Tag: production problems

OM in the News: Tesla’s Lean Problems

A recent report in Industry Week (Sept. 12, 2018) suggests that Tesla, like a lot of facilities, has trouble being lean.  Here are a few observations from industry experts who visited the Fremont manufacturing plant.

From a Lean Enterprise Institute advisor: “High, leaning stacks of cardboard boxes and other items make it difficult to see. There was stuff piled up on the floor, and the stuff was dirty. There were fork lifts—I haven’t seen these in an assembly floor in a long time. Most of the AGVs  were empty. The aisles were narrow and crowded, and some of the stuff, piled up, was leaning into the aisle. Rear doors are on the Model 3 body going down the main assembly line, while the front doors aren’t.  In most of the plants I’ve been in, all four doors are off while it’s going through the main interior assembly so the workers can get better access, and the doors don’t get damaged.”

From the CEO of the Center for Automotive Research: “The low production numbers, with the number of workers and the size of the facility, indicates inefficiencies where the manufacturing team is doing a lot of manual work instead of optimizing the production process. The fact that the entire outdoor area—a collection of tents—is set up for rework says they’re having fundamental issues with quality.”

From a manufacturing technology consultant: “They first focused very much on high levels of robotics and automation, only to realize how difficult it was, and now they’re scaling back. So they wasted time ramping up and going back so they could get to the levels of automation that they thought they could. It’s very likely that someone with real, deep manufacturing experience could have realized it early enough.”

Classroom discussion questions:

  1. Why do you think Tesla is facing such production problems?
  2. There have also been reports of multiple paint room fires and a higher than average number of safety incidents. How can OM help resolve such issues?

 

OM in the News: Tesla’s Sloooow Rollout


Tesla charging stations wait to be unwrapped.

When Elon Musk first unveiled the Tesla Model 3 sedan in March 2016, consumers stood in long lines at showrooms to place $1,000 deposits, giving Musk an iPhone moment unprecedented in the auto industry. When people stand in line at an Apple Store, they typically walk away with a new phone; the all-electric Model 3 had yet to be built. Overwhelming demand inspired Musk to announce in May 2016 that he was advancing Tesla’s production plans by 2 years.  It would build 500,000 total cars annually by the end of 2018, rather than 2020—a fivefold production boost in just 2 years. For Tesla, which had no experience manufacturing cars in high volume, it has been a steep production learning curve, writes Businessweek (Jan. 15, 2018).

Tesla delivered only 1,770 Model 3 sedans to buyers in 2017’s second half. In August, Tesla said it expected to achieve a manufacturing rate of 5,000 Model 3 vehicles a week by the end of the year. In November the company back pedaled, saying it would hit 5,000 units a week in late March 2018, citing “production bottlenecks.” Musk stated he was on the “front lines” of production hell.

“They vastly underestimated how challenging it is to mass-produce vehicles, and quality should be their focus,” said one industry exec. On Jan. 3, Tesla delayed the production goal by yet another quarter, saying that it now expects to hit 5,000 units a week by the end of June, with a “focus on quality and efficiency rather than simply pushing for the highest possible volume in the shortest period of time.” Concentrating on quality makes sense for the carmaker. A mass-recall would probably be far more damaging.

(Tesla’s stock, by the way, surged 43% in 2017, despite the factory setbacks).

Classroom discussion questions:

  1. What are the OM issues that Tesla is facing?
  2. Do a quick SWOT analysis on Tesla.

OM in the News: GM Wrestles With Excess Capacity

Despite its drastic downsizing a decade ago under a federally funded bailout and bankruptcy restructuring, General Motors again finds itself with too many U.S. factories that can turn out too many vehicles. GM’s factory-utilization rate in North America averaged 95.1% over the past two years, below Ford’s 111.9% and Toyota ’s 101.4%. (Rates can exceed 100% when factories work a 3rd shift or schedule overtime work on weekends.) The auto industry often runs its factories dawn-till-dusk or even around the clock to boost their efficiency, writes The Wall Street Journal (Oct.10. 2017).

Factory-utilization rates typically measure how much production capacity a plant uses based on a 16-hour workday. GM says its utilization rate is 100% on average when its round-the-clock truck and SUV lines are figured in with the relatively sleepy factories making cars. GM said it is working to “drive further improvements” in its plant utilization, including adding crossover SUVs to more factory lines. A plant in the Kansas City area that now makes only the Malibu is scheduled to begin assembling a small Cadillac SUV by late 2018. But such a switch-over typically takes car makers several years of lead time, to order and install new assembly-line equipment and tooling.

GM operates 17 vehicle-assembly plants in North America, after closing several during its bankruptcy. Most, except for 5 that operate around the clock to build trucks and SUVs, have ample unused capacity.

Classroom discussion questions:

  1. How is capacity computed in the auto industry?
  2. What can GM do to bring capacity in line with demand?

OM in the News: Pratt & Whitney’s Supply Chain Falls Short

pratt-enginePratt & Whitney, the giant jet engine maker,  just warned it will miss its 2016 goal for deliveries of a new “geared turbofan” jet engine by 25%–likely shipping 150, down from a target of 200. Pratt has staked a decade and $10 billion in R&D on the new family of engines, writes The Wall Street Journal (Sept. 17-18, 2016). “Suffice it to say the airlines aren’t happy they’re not getting the engines,” CEO Greg Hayes said. “We’re not happy we’re not delivering.”

Pratt previously warned the introduction of the new engine will put pressure on its supply chain, but still hopes to deliver 400 of the new engines in 2017. The company says it will churn out more than 1,000 of the engines by 2020, part of an effort to attack a backlog that now includes some 8,200 engine orders.

But problems have bedeviled the ramp-up. A new logistics center run by United Parcel Service, under contract with Pratt to organize the delivery of the more than 800 parts that make up an engine, has developed some kinks. Pratt also angered some customers when the first geared turbofans it delivered had a flaw that required airlines to use longer-than-expected cool down times between flights to avoid engine damage.

“There are five parts that are causing us pain this year,” stated Hayes, “because suppliers haven’t been able to deliver them in sufficient numbers and quality to keep pace with engine assembly. A particular problem has been the newly designed aluminum-titanium fan blades. We’ve just struggled because of the technology involved in these blades.” He added that he had just visited the shop where blades are produced. “Today it takes us about 60 days to build the blades through the shop and that needs to get to 30 days.”

Classroom discussion questions:
1. Is this an unusual production problem in the aircraft industry? Why?

2. Discuss the UPS arrangement with Pratt. Advantages? Disadvantages?

OM in the News: Pratt & Whitney Grapples with its Supply Chain

Prat enginePratt & Whitney has bet billions on its commercial jet engine market, but first, it has to get parts delivered on time. The Wall Street Journal (June 8, 2016) reports that half of the company’s suppliers for its new “geared turbofan” engines aren’t delivering parts and materials at expected levels as seamlessly as the company expected. Some 44% of the company’s 1,600 suppliers weren’t meeting the company’s on-time delivery and quality control targets. “Forty-four percent is the challenge,” said the CEO.

It is the latest hiccup in P&W’s effort to ramp up production of the engine from 15 in 2015 to 200 units this year, and 1,200 a year by 2020. As P&W tries to coax its supply chain into shape, the company is requiring underperforming suppliers to provide buffers of extra parts as insurance against any interruption in production. The firm has more than 7,000 orders for the engine, and says that the new design will offer increased fuel efficiency and thrust while lowering engine noise—big enticements to airlines.

Unlike previous generations of engines, 80% of parts for the geared turbofan will be made by entities other than P&W itself, then shipped and assembled in the company’s engine manufacturing centers in Connecticut, Florida, Canada and Germany. As a defensive measure against production problems, the company says it has tried to double up its suppliers—signing up duplicate makers for many of the engine parts to avoid interruptions. “We have all the capacity we need—the challenge is to get all the parts in on time,” said P&W’s VP for operations. “It’s a dogfight every day.”

Classroom discussion questions:

  1. Discuss P&W’s approach to defend against production problems.
  2. Why is this supply chain problem arising?