How dedication to lean-management principles in auto-industry has led organizations to new performance breakthroughs
Since 1926, Mercedes-Benz, under Daimler AG, has grown from its roots in Germany to become one of the world’s largest automobile brand, with more than €167 billion in revenues as of the year ended 2018. Mercedes-Benz’s origins mean that the principles underlying lean management have been a part of the company’s culture almost since the beginning—not only in its home country, but also as it expanded overseas. One of their assembly plants is in Indonesia.
The vehicle assembly process has almost the same stages and systems, with a number of different standards applied according to the needs and type of vehicle. One of their factories is located in the village of Wanaherang, Gunung Putri, Bogor District, with an area of 42 hectares. The factory is equipped with integrated vehicle preparation and logistics, for passenger and commercial vehicles. There are a number of steps that must be passed to assemble a chassis into one unit of car or vehicle. Each station is a combination of robots, human power, and a computerized system for testing and quality control. Of 700 employees in assembling these vehicles, 90 of them work in the commercial vehicle unit. In one day, the factory can assemble 6 units of commercial vehicles, both trucks and diesel buses. The work done includes the stages of inspection, wheel alignment, brake test, speedometer test, and finally a final inspection. in the final station of the commercial stage such as trucks are fully inspected to determine the readiness of mechanical and electrical functions. if quality control test passes, the vehicle is ready to be distributed.
Not much different from the commercial vehicle assembly line, the passenger car assembly process also has the same number of stations. The difference is there are more stations, up to 20 stations with 2 workers in each station. In a day, the effective processing time for production is 7.3 hours. There are 2 lines for making this passenger-specific vehicle. There is a combination of robotic machines and human power to reduce inaccuracies. A number of assembly stations ranges from the installation of feature devices, seats, and more. In the final stage, at station 20, they perform quality control gate, tire testing, engine speed, among others. Afterwards, the car is ready to be distributed and also sold to consumer. It took about 1 day to be able to create about 9 units of cars from the factory here in the village of Wanaherang, Gunung Putri, Bogor District.
Human resources are needed help us avoid becoming complacent or falling back into a fixed mind-set. And we have to develop our talent. Our frontline associates are functioning at what was once a leadership level, so now we need to give them some more autonomy in order for them to keep building.
Companies embracing change and innovation are building a culture of innovation: a work environment cultivated by leaders to nurture new thinking, apply new processes and encourage innovation to drive long-term value for the business. Digital transformation is occurring at a rapid pace, creating a more connected world and providing new opportunities for companies to grow. Creating a culture of innovation is an investment in the future of any business.
In times of organizational and industry transformation, current and future leaders must be open to change and ready to take opportunistic risks. Adaptability continues to be a critical element. Yet in the digital age, leaders must also unleash talents quickly. Developing a culture of innovation requires an organizational mindset that enables individual employee contributions. The process is not easy, however with the right approach, a business can maintain its commitment to continuous improvement while driving a sustainable competitive advantage to achieve short and long term ROI. In conclusion, an organizational culture should produce measurable and quantifiable change more than just an abstract concept.
In culture of transformation, companies focus on the following:
- Industry leaders achieve 70% greater productivity increase from investment in new technology than industry followers do at 30%.
- Companies allocating 25 percent or more of their R&D budgets to software and services (vs. products) report faster revenue growth than their competitors.
- Companies with formal innovation system and structure in place see yields: 51 percent are first to market.
- 34 percent of business leaders have seen a positive impact from their own digital transformation.
The key is in the execution. Organizations must be clear in building the right culture in order to make changes happen. Employees will not be able to make changes if they are punished for risk-taking. Corporate websites cannot be filled with statements about valuing innovation if the organization is solely focused on cost-cutting to produce short-term results. Instead, organizations should focus more on the long-term results.
Establishing a culture of innovation may have different speed depending on the organization and the industry. In any industry, innovating and adapting is a baseline expectation in today's transforming business environment. Investing in innovation and culture will prepare any organization for its digital future. If it is done well, the return can be significant and rapid.
The global manufacturing sector is estimated to grow millions of new job over the next decade. At the same time, millions of manufacturing workers are set to retire by 2025, while digitization and automation are changing skills at unprecedented rate. The manufacturing jobs of today will be different compared to yesterday.
Our workforce analysis indicate that there are future roles that include both the technical and soft skills for in-demand roles such as collaborative robotics specialists, manufacturing cybersecurity strategists and enterprise digital ethicists. Organizations need to identify people with adjacent skills - those skills that are connected and can be adapted easily, developed and applied to these new roles. This is how manufacturing organizations can source a talent pipeline for existing and future factories, put new technology into practice and remain globally competitive.
In exhibit 1 below, we are exploring the manufacturing roles today, and how it evolves to new manufacturing roles tomorrow.
Organizations must now assessing for current capabilities and future skills adjacencies. People perform at their best when their role is the right fit for their natural capabilities and their strengths are understood. The most valuable way of understanding human potential and matching people to the right role is by assessment. This is how organizations can identify skills adjacencies - the skills people have that can be easily adapted and applied to new roles.