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General Motors Process Improvement: Lean Principles

GM process analysis with Womack and Jones lean thinking principles

Lean philosophy is the approach to process improvement that sees the elimination of all types of waste as its primary objective. It can be whether the excess lead time, using the excess amount of inventory or number of workers for producing a unit of the final good, unneeded space or distance between factories, etc. In general, lean is about being more productive with spending fewer resources: workers, time, inventory, space, etc. The concept was developed by Japanese Toyota as the tool for recovery after World War II and becoming productive and competitive under the constant lack of resources.

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Womack and Jones identify five primary principles of lean thinking that are basically the guideline to lean manufacture. These rules include defining value from the customer’s perspective, identifying the value stream and making the value flow through it, having the customer pull value through the value stream, and seeking perfection (Meredith & Shafer, 2013). It should be noted that the value stream is a complex of activities aimed at creating the output that is valued by the customer and making the value flow through it means that the company gets rid of non-value added activities and controls the rest value-added processes.

General Motors has the experience of exploiting the lean principles at its plants. However, it is limited and was used only in the case of New United Motor Manufacturing Inc. (NUMMI), a joint venture of Toyota and GM. The plant was operational in the period between 1986 and 2010, and it has proved that lean philosophy has many benefits and indeed leads to process improvement (Hozak, 2012). Even though the company witnessed that this concept works and is beneficial, the official position of the General Motors senior management is that lean is for the companies that do not have enough resources to deal with the problem, so that they are forced to eliminate waste (Carraciolo, 2014). That said, GM is a non-lean organization.

I think that the opinion that lean is for companies in need is wrong because the organization faced many challenges, and ignoring the successful experience of using lean principles cannot be considered a wise decision. I believe that with the company’s resources, it is possible to hire managers with the knowledge of this approach and improve the operational performance because it will entail not only the increase of productivity and customer satisfaction but also resource-saving through waste elimination.

GM value stream

Lean philosophy centers on the concept of value. It stresses that it is the customer that creates value. So, it is vital to define what the customer is willing to pay for and detect the waste that leads to no added value. There are seven types of waste, and they include overproduction, inventory, waiting, unnecessary transport, processing, and human motions, and, finally, defects (Meredith & Shafer, 2013).

Once the company manages to define value from the customer’s perspective and the types of waste that can be eliminated thus establishing a target cost, it can proceed to identify value stream that comprises all processes from raw materials to delivering final goods to the customer. The focus is made on grouping the processes in value-added, non-value added but vital, and non-value-added and unnecessary (Meredith & Shafer, 2013). This step is important because it helps understand carrying out operational activities in a way that will be valued by the customer.

General Motors uses value stream mapping as the instrument for analyzing process flows and visual tools for detecting and eliminating waste in every department, even though it is a non-lean company. GM’s value stream map consists of six primary elements: the customer and the customer’s requirements, major process steps, process metrics (basically, process time), supplier with material flows, information, and physical flows, and overall performance (Thorsen, n.d.).

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The whole process is a set of four steps: pre-study defining the scope of the value stream, drawing the current situation, defining the desired future situation, and implementing the plan. So, value stream mapping in GM is drawing the difference between the state of the process as it is and how it should be (Thorsen, n.d.). The practice has proved to be effective because the company actively uses it.

5S, Kaizen, JIT, and Kanban systems in GM

5S is the concept used for improving individual performance. It includes five stages (S’s). The first one is a sort that implies defining the steps of the process and eliminating the unnecessary ones. The second is straighten that is about setting the processes in order. The next step is scrub that comes down to keeping the working place clean. The fourth step is systemized, and it means developing and implementing standards for keeping the workplace in the chosen order. Finally, the fifth S is standardized, and it is as simple as making the first four S’s the habits of the employees (Meredith & Shafer, 2013).

Kaizen comes from the Japanese “continuous improvement”. This concept implies that the company is in the constant strive for perfection and seeks ways to improve operational performance. JIT is the acronym for just-in-time. This concept is the foundation of the lean philosophy and implies that the waste is minimized and that fewer resources are used to gain better results. Kanban comes from the Japanese word that means “card”. The idea of the approach is that the materials (inventory, space, workforce, etc.) should be used only in the case if the company needs them. It means that the process of production is pulled, not pushed, thus, it is productive (Meredith & Shafer, 2013).

Nowadays, General Motors does not use these principles in its activities. As it was already mentioned, the company’s experience of falling back on the lean philosophy is limited with value stream mapping and six sigma approach, and the only period when GM embraced the whole set of lean principles was when it worked in cooperation with Toyota – the case of NUMMI plant (Hozak, 2012).

Goldratt’s theory of constraints in GM

The theory of constraints developed by Goldratt proposes a guideline for analyzing process flows through identifying the bottlenecks and reaching balance in the workflow. Implementing the approach to the company implies five steps: specifying an organization’s constraint, exploiting it through finding the ways to maximize the return per unit, ensuring that the constraint is always productive, elevating it, and, finally, making sure that it is no more a bottleneck and repeating the steps again for the next identified constraints (Meredith & Shafer, 2013).

Goldratt’s theory of constraints has an application in General Motors. The company used it in all plants because focusing on bottlenecks is more beneficial than worrying about the capacity of all divisions and segments of the organization. However, it focused mainly on using overtime labor to meet the customer’s demand and was implemented only from 1990 to 2002. The primary result of the application is the decrease of lead-time in assembling individual orders (Weygandt, Kimmel, & Kiesso, 2010; Top reference bank – General Motors, 2014).

So, today, GM positions itself as a non-lean company, and among the actively used lean principles, are only value stream mapping and Six Sigma approach.

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Carraciolo, S. (2014). Q&A: General Motors Brazil. Web.

Kozak, K. (2012). Lean and Six Sigma create valuable synergies for RFID adopters. Web.

Meredith, J. R., & Shafer, S. M. (2013). Operations management for MBAs (5th ed.). Hoboken, NJ: John Wiley & Sons. Web.

There, W. (n.d.). Value stream mapping & VM. Web.

Top reference bank – General Motors. (2014). Web.

Weygandt, J. J., Kimmel, P. D., & Kiesso, D. E. (2010). Managerial accounting: Tools for business decision making (5th ed.). Hoboken, NJ: John Wiley & Sons. Web.

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