World class manufacturing.PPT

4 Stages
 Stage I
 Stage II
 Stage III
 Stage IV

STAGE I
Stage I companies consider their
manufacturing organisation to be
internally neutral, in that its role is simply
to “make the stuff”, without any surprises.
Such companies believe that their
product designs are so unusual or their
marketing organisations so powerful that if
the product can simply be delivered to
customers, as advertised, the company
will be successful.

STAGE I (cont
Although often naïve, such a philosophy is
sometimes successful, particularly if a company is
able to find a niche in its market that protects it from
immediate competitors.
But as such companies grow, one of two things
typically happens.
Either they outgrow their niche and come up against
competitors in adjoining niches, or the niche itself
grows to the point where it becomes attractive to
other companies.

STAGE I (cont
At this point simply making the stuff is not
enough; one must also meet the cost, quality,
and delivery standards achieved by one’s
competitors.

STAGE II
Stage II companies look outward and ask their
manufacturing organisations to be externally neutral, that is,
able to meet the standards imposed by their major
competitors.
Such companies tend to adhere to industry practice and
industry standards.
They buy their parts, materials and production equipment
from the same suppliers that their competitors use, follow
similar approaches to quality and inventory control, establish
similar relationships with their workforce, and regard
technicians and managers as interchangeable parts-hiring
both, as needed, from other companies in the industry.

STAGE II
Some companies eventually reach a point, however,
where this kind of copycat behaviour no longer
seems appropriate.
If their competitive strategy is different from that of
most of their competitors, why should they follow
industry practice as regards manufacturing?
In seeking to develop a coordinated set of
manufacturing sructural and infrastructural decisions
tailored to their specific competitive strategy, such
companies evolve to Stage III.

STAGE III
A manufacturing organisation that is internally
supportive of other parts of the company.
But for a few companies even this is not
enough. It is clear that q regional airline that is
competing on the basis of flexibility will
probably want to choose airplanes that are
different from those adopted by its large
competitors; but this does not mean that it will
prevail over other small airlines that have
chosen similar equipment.

STAGE III
Success will depend on its ability to use its
equipment more effectively than its
competitors use theirs, and to exploit better
the capabilities of that equipment in other
parts of the oraganisation.

STAGE IV
Stage IV companies regard their manufacturing
organisations as externally supportive, that is,
playing a key role in helping the whole company
achieve an edge over its competitors. Such
companies are not content simply to copy their
competitors, or even to be the “toughest kid on the
block” in their own neighbourhood.
They seek to be as good as anybody in the world at
the things they have chosen to be good at – that is
world class.

HOW DO YOU KNOW IF YOU ARE
WORLD CLASS?
How does one know when one is world
class?
The obvious way is by observing how one’s
products fare in the market place and by
checking one’s cashbox.
Worldclass (Stage IV) companies tend to
grow faster and be more profitable than their
competitors.

WORLD CLASS INDICATORS
1. Having workers and managers who are so skilled
and effective that other companies are continually
seeking to attract them away from one’s
organisation.
2. Being so expert in the design and manufacture of
production equipment that equipment suppliers
are continually seeking one’s advice about
possible modifications to their equipment, one’s
suggestions for new equipment, and one’s
agreement to be a test site for one of their pilot
models.

WORLD CLASS INDICATORS (cont
3. Being more nimble than one’s competitors in
responding to market shifts or pricing changes,
and in getting new products out into the market
faster than they can.
4. Intertwining the design of a new product so closely
with the design of its manufacturing process that
when competitors “reverse engineer” the product
they find that they cannot produce a comparable
one in their own factories without major retooling
and redesign expenses.

Continually improving facilities, support
systems and skills that were considered to be
“optimal” or “state of the art” when first
introduced, so that they increasingly surpass
their initial capabilities.

This kind of behaviour does not “just happen”
by itself. In fact, in many ways it is very
unnatural behaviour in companies whose
organisational structure, staffing policies and
performance measurement and control
systems are predicated on the assumption
that an organisation should be composed of a
collection of specialists who operate within
fairly narrow job descriptions.

Such companies (stages I or II), typically
operate under a “command and control”
mentality: senior management is expected to
make the major resource allocation decisions
(with the help of staff and external experts
whenever necessary), and the role of the line
management is simply to operate the resulting
configuration of facilities, systems and
personnel in such a way that the performance
expected from them is attained.

This command and control mentality values
specialists, assumes that whatever
capabilities are lacking in an organisation can
be purchased from the outside, and considers
management’s primary task to be the orderly
assimilation, exploitation and coordination of
separate sources of expertise.

Factory location decisions are made by real
estate experts and outside consultants,
equipment decisions by engineers (the
equipment itself is designed and built by
independent equipment suppliers), the
selection of production scheduling and
inventory control systems by computer
specialists, quality systems by outside
consultants, and personnel decisions by
human resources specialists.

Whenever a particular set of worker (or
manager) skills is desired, the outside world is
combed for them.
Finally, these organisations are inherently
hierarchical, in the sense that the primary
relationships between people are vertical:
decisions (and rewards or punishments) flow
down and information flows back up.

World class stage IV companies dislike being
dependent on outside organisations for
expertise. They want to grow their own
people, equipment, and systems, but they
also respect the capabilities of others.
Therefore they continually scour the outside
world – and particularly their best competitors
– to ensure that they are on top of all the
newest ideas and approaches.

They strive to build strong horizontal
relationships throughout the company, so that
product design decisions are closely coupled
with manufacturing process decisions, vendor
management with production scheduling and
quality management, and personnel with
everything. Finally, they place great emphasis
on R&D, experimentation, training and the
building of general organisational capabilities.

They continually push at the margins of
expertise, trying on every front to be a bit
better than before. Standards, to them, are
ephemeral – milestones on the road to
perfection. They strive to be dynamic, learning
companies. This emphasis on continual
improvement is the ultimate test of a world
class organisation.

BIBLIOGRAPHY
Hayes R., Wheelwhright S. & Clark K. 1988.
“Dynamic Manufacturing” The Free Press:
New York

World class manufacturing.PPT

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