JUNE 21, 2013

Cut-away of Toyota’s Auris hybrid at Paris auto show

Toyota has decided it no longer needs 50 kinds of airbags to protect drivers’ knees. Ten, the company says, ought to suffice. In one of Toyota’s biggest initiatives since 2009, reports Bloomberg (June 10, 2013), the carmaker is winnowing the number of parts it uses and increasing common components across models. The plan will cut both the time and cost for creating new models by as much as 30%. The automaker spent $9.6 billion in R&D last year.

In the past, Toyota focused on developing custom parts. It needed 50 types of knee-level airbags because seats for various models had different profiles. By standardizing “hip heights” across models, Toyota is reducing knee airbag variants by 80%. Last year, it had slashed radiators to 21 models from about 100. And it is reducing the number of cylinder sizes in its engines to 6 from more than 18. “From now on, Toyota will seek the compatibility of certain parts it uses with standard parts used by many automakers globally,” says the firm.

Toyota’s goal should make the company less vulnerable to supply disruptions by using parts from the largest manufacturers that can be substituted globally. The 2011 earthquake and tsunami in Japan forced Toyota to confront the complexity and risks of relying on thousands of suppliers, sub-contractors and sub-subcontractors making customized parts. The earthquake “really made us to look into our supply chain in great detail and see certain weaknesses there and look into things that needed to be fixed,” said Toyota’s spokesman.

International component makers such as Johnson Controls, Bosch GmbH and TRW Automotive are betting Toyota’s campaign will help them win contracts currently held by smaller Japanese companies. “This should mean more opportunities for global mega-suppliers with worldwide capacity and design expertise,” said one analyst.

This post provided courtesy of Jay and Barry’s OM Blog at www.heizerrenderom.wordpress.com. Professors Jay Heizer and Barry Render are authors of Operations Management , the world’s top selling textbook in its field, published by Pearson.

JUNE 16, 2013

The upper for Nike’s Flyknit shoe

“Welcome to the New Industrial Revolution,” writes The Wall Street Journal (June 11, 2013)—a wave of technologies and ideas that are creating a computer-driven manufacturing environment that bears little resemblance to the gritty and grimy shop floors of the past. The revolution threatens to shatter long-standing business models, upend global trade patterns and revive American industry.

“Manufacturing is undergoing a change that is every bit as significant as the introduction of interchangeable parts or the production line,” says the head of GE’s global research lab. “The future is not going to be about stretched-out global supply chains connected to a web of distant giant factories. It’s about small, nimble manufacturing operations using highly sophisticated new tools and new materials.” The upheaval is accelerating thanks to the convergence of a number of trends: the low cost and accessibility of Big Data associated with cloud computing; the plummeting cost of electronic sensors and microprocessors that can be used to make machines more adept; and software advances that allow a whole new level of manufacturing precision.

To get an up-close look at how the new technologies are already disrupting the old ways of doing things, consider Nike’s Flyknit shoe. As high-tech as some sneakers may be in materials and appearance, almost all of them are still made on assembly lines that put heavy emphasis on human labor. Workers sit side by side in enormous facilities, cutting material and stitching and gluing shoe components together. But with new technology, Nike has begun to make a shoe with just a few parts instead of dozens– and with up to 80% less waste. Out of the blue, the reason for making shoes in low-wage countries begins to evaporate and the advantages of locating the machine closer to the customer—in part for faster delivery—begin to loom much larger.

Boston Consulting Group just published a report predicting that as much as 30% of America’s exports from China could be domestically produced by 2020.

This post provided courtesy of Jay and Barry’s OM Blog at www.heizerrenderom.wordpress.com. Professors Jay Heizer and Barry Render are authors of Operations Management , the world’s top selling textbook in its field, published by Pearson.