader
WWII Japan attacks Pearl Harbor (Dec. 7, 1941) 1940s - Ohno (Taiichi Ohno, Toyotas chief production engineer)

experiments with U.S. presses and perfects SMED (quick changeover)

Attacks on Japan (August 6 & 9, 1945), Shortly after Assistance to

broken Japan
1950 Eiji Toyoda, Japanese engineer, visits FMC with Taiichi Ohno,

beginning the Lean Manufacturing Revolution

Cost Reduction

(totalqualitymanagement.files.wordpress.com)

Lean Historical Milestones

In thirteen years of effort, the Toyota Motor Company had, by 1950, produced 2,685 automobiles, compared with the 7000 the Rouge [Ford Rouge Plant in Detroit] was pouring out in a single day. This was soon to change. (Womack, Jones, & Roos, 1990, p. 48)
Early 1950s U.S. automotive is mighty U.S. and Europe embrace

mass production and automation (Ohno sees waste)

1950s 1960, Lean Manufacturing revolution is born While U.S. focuses on mass production, at TMC Ohno institutes defect

prevention, teamwork, problem signaling, pull production, flow control, small lot sizes, supplier integration

Cost Reduction

Lean Historical Milestones

1961, Unimate, First robot in production part of the automation

revolution, human replacement concept

Early 1970s, microprocessor technology developed programmable

automation made possible

1973 Fuel prices increase dramatically. Consumers preferences

change: Want fuel efficiency, compact size

Ohno and Eiji Toyodas 20-year focus on productivity, quality, and

responsiveness (aka Just-In-Time) come to play

Cost Reduction

Lean Historical Milestones

1980s - Quality Revolution, 6 born, Toyota grows in popularity, U.S.

automobile manufacturers begin to see negative shift

U.S. focuses on technology (automates waste at record rate) 1988 International Motor Vehicle Program (IMVP)/MIT researcher,

John Krafcik, coined the term Lean: Lean Production uses half the
human effort, space, tools, engineering hours to develop new products as mass production. Lean production has less inventory, fewer defects, and produces greater variety of products.

(www.autofieldguide.com)
Cost Reduction 8

Lean Historical Milestones

Late 1980s Toyota is legitimate threat, fuel efficiency and

customer preferences are critical success factors, JIT and TQM

become important to U.S
1990s - Customer focus (customer is always right), Global

Marketplace: outsourcing and international trade fully embraced, TQM more emphasized
1990s Evolution of Six Sigma/DMAIC (Motorola), Lean

manufacturing significantly grows in popularity, but implementation is difficult

2000 Lean Six Sigma, lean is applied to fields other than

manufacturing (e.g. construction)

Cost Reduction

Now
Present TMC is worlds largest automobile manufacturer Present Lean applied to all fields, service industries, supply

chains, business processes.e.g. Lean Office, Lean Healthcare, Lean Farming, Lean Construction, Lean Accounting, Lean Graphic Communications
Present Lean successes are apparent in some companies, yet

most companies struggle with implementation

Present Telecommunications/internet leveled playing field in

global marketplace, business conducted anywhere @ anytime

Present - Green emphasis Present Employers want people who are motivated, trainable,

educated, skilled (but with operations management abilities)

Cost Reduction 10

Now
Present GM automaker (and suppliers) struggle to stay afloat Present Manufacturing/Construction impacted (mfg 9.3-12% of

U.S. GDP as opposed to about 20% in 1980s)

Present U.S. is in debt (China) and is losing market share Present Keeping jobs in U.S. a focus: 1 out of 3 college

graduates lands job (2009 NACE), U.S. education in turmoil, population is aging healthcare in crisis, skills have become specialized, country is divided politically, cost of living increasing while salaries are decreasing, green emphasized while costs are being scrutinized, world population continues to grow

Cost Reduction

11

Future?
Irony when we look at 70+ years of history

Much of U.S. problems are seen as consequences of short-term

planning
Today, Efficiency as the primary driver, NOT technology

So, .where do you think the U.S. will we be in 10 years?

Cost Reduction

12

References

Womack, J. P., Jones, D. T., & Roos, D. (1990). The machine that changed the world: The story of lean production. New York: HarperCollins.

Image References: John Krafcik - http://www.autofieldguide.com/articles/010502.html Taiichi Ohno http://totalqualitymanagement.files.wordpress.com/2008/11/taiichiohno.jpg Henry Ford - http://mises.org/images4/HenryFord-Model-T.jpg

Cost Reduction

13