world cls mfg

World-Class Manufacturing

……. Suhas Rane

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 different Management 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

Global competition

Regulatory policies

Rising Customer

Expectations

Increasing input costs

What do these things mean to you?

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.

Eras of Manufacturing Process Control

• The craft system (circa 1500)

• English system of manufacture (circa 1800)

• American system of manufacture (circa 1830)

• Scientific Management (circa 1930)

• Statistical process control (circa 1950)

• Numerical control (circa 1965)

• CIM / flexible manufacturing (circa 1985)

(From filling and fitting to flexible manufacturing by R. Jaikumar)

Changing Business Goals in a Changing Environment

Growth

Turnover

Productivity

Market Diversification,Flexibility

1960 1970 1980 1990 2000Year

EVA

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

• 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 Industrial Age Business Information Age Business

Economic • Assy line production• Stable markets and suppliers • Domestic competition

• Customization of products• Fluid markets and suppliers• International competition

Organizational • Inside out • Intra-organizational Communication • Domestic reach / ambition

• Outside in• Inter-organizational communication• Global reach and ambitions

Technical • Mechanical technology • Proprietary standards • Predictable innovation

• Electronic technology• Open, inter-operable standards• Rapid unpredictable innovation

Socio-cultural • Authoritarian, hierarchical • Business task focus (MBO)• Individual responsibility

• Horizontal, team consensus• Business process focus• Team responsibility

Exporters World-class Manufacturers

Domestic MNC Players

Global

Markets

Local

Local Global

Mfrs./Competitors

Different business scenarios

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 )

Manufacturing Excellence through combination of several approaches (Hall 1987):

• 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.

Hall’s framework of Value-added Manufacturing

JIT Manufacturing

Total Quality

Total PeopleInvolvement

• Take a broad view of operation

• Make problems visible to everyone.

• Improve operations before spending on new plant and equipment.

• Keep it simple.

• Flexibility.

Hall’s Framework of “Value-added manufacturing”

1. Total Quality Control

– Begin with the customer

– Measure and track quality

– Take a broad view of quality

– Set targets for improvement

– Responsibility at the source

– Standardization

– maintains good practice and

prevents problems from recurring

– Fail-safe operations.

2. JIT Manufacturing

- Only the right materials, parts

and products, in the right place

at the right time

3. Total People Involvement

- Broad perspective

- Problem-solving atmosphere

- Employment security

- Performance measurement

Prabhala, 1994 : 5 Goals to achieve Mfg. Excellence

1. Throughput should go up.

2. Inventory should come down.

3. Operating expenses should come down.

4. Cycle time should come down.

5. Yield should go up.

Creators of WCM

World-Class manufacturing was developed largely by –

Taiichi Ohno - who rose from foreman to VP at Toyota,

and Shigeo Shingo - an Industrial Engineering consultant.

Goal of WCM :

To bring manufacturing closer to the market.

Ohno’s View of the Essence of WCM

Order CashTime Line

Ohno’s 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 Elimination Method

1. Overproduction Reducing set-up time, Synchronizing quantities and timing between processes, etc

2. Waiting Synchronizing workflow as much as possible, balancing uneven loads, etc.

3. Transportation Redesigning layouts to make transport and handling unnecessary.

4. Waste of processing itself

Need assessment of product and process.

5. Waste of stocks Reduce set-up times, and lead times by synchronizing workflows.

6. Waste of motion Study motion for economy and consistency.

7. Making defective parts

Prevent defects to eliminate inspection

Required Attitude Changes for WCM

From ToLittle boxes (fragmented view) The big facture (holistic view)

Complacency Competitiveness

Manufacturing as a Cost Centre Manufacturing as a Strategic Resource

Top management as a roadblock Top management as a leader

Inventory as an asset Inventory as a liability

‘It is not my job’ ‘ It is everyone’s job’.

Vertical communication in organization Open, Horz. and Vertical communication

Just meet the goal, balance for next time Improve day by day

‘I am not allowed to….. ‘I am encouraged to….

Not invented here Use if it works; learn from others

Required Attitude Changes for WCM ( contd.)

From

Do it ourselves

To

Core Competency

Planning is no good and not needed here Planning is useful; we must plan.

Number games True & accurate info. visibility

We know what is best for the customer The customer is always right.

Computers are an expense Computers are a competitive asset.

Data control and definitions are not important

Data is a corporate resource, to be defined and controlled effectively.

Definitions

World Class Manufacturing is a different set of concepts, principles,

policies and techniques for managing and operating a manufacturing

company.

It is driven by the results achieved by the Japanese manufacturing

resurgence following World War II, and adapts many of the ideas used

by the Japanese in automotive, electronics and steel companies to

gain a competitive edge.

It primarily focuses on continual improvement in quality, cost, lead

time, flexibility and customer service.

http://rockfordconsulting.com/wcm.htm

Definitions

http://dictionary.bnet.com/definition/world+class+manufacturing.html

A position of international manufacturing excellence, achieved by

developing a culture based on factors such as continuous

improvement, problem prevention, zero defect tolerance, customer-

driven just-in-time production, and total quality management

The capability of a manufacturer to compete with any other

manufacturing organization in a chosen market, with the aspiration of

achieving world-beating standards in all organizational aspects.

World class manufacturing encompasses the practices of total quality

management, continuous improvement, international

benchmarking, and flexible working.

A World Class Mfg. firm..

Anand Sharma, author, The perfect engine

Achieve growth in top and bottom lines and reduce trade working

capital. It has to be a multiple of industry average.

The top line (sales) should be growing at two to three times industry

average.

The bottom line (profit) should be growing at four to six times industry

average.

How do you do this? - 7 Keys

Reduce lead times

Cut operations cost

Improve business performance visibility

Speed time to market

Exceed customer expectations

Streamline out-sourcing processes

Manage global operations

The seven keys to World class manufacturing, Mapics

Reduce lead times

Cut operations cost

Improve business performance

visibility



Streamline outsourcing processes


Lower cash to cash cycle

Customer preference

SMED

Single piece flow

Low inventory

Greater flexibility

Reduce lead times

Cut operations cost


visibility





Case 1

Case 2

Sales 100 117

Material Costs 50% 50 58

Other variable costs 20% 20 23

Fixed costs 20 20 20

Profits 10 15

Case 3

Sales 100

Material Costs 47% 47

Other variable costs 18% 18

Fixed costs 20 20

Profits 15

Reduce lead times

Cut operations cost

Improve business

performance visibility





Know performance against objectives

- strategic

- tactical

Problem identification

Reduce lead times

Cut operations cost


visibility





Collaborative design

Design for manufacture and assembly

Design for logistics

Quick response

Reduce lead times

Cut operations cost


visibility


Exceed customer

expectations



Kano’s model

Delighters

Satisfiers

Dissatisfiers

Reduce lead times

Cut operations cost


visibility



Streamline out-sourcing

processes


Focus on core competence

Collaborate with best in class

Minimize capital investments

Preserve agility / flexibility

Reduce lead times

Cut operations cost


visibility





International products

Local tastes / currency/ time/ language

Global procurement /

manufacturing and sale

e-Commerce

Attributes of WCM

WCM report 2005 (SAP)

Theory of holistic management for world class performance

Quality planning

Quality Management System – ISO 9000

Supply chain management

Continuous improvement

Strategic quality planning

Customer focus

Quality control

Quality Improvement

Total organization involvement

ResultsDelighted customers

Empowered Employees

Maximisation of R.O.I.

All round performance of excellence

T.Q.M .Process

Infrastructure

Foundation

Theory of holistic management for world class performance

• Foundation: Attitude, Commitment, Culture- Customer Focus : Meets, Training, Warrant claims, - Continuous improvements: P.D.C.A. cycle, Kaizen, Q. Circles, - Strategic Quality Planning: Mission, Vision, S.W.O.T., Plan,

• Infrastructure: Good leadership, Responsiveness to market changes - Total organisational involvement: Structure, Decision making, Employees involvement, Problem solving techniques, Suggestion scheme- Supply Chain Management: M.R.P.I , M.R.P.II, Capacity

planning, Make v/s buy, Distribution channels- Quality management : ISO 9000, QS9000, ISO14000,

Tools of Holistic Management for world class performance

• Total Quality Management: - Quality Planning: Mission, Vision, Strategic planning,

Quality planning- function wise- well defined- expected output

- Quality Control: Measure the performance, controlling the critical operations,

Adherence to the quality plan- Quality Improvement: Cost of quality, JQIP, Q.C.,

T.O.C.,K.R.A., P.D.C.A.

Holistic management : The results• The delighted customers – Latent needs

• Maximization of R.O.I.- Profit*No of Working capital cycles /annum

• Empowered employees

• All round Performance: Wastage reduction, loss of orders, employees’ moral, quality products and services

Thank You

world cls mfg

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