2. Towards 21st Century
management of mfg. companies
• ii-Management by
procedure
• iii-Management by
• Policies
• iv-Management by
Principals
• Mode • Assessment
• i-Management by Edict Inconsistent,wasteful
Inconsistentquicker,wasteful
of talent
High level wisdom,limits
empowerment
Customer focused,employee
driven,data based
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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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
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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. The path to becoming world class
Drive performance using peopletechnology
Leadership defines and communicates the
goalstasks
Employees must be empowered to apply their skills
for efficient operations
Technology is the means to transform raw materials
into saleable products.
Technology supported with proper procedures and
trainedmotivated personnel can ensure success
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. 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. 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. 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. 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. 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. 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. 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. 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. 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. Today,s global business
conditions
• For developing business strategy ,it is essential to
know the factors affecting today's 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. 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. 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. 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
exploit opportunities
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. 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. 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. 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. 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. 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. 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. 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. Performance of world class
manufacturers(contd.)
• 11-P
Pl
lanning and scheduling operations-World
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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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.
