Lean Management in Correlation with the IATF 16949:2016 Automotive Standard: What Impact on Automotive Companies' Performance?

Abstract:

Facing the competitiveness and evolution of the sector, automotive manufacturing companies are concentrating their efforts on producing components at the required level of quality and the best cost while respecting delivery times. Improving systems and performance, optimizing processes, controlling risks, seizing opportunities, and achieving targets are also among their priorities.  The “Lean” approach derives from the Toyota production system; it aims to maximize the gains of organizations while minimizing costs. Lean Management is a set of principles, tools, and methods that eliminate waste throughout the supply chain, optimize the operation of different processes, and improve effectiveness, efficiency, and business performance while involving personnel and creating a teamwork spirit. Lean Manufacturing is adopted by operational processes within manufacturing companies, it aims to eliminate non-value-added operations related to overproduction, inventory, waiting time, motion, transportation, defects and errors, overprocessing and non-utilized talent. Nowadays, original equipment manufacturers as well as automotive companies of different tiers require their suppliers to deliver just-in-time (JIT), to manufacture products conforming to predefined characteristics, to reduce costs, and to achieve defined quality objectives. In order to ensure their sustainability and with the aim of continually meeting customer needs, automotive companies are adopting Lean Management tools and methods. The objective of Lean Management is to optimize flows, improve operational processes’ efficiency, satisfy customers, ensure the conformity of products and services, deliver on time, and minimize related costs. This is in alliance with clause 10.3.1 of the international automotive standard, which requires organizations to implement a continuous improvement approach in order to reduce waste and optimize the functioning of the automotive supply chain. On the other hand, IATF 16949:2016 is the international standard that defines the quality management systems (QMS) requirements for design and development, manufacturing, assembly, installation, and service intended for organizations operating in the automotive sector. The standard is applicable in the automotive supply chain regardless of the supplier’s tier and the nature of the supplied product.  IATF 16949:2016 follows the "HLS: High Level Structure", and its requirements are organized around 10 chapters structured according to the PDCA (Plan-Do-Check-Act) cycle.  As per the ISO 9001:2015 standard, the first three chapters of the IATF define the scope of the standard and the vocabulary specific to the automotive industry, and the following seven contain the detailed requirements. “Plan” step encompasses Chapter 4: “Context of the organization”, Chapter 5: “Leadership”, Chapter 6: “Planning”, and Chapter 7: “Support”.  The “Do” step contains operational requirements dictated in Chapter 8: “operation”. Chapter 9: “Performance evaluation” is assigned to the “check” step, and requirements related to Chapter 10: “improvement” are allocated to the “act” stage.       The certification of QMS according to the international automotive standard IATF 16949:2016 is required by the automotive market, customers, and automotive manufacturers. That is why the QMS certification is one of automotive suppliers’ top priorities; it is considered a license to operate in the automotive market. To ensure the organizations’ sustainability, automotive suppliers should certify their QMS to the IATF standard while ensuring the integration of its requirements into their system and maintaining compliance with IATF clauses continuously. Some studies have demonstrated that Lean Management excels in the automotive industry due to high demand and competition, as well as specific customer requirements and the requirements dictated in the international automotive standard IATF 16949:2016. The latter requires organizations to define a continuous improvement process and to deploy particular efforts to reduce waste and increase customer satisfaction. Through its requirements, IATF 16949:2016 encourages automotive organizations to develop a QMS capable of providing continuous improvement, the prevention of quality defects, the reduction of waste and variations throughout the supply chain, and continuing to meet the demands of their customers. In this context, the present paper provides guidance to automotive suppliers in order to improve their performance results by analyzing and defining the impact of the adoption of Lean Management tools and the compliance of QMS with IATF 16949:2016 requirements on performance improvement. For this purpose, a correlation analysis was performed between the Lean Management concept and the IATF 16949:2016 requirements. The contribution of each Lean Management tool and the related IATF requirement to operational performance improvement is defined in the present study. The considered key performance indicators (KPIs) were determined according to the IATF standard, and we classify them into two categories: internal KPIs and external KPIs.  The cost of internal poor quality, process effectiveness, process efficiency, product conformance, and maintenance performance are part of the internal KPIs, while delivered part quality performance, delivery performance, customer disruptions, warranty, and the cost of external poor quality evaluate the external performance. The findings show that a substantial improvement in both internal and external performance as well as customer satisfaction can be achieved through the implementation of Lean Management tools in conjunction with the QMS conformance with the international automotive standard requirements.

Key words: automotive industry, IATF 16949, key performance indicator, Lean management, quality management system.