brazilian automotive industry trends in lean product development practices€¦ · ·...

BRAZILIAN AUTOMOTIVE INDUSTRY

TRENDS IN LEAN PRODUCT

DEVELOPMENT PRACTICES

Ana Julia Dal Forno (UFSC)

[email protected]

Luis Fernando Serapiao (UFSC)

[email protected]

Fernando Antonio Forcellini (UFSC)

[email protected]

The focus of this paper is to present some practices of lean product

development used in Brazil’s largest private companies by revenue in

sales in order to indentify the types of projects, if the products are

developed in the country, whichh processes the lean approach are

being applied, supplier involvement, standardization, learned lessons

record, techniques to capture the voice of customer, value stream

mapping and others. To achieve this objective, an exploratory

descriptive survey was conducted in a non-random sample, using as

instrument for data collection a questionnaire with 23 questions sent by

e-mail after telephone contact to the person responsible for product

development in the companies. In this paper is presented some tools

used by the Brazilian’s automotive sector. The results shows that there

are some practices being implemented by the companies, but so far,

there aren’t a reference company in lean product development in the

country. In the conclusions are described some industry trend and

future prospects of automobile industry.

Palavras-chaves: Lean Product Development, Survey, autoindustry

XVII INTERNATIONAL CONFERENCE ON INDUSTRIAL ENGINEERING AND OPERATIONS MANAGEMENT

Technological Innovation and Intellectual Property: Production Engineering Challenges in Brazil Consolidation in the World Economic Scenario.

Belo Horizonte, Brazil, 04 to 07 October – 2011


Technological Innovation and Intellectual Property: Production Engineering Challenges in Brazil Consolidation in the World Economic Scenario. Belo Horizonte, Brazil, 04 to 07 October – 2011

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1. Introduction

This paper uses the survey methodology, also known as evaluation research, which

consider a significant sample of a problem to be investigated. In this study the focus is to

diagnose the existing lean practices in product development of the largest Brazilian

companies. Firstly occurred the literature research in journals, theses/dissertations, books and

conferences on major issues of Production Engineering, Product and Process area - product

development, lean approach and benchmarking as a method of diagnosis and implementation

of improvements. Thus, was elaborated a questionnaire to be applied to the sample of

companies. The sample was chosen the top 500 firms in sales in the year of 2009, according

to the criteria of Exame (2011). It’s contains the main financial indicators of companies, such

as sales, sales growth, profitability, adjusted net income and margin of sales. From an initial

sample of 1245 firms, was selected only those sectors that develop products such as

automobile, capital goods, consumer goods, sundries, electronics, pulp/paper, metal and

textiles. After this filter and after connecting businesses that merged to with each other, it was

left 306 companies. Figure 1 diagram the sample of the research and its classification in the

sectors of the economy. All the remaining, in a total of 63 companies in the automobile

industry were contacted by telephone in order to obtain the contact of the responsible for

product development process and explain the focus of the work. A questionnaire with 23

questions was developed, it was given enough attention to make the questionnaire as

straightforward as possible, leaving no room for contradictions, the responses could be

multiple choice, yes / no and descriptive, when needed it was given the option of answer "do

not know" and the responders could make comments on the questions. The questionnaire was

sent to all contacts, totaling 210 of all the sectors mentioned above and 54 for the automobile

industry. The questionnaires were sent after the contact by telephone and companies had 15

days to respond. Due to an initial low response rate, the questionnaires were resent twice,

resulting in a final response rate of 27%.



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500 Brazilian Sales Largest Companies

339 Industrial Companies that develop products

Autoindustry(63)

Capital Goods(28)

Several (13)Electronics

(27)

Digital Factory(22)

Textiles (17)Steen and

Metallurgy (49)Pulp andPaper(17)

ConsumerGoods (98)

Figure 1 – Sampling characterization

According to Perrien, Chéron and Zins (1984), this type of sampling is fit as non-

probabilistic, because it is obtained from some kind of criteria, and not every elements of the

population has an equal chance of being selected, which makes results not generalizable. The

objective of this paper is to present the preliminary results of the automobile industry.

According to Miguel (2010) this survey was characterized as exploratory descriptive, it is also

one of the initial stages of the thesis of one of the authors of this paper for later provide the

basis for a more detailed survey.

The questionnaire was developed based on current problems on product development

identified in literature (ROZENFELD et al., 2006; DAL FORNO, FORCELLINI and

PEREIRA, 2009; LOCHER, 2008; MACHADO, 2006; MARTINS and LAUGENI, 2006;

MAY, 2006; BAUCH, 2004; FIORE, 2005):

– Lack of integration between the areas and areas with the business strategy;

– Organizational and communication barriers;

– Runtime exceeds planned;

– Variability in the tasks and method;

– Constant reworks;



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– Relationships with suppliers are not long-term, based on philosophy of partnership

(win-win);

– Deficiencies in measurement and control;

– Lack of a structured Product Development Process;

– Unclear definition of the input data (specifications and requirements);

– No record of lessons learned and historic of projects.

To minimize some of these problems, the lean approach aims to add value and

eliminate waste. Some practices are countermeasures for waste and are related to people,

process and tools. Therefore, this paper describes some key practices of lean product

development in section 2, in section 3 some results of the survey is presented and concluded

in section 4.

2. Lean product development practices

The questionnaire was developed considering the lean practices of product

development mentioned in the literature. Some of these practices, also called the tools

includes involving strategic suppliers since the beginning of the development process, have

few and reliable suppliers to create a relation of partnership and joint development, value

stream mapping, planning techniques problem solving, standardization, have a matrix

structure rather than departmental, involving different areas (marketing, engineering,

production, sales, PCP, design), techniques to capture the voice of the customer, visual

management, efforts to understand the needs of internal customers, virtual simulations to

avoid rework prototyping, reuse, library of projects, record lessons learned, concurrent

engineering. These practices will be defined now.

– Value Stream Mapping (VSM) - Aims to develop a picture of the current state to

identify the waste and calculate the lead time. After that, in the designed map and

action plan, improvements are planned Rother and Shook (1998), Loker (2008),



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Morgan and Liker (2008), McManus (2005), Dal Forno, Forcellini and Pereira (2009),

Hines, Rich and Esain (1999), Gurumurthy and Kodali (2009).

– Voice of the Customer - One of the basic fundamentals of any development process

is to incorporate the client's needs in the project. In automobile industry, the

automakers consult clients on variations in aesthetic items, comfort and convenience.

A variety of formal techniques like Quality Function Deployment (QFD), Focus

Group, market research are used to capture the voice of the customer. Since customers

often use a subjective language and do not define clearly what it wants, the VOC is

rarely used in early stages of the PDP (CAR 2007). According to Thabet and

Badinelli, 2009 QFD has been a very useful tool to reflect the voice of the customer.

– Visual management - devices that detect errors in the source. Examples are

parametric CAD systems, checklists, detailed and standardized test plans. A visual

board with the schedule and phases of ongoing projects helps you visualize the

achievement of deadlines and take preventive measures in time, according to the

frequency of checking the performance of the project (Locher (2008), Parry and

Turner (2006).

– Project Library - This practice summarizes the learning and the habit to maintain a

record of lessons learned to facilitate the reuse of knowledge Nonaka and Takeuchi

(2008), Senge (2004), Morgan and Liker (2008), Waal and Counet (2009)

– Early Supplier Involvment - The intention is to keep fewer suppliers and involve

them from the beginning of development and thus establish a partnership relation

(long term). The benefits are reduced risk, reduced cost and lead time, joint

development and establishment of shared goals. Gurumurthy and Kodali (2009),

Salzman (2002), McAdam, Hazlett and Anderson-Gillespie (2008), Magnan Birou and

Fawcett (1999), Cha et al. (2008), Dero, and Yusof Salleh (2006), Ge and Fujimoto

(2006) and Sobek (1997)

– Standardization - Standardization is the basis for reducing variability through

checklist and as a mechanism to capture knowledge. The project’s standardization



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involves the product, its components, raw material and its architecture. The

standardization of processes involves common tasks, sequence and duration of tasks

and standardization of technical skills is related to the capability of people involved in

the development team. Emiliani (2008), Muenstermann et al. (2010), Marksberry et al.

(2010), Wang and Kleiner (2005), Wee and Wu (2009), Gurumurthy and Kodali

(2009)

– SBCE (Set based concurrent engineering) - In this tool, the entire development team

takes a series of parallel and independent alternatives through the phases of the PDP,

the alternatives are eliminated until there is a better alternative generated from a

combination of systems, subsystems and components Kincade, Regan and Gibson

(2007), Schäfer and Sorensen (2010), Hines, Francis and Found (2006), and Madhav

Appan (2010), Salah, Rahim and Carretero (2010), Doll, Hong and Nahm (2010),

Mols (2010), Person, Loureiro and Alves (2007).

3. Results

In this topic will be presented some preliminary results regarding the analysis done

with the questionnaires considering the automobile industry. In this industry companies are

classified in automakers, which are at the tip of the supply chain and also the first-tier

suppliers, in this case suppliers of the parts and automotive components. Companies of these

industry who responded to the questionnaire consist of the following, three major

representatives automakers of Brazil and fourteen companies that supply parts. Some

companies that were part of the sample analyzed are: Agrale, Autometal, Bridgestone, CNH,

Cummins, DHB Componentes, Suspensys, Trelleborg, Behr, Marcopolo, Eaton e ZF Sachs.

Was asked directly if the company uses the lean approach, 83% said yes and 17% said

no. Out of those who said they use the lean approach, 86% uses it in manufacturing, 50% in

product development and 36% in both processes (production and product development).

The Value Stream Mapping (VSM) tool, commonly used as an initial step for

diagnosis and identification of waste, only 33% of companies affirm to use it.



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Figure 2 shows that approximately half of the firms reduced the number of suppliers in

recent years, a trend considered to be lean.

Figure 2 - Total number of suppliers

All the participants affirmed to have a standardized product development process.

Although, even many companies claiming to be lean, 53% of them still maintain a

departmental structure as can be seen in Figure 3.



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Figure 3- Type of organizational structure

To capture the voice of the customer, one of the practices most well recommended and

most complete is QFD. However, only 35% of companies questioned use QFD. One way of

measuring the waste is through overtime, which shows that not always the quality of the

information is good, it also shows that there is incomplete or duplicated documentation, lost

time between one process and another. Even when the product is launch on time, 56% of

companies said they use overtime hours on projects

For monitoring the projects, most of the companies use MS Project, followed by MS

Excel and Visual Board. Figure 4 shows the percentage of use of each software.



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Figure 4 - Sofware used to manage projects

To control the project, whether incremental or innovative, control is very important to

avoid problems related to the scope in terms of cost, time and quality. From the 17 companies

that answered this question, 81% of them monitor the project performance weekly, 6% and

13% accompanying fortnightly and monthly respectively (Figure 5).

Figure 5 - Frequency of project control



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Was also asked the companies to mention some indicators used in the process of

product development. Some indicators mentioned were:

– Adherence to schedule;

– Project cost;

– Project Scope;

– Customer satisfaction;

– Excellence in Design;

– Suppliers requirement;

– Percentage of the project carried out according to the pre-established phases;

– Results of the tests;

– Numbers of problems encountered during the project development;

– Parts produced in accordance with the project.

The record of lessons learned is a way of reusing knowledge from previous projects,

both requirements and solutions that worked and also the ones that didn’t work, 76% of

companies said that record and use the lessons learned.

4. Conclusion

The lean approach has been increasingly used in product development to reduce time

to market and deliver a value product to the customer. Many Brazilian companies already use

these practices in manufacturing process and are expanding to other areas and process of the

company.

However, much needs to be done. The focus of this paper was to show an initial

diagnosis of Brazilian automobile industry. The literature shows that this industry is well

developed, taking Toyota and APQP as benchmark. Yet, it is clear that the lean approach goes

beyond the implementation of practices, companies need an understand the principles and



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have a global view, seeing the product development process as key of success that generate

value to internal and external clients.

A company can’t be totally lean or totally not lean. Even when the lean approach is not

applied completely, some practices are used, either directly or indirectly. This paper showed

that even 83% of companies calling themselves to be lean, there are many practices that need

to be better implemented. People are fundamental in the process of transformation and

continuous improvement. Changing a departmental structured organization to a process

structure (strong matrix) impacts on the company's culture.

Due to a response rate of 27% of the total sample, the exploratory-descriptive survey

does not allow generalizations, but it is possible to identify a trend that the Brazilian

automobile industry is seeking to improve its processes to be competitive internationally. A

deeper study will point out correlations between the practices, the maturity level of each

company and plan of action for those who want to eliminate waste and deliver a value product

with better quality in less time and at lower cost.

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