world class manufacturing, Lean guide

8/12/2019 world class manufacturing, Lean guide

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CHAPTER-2

WORLD CLASS MANUFACTURING

AN OVERVIEW


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Towards 21st Century

management of mfg. companies Mode

i-Management by Edict

ii-Management byprocedure

iii-Management by

Policies

iv-Management byPrincipals

Assessment

Inconsistent,wasteful

Inconsistent\quicker,wastefulof talent

High level wisdom,limits

empowerment

Customer focused,employee

driven,data based


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Customer based principals

1-Team up with customers,organize by families ofcustomers to products

2-Capture and apply customer,competitive and

best practice information 3-Dedicate to continual,rapid improvement in

quality,response time,flexibility and value

4-Frontline employees involved in change andstrategic planning

5-Cut to few best components,operations and

suppliers


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GLOBAL MARKET

Markets are becoming more global in nature

Consumer demand is more homogenized oninternational basis

An international business organization is a firm thtengages in cross-border transactions

When operating in global market,a traditional

company is at a competitivedisadvantagebecause of inadequate

products,wrong scale of operations,wrong way to

produce and wrong way to market its products


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GLOBAL MARKET(contd.)

This has resulted in emergence of following

1-Multinational corporation-is a firm withextensive involvement in international business

2-Global companyis a firm that integratesoperations from different countries,considersworld s single market

3-Transnational company is a firm that seeks tocombine the benefits of global scale efficiencieswith benefits of local responsiveness


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GLOBAL MARKET(CONTD.)

The world wide customers evaluate quality ofproducts\services from various dimensions such asperformance,features,reliability,serviceability,durability,appearance ,customer service and safety

This calls for improvement in products\services tomeet the expectations of customer

Companies who have excelled on the internationallevel are referred as World class companies

World class company means that each product

\service would be considered best in class by itscustomers.


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BECOMING WORLD CLASS

World class performance comes from world classpractice,which is created by world class

management

Quality is no longer viewed as an act of faith butas a contributor to business results

In going beyond quality ,the focus should provide

,new challenges and new targets and reinforce

what has already been achieved


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BECOMING WORLD CLASS

(CONTD.) QUALITY MATURITY PHASES-

1-Management decides they need quality

2-Management learns\talks about quality

3-Quality begins to be seen as a reality 4-Embedding the quality process

5-CEO establishes benchmarks from externalsources and drives the organization

6-Quality process and business objectives getintegrated

7-The company has become lean,fast and capable.means World class


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GLOBALISATION OF

PRODUCTION

Objectives 1-Reduce costs

2-Reduce risks

3-Improve supply chain

4-Provide better goods and services

5-Attract new markets 6-Learn to improve operations

7-Attract and retain global talent


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WORLD CLASS

MANUFCTURING Factors affecting global business conditions

1-Reality of global competition

2-Quality,customer & cost challenges

3-Rapid expansion of advanced manufacturingtechnology

4-Continued growth and importance of service

sector 5-Scarcity of production resources

6-Social responsibility issues


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Global competition reality

India,s liberalized economic policy started in 1992

Means Liberalization,Privatization & globalization

Indian manufacturers face tough competition from

foreign companies Also inflation,fluctuating currency,turbulent

interest rates,volatility in international stock

market,huge national debts of manycountries,trade imbalance etc have createdcomplex financial conditions in global businesses

Global business in future will have the objectiveof perfect product & service quality


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TQM IN WORLD CLASS

MANUFCTURING Many small\large companies have adopted total

quality management as a way of life

They focus on customers needs , and structure

their organization to deliver to these needs Organization culture gets changed to achieveperfect quality

To respond to customer,s needs ,many firms hveadopted TQM,ISO 9000 and JIT manufacturing toensure reduced inventory costs and flexible

operations


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AUTOMATION IN

PRODUCTION\SERVICEOPERATIONS

i-Computer aided design(CAD)-Specializedsoftware\hardware for design of products

ii-Computer aided manufacturing(CAM)-

Translation of CAD information in automatedproduction machinery

iii-Flexible manufacturing systems(FMS)

Computers give instructions,robots handle partsand materials\machines setting are changedautomatically to produce different products


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Automation in production\service

operations(contd.)

iv-Automated storage and retrieval

systems(ASRS)-Computer controlled

warehouses.Includes automatic placement

\removal of parts as also automatic transportationof parts

v-Automatic identification system(AIS)-Bar

coding,radio frequency\optical characters aredesigned to present data and are read by scanners

that transmit data to computers


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ISSUES

1-Growth of service sector-Service andmanufacturing sectors are inter-related

2-Scarcity of production resources-Scarcity ofvarious raw materials,personal skills require

judicious allocation of resources

3-Social impacts

i-Environmental impact-needs concern aboutabout waste disposal,air\water\ground pollutionetc

ii-Employee impact-Labor shortages,state\federallaws etc require development of fair treatment


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GLOBAL COMPETITIVENESS

Competitiveness can be defined as the long termviability of firm and is also measured by itsmarket share or its profitability

Competitiveness of a nation in the sense of itsaggregate competitive success in all markets

Distinctive\Core competencies represent

competitive advantage in capturing markets Examples of Distinctive\Core competency are

automated production

technology,skilled\dedicated work force,ability tobring new products in production,talented workforce etc


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Competitive priorities of

Manufacturing

1-line production costs-Redesign of products,new

production technology,increased rate of

production,Reduction of scrap,reduction of

inventories 2-Delivering performance-higher finished goods

inventory,Faster production rates,Quicker

shipping methods,realistic promises,Better controlof production orders,Better information system


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manufacturing(contd.)

3-High quality product\Services-improve

product\services appearance\malfunction or defect

rates\performance and function,wear,Endurance

ability,after sales service 4-Customer service and flexibility-Change

production process,use of CAD\CAM,reduction of

work through JIT,increase in production capacity


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TOP COMPETITIVE

PRIORITIES

1-Conformance quality 2-Product reliability

3-On-time-delivery 4-Low price

5-Fast delivery

6-Performance quality

7-Speedy new product introduction


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RECENT TRENDS

Trends which demand considerable attention inbusiness since they influence planning anddecision making .Many are related to globalcompetition and the impact it has on

manufacturing firms

1-GLOBAL MARKET PLACE-WTO led to anagreement among member nations to open theireconomies,reduce tariffs and subsidies ,which hasresulted in level of competition throughout theworld


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RECENT TRENDS(contd.)

2-OPERATIONS\MANUFACTURINGSTRATEGY-More and more manufacturing arenow realizing the importance of operationsstrategy and relating the same to overall business

strategy

3-TOTAL QUALITY MANAGEMENT-Here theentire organization is committed\involved incontinuous improvement of goods andservices.Key features are Team approach,problemsolving etc


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RECENT TRENDS (contd.)

4-TIME REDUCTION-Time reduction is beingachieved in processing,informationretrieval,product design and response to customercomplaints

5-TECHNOLOGY-Technological advances haveled to new products and processes.Computertechnology applications include Productdesign,product features,process singtechnology,information processing andcommunications


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RECENT TRENDS (contd.)

6-FLEXIBILITY-The ability to adaptquickly to changes in the mix of products

demanded and in product design has

become a major competitive strategy

7-WORKER INVOLVEMENT-A key to

worker involvement in the use of teams ofworkers ,who solve problems and make

decisions on a consensus basis


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8-RE-ENGINEERING-Reengineeringfocuses on improving processes such as

steps required to fill a customer,s request

9-ENVIRONMENTL ISSUES-World class

producers adopt the policy of

environmentally responsiblemanufacturing means reducing

waste,pollution control,waste disposal etc


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10-CORPORTE DOWNSIZING-in order to facecompetition and improve profits,world class

producers are reducing their Labour force

11-SUPPLY CHAIN MANAGEMENT-Toremain competitive ,the world class producers areconcentrating in managing supply chain efficiently

12-LEAN PRODUCTION-Lean productionsystems are those that use minimal resources toproduce high volume\high quality \high varietygoods


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GLOBAL CORPORTIONS

Characteristics of Global corporation

i-Facilities\plants are located world wide

ii-Components\parts\services are sourced on a

global basis iii-Global product design\process technology are

used

iv-Process technology is standardized v-Demand of products is considered world wide

vi-Logistics\Inventory control systems are global

in nature


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REQUIREMENT OF

EXCELLENCE

i-EXTERNL QUALITY-Value added

performance exceeding customer

expectations.Means repeat sales,warranty return

rates,independent customer satisfactionsurveys,complaints,service wait time etc

ii-INTERNAL QUALITY-Defect free

processes,means yields,defect rates,errorrates,process capabilities ,percentage of processes

with fail safe mechanisms\procedures


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Requirement of

excellence(contd.)

iii-DEPENDIBILITY-Ensure adherence to

promise,means on-time delivery to

customer,timely deliveries from suppliers

iv-RESOURCE USE-Eliminate waster and non-value added steps,means labour productivity

ratio,inventory turnover,output rates

v-FLEXIBILITY-Ability\response to customerchanges quickly,means time to bring new

product,customer order lead time,setup times etc


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Requirement of

excellence(contd.)

vi-HUMAN RESOURCE IMPROVEMENT-

Employees,customers,suppliers are the most

important and valuable assets,means effective

training,suggestion schemes,attendance rates etc vii-INNOVTION-Advancing in the application of

product\process technology without waste,means

time to market,product feature comparisons withcompetitors,number of patents ,percentage of

product line turnover


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Requirement of

excellence(contd.)

vii-ENVIRONMENTAL SOUNDNESS-Business

operations without damage to the

environment.Means levels of

effluents\emissions,recycling percentage,accidentrate etc

viii-FINANCIAL RESULTS-Rate of return

ensuring satisfaction by Financialsupporters.Means Profit & Loss

statement,financial ratios,trends on actual costs


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Comparison of performance

Five ways to make comparisons

1-STANDARDS-Means comparison withaccepted norms

2-PRIOR PERFORMANCE-Past internally datacan be complied

3-CUSTOMER EXPECTATIONS-External

performance measurement 4-SIMILAR OPERATIONS-Comparisons with

world class competitors

5-ULTIMTE STANDATDS-Set the ultimate goalof Zero error standard


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Factors of excellence of world

class companies

i-Strategy & culture

ii-Fix new skills amongmanagers\executives

iii-Creativity and innovation iv-Adaptive to innovative changes

v-Customer\employee orientation vi-People oriented recognition\reward

system


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Factors of excellence of world

class companies(contd.) vii-Team work,group activities,employee

empowerment

viii-Transformation oriented leadership-Leadersled & inspire change

ix-Belief in quality,discipline and resultorientation

x-Prevention orientation and belief in neverending improvements (Kaizen)

xi-Total quality management orientation


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The path to becoming world classDrive performance using people\technology

Leadership defines and communicates thegoals\tasks

Employees must be empowered to apply their skillsfor efficient operations

Technology is the means to transform raw materials

into saleable products.Technology supported with proper procedures and

trained\motivated personnel can ensure success


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BUSINESS DRIVERS

Things which drive improvements

i-Quality-Process capability\performanceindices and refers to product which meets

customers needs ii-First pass first quality-Refers to making

product right first time

iii-Throughput-Ensure efficient productioncycle time


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Time based competition Using JIT(lean manufacturing) for time based

competition

BENEFITS

i-Customers will pay for quick response.Supplierswill be benefited with fast delivery.Ensures fastergrowth and greater market share

ii-The re-engineered processes increaseproductivity,high quality & costs as comparable tothe competitors

i i b d


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Becoming a time based

competitors

i-It focuses on processes & not functions

ii-Managers are evaluated and rewarded on the

basis of their time metrics

iii-Just in Time is the key to speed on the shopfloor

iv-Reengineering based on JIT concept is the key

to speed in all the firm,s processes.Reengineering

is the engine of Time based competition


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WORLD CLASS SUPPLIERS

Choosing suppliers-While

selecting,flexibility,location,price,product\

service changes,reputation and financial

stability re key considerations

Evaluating sources of supply-must be

evaluated periodically onprice,speed,responses to changes

WORLD CLASS


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WORLD CLASS

SUPPLIERS(contd.)

Supplier audits-periodic audits of suppliers

provide a means of keeping up-to-date,suppliers

production\service,quality,delivery issues etc

Supplier certification-supplier certificationexamines the policies\capabilities.If supplier

exceeds the expectations,they are certified as long

term relationship suppliers and sometimes calledWorld class suppliers


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Supplier partnership World class suppliers are viewed as partners of

world class manufactures and build long termrelationship,which could lead to improvedcompetitiveness in

i-Cost reduction in purchase\production costs

ii-Reduction in transportation\inventory costs

iii--Improvement in product design\quality\newproducts\processes

iv-Reduction in throughput time

v-Improvement in customer satisfaction

WORLD CLASS


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WORLD CLASS

CUSTOMERS(BUYERS) World class customers(buyers) are characterized

by seven drivers of partnering with suppliers 1-Excellent quality

2-Timeliness

3-Flexibility

4-Superior communication

5-Continuous improvement 6-Collaborative attitude

7-Trust

Ch t i ti f d


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Characteristics of a good

customer towards supplier i-Awareness \attractiveness to their suppliers

needs ii-Record of keeping promises

iii-Willingness to share plans\information withsuppliers

iv-Willingness to explore process\product

improvement v-Solving suppliers problems expeditiously

vi-Active feedback from suppliers and taking

corrective action,wherever required

Benefits achieved by being world


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y g

class customers in supplierpartnership

i-Cost saving-Better communication with

suppliers lowers administrative costs ii-Time saving-By giving early

information,suppliers lead time can be reduced

iii-Better products\Processes-Based on suppliersexperience\expertise,he can offer better

products\Processes

iv-Improved customer organization andprofessional skills-By spending time withsuppliers,customers learn new communicationskills\aspects of their organization

T d l b l b i


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Today,s global business

conditions For developing business strategy ,it is essential to

know the factors affecting today's global businessconditions

i-Reality of global competition

ii-Quality,customer service & cost challenges ofthe supplier firm

iii-Rapid expansion of advanced productiontechnology

iv-Scarcity of production resources

v-Social-responsibility issues



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production #-Low production costs

#-Fast and on-time delivery

#-High quality product\services

#-Customer services and flexibility

After setting competitive priorities

,operations strategy must determine the required

production system needed to provide the priorities

for the product\services

Performance of world class


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manufacturers

Areas of production\operation management

relevant to achieve competitive advantage

1-Manufacturing\operations strategy-

Requires long term business plans such spersonnel training & development,market

development,new product\servicedevelopment,high tech. Production

process,R&D



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manufacturers Characteristics of world class producers

i-Customer first

ii-Introduce new products\services faster

iii-Ensure Total Quality Management iv-High labour productivity\Low production costs

v-Shop globally for supplies

vi-lean\flexible organization with balancedinventory

V-Develop specialized \focus production facilities

vi-Encourage strategic alliances\joint ventures to



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manufacturers(contd.) 2-Forecasting in operations management-

Forecasting experts maintain sophisticatedcomputer software and get data such as marketresearch,industry trade association data etc to

ensure best long range estimate of sales ofnew\existing products in global market andmonitor performance of forecasts

The effective forecasting of productioncapacity,size of work force,quantity of materials

purchased ,inventory levels and working capital

requirement drives a closely managed productionplanning system



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manufacturers(contd.) 3-Designing\Developing products and

production processes-World class producers planand design their production processes withspecific capabilities that are matched with the

competitive priorities of their business strategies High product quality,high production

flexibility,low product cost and high customer

service are the major strengths.To achieve theyuse various technologies such as usingCAD\CAM,continuous improvement,improving

flexibility & reducing costs by redesigningproduction processes\doing automation etc


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manufactures(contd.) 5-Long range capacity planning and facility

location-World class producers carry out longrange business planning considering expectedchanges in product life cycle and involve world

wide search for location of Plants 6-Facility Layout-World class producers strive

for flexibility in their layouts ensuring change in

production rates\designs quickly and useAutomated Layout Design Program,ComputerizedRelationship Layout Planning,Computerized

Relative allocation of facilities techniques forlayout designing


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manufacturers(contd.) 10-Shop floor planning and control in

manufacturing-In this type of production,worldclass producers have effective MRP-II systems in

place which provide near real time information for

companies,their suppliers\customers.These

systems facilitate meeting customer delivery

promises,optimal loading of shops,low productioncosts and high product quality



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manufacturers(contd.) 11-Planning and scheduling operations-World

class producers offering services have adoptedadvanced\well known planning,analyzing andcontrolling approaches and have recognized the

unique properties of service operations and havedeveloped novel management approaches forservice operations

12-Just In Time manufacturing-Elimination ofwaste,enforced problem solving,building teamwork,TQM,parallel processing,Kanban production

control and JIT purchasing are essential in worldclass manufacturing

Pl



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manufacturers(contd.) 13-Supply Chain Management-World class

producers are forming partnership with suppliersto expedite production of products of perfectquality and use computers for solving complicated

logistic related issues 14-Productivity,Team work and

Empowerment-World class producers hire

workers who have problem solving abilities andtrain them in multiple skills.Workers are educatedand empowered so that they can work in teams to

solve production problems and respond tocustomer needs also.



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manufacturers(contd.) 15-Quality Management-World class

manufacturers are committing tremendousresources to put in place TQM program aimed at

continuous quality improvement

16-Quality Control-World class companies have

comprehensive proactive total quality

management programs with specific projectsaimed at improving quality to meet customer

expectations



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e o a ce o wo d c ass

manufacturers(contd.) 17-Maintenance Management and Reliability-

World class producers give much of responsibilityfor repairs and preventive maintenance to workers

and they are made to feel that they own machines

and ensure avoid major breakdowns by ensuring

regular preventive maintenance.They also

implement JIT system to increase flexibility inproduction and implement a sophisticated

preventive maintenance program

Path of world class


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Manufacturing i-Fewer suppliers

ii-Focused factories

iii-Simplification & variety reduction

iv-Scheduling to a rate of production v-Fewer storage racks

vi-Frequent deliveries by suppliers

vii-Smaller manufacturing plants viii-Minimum material handling

ix-Less paperwork

x-Fewer inspectors

World Class manufacturing


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g

Strategy The world class companies are required to build

an interface between marketing andmanufacturing,and follow actions such as

i-Invest more in R&D,emphasize less on short

term payoff. ii-Improve manufacturing capability by investing

in people\equipments.

iii-Remove communication barriers.

iv-Labor force is to be murtured.

v-Build quality at design stage,emphasize onprocess innovations.


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World Class Service Delivery Characteristics-Service excellence,Delight

customers,Expand customer expectations to alevel, competitors can not fill

Service quality-Raises customer

expectations,seeks challenges,improvescontinuously

New technology-Source of first mover to gain

advantage

Work force-Innovative,create procedures

First line management-Is listened to by topmanagement as a source of new ideas


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World Class Performance(contd.) Strategy on the road to Excellence-

Manufacturing strategy starts with anassessment of where a firm is now and avision of where it wants to be in future inkey indicators such as on-time delivery tocustomer requirements,manufacturing lead

time,inventory turns,quality,new productintroduction time,supplierrelations,employee involvement ,flexibility


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World Class Performance(contd.) Vision-Answer questions with What-if for a

firm looking forward 3\5 years hence i.e. reducemanufacturing cycle time by 70%,quality costs arereduced by 25% etc

Control-Having assessed its strengths andweaknesses and defined its vision,the companymust gain control over the current environment by

developing process to ensure integrated planningfrom top to bottom.Requires education andtraining to all employees in systems,policies and

procedures to support the user and process.


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World Class Performance(contd.) Simplification-Ensure continuous

improvement through team work on

changeover times,factory layout,restrictive

job classifications,supplier relations etc Automation-Computer Integrated

Manufacturing,MRP-ii,JIT,Total Qualitycontrol,Focused factories etc are supportive

of world class factories

World Class Companies in 21st


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Century Previous Decade(1990-2000)-Competitive

priorities were Low price,New productintroduction speed,Quality,Delivery speed,Productreliability

Present Decade(2000 onwards)-Competitivepriorities high quality at low price,means highquality,timely availability and removal of non-

value adding wastes.requires finding externalpartners ,who can perform valued function,withadvanced communications and efficient logistics


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Customer focused Principals 1-Team up with customers,organize by families of

customers to products

2-Capture and apply customer,competitive and

best practice information

3-Dedicate to continual,rapid improvement in

quality,response time,flexibility and value

4-Frontline employees involved in change andstrategic planning-to achieve unified purpose

Customer focused


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principals(contd.) 5-Cut to the few best components,operations and

suppliers 6-Cut flow time,distance,start up,and changeover

times all along the chain

7-Operate close to customer,s rate of use ordemand

8-Continuously enhance human resources throughcross training,job,and career path rotation andimprovements in health,safety and security

Customer focused


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principles(contd.) 9-Expand the variety of rewards ,recognition,pay

and celebration-to match the expanded variety ofemployee contribution

10-Continuously reduce variation and mishaps

11-Front line teams record and own process dataat the work place

12-Control root causes of cost andperformance,thereby reducing internal transactionsand reporting,simplify external communications

Customer focused


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principles(contd.) 13-Align performance measures with universal

customer requires-quality,speed,flexibility andvalue

14-Improve present equipment and human work

before considering new equipment and automation 15-Seek simple ,flexible,moveable,low

cost,readily available equipment and work

facilities-in multiples,one for eachproduct\customer family

16-Promote,market and sell your organization,s

increasing capability and competence-everyim rovement made.


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world class manufacturing, Lean guide