JIT AND INDIA

Indian Institute of Materials Management (IIMM) is a forum for purchase and

materials related employees and they have frequent meetings, seminars and
annual conventions to share knowledge.

In one of their annual conventions the topic was implementation of JIT for
competitive advantages. Leading personalities of the Indian industries talked lots of
positive points and benefits due to the JIT purchase and JIT manufacturing methods.
Many presented calculations and statistics of savings in costs and time and how it
helps in reduce the price of the end products and hence competitive advantage.
Most of the audience were impressed about the theory and thought of practical
application in their respective companies. However, few of the executive
participants were more worried about practice and less interested in idealistic
theories.

One Mr. JItendra Joshi of LML’s Bangalore office was impressed. He has been
arranging Engine Block castings, tyre tube sets, machined components,
speedometers etc from southern region to LML, Kanpur Unit. He has 15 years’ of
experience in facing lots of problems in arranging the long distance supplies. He
mustered courage to get up and ask few questions against the JIT and summary of
question to Mr. Sudhakar (the speaker) were as follows:

Mr. Joshi said JIT cannot be fully implement able in Indian conditions due to following
genuine constraints.

(a) The inter-state disputes like ‘Kaveri Dispute’, “Border disputes’ at times
disturb the arrangements.
(b) On and off terrorism, political agitatations, holidays due to local, regional and
national leaders’ deaths also disturb work environment.
(c) Spread of vendors all over India and vastness of coverage do not enable to
know correct position of WIP of vendors.
(d) Transport bottlenecks, heavy rains, floods (coastal areas), workers’ strikes
cause anxiety and worry.
(e) Partnership problems, financial and quality constraints are not easily
attended or solved.

These questions were like a mini speech on anti JIT and the atmosphere in the
auditorium got charged up Mr. Sudhakar, the speaker, gave half hearted replies to
questions for which Mr. Joshi and his friends were not satisfied. Finally Mr. Sudhakar
said:

“The system which operate successfully in Japan may not work equally well in other
countries.” Only when Mr. Joshi took his seat as he felt he has made his clear on
practical problems than merely going through the theory. Suddenly he seems to
have won the admiration of the gathering.

Prof. Rao who was chairman of the technical session gave his concluding remarks.
He appreciated the ideology of JIT but advised executives to take it up step by step
and ensure pragmatic views and do not overdepend on JIT to fail. This he told as
Indian Industrial Environment is yet to mature to take care of JIT systems in totality.

QUESTIONS

1. Explain why JIT purchase works well in the developing countries

2. Do you agree with Mr. Joshi’s views on constraints to JIT? Explain the correct
problems in northern and eastern India.
3. Write how you feel the JIT systems can be adopted in India with an example.
 PLANT LOCATION PROBLEMS
Location of a plant has direct relevance to raw materials, market, human resources, civic amenities
transportation etc. However, in some countries the problem becomes complicated due to (i) Inter-State
competitions and tussles, (ii) Regional development and (iii) Political pressures and biased decision.

Around 1970 Government of India mooted the idea of expanding steel production under public sector
units to be established at suitable locations. A committee of eminent personalities was formed to go
through claims of (i) Vijaynagar Steel plant near Bellary in Karnataka, (ii) Salem Steel in TN and (iii)
Vishakapatam steel plant in A.P. Since it was under PSU the political pressure was going on and if it was
under private sector, there would not have been any kind of political pressure.

The most important raw materials for steel plant are iron core power and coal. Again in iron ore the iron
percentage should be preferably more than 60% and ash content in coal should be less than 30%. These
factors enable production of iron and steel at competitive price. From experts’ reports the following brief
was available:

(a) Vizag – The Iron ore is rich with 65% Iron and coal can be arranged from MP and Bihar and
Vizag is well connected by broad gauge railway line to all important cities and the place has sea
port and airport. Hence this place has more natural advantage than other cities.

(b) Salem – Iron ore was having 60 to 65%. Iron content and hence be economically exploited. The
coal is in lignite form which is low quality coal. Hence this needs to be converted as coke for use.
The place has broad gauge line and Madras sea port and airport are nearby. This place was
considered second preference.

(c) Vijaynagar – Bellary belt has Iron ore of 60% iron but coal has to come from AP (Singareni
Colliery). The place had meter gauge railway line and hence not well connected to all India net
work. The seaport and airports were far away and hence this place was not found suitable.

As per the expert committee report steel plant work started Vizag and Salem and these plants came up as
per the plan and are doing well. However, to everyone’s surprise the them PM, Smt. Indira Gandhi, did
foundation stone laying in 1971 at Toranagallu in Bellary district for Vijaynagar steel plant also. This
ultimately proved to be an election gimmick to please the votes, though the PSU unit did not come up
there at all. This is a clear example how politicians try to fool gulliable voters by way of
inaugurations/foundation stone laying.

Steel plants are quite huge with township having about 50,000 to 1,00,000 people. Hence requirements of
housing, electricity, water, hospitals, education, institutions, entertainment facilities are very essential.
The investment is huge and this helps to develop the surrounding area quite well and there is abundant
scope for ancillary units, engineering services and employment inside and outside the steel plant. Both
Vizag and Salem got these advantages and production standard as per the plan and these industries
continue to run profitably.

The expert committee had made comment on Vijaynagar proposal that, the unit can be viable if it uses
latest foreign technology. In this method oxygen is injected to force oxidation of ores instead of natural
air. Though PSU was not started a private enterprise JInal Group took interest and applied for license to
the Central Government. By the year 1990 they obtained license and Vijaynagar Steel plant with foreign
technology and decided to make only sheet products, which fetch higher prices. They also kept bare
minimum workforce and executives to make it economical right from inception. By this time broad gauge
lines were formed and nearest seaport was Goa and hence some problems were taken care. This unit
became operative in about 3 years and is also running profitably.

QUESTIONS

1. What are essential factors for locating a Steel plant and why?

2. Explain how political pressures and pulls effect decision making and delays in starting industries.

3. Explain how it was possible to make Vijaynagar plant visible.

4. Technology, HR, natural facilities play vital role to start new enterprise. Explain your views.
 MANUFACTURING GOES VIRTUAL
On November 12, 2003, the 100,000th Audi A3, manufactured by the German Luxury car major Audi
AG, rolled off the Ingolstadt assembly plant only six months after the A3’s market launch. Only four
months into production, Audi was turning out the A3 at maximum capacity, the so-called ‘watershed’ of
680 vehicles per day. For Audi AG, the A3 represents a major milestone, with the entire manufacturing
simulated from the start to the finish. In fact, Audi began to break new ground from the moment planning
on manufacturing process and production went ahead.

With the aid of simulation and assurance of production processes and plant in the virtual world, problem
areas were identified many months ahead and dealt with before series of production started. The result:
No need for expensive and time-consuming modifications in the production plants, noticeably shorter
planning time and right from the start of production, Audi was producing cars to the highest quality
standards and ultimately recorded the most rapid and successful production start up in its history. Audi
officials attribute these successes to what they call the Digital factory principle. Today, Audi is able to
assure reliable production at an early stage and simulate all the products processes at one and the same
time.

Projects currently in process are the ‘virtual press shop’, ‘virtual tool-making’, ‘virtual body shop’,
‘virtual paint shop’, ‘virtual logistics’. In parallel with this, Audi is undertaking virtual product
development, i.e. the simulation and assurance of a complete Audi model and its technology in
cyberspace. Using these vehicles data, the digital factory can be set up to produce a new model even in
the conceptual stage.

The principles

Audi AG’s Digital Factory validates the concept of Virtual Manufacturing, which first came into
prominence in the early 1990s as a result of the US Department of Defence Virtual Manufacturing
initiative. Both the concept and the term have now gained wide international acceptance, and have
somewhat broadened in scope. Virtual Manufacturing refers to the use of reality and related technologies
to simulate the prototyping and manufacture of a proposed product before a commitment is made to its
physical production. Global virtual manufacturing extends this definition to include and emphasise the
use of Internet/Intranet global communications networks for virtual component sourcing, and multi-site
multi-organization virtual collaborative design and testing environment. Here, we will emphasise on the
manufacturing aspect.

Automation technologies, such as CAD/CAM and CAE, shortened the time required to design products
substantially. Virtual Manufacturing will have a similar effect on the manufacturing phase.

In fact, the evolution of CAD systems beyond simple on-line drafting tools, the maturity of FEA for
simple systems, coupled with the desire to reduce the cost of actual production is driving the development
efforts of virtual manufacturing environments and systems.

Virtual manufacturing is an effort to create environment that are able to model and simulate many, if no
all, of the steps in a given production process. Digital computers with powerful application software
define the product geometry, test the product, design the process steps, analyze and simulate
manufacturing operations, simulate the ergonomics, and develop control code for the automation. With
virtual manufacturing, one can predict the performance of a manufacturing process or a system without
building the process or the system given set of manufacturing conditions.

In addition to shortening the time required to bring products to market, Virtual Manufacturing will also
reduce the cost of tooling, eliminate the need for multiple physical prototype, and reduce material waste,
because you can “get it right the first time.” In short, it will provide a manufacturer the confidence of
knowing that they can deliver quality products to market on time and within budget. The project manager
of the digital factory at Audi, “The number of model versions is complexity and scope of development
work, but less time is available for development. A near model needs to be on the market as fast and in as
great a volume as possible, right from the start. Without virtual planning methods, it would not be
possible to realize several model projects every year.”

Virtual Manufacturing is one element, albeit it is a large and significant one, needed to fully address the
issues involved in creating a workable on-line product development system. From a business perspective,
it is clear that small improvements in manufacturing can have dramatic and profound effects in terms of
cost and quality. For example, if it were possible to reduce, even slightly, the thickness of a given
material, say the metal used to form the hood of an automobile, while at the same time maintaining, or
even improving, its structural integrity, then, the potential cost savings would be enormous.

The evolution

Prior to the digital revolution of the late 70s; the realization of the designer’s styling concepts, the
definition of body sheet-metal, and the design and construction of stamping and assembly tooling relied
entirely on physical models. Other models were used for the construction of assembly and checking
fixtures. It took a while before the automotive and aerospace industries accepted CAD. Even then, it was
used more like an ‘electronic pencil’ than a design system, simply computerizing the existing
methodology. It took years for design to evolve to the point where the CAD drawing was an output rather
than the input to the process.

Today, the process has evolved much further to a situation where 3-D geometry is now the basis of the
design process. It is not surprising to see the design department in a typical automotive OEM using
digitals tools to model vehicle shapes of new vehicles concepts. Here, sketching tools emulate paper, pen
and paint. Photorealistic modelers give the designer an almost true to life view of the new model. In fact,
today, vehicle component design is done entirely in A CAD. Digital assembly of the vehicle insures that
the parts will fit and function together. Standard parts and steels are used from the CAD library. The
finished design is inspected and adjusted in 3D CAD environment before build begins. Even here,
assembly systems, manual work stations, conveyors, piping, and safety work envelopes are maintained
within a CAD facility layout of the entire plant.
Benefits

• Reduced time-to-market

• Reduced cost of tooling

• Elimination of multiple physical prototypes

• Reduced material waste

• Confidence in the process

• Lowe overall manufacturing cost

• Improved quality

Discrete event simulation of the plant includes things like the conveyor speeds, production throughput,
and machine downtime. These parameters assist in understanding causes of bottlenecks and the impact of
new technology in the plant.

Tool are in place

The current scenario can be summarized this:

• The realistic simulation of products and process generally begins with a three dimensional model.
Finite Element Modelling and dynamic simulation tools are helping reduce the cost while
improving the performance of manufacturing tooling.

• The advantages of concurrent engineering are already felt

• The concept of ‘virtual prototyping’ of products, if not yet manufacturing processed, is widely
accepted. Rapid prototyping tools are helping streamline the tooling development process further,
by eliminating steps in the manufacturing process.

• The mathematics of non linear simulations are well understood and confirmed by tests

• Database tools provide quicker and easier access to digital designs and equipment performance
histories.

• The factory floor is getting populated with intelligent devices that are helping to reduce if not
eliminate variability.

Leading edge companies have demonstrated the successful use of virtual manufacturing techniques. For
example, the Boeing 777 is the first paper-less airplane produced, involving co-ordination with 250 cross-
functional teams in diverse locations. Furthermore, the rapid development in computing power has meant
that virtual manufacturing is not restricted to large companies like Boeing who can afford powerful main
frames. Today, virtual manufacturing software operate on work stations running any of the popular
operating systems. With all the tools conducive to virtual manufacturing in place, it may not be over-
optimistic to claim the virtual manufacturing will soon be a business requirement for all manufacturing
companies.

QUESTIONS

1. Explain the methods adopted to speed of new model development

2. Compare how there are delays in product development in developing countries and speed at
developing countries

3. What is the current scenario to product development

4. If you were M.D. of Maruti Udyog Ltd. what steps would you take to improve new product
development in terms of time and cost.