OPM-2 GROUP

ASSIGNMENT

Group I1:
Juhi Baranwal- 15F225
Krutarth Vashi- 15F227
Mahesh T-15F229
Shashank Lahoty-15F247
Shruti Surendran- 15F250

Q. Was Daktronics implementation of Lean manufacturing successful? Present your

evaluation based on aspects of operational performance measures/ Quality
improvement/ Capacities.
Need for Lean Manufacturing
Daktronics was following a replication and batch production manufacturing process up until the year
2006. In February 2006, following a rapid growth in sales, the company made a decision to go ahead
with lean manufacturing. With their rapid rate of growth, the inefficiencies in the manufacturing
process came up and it became apparent that the replication method that they were following was not
easily scalable. This also limited the growth of the company. This led to the implementation of lean
manufacturing as an alternative to increase the output.
In 2008 and 2009, the company started allocating inventory and decentralizing various functions to
each plant, with a view to expand the reorganization. This led to significant investments in duplicating
processes which in prior years were centralized. This was however exceptionally important given the
rapid growth of the business and dynamic market trends which resulted in unique needs of customers
in each business unit. Given the cyclical nature of some divisions of their business, the company
needed to maintain its ability to manufacture the same products across all plants to smooth out the
peaks and valleys of consumer demands.

Objective of Lean Manufacturing

President James Morgan saw the inefficiencies in the manufacturing processes and the low level of
standardization in the same, which resulted in problems with planning. Also the firm had a limited
ability to recover cost overruns. So, lean manufacturing represented a way to generate cost savings by
reducing the time between customer order and receipt of payment. For achieving this it was necessary
to eliminate the sources of waste. Waste, in terms of Lean manufacturing, is defined as useless
consumption or expenditure, or use without adequate return. The seven sources of waste were
identified in transportation, inventory, motion, production, processing, waiting and defects. Material
taking more space which resulted in more costs and also had the potential to get being damaged.
Producing more material than is needed was another area of concern. Lean manufacturing was
believed to eliminate the sources of waste and by reducing the lead time, the company will be in a
credible position to deliver the products to customers on time.
To achieve the same, employees were given lean operations training like 5S housekeeping system
(Sort, Straighten, Shine, Standardize, Sustain), Lean Tools and Lean Leadership. Lean implementation
started off with LED assembly. Before implementing the lean system, means of transporting the
product was with push carts, where in one cart was pushed by one person. The discussions on
improving the efficiency of the transfer process directed them on using gravity conveyors. This
significantly reduced the time spent on transferring a product between stations.

Implementation and Results

The initial implementation was to test the products that work best on the high mix flow line. The
benefit of this single production line with duplicate resources is that the idle equipment could be
undergoing a setup while another production is running. So there is no loss of time due to this. 5S
system implemented in the early stages gave a visual workplace and disciplined approach. With the
racks and shelves all sorted out and arranged, it reduced the total walking distance that an employee
had to cover in order to search for the tools. Furthermore, there were no stockpiles of finished goods
and work in process inventories. This showed that with lean manufacturing the products moved at a
faster pace than before. This enabled the firm to lower their lead times, grow the revenues and serve
the customers better.
Daktronics also sought for changing the approach to quality management. During batch production,
even with a dedicated assembly workforce, there were quality problems. The major concern was the
timing when the issue was discovered. It took up to three days for a functional test to be performed on
a fully assembled product. This delay affected every order and test stations used to get congested
because of piling up of inventories. This in a way also asked for space requirement for the products
waiting in queue, increasing the wok-in-progress inventory levels, which ultimately increased the
costs. Not only had the inventory in batch process resulted in greater need of space, it also resulted in
quality issues. If a flaw was discovered in a product during functional test, it was sent for repair. Thus
the time between the production completion and the quality product received by the customer was
huge. The integration of real time product testing which took place simultaneously with the product
building was considered to be the best thing that happened in the project. If any problem is found in
any test station, the production line is brought to a halt until the root cause of the issue has been
identified and resolved. In the process the work in progress inventory volume was reduced by greater
than 50 percent.

Results
As a result of lean efforts, Daktronics was able to increase the factory efficiency by 60%. This
happened because of the standardization of the processes across the company. With the application of
the lean system, there was a recovery of the production space. The electronic work instruction almost
eliminated the paper-work orders and the order processing time. With the conveyors being installed,
the product handling time was reduced and hence it reduced the defects occurring due to moving and
handling. As the lead time was reduced, it enabled the faster completion of the customer orders. The
quality of the products delivered was significantly improved with the in-line testing strategy, which
reduced the defects and increased the First Pass Yield. There was a tremendous reduction in the scrap,
the cost of scrap went down from $9615 in year 2009 to $2762 in year 2010, a reduction of 70% in
the average monthly cost of scrap.
Based on the above analysis, it can be concluded that the implementation of the lean manufacturing
by Daktronics proved to be extremely successful and the company can go ahead in implementing the
same technique to its non-manufacturing departments like offices, by having the manufacturing area
as the model.

Toyota: The Accelerator Crisis

Q) What are the drivers to Toyotas accelerator crisis? Why was Toyota facing a recall
crisis?
Toyota in the United States and world over was regarded as a synonym for quality and reliability.
Since its stint at the United States, Toyota pursued growth at a breakneck speed. With over 8900 U.S.
based employees, 14 regional offices and 1500 dealerships across all 50 states, Toyota was one of the
largest foreign companies in the United States. By 2009, Toyota Motor Corporation had acquired the
largest market share of about 17.80% in the U.S. Automobile Industry. In 2008, Toyota was also at the
leading position in terms of new car sales, by having a presence in more than 170 countries.
In spite of doing exceptionally well for over 20 years, the year 2006 marked the start of Toyotas
nightmare in the U.S. The 911 tape that practically recorded the death of 4 passengers caused by the
sticky accelerator problem not only brought the crisis to the attention of the public, but also to the
company. This resulted in the advent of the recalls. In the following years, up to April 2010, Toyota
recalled a total of 8.8 million cars related to the accelerator problem worldwide. The company had to
deal with problems of sudden acceleration that occurred in some of its model. There was also a delay
on the part of Toyota in responding to the impending crisis.
Toyota had everything going for them until the dawn of the crisis. From their revolutionised
management, manufacturing and production philosophies like the Toyota Way to the Toyota
Production System (TPS), their practices and values gained praise world over. The Toyota Way
emphasised on highlighting the problems instead of running away and encouraged self-critical culture
for fostering continuous improvement. In spite of having these practices in place, Toyota failed to
recognize the accelerator problem until the time it became a publicly noted disaster. Instead of letting
the customers know that the problems were being investigated, Toyota jumped to conclusion time and
again suggesting various reasons for the sticking accelerator problem.
Toyota underwent a series of recall for various reasons. They were said to have recalled more cars
than what they sold. The recall crisis started with improper floor mat installation. In the year 2009,
around 3.8 million vehicles were recalled after the car crash which was assumed to be due to the gas
pedal getting stuck in the floor mat. By the end of the year Toyota called for the recall of 4 million
vehicles to reconfigure the gas pedals and redesign the floor mats.
Toyota then recalled another 2.3 million vehicles in 2010 to correct the problem of the sticky
accelerator. They also suspended sales and halted production of car models to tackle with the
accelerator problem. A total of 8.1 million vehicles were recalled by 2010. Further recalls were made
for other issues such as over brake problems, defects in front drive shaft. The main reason for the
recalls have been quality issues that never seemed to stop.

The drivers to the Toyota accelerator crisis and the reasons for the recall crisis can be attributed to the
following factors:

One of the reasons that Toyota cited for the accelerator getting stuck was the problems caused by
the improper installation of the floor-mat. Toyota suspected the floor mats to have trapped the gas
pedal due to which the accelerator got stuck causing the vehicle to speed up unnecessarily.

Further investigation suggested that floor mats alone were not the sole cause of the problem. The
accelerator itself had a sticky habit to it which caused it to stick in a partially depressed position.
The friction in the pedal mechanism is said to have led to sudden acceleration problem.
One of the major drivers to the crisis is the rapid rate of growth that Toyota had been undergoing
in the U.S. over the years. The values and principles that pillared Toyota along its journey were
allegedly getting diluted as and when Toyota grew overseas. Toyotas inability to standardize its
culture and practices across countries

But in spite of Toyotas rapid growth overseas, the organizational structure was still centralised.
This led to lag in the decision making process as the orders would have to come from the
executives in Japan. The structure did not prove to be in favour of Toyota and was detrimental to
the recall crisis as the Japanese executives were probably unaware of the seriousness of the issue
in the U.S. The delay in responding to the crisis was due to this factor. This structure is also said
to have caused dissatisfaction among the employees in the U.S. offices as information related to
the crisis was sent directly to the Headquarters in japan where all key decisions were taken.

Toyota also consciously cut costs in order to reduce waste. This was done during its rapid growth
phase. It can be said that the diluted quality measures and vigilant cost-cutting practices could be
a driving factor to the resulted reduced quality of production.

The complex web of supplier network is another such force that could have led to the crisis since
short term contracts were awarded to the lowest-price bidders, as another way of cutting costs.
Although, due to rising globalisation and increased diversification, certain Japanese practices like
the three-tier supplier system began to fade in other countries. The company started to depend on
suppliers outside Japan and outside the keiretsu structure. With this Toyota lost control over the
quality of supplies as it started to associate with suppliers with which Toyota had not had prior
experience with. This could have been another reason for the mismatch between Toyotas
principles and practices abroad.

Another unavoidable factor that led to a crisis situation for Toyota has to be the Media. With the
911 sound clip of fatal car crash of a patrol officer and his family, the media took over the issue
and created a sense of threat much bigger than was necessary. This coupled with Toyotas lack of
urgency in reaching out to the problem created the issue to be blown out. Although eventually
Toyota did not shy away from the media, they were compelled to recall every car with the
smallest of defect only to save face.

References:
http://www.businessinsider.com/toyota-paying-billions-because-of-marketing-failures-2012-12?IR=T
http://business-ethics.com/2010/01/31/2123-toyota-recall-five-critical-lessons/
http://epublications.marquette.edu/cgi/viewcontent.cgi?article=1072&context=theses_open
http://www.businessweek.com/managing/content/feb2011/ca20110211_469910.htm