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Car Manufacturing
World-wide benchmarking studies of car and
component manufacturing in the early 1990s revealed
a two to one gap in performance and a 100 to one
gap in quality between Japanese and Western car
manufacturers. The opening of the Nissan, Toyota
and Honda plants in the UK showed that this level
of performance could also be achieved in plants
outside Japan. Western car manufacturers then began
crash programmes to implement "lean production"
systems in order to close the gap. To fulfil their
aim of 80% local content within a few years, the
Japanese carmakers also began to work closely with
local component suppliers to help them implement
lean production.
The scale of the improvements achieved by the
best and being sought by the others is impressive.
The time to introduce a new car, from design freeze
to launch, is coming down from 40 to 15 months. The
time to weld, paint and assemble a car is coming
down from 40 to 15 hours per car, with similar
reductions in effort in component production. The
rate of supplier defects delivered to the assembly
plant is coming down from 3% to 5 parts per
million. The time from placing an order on the
factory to sale to a customer is coming down from
120 days to 15 days. As a result of these
improvements UK car production and exports have
nearly doubled over the last decade.
The most critical constraint on improvement lay
in spreading lean production to smaller second tier
suppliers. The Department of Trade and Industry
sponsored initiatives to help smaller suppliers
learn from Japan. In 1995 the leading manufacturers
and suppliers established the "Industry Forum" as
the focus for industry-wide improvement activities.
The forum is unique in bringing together
experienced engineers from Nissan, Honda, Toyota,
General Motors and Volkswagen to train local
engineers in accelerated process improvement on the
shop floor in smaller component suppliers. They are
also developing generic tools for spreading
accelerated process improvement throughout the
industry. After initial pump priming from the DTI
the Forum will shortly become self-financing.
Steel-making
The key drivers for the restructuring of British
Steel were the need to respond to shareholders' and
customers' simultaneous requirements for cost
reduction and performance improvement, and the
longer term need to secure the competitive position
of steel compared with other materials such as
concrete, plastic or aluminium. A series of
complementary initiatives were introduced to
deliver a dramatic and sustained improvement in
performance.
Business procedures were revised, processes
simplified and improved, and waste eliminated. A
programme of Total Quality Management covering
products, processes and employees throughout the
Company was initiated, facilitating moves towards
multi-skilling and teamworking. An essential
enabler was and remains a substantial training
programme: employees currently receive, on average,
11.4 training days each, representing a spend of 5%
of employment costs. Capital investment was closely
linked to customer requirements, productivity and
quality improvements, and removal of
bottlenecks.
Partnership arrangements with customers were put
in hand to drive joint initiatives to take out cost
and complexity. British Steel has taken steps to
become involved at the design stage of customers'
products, through broadening the Company's selling
organisation to reach specifiers directly, and
enhancing research and development facilities to
facilitate joint working with customers. As a
result of these initiatives British Steel has
increased sales and production levels whilst
reducing UK manpower from 200,000 to less than
40,000 in two decades. The programme has an ongoing
objective of maintaining the competitive edge.
Grocery Retailing
Leading grocery producers and retailers
established the Efficient Consumer Response (ECR)
movement in the USA in 1993 to improve their
competitiveness. The aim was to develop a common
framework for jointly managing the grocery supply
chain and to replace the adversarial relationships
of the past. It was built around an industry
'scorecard' measuring the progress of all parties
and a value chain costing methodology for
identifying the savings being realised. In the UK
ECR is co-ordinated by the Institute for Grocery
Distribution, run jointly by the retailers and
producers. Groups of ECR members undertook to carry
out pilot projects together and to share the
findings with the rest of the industry. These
pilots were successful in demonstrating real
savings that could only be achieved by working
together, and led to new partnerships between
producers and retailers.
ECR has spread right across the world and the UK
industry is a leading player. In the last 15 years
UK grocery retailers have made huge progress in
streamlining their distribution systems, shrinking
order lead times from two weeks to two days and
cutting inventories from five to 2.5 weeks, at the
same time as product ranges and volumes grew eight
to ten fold. ECR has been instrumental in
sustaining this rate of improvement across the
whole supply chain and in breaking down adversarial
relationships. It has also led to new
cross-industry initiatives on standardisation,
shared distribution arrangements and other
issues.
Offshore Engineering
In 1992 the offshore oil and gas engineering
industry in the North Sea faced a crisis. The price
of oil dropped from $35 a barrel to $12, making
exploitation uneconomic. Platform operators,
contractors and suppliers came together to form the
Cost Reduction Initiative for the
New Era or CRINE, a co-operative
effort to find ways of reducing wasteful activity
in platform construction.
After 12 months of investigation and analysis
the CRINE Report was published, recommending:
functional rather than prescriptive specifications;
common working practices; non-adversarial contracts
and use of alliancing; reduction in procurement
bureaucracy; and a single industry body for
prequalification. These recommendations were put
into practice by the industry. As a result the cost
of oil and gas field developments was reduced by
40%.
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