Adoption of lean manufacturing systems both on a macro and a micro level can largely help construction equipment manufacturers in cutting down production cost and in turn provide customers value for money. Partha Pratim Basistha explores the possibilities.
Putting in place an elaborate lean manufacturing system has never been so important for construction equipment manufacturers in their production line. The significance of adopting the right lean manufacturing system is because of the growing capital expenditure, the equipment manufacturer has to incur in present days to set up a greenfield facility. This is primarily owing to the growing cost of land and production machinery involving cutting edge technologies for quality production. Lean manufacturing system is also significant to adopt owing to the high recurring production costs manufacturer are paying for carrying on production. This is precisely owing to rise in power and skilled labor costs. Not to mention, steady rise in transportation costs for getting raw materials and transporting the finished products to dealers and end users driven by high inflation.
Solid and heavy engineering is the main character of construction equipment manufacturing. This is as because construction equipment manufacturing process involves critical fabrication jobs, supported through jigs and fixtures to manufacture vital areas of the construction equipment through welding process. This involving booms of excavators, backhoe loaders and cranes, crane turn tables, undercarriages, screens of crushers, bins for batching plants etc.
Value Engineering: VitalValue engineering in the fabrication process can to a large extent be ensured through putting in the production line well designed fixtures to appropriate welding of the machinery parts. A well designed welding fixture will minimise inaccuracy in welding through arresting deformation of the equipment parts that has to be welded. Though a well designed fixture can arrest welding deformations to a good extent but results may not be totally accurate in terms of percentage. This is because of variations in welding temperature can provide deformations. Hence, it would be necessary to have a proper designing concept carried through necessary research and development before designing the welding fixture.
Designing the right fixtures for fabrication would ensure high productivity, cut down on labor costs as accuracy would be ensured in the production line. This will in turn ensure consistent production. Additionally, correct fixtures would ensure in rationalising or cutting down utilization of consumables, involving cutting, drilling and fitting machines. However, it would most significantly cut down on raw materials involving steel (presently witnessing high upward price spirals). Raw materials constitute 60% of the total production costs in the engineering manufacturing sector.
Precise cutting of raw material is much pertinent to cut down on wastage of raw materials. This has to be ensured through selection of the right cutting materials. Selection and procurement of the right cutting materials has to be done based the gauge of steel.
Essential value engineering can be undertaken by the OEM in the assembly line also much at par with the main production line. Value engineering in the assembly line can be undertaken on a proper scale through rational use of the material handling equipment. Since most of the assembly lines use EOT cranes, pick and carry cranes, crawler cranes, and goliath cranes, it is quite essential for manufacturers to select the right crane based on utility and tonnage to be lifted and carry their rational use based on lifting requirement. This will save on diesel and electricity costs and labor costs.
Based on the absolute observation on the tonnage that the crane would be lifting in the assembly line, the manufacturer can avoid in procuring a crane that would be not required for the purpose, thus bypassing a major capital expenditure. On operation, it is essential for manufacturers to ensure that material handling systems, deployed in the assembly shop work in compatibility with other material handling systems in the assembly line. This will ensure consistent load transfer of the item to be assembled both at interplant and intraplant levels.
It has been widely seen that OEM's fall victims of selection of inappropriate material handling equipment and inconsistent utilization, thus incurring high recurring expenditure in their manufacturing systems.
It is important to note down that for rational use of the manufacturing and the assembly shop, the equipment manufacturer can always explore the possibility of outsourcing vital manufacturing work to vendors. This can only be done by manufacturing of boom, undercarriage or buckets. Out- sourcing can rationalise space utilization and save on costs to a great extent in the shop floor. This can facilitate efficient brown field expansion by the OEM.
Selection of Right VendorsValue engineering in manufacturing process can largely be undertaken through selection of the right vendors. Selection parameters involve, right infrastructure availability with the vendor to roll out the specified component. It is essential for the vendor to have in place the right production standards and the necessary engineering skills required. Having quality systems certification in place from reputed certifying agency would be of value. Above all it is important to scrutinise the financial profile of the vendor. This will ensure the vendor's ability to turn out the products as required by the OEM on specified time.
Post selection of the vendors, it is essential to classify the vendors as per their manufacturing capabilities and the nature of the components and parts being manufactured by them. Classification of the vendors would provide the original equipment manufacturer ready identity of the vendor concerned. This will allow the manufacturer to procure the equipment based on the requirement without delay. Classification of vendors can also allow the manufacturer to upgrade the vendor from one class to another. This will minimise the dependence of the OEM on a single vendor, leaving the manufacturer with multiple choice of procurement in due course.
However, it would be necessary for the OEM to keep open other options of procurement. Vendors selection can also be done through economies of scale and through identification of vendors at the close proximity of the production centre. This will provide cost benefits to the original equipment manufacturer. Equipment manufacturers based on the availability of land infrastructure can set up vendor parks.
Development of vendor parks is a new concept rapidly catching up with the manufacturing sector in India. However, sustainability of the vendor parks has to be ensured through assured components and parts procurement by the original equipment manufacturer. The noticeable benefit of setting up vendor parks is that it will provide economies of scale to the original equipment manufacturer down the line.
One of the vital components of lean manufacturing system is to maintain the right inventory. Inventory control can curtail down recurring expenditure. Manufacturers can work on just in time concepts to keep inventory in check. It is also important to have well laid inspection standards and testing at various stages of production. This will ensure the rejection level of various component to almost zero and ensures the finished product matching advanced standards.
Adoption of lean manufacturing systems can offset precious expenditure in course of production. This can allow in turn the company to channelise the expenditure for other valuable exercise. However, lean manufacturing will enhance volume of production to support per unit engaged in production systems. This in turn will provide satisfactory breakeven to manufacturers.
Value in WarehousingAppropriate lean manufacturing systems can ensure enhanced productivity and quality while saving on inflated recurring expenses. This will provide value for money to customers. However, value for money can also be provided by construction equipment manufacturers and distributors by ensuring timely components support to customers to have greater equipment availability. Timely availability of components and parts is a vital element of service support.
Timely and adequate component support can be ensured by OEM's and distributors to the end users through proper warehouse planning. Efficient warehouse planning can be ensured through creation of well arranged infrastructure to house adequate and assorted components stocks. In accordance with this, the warehouse should have good number of chambers as a rule to store assorted components.
Provision of storing the components in separate layers would enable the OEM and distributor to have an easy access and supply them as soon as the demand is placed by the end–user. The timely service through fast equipment availability will help cutting down in dwell time lag.
Well laid standards of inventory management for the timely replenishment of stocks has to be in place as well. In accordance with this, the OEM or distributor has to keep a continuous track and monitor, the equipment population in the market based on the requirement placed by both on the ongoing and recently started construction and mining projects. The size and the completion time of the projects have to be taken into account. Based on the same, calculation has to be done the number of equipment in terms of units, the projects could require and how fast could be the requirement of the fast and moving components based on the equipment usage. The analysis of equipment utilization has to be done taking into account the character of the project. Based on the calculation, the OEM or the distributor has to place the component orders through its vendors or parents to replenish the stocks on time. All to provide greater value to the customers and cut down on operation costs at various quarters.