World-Class Manufacturing

Introduction
Partly covered from Ref Book :

World-Class manufacturing - A Strategic Perspective

by B S Sahay, K B C Saxena & Ashish Kumar

Learning Objective
To understand the views of diff. Mgmt. Thinkers on
World Class Manufacturing viz. Alvin Toffler, Thomas Friedman, Kaplan & Norton, Ohno, Shigeo
Info. Age Business & Challenges thereof WCM : Definitions 7 Keys to WCM

Business Transitions and Emerging Business Trends

Epoch making events

Fire Wheel Industrial revolution Internet

The Emergence of the Information Age

According to Alvin Toffler (American futurist) 3 Periods of Economic Evolution:

Agricultural Age : from 8000 BC till mid 18th Century Industrial Age : lasted until late 20th Century

Information Age : that began in the 1960s and will last for many decades to come.

Changing Business Goals in a Changing Environment

Strategic Goals

EVA

Market Diversification, Flexibility Productivity

Turnover

Growth 1960 1970 1980 1990 2000 Year

Business Challenges of the Information Age

Managing Uncertainty

- Uncertainty in business becomes a way of life.

- Difficult to predict changes, Customers becoming competitors and competitors becoming partners

Understanding customers is important

- The companies capturing (and applying) info. at each point of

customer contact will be better off than others

Understanding globalization of business

- Cutting across national boundaries, barriers of time and locations.

- IT has helped small cos. to compete with the Industry giants ( from The world is flat Thomas Friedman )

Operating Environment of Information Age Business

Info Age organizations are being structured on* Business Process orientation Links to customers and suppliers Customer Segmentation Global scale Managing Innovation

Knowledge Workers
* ( Kaplan & Norton, 1996)

Emerging Business Trends in the Info. Age

Area Economic Industrial Age Business Assy line production Stable markets and suppliers Domestic competition Intra-organizational Communication Domestic reach / ambition Information Age Business Customization of products Fluid markets and suppliers International competition Inter-organizational communication Global reach and ambitions

Organizational

Technical

Mechanical technology Proprietary standards Predictable innovation Authoritarian, hierarchical Business task focus (MBO) Individual responsibility

Electronic technology Open, inter-operable standards Rapid unpredictable innovation Horizontal, team consensus Business process focus Team responsibility

Socio-cultural

Global Companies and WCMs

Objectives of Global production /operation

Provide better goods and services Attract new markets Reduce costs ( labor, taxes, tariffs etc) Reduce risks (foreign exchange) Improve supply chain Learn to improve operations Attract and retain global talent

MNC, Global & Trans-National Cos.

MNC is a firm that has extensive involvement in international businesses in more than one country Global firm integrates operations from different countries and views the world as a single market. Transnational firm seeks to combine the benefits of global scale efficiencies with the benefits of local responsiveness

Different business scenarios

Global

Exporters

World-class Manufacturers

Markets Local

Domestic

MNC Players

Local Manufacturing

Global

Needs for Business Excellence

World Class Business Processes World Class Suppliers

World Class Customers / Buyers

Requirements of Excellence
Genuine improvement, without slipping - External Quality (Indicators: Rpt sales, warranty returns, complaints) - Internal quality (Defect free processes, defect rates, error rates ) - Dependability (OTIF delivery to cust., on-time arrival from suppliers) - Resources use (Eliminating waste, non-value adding Activities) Flexibility (respond quickly to customer needs, concept- to- customer
time to bring new product, order lead times etc.

H R Improvement (Employees, Suppliers, Customers ) Innovation (Always advancing in products and process technology) Environmental soundness (Operations w/o damage to environ) Financial results (Sustaining RoI favorable to all fin. Stakeholders)

World Class Suppliers

SCM is viewed as key element by WCM Key considerations for choosing suppliers
Quality of product or services, On time delivery, Flexibility, location Price Product or service changes Reputation, and Financial stability

Suppliers evaluated periodically.

World Class Customers

Manufacturers themselves need to be WC Customers to attract & maintain the WC sources of supply Characteristics of good customers - beneficial to both partners
Awareness of their suppliers needs Record keeping of promises made Willingness to share plans and information with suppliers Willingness to explore process and product improvement Providing quick response to problems raised by suppliers Feedback from key suppliers and action when required

Required Attitude Changes for WCM

From
Little boxes (fragmented view) Complacency Manufacturing as a Cost Centre Top management as a roadblock Inventory as an asset It is not my job Vertical communication in organization Competitiveness Manufacturing as a Strategic Resource Top management as a leader Inventory as a liability It is everyones job. Open, Horz. and Vertical communication

To
The big facture (holistic view)

Just meet the goal, balance for next time

I am not allowed to.. Not invented here

Improve day by day

I am encouraged to. Use if it works; learn from others

To compete successfully in a global business, key strategic issues to be addressed effectively :

Cost-quality improvement through coordinated manufacturing and

through concurrent engineering

( e.g. JIT, SCM, Over-all Quality Improvement) Shortening Operating Cycle (i e. Cash to-cash)

After-sales customer support (spares, service, add-on products)

Shortening design cycle to match shortened PLC Global sourcing, flexible mfg. at multiple plants

& efficient distribution

Globally coordinated R&D ( e.g. Toyota )

Views of Diff. Scholars on WCM

Schoneberger (1982) Hall (1987) Gunn Maskell (1991) Shingo (1981) & Ohone

Schonbergers Model of WCM

Richard Schonberger
Author of 1982 book Japanese Manufacturing Techniques, which set off the Lean-manufacturing era in U.S. The term World Class Manufacturing was coined by Dr. Richard Schonberger, then a professor Authored World Class Manufacturing : Lessons of Simplicity Applied in 1986 to extend and universalize the concepts.
Toyota Production System was the basis of these concepts

Author of five other books on lean topics, is president of his own management development/advisory company based in Bellevue, Washington

WCM : The Lessons of Simplicity Applied

Tells the success stories of nearly 100 American corporations that have adapted JIT and TQC strategies Examines the concrete, specific steps used by these top cos. and how they can be implemented in any industry today Identifies key elements of implementation production organization and process, the quality improvement program and vendor relations Includes Schonberger's 17-point action agenda to guide innovators toward manufacturing excellence

Schonbergers Framework
Dr. Schonbergers definition of WCM

Becoming world class is continually and rapidly improving in the eyes of the customer
In the eyes of customer means Ever high quality Ever lower cost Ever quicker response Ever greater flexibility

Schonbergers 3 pillars
Employee Involvement & Cross Functional Approach
Total Preventive Maintenance (TPM) Comprehensive maintenance activity to be carried out by operator (the owner) and not only by maintenance specialists to ensure zero breakdown of equipment Comprises of 3 chief elements
Regular maintenance (housekeeping) Periodic overhauls (pre-failure replacement) Zero tolerance of deficiencies

Just In Time (JIT) Smaller the lot, the better it is Parts are produced only as needed, fed to next operation only when needed : Pull system Associated Techniques like Cellular Manufacturing Leads to shorter manufacturing cycle times, streamlined workflow, reduction in WIP inventory

Total Quality Control (TQC) Do it right the first time Makes quality every operators concern and responsibility Results in job enlargement Savings on labor and raw materials, fewer quality inspectors, fewer rework hours and less material wastage Large savings through elimination of hidden costs Compliance, Inspection, Quality measures, fail safe methods, Worker participation

Schonbergers Framework contd.

All three pillars are related
JITs stress on production efficiency leads to less tolerance for breakdowns TPM precedes the implementation of JIT Like TQC, TPM requires focus broader than the function and involvement of all employees

JIT

TQC
17 principles of WCM fall into eight categories

TPM

17 Point Action Agenda

8 Categories
General Design Operations Human resources Quality and process improvement Information for operations and control Capacity Promotion Marketing

Get to know the customer

Cut work in process (WIP)

Cut flow time (manufacturing cycle time)

Cut setup and changeover time

Cut flow distance and space

Increase the make/deliver frequency for each required item

Make it easy to manufacture the product without error Record and retain production, quality, and problem data at workplace

Cut number of suppliers to a few good ones

Cut number of part numbers

Arrange the workplace to eliminate search time

Cross train for mastery of more than one job

Assure that line people get first crack at problem solving before staffexperts

Seek to have plural instead of singular workstations, machines, cells, and lines for each product

Look for simple, cheap and movable equipment

Maintain and improve existing equipment and human work before thinking about new equipment

Automate incrementally, when process variability cannot otherwise be reduced

Case Study: CalComp*

Company Overview 30- yr old manufacturing co. when

Schonberger was hired as consultant in

1988 100+ computer graphics products

Market Leaders in plotters, digitizers and

displays Challenges Increased price competition
Changing market direction
*World Class Manufacturing Proves First-Class Success, David Schlotterbeck

Drivers for WCM

Was losing ground to its competitors in the computer graphics equipment business Need to lower the cost and ship thousands of plotters a year Inventories- no longer considered to be Assets Design Changes -> Obsolete inventory Defective products -> Huge amount of scrap Need for JIT deliveries Total Organization commitment necessary

Key Outcomes*
THEN
500 3100 $200mn No. of suppliers No. of employees Annual Revenue Unit Volume shipped Cost of critical product

NOW
50-100 2700 $400mn 5 times -38%

*articles.latimes.com/1988-05-09/business/fi-1573_1_class-manufacturing

HALL 1987
Mfg. Excellence through combination of several approaches Value-added manufacturing, (means - do nothing that does not add value

to the product or to the customer)

Continuous improvement manufacturing, which suggests that every aspect of manufacturing is dedicated to making it better - in ways, great and small. Just-in-time (JIT) / Total quality control.

Halls framework of Value-added Manufacturing (1987)

JIT Manufacturing

Total Quality

Total People Involvement

Take a broad view of operation

Make problems visible to everyone. Improve operations before spending on new plant and equipment.

Keep it simple.

Flexibility.

Gunns Model
Total Quality Control [TQC]
Computer Integrated Manufacturing [CIM] Just in Time [JIT]

3 Pillars of WCM

Maskell (1991)
World Class Manufacturer : A firm which continues to excel in manufacturing and thereby dominates the world market

Manufacturing Excellence
World-Class Manufacturer - Maskell, 1991

Maskells model

Workforce Management

New approach to Product Quality

Flexible approach to Customer Requirements

JIT Production Techniques

Maskell on Workforce management

Requires fundamental changes in style and philosophy New approaches to people management: Transfer of responsibility Education and cross-training Problem-solving and quality circles

Ohno & Shino : Creators of WCM

World-Class manufacturing was developed largely by Taiichi Ohno - who rose from foreman to VP at Toyota, & Shigeo Shingo - an Industrial Engineering consultant.

Goal of WCM :
To bring manufacturing closer to the market.

Ohnos View of the Essence of WCM

Order
Time Line

Cash

Ohnos simple definition of WCM

All we are doing is looking at the time line from the moment the customer gives us an order to the point when we collect the cash. And we are reducing that time line by removing the non-value added wastes.

Shigeo (1981)

7 Wastes & their elimination methods

Waste Type 1. Overproduction 2. Waiting 3. Transportation 4. Waste of processing itself 5. Waste of stocks 6. Waste of motion 7. Making defective parts Elimination Method Reducing set-up time, Synchronizing quantities and timing between processes, etc Synchronizing workflow as much as possible, balancing uneven loads, etc. Redesigning layouts to make transport and handling unnecessary. Need assessment of product and process. Reduce set-up times, and lead times by synchronizing workflows. Study motion for economy and consistency. Prevent defects to eliminate inspection

Thank You