International Journal of Advances in Engineering & Technology, Nov. 2012.

IJAET ISSN: 2231-1963

IMPLEMENTATION OF THE HYBRID LEAN-AGILE MANUFACTURING SYSTEM STRATEGIC FACET IN AUTOMOTIVE SECTOR
Salah A.M. Elmoselhy
MBA Alumnus, Maastricht School of Management, Maastricht, The Netherlands

ABSTRACT
Recently the hybrid lean-agile manufacturing system has been proposed in order to meet the current automotive market winning order criterion of a blend of cost and availability. This study shows how strategically a hybrid lean-agile manufacturing system can be implemented. It shows statistically that almost one third of the variation in successfully dealing with the sources of competitive advantage in automotive sector can be explained by adopting the strategic facet of the hybrid lean-agile manufacturing system. The cost demanded by the implementation of the hybrid lean-agile manufacturing system can be moderated by the gained benefits of reduced operational cost and reduced time to market.

KEYWORDS: Lean Manufacturing; Agile Manufacturing; Manufacturing Strategy; Value Chain

I.

INTRODUCTION

Getting the right product, at the right price, at the right time, in the right place to the consumer is not only the way to achieve competitive advantage, but is also the key to sustainable success in the manufacturing sector. According to Womack [1,2] significant interest has been shown in recent years in the idea of lean manufacturing and the broader concept of the lean enterprise. Yet, the demand in the current automotive market is volatile and the customers requirements for variety are high which together demand for a much higher level of agility. Hence it is not surprising that becoming competitive in terms of cost, a lean attribute, can cause the value chain to become threatened in terms of availability, an agile attribute. A newer manufacturing approach than the lean manufacturing to deal with the change in the manufacturing business environment is agile manufacturing. The concept of agility comprises two main factors which are: (a) responding to change in proper ways and in good time and (b) exploiting changes and taking advantage of them as opportunities [3,4]. Yet, this agile manufacturing approach has exhibited a cost challenge. This research stems from the changes in the manufacturing business environment in the automotive sector that have led to customers requirements of both competitive cost and availability without compromising quality [5]. The research method adopted in the present research starts with literature review of the manufacturing systems which traditionally exist in automotive industry. From this literature review research questions are derived. Answers to some of these research questions are proposed in a form of a research hypothesis. The rest of the research questions are answered from the literature review. In an endeavour to validate the research hypothesis, both interview with executives of and review of annual reports of ground vehicle manufacturing companies and Original Equipment Manufacturers (OEMs) have been conducted. Since case studies are useful in developing solutions to the current manufacturing business problems, the General Motors Production System, as a leader in

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automotive sector that has a global corporate strategy, is examined in light of the proposed HLAMS, in order to verify the relevance of the proposed manufacturing system to the real world of the automotive business. This research paper investigates the implementation of the strategic aspects of the proposed HLAMS. The paper starts with literature review. Research questions are then derived from literature review. Risk management in product design and manufacturing is investigated after that and the present research will identify how HLAMS addresses this aspect. This is followed by presenting the proposed implementation method of the strategic aspects of the proposed HLAMS. Finally, verification, validation, and the limitations of the proposed manufacturing system will be presented.

II.

LITERATURE REVIEW

In order to balance the automotive product portfolio, the engineering resources have to be utilized by global vehicle platforms by shifting product development and manufacturing programs to low-cost manufacturing bases, such as China, India, Mexico, Brazil, and South Africa [6]. The challenge will be in building a global engineering network to support vehicle product development and manufacturing in such multiple regions [7-10]. Therefore, the concept of hybrid lean-agile manufacturing system (HLAMS) has been proposed recently [11]. The rules for competing and surviving in the automotive industry are changing rapidly. Time and knowledge are the essence of winning in the contemporary marketplace [12]. Thus, success in the global automotive market is increasingly linked to the enterprises ability to rapidly turning information into knowledge. The winners will be extended enterprises with the capability to integrate, optimize, and collaborate across their entire value chain faster, better, and more profitably than anyone else. The winning value-chains will be those that strike a balance between cost and availability of products and related services in terms of low costs, short product development and distribution cycles, and smart investments in value-chain business and technology practices. In other words, a blend of leanness and agility is expected be a necessity in meeting such contemporary success criteria [11]. Value engineering can be implemented in the development of any product, such as a car, to optimize its value [13]. Some scientists called for what was called leagility or agilean, but what they proposed is to adopt leanness in the upstream of the value chain before the decoupling point and agility in the downstream of the value chain after the decoupling point [14]. What the HLAMS proposes is a manufacturing system that hybridizes both leanness and agility together in one manufacturing framework to be implemented throughout the value chain [11]. The proposed HLAMS hybridizes the strategic attributes of both the lean and agile manufacturing systems in order to realize both flexibility of production equipment, of chaining plants, and of execution of a production order along with responsiveness to varying customer needs. In the automotive sector, planners have a difficult balancing act. On the one hand, there are benefits from using common vehicle parts. On the other hand, there are more niche demands in the global market. The challenge that faces the entire automotive industry is to balance these two extremes costeffectively and without compromising quality. This challenge is evident in light of recent and frequent safety recalls of millions of vehicles in the automotive sector, even from the lean manufacturing pioneer, Toyota [15]. The current research aims to meet this balancing act by proposing an implementation method to implement the strategic facet of the HLAMS. The implementation of the strategic facet of the HLAMS aims at striking a balance between the main six competitive dimensions of manufacturing in the automotive sector, which are quality, delivery reliability, response time, low cost, customization and product life cycle, in addition to revenue [16]. Research questions can now be derived from this literature review.

III.

RESEARCH QUESTIONS AND HYPOTHESIS

The research questions have been derived from the literature review. Answers to some of these research questions are proposed in a form of a research hypothesis.

3.1. Research Questions

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Based on the research problem definition and research objective, the research questions in this research paper are as follows: 1. Does the implementation of the hybrid lean-agile manufacturing system necessitate change in the enterprise organization? If so, how? 2. Can the implementation of the strategic facet of the hybrid lean-agile manufacturing system be valid?

3.2. Research Hypothesis

The research hypothesis that is derived from some of the research questions in this research paper is as follows: Ho: The implementation of the strategic facet of the hybrid lean-agile manufacturing system is not correlated with the manufacturing enterprises manufacturing business success in automotive sector. Ha: The implementation of the strategic facet of the hybrid lean-agile manufacturing system is correlated with the manufacturing enterprises manufacturing business success in automotive sector. In an endeavor to answer these research questions, let us first take a closer look at risk management in product design and manufacturing.

IV.

RISK MANAGEMENT IN PRODUCT DESIGN AND MANUFACTURING

Automotive is a huge sector and it is yet expected to become bigger. The World Trade Organization 2006 annual report predicted that the world trade in automotive products from 2005 to 2015 will increase annually by 7 percent, corrected to inflation [17]. Managing risk in the design and manufacturing processes concerns manufacturing business managers, particularly in the automotive sector. A successful manufacturing enterprise must meet the aggregated value chain metrics that should be met throughout the value chain which are lead time, quality, costs, and associated service with the product [14]. Quality and the associated services with the product have become prerequisites to compete in automotive sector. Cost, a lean metric, and lead-time, an agile metric, are the metrics that manufacturing enterprises compete on with each other in automotive sector. While endeavoring to meet these metrics the manufacturing enterprise may face some uncertainties. Risk exists only when uncertainties exist. There can be some risks associated with realizing the manufacturing competitive dimensions through implementing the strategic facet of the proposed HLAMS. The lean dimension in the hybrid lean-agile risk management addresses and cures risk through the elimination of avoidable risk through eliminating the sources of uncertainty and eliminating the impact of their uncertainty. The agile dimension in the hybrid lean-agile risk management addresses and cures risk through the reduction of unavoidable risk through reducing the impact of the unavoidable sources of uncertainty. Risk can be dealt with through dealing with the level of uncertainty behind that risk and through dealing with the impact of that particular uncertainty. Souder and Moenart [18] found that there are four sources of uncertainty which are consumers, competitors, technology, and resources. Maull and Tranfield [19] found that the competitive pressures that the manufacturing companies, especially Small and Medium Enterprises (SMEs), are often faced with are (1) rapidly decreasing lead time, (2) increasing choices offered by competitors, (3) pricing, (4) new entries to markets, especially from the New Industrialized Countries (NICs). Tatikonda and Montoya-Weiss [20] proved that technological uncertainty moderates the relationship between organizational process factors and operational outcomes, and market and environmental uncertainty moderates the relationship between operational outcomes and market success. The most significant risk because of the technological uncertainty is the risk of failed products [21]. This is an avoidable risk that can be avoided by taking the following measures: (1) killing-off products as soon as they fall short of the set target and seem unsuccessful based on marketing and sales early signals; (2) factoring the costs per unit of stock-outs or market-downs into the production planning process. By taking these measures the high technical uncertainty behind this risk will be mitigated through little financial commitment, and consequently little influence of market uncertainty. There are a couple of most significant risks because of market and environmental uncertainty. The first of these couple of risks is the uncertainty in demand predictions and this uncertainty is related directly to the prediction period so that forecast accuracy degrades to 20% for 2 months future prediction, to 50% for 3 months future prediction, and to 100% for 4 months future prediction [14]. This is also an avoidable risk that can be avoided by taking the following measures: (1) not to make

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demand prediction for more than three months; (2) factoring multiple demand scenarios into production planning; (3) decisions about the items of the most unpredictable demand should be postponed until some market signals such as early sales data become available; (4) for seasonal products, making the items of predictable demand in advance in order to reserve greater manufacturing capacity for making the items of unpredictable demand and shift the production of those items that their demand is relatively unpredictable closer to the selling season [22]. The second of these couple of risks due to market and environmental uncertainty is unsatisfied customers. This is also an avoidable risk that can be avoided by taking the following measures: (1) conducting customer satisfaction survey; (2) conducting Failure Modes and Effects Analysis (FMEA) [23]; (3) acting accordingly on eliminating the causes behind this dissatisfaction. The unavoidable risks happen because of the existence of the four unavoidable uncertainties that are consumers, competitors, technology, and resources. The consumer uncertainty is a sort of market uncertainty that results in the risk of the ever increasing demand for short lead time. In order to reduce both of the level of this uncertainty and its impact, the following measures should be taken: (1) manufacturing should be carried out in the countries in which the cost of manufacturing per unit sold is the cheapest and which are geographically the closest to the location of the market-places of selling the product; (2) machine capacity and type of vehicles to be manufactured, e.g. car, bus, or truck, should be determined based on a global aggregate forecast of demand based on the expected growth in population in the countries that are the market places of selling the product. The competitor uncertainty is another sort of market uncertainty that results in the risks of the demand for variety of choices, low prices, and new entrants. The following measures should be taken to reduce both the level of this uncertainty and its impact: (1) implement the agile dimension of the HLAMS in order to deal with the risks of the demand for variety of choices and new entrants; (2) implement the lean dimension of the HLAMS in order to deal with the risk of the demand for low prices. The third unavoidable uncertainty is the technology uncertainty which is a sort of the technological uncertainty. This uncertainty can result in the risk of obsolescence and lack of efficiency and can be dealt with by adopting scalable and upgradeable technology. The fourth unavoidable uncertainty is the resources uncertainty which is a sort of the technological uncertainty. This uncertainty can result in the risk of incomplete tasks and consequently long lead time. The following measures should be taken in order to reduce both the level of this uncertainty and its impact: (1) sharing resources throughout the entire value chain so that loading gets leveled; (2) having resources of flexible attribute in its operating method and in its construction/architecture so that bottlenecks get resolved. The present research proposes a risk management action plan to minimize risk in the product design and manufacturing processes. The proposed risk management action plan consists of the following three phases which are (1) before the beginning of the product design process, (2) during the product design process, (3) before the beginning of and during the manufacturing process. 1. Before the beginning of the product design process phase: Conducting Strengths, Weaknesses, Opportunities, and Threats (SWOT) analysis for the manufacturing enterprise; Establishing strategic partnership with key suppliers, technology providers, and retailers. 2. During the product design process phase: 2.1. Proving value of design concept to customers at the end of each design phase through market research and close-contact with key customers. 3. Before the beginning of and during the manufacturing process phase: 3.1. Conducting FMEA. Having investigated this, let us now explore the proposed implementation method of the strategic aspects of the proposed HLAMS.

V.

IMPLEMENTATION OF THE MANUFACTURING SYSTEM

PROPOSED

HYBRID

LEAN-AGILE

The implementation of the strategic facet of the HLAMS consists of a short-term phase and long-term phase. In the short term, the assessment of the current state of the manufacturing system with respect to the HLAMS is implemented, a change plan towards the HLAMS is set, and the Five-S method is

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applied throughout the entire value chain. In the long term, the change plan towards the HLAMS is carried out and the HLAMS should be fully implemented. A proposed implementation plan of the HLAMS is illustrated in Table 1, and is proposed for each of the cases of either a firm has already established its manufacturing business or is going to establish its manufacturing business. For the already established manufacturing firm, the change program is four-fold. At the system engineering level, requirements are reviewed with the marketing team and key customers in order to eliminate those requirements which are unnecessary and costly. In addition, a product design review checklist is developed and reviewed since most costs are assigned when a product is designed and often design engineers specify what they are familiar with rather than what is most efficient [24]. Since a manufacturing strategy refers to an approach that starts with corporate, business, and marketing strategies and then establishes a designs of manufacturing system to support them [25-26], the following change program is proposed for the manufacturing strategy [27] : (1) gain top management commitment in both time and resources; (2) evaluate the strategic position of the company; (3) review in a discussion group the existing primary and secondary requirements of the manufacturing strategy in light of the corporate strategy; (4) brainstorm issues surrounding these requirements; (5) categorize these issues in terms of people, machine, process, and plan; (6) carry out a cause-and-effect analysis; (7) prioritize the identified causes; (8) set initiatives to address prioritized issues; (9) form teams of inspired people and implement these initiatives; (10) measure the new processes and compare the results against the expected results to spot and make up for any differences; (11) analyze the differences to determine their cause; (12) evaluate the strategic position of the company. For the manufacturing activities improvement, the following change program is proposed [28]: (1) for each manufacturing activity the following questions are asked: 1.1. What is value added? 1.2. What activities can be joined? 1.3. What activities can be discarded? 1.4. What activities can be done in parallel? (2) remove the non-value added manufacturing activities; (3) joint the possibly joined activities; (4) have the activities that can be done in parallel done in parallel if the available resources permit.
Table 1. Proposed implementation plan of the hybrid lean-agile manufacturing system A firm already has established its manufacturing A firm is going to establish its manufacturing business business 1. Assess the enterprises lean capabilities against 1. Set business values and business objectives to the lean capabilities mentioned in the table of realize the hybrid lean-agile manufacturing the leanness assessment, Appendix A [29, 30]; attributes; the lean capabilities are assessed in terms of 2. Establish and build the lean capabilities and agile eleven capabilities that are inventory, team capabilities mentioned in the tables of the lean approach, processes, automation, maintenance, assessment and agile assessment; layout & handling, suppliers, set-ups, quality, 3. Establish and build the hybrid lean-agile retailers, and scheduling & control; manufacturing attributes; 2. Assess the enterprises agile capabilities against 4. Prioritize the process implementation initiatives the agile capabilities mentioned in the section of based on their effectiveness according to the the agility assessment, Appendix B [31]; the (80/20) Pareto rule; value chain agility is assessed in terms of goals, 5. Use posters and signs as a way of engaging design, and managerial measurements with employees and maintaining standards [32]; respect to organization, process, technology, and 6. Empower enthusiastic workforce for this people jobs; implementation; 3. Address the emerging points of drawbacks and 7. Motivate neutral workforce for this bridge the gap, if any, through setting a change implementation. management plan towards the hybrid lean-agile 8. Assess the enterprises performance; manufacturing attributes mentioned in section 9. Amend the enterprises objectives and strategies 8.3., based on incremental change that has the based on the feedback of actual results. following four pillars: a. Revising and changing incrementally the business values and business objectives of the firm to address the points of drawbacks; b. Prioritizing the process improvement initiatives based on their effectiveness according to the

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(80/20) Pareto rule; Using posters and signs as a way of engaging employees and maintaining standards [32]; d. Empowering enthusiastic workforce for this change; e. Motivating neutral workforce for this change. Assess the enterprises performance; Amend the enterprises objectives and strategies based on the feedback of actual results. c.

4. 5.

Manufacturing team leaders should be the focus of training efforts since they are the change agents to lead improvements in performance as the implementation of the proposed HLAMS should be push implementation by the manufacturing team leaders rather than pull implementation by the team themselves. The implementation of the HLAMS necessitates building culture, structure, and systems. Building culture requires the following: (1) culture development requires leadership with a continuous passion for perfection to create attitudes in all employees so that their behavior positively influences product and service quality; (2) culture development also requires the empowerment of all employees in the pursuit of quality; (3) team work implies that there is an organized, engaged, and selfdisciplined team; (4) it is instilled in all staff that poor quality is a major waste and must be improved to "near perfect", by continuous improvement with employees who are enabled to solve problems using tools such as Five Whys. Building organizational structure comprises the following: (1) low and high level ownership of quality; (2) technical and management support to resolve problems; (3) removal of indirect workers, adopting narrow job classifications, and adopting cross training; (4) short feedback loops based on a flat organization structure; (5) mechanisms for continuous improvement with routine daily stand-up team meetings to flush out problems; (6) managers act as facilitators and provide mentoring. There are two types of quality systems: problem preventive system and problem corrective system. While the problem preventive quality system prevents problems from happening in the first place, the problem corrective quality system deals with problems only when they arise. The HLAMS adopts hybridization of these two quality systems in terms of (1) instilling flexibility into the design and manufacturing processes for embracing change; (2) adopting robust design of product using Quality Function Deployment (QFD) to satisfy customers and stakeholders and using Design for Manufacture in order to provide the manufacturing and transportation processes with what these processes need; (3) adopting robust design of processes using Five Ss and Poka Yoke; (4) adopting systematic procedures of doing things using ISO and QS standards; (5) detecting problems that can arise as early as possible using Statistical Process Control, Management By Walking Around, customer satisfaction surveys, staff surveys, quality standards audits, Kaizen continuous improvement events, product strip down, and inspection and testing; (6) analyzing the root causes of those problems and removing those root causes using Pareto analysis, Ishikawa/fishbone diagrams, Five Whys, value stream mapping, and FMEA. The pragmatic reader might now well ask: How valid is the strategic facet of the proposed HLAMS? The next section will answer this question.

VI.

VERIFICATION AND VALIDATION OF THE IMPLEMENTATION OF THE STRATEGIC FACET OF THE PROPOSED HYBRID LEAN-AGILE MANUFACTURING SYSTEM

The implementation of the strategic facet of the proposed HLAMS is verified in this section by testing the research hypothesis. In an endeavor to verify and validate the implementation of the strategic facet of proposed HLAMS, product and service managers of three Ground vehicle manufacturing companies and OEMs were interviewed and their annual reports were reviewed with regards to the strategic facet of the proposed HLAMS. In addition, the annual reports of additional twenty seven Ground vehicle manufacturing companies and OEMs were reviewed in this regard. Historically, Taiichi Ohno and Shigeo Shingo developed the Toyota Production System from which

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the lean manufacturing principles were derived over a period of 20-30 years [33]. Thus, in an endeavor to double check the relevance of the implementation of the strategic facet of the proposed HLAMS to the real world of the automotive business, the General Motors Production System as an automotive sector leader, is reviewed in this section as a typical case study on the proposed HLAMS.

6.1. Verification of the Implementation of the Strategic Facet of the Proposed Hybrid Lean-Agile Manufacturing System
The sources of competitive advantage in automotive sector are: (1) market position; (2) competitive resources in terms of brand equity, systems, skills, market share, and patents; (3) learning organization [34-35, 16]. Assuming equal weight of each of these sources of competitive advantage in automotive sector, the proposed manufacturing system thus can improve on 39% of them since it improves on systems (6% of the sources of competitive advantages) as well as on learning organization (33% of the sources of competitive advantages). Therefore, almost one third of the variation in successfully dealing with the sources of competitive advantage in automotive industry can be explained by adopting the technical facet of the HLAMS. Therefore, the alternate hypothesis is true and the implementation of the strategic facet of the HLAMS is positively correlated with firms manufacturing business success in automotive sector. Causality in this study is determined according to the percentage of variation in manufacturing business success in automotive sector due to a variable (r2) of a correlation coefficient (r). For whether or not correlation does not necessarily mean causality, the following measure were taken: (1) the percentage of variation in manufacturing business success due to the variable (r 2) has been calculated; (2) reliability (Cronbach's Alpha) analysis of the data collected has been performed with a result that satisfies the minimum acceptable value of Cronbach's Alpha which is 0.7; (3) both sampling design and the sample size are important to establish the representativeness of the sample for limited generalizability; in the sample design, thus, probability sampling design of simple random sampling was used for its cost-effective and fair statistical results with more than 50% of the ground vehicle manufacturing companies included in the statistical sample; in addition, those included automotive OEMs and manufacturing companies hold collectively more than 50% of the global market share in the automotive market sector; (4) in order to further establish the representativeness of the sample for limited generalizability, sample size of 30 is adopted since it is the minimum statistically representative sample size [36, 37]. This leads us to elaborate on the case studies investigated in this research.

6.2. Validation of the Implementation of the Strategic Facet of the Proposed Hybrid Lean-Agile Manufacturing System and Case Studies
The validity of the research results has been tested in terms of four key validity types; firstly, in terms of statistical conclusion validity, since the resulted relationships are meaningful and reasonable; secondly, in terms of internal validity, since the results are causal rather than being just descriptive; thirdly, in terms of construct validity, since the results represent what is theoretically intended; fourthly, in terms of external validity, since the results can be limitedly generalized to the population of automotive manufacturers since the statistical sample was representative. An important and study-worthy practical example of agility combined with leanness in the global arena is China. Chinas biggest threat to world manufacturing is not only low cost but also quick-to-market. Almost every plant in China boasts that it could design, develop and manufacture products in China faster than it could overseas. Sometimes this occurs because the intense competition for the growing internal Chinese consumer market forces companies to be more nimble and innovative than their competitors. For instance, due to the booming Chinese auto industry, one-third of all growth in annual global auto sales has been almost taking place in China [38]. This is why all of the major auto makers in the world have established a manufacturing presence in China, mostly partnered with one of the state-owned Chinese automotive enterprises that have had strong-enough management to survive the transition to a market economy. A hybrid lean-agile production system should be designed to flow, and automation should be selected after deciding how best to improve flow and boost flow [39-40]. In order to compete in the Chinese market, which was almost doubled recently, many global automakers, such as the General Motors

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Corporation, have established their own China-based design studios and tooling facilities in order to speed up their development of auto products customized to the Chinese consumers tastes. Some of these ideas and products can also be used worldwide. This can foster a recent perception that in China nothing is different, but that it happens cost-effectively and five times faster. Such increased speed-tomarket could be because cheap technical labor in China can enable enterprises to put more minds at work on a design problem than they could economically justify in dozens of other countries. For instance, in China an automaker is able to employ an army of highly-skilled sculptors who can quickly design and hand-make prototypes for consumer testing, and a legion of highly skilled machinists who can turn the best designs into injection-mold dies within a few months. As a result, such an automaker can go from concept to production in almost 9 months; a period of time short enough to enable such an automaker to have a comparative advantage in automotive sector. Consequently, strategically integrating comparative advantages can be a sustainable competitive advantage for the enterprise in the marketplace. Apparently, being lean only can harm the availability attributes of products and related services to customers. Meanwhile, being agile only can prevent performance on the reasonable cost attribute of products and related services to customers. The Chinese manufacturing approach in this context gives extra credibility to the validity of the proposed HLAMS in striking such a balance effectively. The General Motors Production System, as an automotive sectors leader, is reviewed as a typical case study of the proposed HLAMS, in order to double check the relevance of the proposed system to the real world of the automotive business. By reviewing The General Motors Production System in light of the leanness assessment table and agility assessment method, Appendix A and Appendix B, respectively, it has been found that General Motors Production System had two shortcomings. The first of these two shortcomings, which is related to leanness, was its deficiency in managing the change towards lean manufacturing. The other shortcoming, which is related to agility, was the lack of strong relationships with suppliers in the General Motors Corporation supply chain. The Corporation has recently recognized these shortcomings and has recently acted to resolve them. In an endeavor to resolve the deficiency in managing change towards lean manufacturing, General Motors Corporation has established in 2003 its first ever lean and flexible plant. This plant is situated in Michigan, USA. Also, the Corporation has recently revisited and reestablished its entire value chain, with great emphasis placed on strong relationships with its suppliers and dealers. For instance, General Motors Corporation has acquired 10% of Mansour's Automotive Company share equity, the exclusive distributor of General Motors vehicles in Egypt, in 2001, as a means of moving forward vertical integration in the General Motors value chain. These findings uphold the proposed hybridization of leanness and agility as a way towards sustainable competitiveness in automotive manufacturing business.

VII.

DISCUSSION AND CONCLUSION

The challenge that faces automakers is to strike a balance between the current order-winning criterion of both cost and availability of products and related services without compromising quality. This research has aimed to help automakers to overcome this challenge through proposing a method to implement the manufacturing system that hybridizes the strategic attributes of both the lean and agile manufacturing systems together in one manufacturing framework that meets the three levels of flexibility and responsiveness in automotive sector. The study has identified the sources of uncertainty in product design and manufacturing which are the root causes of risk in product design and manufacturing and has presented a method to deal with them. In addition, the study has proposed a risk management action plan that consists of three phases: (1) before the beginning of the product design process, (2) during the product design process, (3) before the beginning of and during the manufacturing process. The implementation of the strategic facet of the HLAMS is divided into short-term and long-term strategies. In the short term, the assessment of the current state of the manufacturing system with respect to the HLAMS is carried out, a change plan towards the HLAMS is set, and the Five-S method is applied throughout the entire value chain. In the long term, the change plan towards the HLAMS is carried out and the HLAMS should be fully implemented. In order to facilitate the implementation of the strategic facet of the proposed HLAMS, the study has proposed

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implementation plan of the proposed manufacturing system for both the enterprises which have already established their manufacturing business and for the enterprises which are going to establish their manufacturing business. The study has suggested assessing the lean capabilities of a manufacturing enterprise in terms of eleven capabilities which are inventory, team approach, processes, automation, maintenance, layout & handling, suppliers, set-ups, quality, retailers, and scheduling & control. The agile aspect of the strategic facet of the proposed manufacturing system consists of delivery reliability and agility assessment. The enterprises agile capabilities are suggested to be assessed against the agile capabilities which are organization, process, technology, and people. Each of these four capabilities is assessed based on three aspects: goals, design, and managerial measures. There have been some limitations of this research which are: (1) due to the fierce competition in the automotive market, some information is considered confidential and hence is unavailable; (2) the interviews were conducted using open-ended questions; these interviews were structured and face-toface interviews since the interviewees preferred to be interviewed with open-ended questions; (3) the scope of the study covers only the automotive sector. The study has shown that implementing the hybridization of the lean and agile manufacturing systems together can be strategically and industrially valid. The study has presented that the implementation of the strategic facet of the HLAMS is correlated with the manufacturing enterprises manufacturing business success in automotive sector. It has been found that almost one third of the variation in the manufacturing business success can be explained by adopting the HLAMS. The cost demanded by the implementation of the HLAMS can be moderated by the following benefits: (1) reduced operational cost; (2) reduced time to market.

VIII.

FUTURE RESEARCH

The HLAMS presented in this study exhibits further research. The future research proposed in the present study includes: (1) conducting industrial experiments for further validating the implementation of the strategic facet of the HLAMS, (2) reviewing further relevant industrial case studies for further validation.

ACKNOWLEDGEMENT
Professor Arthur Sybrandy from Maastricht School of Management, The Netherlands, is acknowledged for his insightful contribution to this research work. The people of Maastricht School of Management, The Netherlands, and the people of The Regional IT Institute, Egypt, are acknowledged for their support for accomplishing this research.

REFERENCES
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APPENDIX A
Leanness Assessment Tool 1.0 Inventory For the categories of Finished Goods, WorkIn-Process (WIP) and Purchased/Raw Materials, what portion of middle and upper managers can state from memory the current Response 0%-20% 21%-40% 41%-60% 61%-80% X

1.1

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turnover and the purpose of each type? What is the overall inventory turnover, including Finished Goods, WIP and Purchased/Raw material? 81%-100% 0-3 4-7 8-12 13-24 25+ <=1.0 1.1-2.0 2.1-4.0 4.1-8.0 8.1+ Response Exploitive Bureaucratic Consultative Participative Highly Participative Individual Incentive Hourly Wage Group Incentive Salary Salary +Annual Bonus Layoffs Every Year Transfers & Retraining Reduce Layoffs Layoffs Are Rare 31%+ 14%-30% 7%-11% 3%-6% 0%-2% <5% 6%-10% 11%-30% 31%-90% 91%-100% <5% 6%-10% 11%-30% 31%-90% 91%-100% Response 9+ 7-8 5-6 3-4 0-2 Large Scale Medium/Mixed Small Scale Very Difficult Moderately Difficult X X

1.2

1.3

What is the ratio of Inventory Turnover to the industry average?

2.0

Team Approach

2.1

What is the organization type?

2.2

How are workers on the factory floor compensated?

2.3

To what extent do people have job security?

2.4

What is the annual personnel turnover

2.5

What percentage of personnel has received at least eight hours of teambuilding training?

2.6

What percentage of personnel are active members of formal work teams, quality teams, or problem-solving teams?

3.0

Processes How many large-scale machines or singleprocess areas are in the plant through which 50% or more of different products must pass? How would you rate the overall scale of the plant's processes? How easy is it to shift output when the product mix changes?

3.1

3.2 3.3

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Easy Very Difficult Moderately Difficult Easy 96%-100% 91%-95% 86%-90% 76%-85% 50%-75% Complex Technologies Moderate/Mixed Simple Technologies

3.4

How easy is it to alter the total production rate by +/-15%?

3.5

What is management's target operating capacity for individual departments or machines?

3.6

How would you rate the overall technology level of the plant's processes?

4.0

Automation

Response Nothing

4.1

What must be automated to meet customer demand? (e.g. Load, Cycle, Unload, Transfer)

Cycle Cycle and Unload Load, Cycle, and Unload Load, Cycle, Unload, and Transfer 1-2 3-4 5-6 7-8 9-10 10+ The automation has to be in one machine

4.2

How many functions the machine has to perform?

4.3

Does the automation have to be in one machine or can it be spread over multiple machines?

The automation can be spread over multiple machines

5.0 5.1

Maintenance Describe equipment records and data. Include records of uptime, repair history, and spare parts. Include repair and parts manuals. Excluding new installations and construction projects, what percentage of maintenance hours is unplanned, unexpected, or emergency?

Response Non-Existent Substantially Complete Complete & Accurate 71%-90% 51%-70% 26%-50% 11%-25% 0%-10% No Preventive Maintenance 1%-10% Coverage 11%-30% Coverage 31%-90% Coverage 91%+ Coverage Often Occasionally Frequently Unknown

5.2

5.3

Does maintenance have and follow a defined preventive schedule?

5.4 5.5

Do equipment breakdowns limit or interrupt production? What is the overall average availability of

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plant equipment? 0%-75% 76%-90% 91%-95% 96%-100% Response X

6.0

Layout & Handling

6.1

6.2

6.3

6.4

6.5

71%-100% 46%70% What portion of total space is used for storage 30%-45% and material handling? 16%-30% 0%-15% 71%-100% 46%70% What portion of the plant space is organized 30%-45% by function or process layout? 16%-30% 0%-15% Pallet-size (or larger) loads, long distances (>100'),complex flow patterns, confusion, & lost material How would you characterize material Moderate loads, bus-route transport, & movement? intermediate distances Small loads, short distances (<25'), simple & direct flow pattern Messy, Filthy, Confused How would you rate overall housekeeping Some dirt, Occasional Mess and appearance of the plant? Spotless , Neat, & Tidy Impossible to see any logic or flow sequence. Most processes are apparent with some study. Most sequences are visible. Processes and their sequences are immediately visible. How well could a stranger walking through your plant identify the processes and their sequence?

7.0

Suppliers

Response 5.1+ 4.1-5.0 3.1-4.0 2.1-3.0 1.0-2.0 1-5 6-10 11-15 16-20 21+ 0%-20% 21%-40% 41%-60% 61%-80%

7.1

What is the average number of suppliers for each raw material or purchased item?

7.2

On average, how often are items put up for resourcing?

7.3

What portion of raw material & purchased parts comes from qualified suppliers?

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81%-100% 0%-20% 21%-40% 41%-60% 61%-80% 81%-100% 0%-20% 21%-40% 41%-60% 61%-80% 81%-100%

7.4

What portion of raw material and purchased items is delivered directly to the point of use without incoming inspection or storage?

7.5

What portion of raw materials and purchased parts is delivered more than once per week?

8.0

Setups

Response 61+ 29-60 16-30 10-15 0-9 0% 1%-15% 16%-30% 31%-45% 46%-100% Not at All

8.1

What is the average overall setup time (in minutes) for major equipment?

8.2

What portion of machine operators have had formal training in Rapid Setup techniques?

8.3

To what extent are workers measured and judged on setup performance?

Informal Tracking & Review Setups Performance Tracked

9.0

Quality

Response 0% 1%-10% 11%-30% 31%-70% 71%-100% 0% 1%-10% 11%-30% 31%-70% 71%-100% 0% 1%-10% 11%-30% 31%-70% 71%-100% 0% 1%-10% 11%-30% 31%-70% 71%-100%

9.1

What portion of total employees has had basic Statistical Process Control (SPC) training?

9.2

What portion of operations is controlled by Statistical Process Control (SPC)?

9.3

What portion of the SPC that is done is accomplished by operators rather than Quality or Engineering specialists?

9.4

What is the overall defect rate?

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10.0 Retailers Response 1-5 6-10 11-15 16-20 21+ 1-5 6-10 11-15 16-20 21+ 0%-20% 21%-40% 41%-60% 61%-80% 81%-100% Fragile Moderate Above-Moderate Strong Very Strong Response 0% 1%-10% 11%-30% 31%-70% 71%-100% 0% 1%-10% 11%-30% 31%-70% 71%-100% 0%-50% 51%-70% 71%-80% 81%-95% 95%-100% X X

10.1

What is the average number of retailers for each product category?

10.2 What is the number of products categories?

10.3 What is the percentage of qualified retailers?

10.4 How strong is the relationship with retailers?

11.0

Scheduling/Control

What portion of work-in-process flows 11.1 directly from one operation to the next without intermediate storage?

11.2

What portion of work-in-process is under Pull Kanban control?

11.3 What is the on-time delivery performance?

APPENDIX B
Value Chain Agility Assessment Tool For all the questions in the following four assessment sections of organization, process, technology, and people, the following rubric should be used: 2 Yes 1 Partially 0 Unsure or No. The higher the score your enterprise gets, the better it is on the value chain agility scale.

1. Organization 1.1. Organization Goals:

The organization goals are the facet of value chain strategy that prioritizes organizational performance requirements of delivery reliability, responsiveness, and flexibility with the internal needs of cost reduction, profitability and asset utilization. 1.1.1. Have you defined your value chains in terms of products and customers? 1.1.2. Are your senior managers measured and remunerated on a set of value chain measures? 1.1.3. Do you know where your value chain performance rates against competition?

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1.1.4. Have you prioritized your competitive requirements in light of the comparison with the competing value chains? 1.1.5. Are your performance goals aligned with your suppliers, retailers, and customers contracts? 1.1.6. Are your performance goals aligned with your suppliers and retailers goals?

1.2. Organization Design:

The organization design is the facet of value chain strategy that has to do with mapping the most efficient and effective value stream. It attempts to balance centralization versus decentralization, globalization versus regionalization, and process versus functional focus. 1.2.1. Does your organization structure address the centralization, globalization, and functional aspects? 1.2.2. Are all relevant functions in place? 1.2.3. Are all the functions necessary? 1.2.4. Is the current flow of inputs and outputs between functions the optimum flow? 1.2.5. Does your organization structure support your suppliers and retailers organization structure?

1.3. Organization Managerial Measures:

The organization managerial measures are the facet of value chain strategy that defines your overall value chain metric scheme including definition, data collection, data segmentation, reporting, and defect analysis. 1.3.1. Are you regularly measuring and managing metrics for delivery reliability, responsiveness, and flexibility? 1.3.2. Are you regularly measuring and managing metrics for value chain cost reduction and asset utilization? 1.3.3. Are you regularly measuring and managing shareholder metrics for profitability and return? 1.3.4. Do you have the data analytics capability to support analyzing value chain performance data? 1.3.5. Are your scorecard and metric definition aligned with your suppliers and customers metrics and contractual requirements? 1.3.6. How responsive is the enterprise to changes in its business environment? 1.3.7. How able is the enterprise to make use of unpredicted opportunities in the marketplace?

2. Process 2.1. Process Goals:

The process goals are the facet of value chain strategy that cascades organization goals to your value chain network and processes. The value chain network refers to the physical movement of goods from your suppliers suppliers to your company to ultimately your customers customer. The value chain process refers to the plan, outsource, make, and deliver processes. Factors considered in setting network goals include service level, order fulfillment cycle time, flexibility, Cost of Goods Sold (COGS), and inventory turnover. Factors considered in setting process goals include transactional productivity for sales orders, purchase orders, work orders, and forecasts. 2.1.1. Do your organizational goals cascade to network goals for service level, order fulfillment cycle time, flexibility, COGS, and inventory turnover? 2.1.2. Do your organizational goals cascade to transactional productivity goals for sales orders, purchase orders, work orders, and forecasts? 2.1.3. Have you segmented your network and transactional cost to serve for each of your suppliers? 2.1.4. Are your middle managers measured and remunerated on a network and transactional productivity measures? 2.1.5. Are your network and transactional productivity goals aligned with your suppliers and retailers goals and contractual obligations?

2.2. Process Design:

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The process design is the facet of value chain strategy that has to do with defining your material flow, work flow, and information flow using the assemble-to-order strategy. Process design factors include geographic location of each supplier, industry best practice assessment, and transactional analysis. 2.2.1. Do you have an integrated plan, outsource, make, and deliver processes? 2.2.2. Have you designed or reviewed your material flow network in the past three years? 2.2.3. Does each of your business units adopt the assemble-to-order strategy? 2.2.4. Have your supply chain processes incorporated the industry best practices? 2.2.5. Are your processes aligned with customer requirements and supplier capability?

2.3. Process Managerial Measures:

The process managerial measures are the facet of value chain strategy that defines your site, functional area, and process metric scheme including definition, data collection, data segmentation, reporting, and defect analysis. It cascades from the organization measures. 2.3.1. Are you regularly measuring and managing site and function metrics for delivery reliability, planned lead-time, and flexibility? 2.3.2. Are you regularly measuring and managing site or function metrics for supply chain cost, i.e. order management cost, raw material and goods delivery cost, inventory carrying cost, information technology cost, and planning cost? 2.3.3. Are you regularly measuring and managing transactional productivity, i.e. process efficiency and transactional yield, for purchase orders, work orders, and sales orders? 2.3.4. Do you have site or functional area data analytics capability to support analyzing value chain performance data? 2.3.5. Does your organization scorecard and metric definition cascade to your site and functional areas? 2.3.6. Are your site and functional area metrics aligned with your suppliers and retailers goals and contractual requirements?

3. Technology 3.1. Technology goals:

The technology goals are the facet of value chain strategy that defines value chain system requirements to enable planning and execution of your value chain processes. The factors involved in defining technology requirements include process flows and definitions, transactional productivity targets, data warehouse and archiving needs, master data requirements, and system architecture constraints. 3.1.1. Do you have appropriate technology, i.e. functionality, which supports how you plan, outsource, make, and deliver? 3.1.2. Did you define your To Be processes based on striking a balance between system functionality and industry best practice? 3.1.3. Do you have goals set for master data integrity? 3.1.4. Are your technology managers measured and promoted on transactional productivity measures? 3.1.5. Do you have a collaboration technology plan with suppliers and retailers?

3.2. Technology Design:

The technology design is the facet of value chain strategy that has to do with defining your technological architecture and requirements. Also, it has to do with setting specific configurations for your business based on your process flows defined above. 3.2.1. Did you configure your system based on a To Be process Blue Print? 3.2.2. Are you using all of the functionality that you bought? 3.2.3. Have you realized all the technological benefits that were aimed to be realized? 3.2.4. Do you have appropriate data warehouse and analytical tools to support value chain analysis? 3.2.5. Did you implement your system with less than 10 software code customizations?

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3.3. Technology Managerial Measures:

The technology managerial measures are the facet of value chain strategy that defines your technology performance metric scheme including definition, data collection, data segmentation, reporting, and defect analysis. It cascades from the process measures. 3.3.1. Have appropriate technology sub-goals been set? 3.3.2. Is your technology performance assessed? 3.3.3. Are sufficient resources allocated to support effective use of technology? 3.3.4. Are the interfaces between technologies being managed? 3.3.5. Is your technology performance metrics aligned with your suppliers and retailers performance metrics and contractual requirements, i.e. outward facing Enterprise Resource Planning (ERP) based on Private Trading Exchange (PTX) performance?

4. People 4.1. People Job Goals:

The job goals are the facet of value chain strategy that defines the type of job requirements and goals necessary to execute value chain processes and to manage value chain technology. 4.1.1. Have appropriate job sub goals been set linked to the plan, outsource, make, and deliver processes? 4.1.2. Are job goals cascaded from the organization and process levels?

4.2. Job Design and People:

The job design is the facet of value chain strategy that defines the type of job requirements and goals necessary to execute value chain processes and to manage technology. 4.2.1. Are sufficient resources allocated to support effective use of technology? 4.2.2. Are the interfaces between technologies being managed? 4.2.3. Are the plan, outsource, make, and deliver processes requirements reflected in the relevant jobs? 4.2.4. Are job steps in a logical sequence? 4.2.5. Have supportive policies and procedures been developed? 4.2.6. Is the job environment enabling?

4.3. People Job Managerial Measures:

The job managerial measures are the facet of value chain strategy that defines metrics to measure whether people performance and job requirements and goals meet the goals of executing the value chain processes and of managing technology. 4.3.1. Do the performers understand the job goals and standards they are expected to meet? 4.3.2. Do the performers have sufficient resources, clear signals and priorities, and logical job design? 4.3.3. Are the performers rewarded for achieving job goals? 4.3.4. Do the performers know if they are meeting job goals? 4.3.5. Do the performers have the necessary knowledge, skill, and physical capability to achieve the job goals?

AUTHORS BIOGRAPHY
Salah A.M. Elmoselhy holds MS in mechanical design and production engineering that he received from Cairo University. He holds as well MBA in international manufacturing business that he received from Maastricht School of Management (MSM). He has ten years of industrial experience in CAD/CAM and robotised manufacturing systems. He has been recently a researcher at the Engineering Department and Fitzwilliam College of Cambridge University from which he received a Diploma of postgraduate studies in engineering design. He is currently a PhD Candidate in mechanical engineering working with the International Islamic University Malaysia (IIUM) and the Center for Sustainable Mobility at Virginia Polytechnic Institute and State University (Virginia Tech).

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