World Class Manufacturing

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In this presentation, we will discuss about world class manufacturing focusing on customer based principals, global markets, achieving world class, global competition reality, importance of automation in production and operations. We will also talk about global competitiveness, competitive priorities of manufacturing, recent trends, various attributes of excellent companies, overview on various world class suppliers, buyers, manufacturers. Present scenario of global business conditions, performance of world class manufacturers, world class service delivery and customer focused principals will also be discussed.
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World Class Manufacturing

  1. 1. CHAPTER-2• WORLD CLASS MANUFACTURING• AN OVERVIEW
  2. 2. Towards 21st Century management of mfg. companies• Mode • Assessment• i-Management by Edict Inconsistent,wasteful• ii-Management by Inconsistentquicker,wasteful procedure of talent• iii-Management by High level wisdom,limits• Policies empowerment• iv-Management by Principals Customer focused,employee driven,data based
  3. 3. Customer based 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 and strategic planning• 5-Cut to few best components,operations and suppliers
  4. 4. GLOBAL MARKET• Markets are becoming more global in nature• Consumer demand is more homogenized on international basis• An international business organization is a firm tht engages in cross-border transactions• When operating in global market,a traditional company is at a “competitive disadvantage”because of inadequate products,wrong scale of operations,wrong way to produce and wrong way to market its products
  5. 5. GLOBAL MARKET(contd.)• This has resulted in emergence of following• 1-”Multinational corporation”-is a firm with extensive involvement in international business• 2-”Global company”is a firm that integrates operations from different countries,considers world s single market• 3-”Transnational company” is a firm that seeks to combine the benefits of global scale efficiencies with benefits of local responsiveness
  6. 6. GLOBAL MARKET (contd.)• Demand for products is considered on a worldwide .This results into higher economies of scale and lower costs.• Logistics and inventory control systems are global in nature• Within the global arena ,competition has become intense due to greater number of players and existence of opportunities
  7. 7. GLOBAL MARKET(CONTD.)• The world wide customers evaluate quality of productsservices from various dimensions such as performance,features,reliability,serviceability,dura bility,appearance ,customer service and safety• This calls for improvement in productsservices to meet the expectations of customer• Companies who have excelled on the international level are referred as “World class companies”• “World class company “means that each product service would be considered “best in class” by its customers.
  8. 8. BECOMING WORLD CLASS• World class performance comes from world class practice,which is created by world class management• Quality is no longer viewed as an act of faith but as 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
  9. 9. BECOMING WORLD CLASS (CONTD.)• QUALITY MATURITY PHASES-• 1-Management decides they need quality• 2-Management learnstalks about quality• 3-Quality begins to be seen as a reality• 4-Embedding the quality process• 5-CEO establishes benchmarks from external sources and drives the organization• 6-Quality process and business objectives get integrated• 7-The company has become lean,fast and capable .means “World class”
  10. 10. 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
  11. 11. WORLD CLASS MANUFCTURING• Factors affecting global business conditions• 1-Reality of global competition• 2-Quality,customer & cost challenges• 3-Rapid expansion of advanced manufacturing technology• 4-Continued growth and importance of service sector• 5-Scarcity of production resources• 6-Social responsibility issues
  12. 12. 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 many countries,trade imbalance etc have created complex financial conditions in global businesses• Global business in future will have the objective of “perfect product” & “service quality”
  13. 13. TQM IN WORLD CLASS MANUFCTURING• Many smalllarge 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 achieve perfect quality• To respond to customer,s needs ,many firms hve adopted TQM,ISO 9000 and JIT manufacturing to ensure reduced inventory costs and flexible operations
  14. 14. AUTOMATION IN PRODUCTIONSERVICE OPERATIONS• i-Computer aided design(CAD)-Specialized softwarehardware for design of products• ii-Computer aided manufacturing(CAM)- Translation of CAD information in automated production machinery• iii-Flexible manufacturing systems(FMS)• Computers give instructions,robots handle parts and materialsmachines setting are changed automatically to produce different products
  15. 15. Automation in productionservice operations(contd.)• iv-Automated storage and retrieval systems(ASRS)-Computer controlled warehouses.Includes automatic placement removal of parts as also automatic transportation of parts• v-Automatic identification system(AIS)-Bar coding,radio frequencyoptical characters are designed to present data and are read by scanners that transmit data to computers
  16. 16. ISSUES• 1-Growth of service sector-Service and manufacturing sectors are inter-related• 2-Scarcity of production resources-Scarcity of various raw materials,personal skills require judicious allocation of resources• 3-Social impacts• i-Environmental impact-needs concern about about waste disposal,airwaterground pollution etc• ii-Employee impact-Labor shortages,statefederal laws etc require development of fair treatment
  17. 17. GLOBAL COMPETITIVENESS• “Competitiveness” can be defined as the long term viability of firm and is also measured by its “market share” or its “profitability”• “Competitiveness” of a nation in the sense of its aggregate competitive success in all markets• DistinctiveCore competencies represent competitive advantage in capturing markets• Examples of DistinctiveCore competency are automated production technology,skilleddedicated work force,ability to bring new products in production,talented work force etc
  18. 18. 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 control of production orders,Better information system
  19. 19. Competitive priorities of manufacturing(contd.)• 3-High quality productServices-improve productservices appearancemalfunction or defect ratesperformance and function,wear,Endurance ability,after sales service• 4-Customer service and flexibility-Change production process,use of CADCAM,reduction of work through JIT,increase in production capacity
  20. 20. 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
  21. 21. RECENT TRENDS• Trends which demand considerable attention in business since they influence planning and decision making .Many are related to global competition and the impact it has on manufacturing firms• 1-GLOBAL MARKET PLACE-WTO led to an agreement among member nations to open their economies,reduce tariffs and subsidies ,which has resulted in level of competition throughout the world
  22. 22. RECENT TRENDS(contd.)• 2-OPERATIONSMANUFACTURING STRATEGY-More and more manufacturing are now realizing the importance of operations strategy and relating the same to overall business strategy• 3-TOTAL QUALITY MANAGEMENT-Here the entire organization is committedinvolved in continuous improvement of goods and services.Key features are Team approach,problem solving etc
  23. 23. RECENT TRENDS (contd.)• 4-TIME REDUCTION-Time reduction is being achieved in processing,information retrieval,product design and response to customer complaints• 5-TECHNOLOGY-Technological advances have led to new products and processes.Computer technology applications include Product design,product features,process sing technology,information processing and communications
  24. 24. RECENT TRENDS (contd.)• 6-FLEXIBILITY-The ability to adapt quickly 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 of workers ,who solve problems and make decisions on a consensus basis
  25. 25. RECENT TRENDS(contd.)• 8-RE-ENGINEERING-Reengineering focuses on improving processes such as steps required to fill a customer,s request• 9-ENVIRONMENTL ISSUES-World class producers adopt the policy of “environmentally responsible manufacturing” means reducing waste,pollution control,waste disposal etc
  26. 26. RECENT TRENDS(contd.)• 10-CORPORTE DOWNSIZING-in order to face competition and improve profits,world class producers are reducing their Labour force• 11-SUPPLY CHAIN MANAGEMENT-To remain competitive ,the world class producers are concentrating in managing supply chain efficiently• 12-LEAN PRODUCTION-Lean production systems are those that use minimal resources to produce high volumehigh quality high variety goods
  27. 27. GLOBAL CORPORTIONS• Characteristics of Global corporation• i-Facilitiesplants are located world wide• ii-Componentspartsservices are sourced on a global basis• iii-Global product designprocess technology are used• iv-Process technology is standardized• v-Demand of products is considered world wide• vi-LogisticsInventory control systems are global in nature
  28. 28. ATTRIBUTES OF EXCELLENT COMPANIES• i-A bias for action• ii-Close to the customer• iii-Autonomy and entrepreneurship• iv-Productivity through people• v-Hands –on,value-driven• vi-Stick to the knitting• vii-Simple form,lean staff
  29. 29. REQUIREMENT OF EXCELLENCE• i-EXTERNL QUALITY-Value added performance exceeding customer expectations.Means repeat sales,warranty return rates,independent customer satisfaction surveys,complaints,service wait time etc• ii-INTERNAL QUALITY-Defect free processes,means yields,defect rates,error rates,process capabilities ,percentage of processes with fail safe mechanismsprocedures
  30. 30. 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-Abilityresponse to customer changes quickly,means time to bring new product,customer order lead time,setup times etc
  31. 31. 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 productprocess technology without waste,means time to market,product feature comparisons with competitors,number of patents ,percentage of product line turnover
  32. 32. Requirement of excellence(contd.)• vii-ENVIRONMENTAL SOUNDNESS-Business operations without damage to the environment.Means levels of effluentsemissions,recycling percentage,accident rate etc• viii-FINANCIAL RESULTS-Rate of return ensuring satisfaction by Financial supporters.Means Profit & Loss statement,financial ratios,trends on actual costs
  33. 33. Comparison of performance• Five ways to make comparisons• 1-STANDARDS-Means comparison with accepted norms• 2-PRIOR PERFORMANCE-Past internally data can be complied• 3-CUSTOMER EXPECTATIONS-External performance measurement• 4-SIMILAR OPERATIONS-Comparisons with world class competitors• 5-ULTIMTE STANDATDS-Set the ultimate goal of “Zero error” standard
  34. 34. Factors of excellence of world class companies• i-Strategy & culture• ii-Fix new skills among managersexecutives• iii-Creativity and innovation• iv-Adaptive to innovative changes• v-Customeremployee orientation• vi-People oriented recognitionreward system
  35. 35. Factors of excellence of world class companies(contd.)• vii-Team work,group activities,employee empowerment• viii-Transformation oriented leadership-Leaders led & inspire change• ix-Belief in quality,discipline and result orientation• x-Prevention orientation and belief in never ending improvements (Kaizen)• xi-Total quality management orientation
  36. 36. The path to becoming world classDrive performance using peopletechnologyLeadership defines and communicates the goalstasksEmployees must be empowered to apply their skills for efficient operationsTechnology is the means to transform raw materials into saleable products.Technology supported with proper procedures and trainedmotivated personnel can ensure success
  37. 37. BUSINESS DRIVERS• Things which drive improvements• i-Quality-Process capabilityperformance indices and refers to product which meets customers needs• ii-First pass first quality-Refers to making product right first time• iii-Throughput-Ensure efficient production cycle time
  38. 38. BUSINESS DRIVERS(CONTD.)• iii-Uptime-Ensure equipment availability at full rate• iv-Cycle time-this is the elapsed time between receiving raw materials and shipping corresponding product• The business drivers as indicated above are the elements of of an appropriate control system
  39. 39. Time based competition• Using JIT(lean manufacturing) for time based competition• BENEFITS• i-Customers will pay for quick response.Suppliers will be benefited with fast delivery.Ensures faster growth and greater market share• ii-The re-engineered processes increase productivity,high quality & costs as comparable to the competitors
  40. 40. 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 shop floor• 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
  41. 41. 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 on price,speed,responses to changes
  42. 42. WORLD CLASS SUPPLIERS(contd.)• Supplier audits-periodic audits of suppliers provide a means of keeping up-to-date,suppliers productionservice,quality,delivery issues etc• Supplier certification-supplier certification examines the policiescapabilities.If supplier exceeds the expectations,they are certified as long term relationship suppliers and sometimes called ‘World class suppliers’
  43. 43. Supplier partnership• World class suppliers are viewed as partners of world class manufactures and build long term relationship,which could lead to improved competitiveness in• i-Cost reduction in purchaseproduction costs• ii-Reduction in transportationinventory costs• iii--Improvement in product designqualitynew productsprocesses• iv-Reduction in throughput time• v-Improvement in customer satisfaction
  44. 44. 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
  45. 45. Characteristics of a good customer towards supplier• i-Awareness attractiveness to their suppliers needs• ii-Record of keeping promises• iii-Willingness to share plansinformation with suppliers• iv-Willingness to explore processproduct improvement• v-Solving suppliers problems expeditiously• vi-Active feedback from suppliers and taking corrective action,wherever required
  46. 46. Benefits achieved by being world class customers in supplier partnership• 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 productsProcesses-Based on suppliers experienceexpertise,he can offer better productsProcesses• iv-Improved customer organization and professional skills-By spending time with suppliers,customers learn new communication skillsaspects of their organization
  47. 47. Today,s global business conditions• For developing business strategy ,it is essential to know the factors affecting todays global business conditions• i-Reality of global competition• ii-Quality,customer service & cost challenges of the supplier firm• iii-Rapid expansion of advanced production technology• iv-Scarcity of production resources• v-Social-responsibility issues
  48. 48. Competitive priorities of production• #-Low production costs• #-Fast and on-time delivery• #-High quality productservices• #-Customer services and flexibility• After setting competitive priorities ,operations strategy must determine the required production system needed to provide the priorities for the productservices
  49. 49. Performance of world class manufacturers• Areas of productionoperation management relevant to achieve competitive advantage• 1-Manufacturingoperations strategy- Requires long term business plans such s personnel training & development,market development,new productservice development,high tech. Production process,R&D
  50. 50. Performance of world class manufacturers• Characteristics of world class producers• i-Customer first• ii-Introduce new productsservices faster• iii-Ensure Total Quality Management• iv-High labour productivityLow production costs• v-Shop globally for supplies• vi-leanflexible organization with balanced inventory• V-Develop specialized focus production facilities• vi-Encourage strategic alliancesjoint ventures to
  51. 51. Performance of world class manufacturers(contd.)• 2-Forecasting in operations management- Forecasting experts maintain sophisticated computer software and get data such as market research,industry trade association data etc to ensure best long range estimate of sales of newexisting products in global market and monitor performance of forecasts• The effective forecasting of production capacity,size of work force,quantity of materials purchased ,inventory levels and working capital requirement drives a closely managed production planning system
  52. 52. Performance of world class manufacturers(contd.)• 3-DesigningDeveloping products and production processes-World class producers plan and design their production processes with specific 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 they use various technologies such as using CADCAM,continuous improvement,improving flexibility & reducing costs by redesigning production processesdoing automation etc
  53. 53. Performance of world class manufacturers(contd.)• 4-Production technology-selection and management .World class producers view advanced production technology as a competitive weapon and do the following• i-Designing products to be ‘automation friendly’,standardization of partsincreasing quality of components• ii-Using CADCAM• iii-Adopting Flexible manufacturing system,automated storage and retrieval systems,automated assembly etc
  54. 54. Performance of world class manufactures(contd.)• iv-Using computer controlled machines• v-Adopting flexible production systems• vi-Adopting computer integrated system• vii-Ensure better customer service,reduced costs and improve flexibility• vii-Using automation processes with justification• vii-Training and building teams using new production technologyprocesses
  55. 55. Performance of world class manufactures(contd.)• 5-Long range capacity planning and facility location-World class producers carry out long range business planning considering expected changes 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 ratesdesigns quickly and use Automated Layout Design Program,Computerized Relationship Layout Planning,Computerized Relative allocation of facilities techniques for layout designing
  56. 56. Performance of world class manufacturers(contd.)• 7-Aggregate planning and Master Production Scheduling-World class producers develop strategies that enable them to capture increasing share of world markets and use current trends approaches to achieve increased market share,high product quality,low production costs and high customer satisfaction
  57. 57. Performance of world class manufactures(contd.)• 8-Independent demand inventory system-’Pull system’ of production planning and control and procurement through EOQRe-order level of efficient Inventory system is used• 9-Resource Requirement planning-World class producers have incorporated MRP-II and ERP system over a period of time ensuring continuous improvements towards improved productivity,lower costs and better customer service
  58. 58. Performance of world class manufacturers(contd.)• 10-Shop floor planning and control in manufacturing-In this type of production,world class producers have effective MRP-II systems in place which provide near real time information for companies,their supplierscustomers.These systems facilitate meeting customer delivery promises,optimal loading of shops,low production costs and high product quality
  59. 59. Performance of world class manufacturers(contd.)• 11-Planning and scheduling operations-World Pl class producers offering services have adopted advancedwell known planning,analyzing and controlling approaches and have recognized the unique properties of service operations and have developed novel management approaches for service operations• 12-Just In Time manufacturing-Elimination of waste,enforced problem solving,building team work,TQM,parallel processing,Kanban production control and JIT purchasing are essential in world class manufacturing
  60. 60. Performance of world class manufacturers(contd.)• 13-Supply Chain Management-World class producers are forming partnership with suppliers to expedite production of products of perfect quality 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 and train them in multiple skills.Workers are educated and empowered so that they can work in teams to solve production problems and respond to customer needs also.
  61. 61. Performance of world class manufacturers(contd.)• 15-Quality Management-World class manufacturers are committing tremendous resources 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 projects aimed at improving quality to meet customer expectations
  62. 62. Performance of world class manufacturers(contd.)• 17-Maintenance Management and Reliability- World class producers give much of responsibility for 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 in production and implement a sophisticated preventive maintenance program
  63. 63. Path of world class 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
  64. 64. World Class manufacturing Strategy• The world class companies are required to build an interface between marketing and manufacturing,and follow actions such as• i-Invest more in R&D,emphasize less on short term payoff.• ii-Improve manufacturing capability by investing in peopleequipments.• iii-Remove communication barriers.• iv-Labor force is to be murtured.• v-Build quality at design stage,emphasize on process innovations.
  65. 65. World Class Service Delivery• Characteristics-Service excellence,Delight customers,Expand customer expectations to a level, competitors can not fill• Service quality-Raises customer expectations,seeks challenges,improves continuously• New technology-Source of first mover to gain advantage• Work force-Innovative,create procedures• First line management-Is listened to by top management as a source of new ideas
  66. 66. World Class Performance• Means winning the competitive race,running fastersmarter than the competition.• Starts with through understanding of ‘current internal environment as well as its ‘strengths and weaknesses’• If Total Quality Management is not enthusiastically promotedsupported by management,it will not be able to achieve ‘Quality at source”
  67. 67. World Class Performance(contd.)• Strategy on the road to Excellence- Manufacturing strategy starts with an assessment of where a firm is now and a vision of where it wants to be in future in key indicators such as on-time delivery to customer requirements,manufacturing lead time,inventory turns,quality,new product introduction time,supplier relations,employee involvement ,flexibility
  68. 68. World Class Performance(contd.)• Vision-Answer questions with ‘What-if’ for a firm looking forward 35 years hence i.e. reduce manufacturing cycle time by 70%,quality costs are reduced by 25% etc• Control-Having assessed its strengths and weaknesses and defined its vision,the company must gain control over the current environment by developing process to ensure integrated planning from top to bottom.Requires education and training to all employees in systems,policies and procedures to support the user and process.
  69. 69. 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 Quality control,Focused factories etc are supportive of world class factories
  70. 70. World Class Companies in 21st Century• Previous Decade(1990-2000)-Competitive priorities were Low price,New product introduction speed,Quality,Delivery speed,Product reliability• Present Decade(2000 onwards)-Competitive priorities ‘high quality at low price’,means high quality,timely availability and removal of non- value adding wastes.requires finding external partners ,who can perform valued function,with advanced communications and efficient logistics
  71. 71. 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 and strategic planning-to achieve unified purpose
  72. 72. Customer focused 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 or demand• 8-Continuously enhance human resources through cross training,job,and career path rotation and improvements in health,safety and security
  73. 73. Customer focused principles(contd.)• 9-Expand the variety of rewards ,recognition,pay and celebration-to match the expanded variety of employee contribution• 10-Continuously reduce variation and mishaps• 11-Front line teams record and own process data at the work place• 12-Control root causes of cost and performance,thereby reducing internal transactions and reporting,simplify external communications
  74. 74. Customer focused principles(contd.)• 13-Align performance measures with universal customer requires-quality,speed,flexibility and value• 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 each productcustomer family• 16-Promote,market and sell your organization,s increasing capability and competence-every improvement made.
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