Agenda Company presentation, Anette Production development, Anette 9.30 Logistic development (material supply systems), Anders

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1 Agenda 8.35 Company presentation, Anette Production development, Anette 9.30 Logistic development (material supply systems), Anders Transport Tour of the factory (½ class), Lennart VPS introduction (½), Marcus Tour of the factory (½), Lennart VPS introduction (½), Marcus Slide 1

2 Volvo Production System Principles i VPS is the way to Operational Excellence Katarina Lindström Chairwoman, VPS Steering Committee Slide 2

3 CS09 Component Step 2009 New production and assembly concepts Line assembly instead of static assembly One flow for axles and one for transmissions Extension from 53,000 m 2 63,000 m 2 to Lean production will result in higher A world class factory quality, less waste, more flexible Higher capacity that can be doubled in the long run. production Slide 3

4 We are moving into a completely new production set-up Current/historical set-up Incremental expansion New production set-up Lean Manufacturing concept in line with VPS Complex flows High WIP Currently runs in five shifts Low/no flexibility High quality and delivery precision Improved flows and flexibility to handle demand variations Lower product cost Decreased investment levels Slide 4

5 Volvo Production System VPS combines the vision with principles - tools and techniques. Teamwork, Process Stability, Built-in Quality, Just-in Time and Continuous Improvement are not new principles to most people, but it is how it is part of a total system and can be used in all processes and operations based on the Volvo Way, that makes it unique to the Group and is our competitive advantage. Ebly Sanchez, Director, VPS Vision An organization where we continuously improve quality, delivery and productivity, in everything we do. Slide 5

6 What is VPS? Volvo Production System (VPS) is a customer-driven, people-oriented, unifying system that serves as the source of common principles and practices. VPS is not just for manufacturing operations it requires all areas and individuals to commit to living according to lean principles and contribute to the transformation of the Volvo Group in the 21st century. Slide 6

7 Avoid Wastes Overproduction Wait Unnecessary Processes Inventory Slide 7 Movements Defects and Rework Transport + Not used employee creativity

8 The Volvo Way is our foundation Leadership Safety & health Slide 8

9 VPS History and focus Pre-study Develop VPS overview VPS Launch VPS Expansion VPS /OD OpEx office Operational Excellence Initiation Overview of existing production systems Collect best practices Develop elop VPS strategy Benchmarking Create and communicate guiding principles Begin development of toolkit and Working Group formed VPS launch with Manufacturing Managers at VPS Conference VPS assessment 1.0 VPS homepage and document database Good Examples Description of VPS-OtD modules VPS Assessment v2.0 VPS Global Conference Extended scope Description of GIB-OpEx VPS-PDP PDP modules governance VPS Toolbox Expansion-VBS, Launch of OpEx Business Admin OD Office Process Expanded scope to PD assessment and VBS self-diagnostic i Operational 2nd round OtD Excellence Office Assessments formed with OD VPS-PDP Office and VPS Assessment v1.0 Academy OD/VPS integration Slide 9

10 The Volvo Production System covers 3i important tdimensionsi Vision 5 Principles Modules with tools and techniques An organization where we continuously improve quality, delivery and productivity, in everything we do We base our guiding principles i on The Volvo Way including our corporate Values, our Culture, our Leadership how we go from Word To Action. Practical tools and techniques that t when applied in each specific area drive operational excellence Slide 10

11 VPS is one of the key parts to achieve our strategic objective of operational excellence, but also a way to create an attractive workplace Increase productivity and cost efficiency: Create and implement the Volvo Production System Increase productivity by 5% Reduce cost of poor quality by 25% by end of 2009 Create a competitive customer oriented culture: Common language with shared terminology Avoidance of duplication of efforts Common solutions Ability to find and benchmark against best practice Slide 11

12 Volvo Production System - Principles Teamwork means creating a sound organization where all employees are involved in the improvement process contributing to achievement of our goals and strategic objectives. This is where everyone s experience, knowledge and creativity is put in play. Process Stability means reducing all kinds of variability and waste in our processes to make them predictable and efficient. Deep knowledge and understanding of the operation is essential for succeeding as we strive for process stability. Built-in Quality means doing things right the first time, detecting and correcting problems at the point of origin. We move towards zero-defects by having the mindset of not accepting bad quality, being proactive, and eliminating root causes. Just-in-Time means producing and conveying what is needed, when it is needed, in the amount needed in the shortest possible lead-time. The mainstays of the principle p are minimal inventory, customer demand and one-piece flow. Continuous Improvement is the driving force behind our efforts and requires a systematic and long-term approach. Generation and implementation of improvement ideas is essential. It is based on standardisation and a clear vision of the future desired state. Slide 12

13 VPS-OtD (Order To Delivery) Modules Operational development Design of improvement organization Problem solving methodology Value stream mapping Quality culture Zero defects Quality assurance Product and process quality planning Flexible manpower Pull systems Takt time Continous flow processing Material supply Visualization Cross functional work Goal oriented teams Organizational design Standarized work Production leveling Maintenance systems 5S Leadership Safety & Health Environmental care Slide 13

14 VPS Structure in Eskilstuna VPS principer (core team) I. Obrovac VPS Council Eskilstuna Management tteam F. Berntsson Principle-team M. Karebo M. Pettersson K. Björklund M. Wiström T. Andersson* A. Ahmedi The Volvo Way L. Da Ros P. Andersson Team Work Process Stability M. Bengtsson D. Adolfsson* J. L. Ståhlberg Magnusson Continuous Improvement Just In Time Built In Quality Customer Key initiatives Key initiatives Key initiatives Key initiatives Key initiatives Key initiatives Key initiatives Value Stream - Axelflöde M. Bengtsson (L. Da Ros) Value Stream - Transmissionsflöde A. Ahmedi (L. Ståhlberg) Value Stream - Lågvolymflöde * OD Slide 14

15 Same model from different viewpoints Product Development The purpose of VPS-PD is to create a product development environment that consistently and efficiently develops excellent products; products which are win-win solutions for all stakeholders. Slide 15

16 VPS-PD Modules Operational development Problem solving methodologies Innovation management Value centric approach Project assurance practices Quality culture Concurrent engineering Product assurance practices (VRES) Product launch assurance Front loaded PD Extended value chain Pull systems Resource flexibility Cross-functional work Visualization and communication Goal-oriented teams Organizational design Leadership Safety & health Environmental care Standard way of working Product standardization and modularization Process simplicity Project portfolio management Competence management Slide 16

17 The s central function is to collect and share best practices in the group There are five main roles and areas of responsibility within VPS: 5 Offer support 2 Assess level 4 Suggest how to do it 1 Own and develop VPS knowledge and documentation 3 Recommend improvement opportunities 1. owns the model and maintains knowledge and documentation needed for its areas of responsibility, e.g. Module Reference Material and Good Examples 2. Assess the performance level at all plants in the Volvo group 3. Recommend improvement opportunities to reach the next performance level 4. Suggest how to drive improvements in the respective plants 5. Offer support for training and implementation Slide 17

18 VPS Assessment Follow-up on data analysis Create themes, develop conclusion and final roadmap Initial presentation to plant manager 1. Overview e of the pa plant performance per area, highlighting strong areas and areas for improvement Continuous improvement 1. The Volvo Way 5,0 4,0 3,0 2,0 1,0 2. Team work 0,0 2. Road Map for short, medium/long term improvement opportunities and scale up support Build up small scale organization 2008 Š 2007 Academy Make best-practice ti Continue to conduct knowledge available to assessments focus organization 5. Built-in quality 4. Just-in-time 3. Process stability Recruit small dedicated teams with experienced practitioners Start conducting assessments Complete library of bestpractice knowledge Regularly update with feedback from organization Expanded scope Slide 18

19 Final presentation Strength and recommendations Road Map Good examples Slide 19

20 The collects and shares good examples across the group Slide 20

21 Information about VPS and Good Examples Slide 21

22 It is common sense to take a method and try it. If it fails, admit it frankly and try another. But above all, try something. --Franklin Roosevelt Slide 22

23 23 Slide 23