Lean Systems at Autoliv

To:          Professor Daniel Dayton

From:     

Subject:  Lean Systems at Autoliv

Date:             July 7, 2017

Business Brief: Lean Systems at Autoliv

Autoliv was founded in 1995 and has become one of the world’s foremost lean manufacturers of automotive safety components that consist of seat belts, airbags, and steering wheels. The organization operations in 27 countries and has over 80 plants with a reported revenue exceeding $10 billion in 2016 (Autoliv, 2016, p.4-6). As the business progressed, the company was facing challenges with the constant change of the environment and to keep with the demand of its clients. To rebrand and rebuild, Autoliv implemented Autoliv Production System (APS) House, which are based concepts embodied by Toyota.

Analysis

Embodied in Autoliv’s system is with the use of the pull method. The pull method is which customer demand activates the production of a good or service (Krajewski et al, 2016, p. 212). For Autoliv, the automotive safety components assemble-to-order within an acceptable amount of time using the pull method. With the use JIT principles from APS, the Kanban card system are used to control the current flow of materials to and from the cells and signals regular replenishments for the cell and the use of Heijunka cards are delivered to each cell every 24 minutes to communicate the work that needs to be done within that cell during the work cycle (Krajewski et al, 2016, p. 235). The launching of the Heijuka cards provides a “takt time”, which is the number of parts that needs to be produced to meet customer demand.

The APS principles coincide with the pull method workflow and lean inventory. This approach allows Autoliv to maximize the value added by each of the activities by removing waste and delays from them (Krajewski et al, 2016, p. 208). APS’s third principle – employee involvement in all process from Jikdoka to Kaizen suggestions has provided the company with improvement in the work environment, empower employees and drive team results.

Recommendations

Autoliv success of APS house has won numerous of awards of the policy deployment goals. The recommendations for Autoliv’s culture is to seek for improvements, avoid complacency, and encourage and support employee engagement can assist Autoliv Production System to be continuously successful. As Autoliv discovered, “…product defects have been dramatically reduced, inventory levels are lower and inventory turnover ratio is approaching world-class levels of 50 times” (Krajewski et al, 2016, p. 210).  Through the current implementation of APS, the business has seen dramatic improvements and should continue to see improve through the recommendations to strive in areas that needed for improvements to foster in long-term growth.