This is my first article on the project that I will be taking on in the following months. I will be working on a project to help a family run, aftermarket commercial-truck parts manufacturer in Istanbul to transition from traditional, push method manufacturing to a pull focused lean manufacturing. I will be writing about the technical and cultural challenges that I’ll be facing as an industrial engineer who had the chance to observe and practice the implementation of World Class Manufacturing in US.
It is easier to implement a lean manufacturing system for companies that are working as OEMs or have stable demand with seasonality. In other words, these companies usually manufacture for same customers whose orders can be estimated using conventional forecasting methods.
First off, OEM stands for Original Equipment Manufacturer. Today, many companies outsource their components and complete final assemblies in house. Especially big automotive manufacturers heavily rely on their suppliers for key components. Working as an OEM for big companies is a double edged sword. It is a prestigious achievement for a company to work as an OEM. It means that the company has achieved high quality standards and is reliable to deliver parts on time. But it also brings seriously restrictive contracts and fairly lower profit margins. In some cases, OEM companies don’t even have the final say on the price and regulations. In one of my conversations with an official from a prestigious car company in US, I learnt that the cost of failing to deliver the required batch of parts is the price of each and every car that doesn’t leave the line due to faulty or late parts.
Like a class project that is reduced to educational level, OEM companies who have achieved structural transition to lean manufacturing are easier to develop better practices and achieve almost complete lean methods. However, the challenge is with manufacturing companies that are family run businesses who have been working with traditional manufacturing methods and whose biggest challenges include demand that is unstable and quite random in order size and time. Not working as an OEM and manufacturing for aftermarket is also a double edged sword. It creates the flexibility in contracts and allows higher profit margins, however, it also brings random demand that is harder to forecast, requiring more frequent changes in the system. Thus, this type of manufacturers face more challenges when it comes to implementing lean principles which I will be tackling in coming months.