Chap 1 Historical Perspective w Cm

World Class Manufacturing

Chapter 1Historical Perspective

World Class Manufacturing - A definition

• World Class Manufacturers are those that demonstrate industry best practice

• To achieve this companies should attempt to be best in the field at each of the competitive priorities– quality, price, delivery speed, delivery reliability,

flexibility and innovation• Organisations should therefore aim to maximise

performance in these areas in order to maximise competitiveness

Dimensions of competitiveness• Cost or price• Quality• Product or service differentiation• Dependability as a supplier• Reliability• Flexibility• Speedy delivery• Customer service• Employee productivity and managerial expertise

Why organization fail in competition

• Higher focus on short term gain at expense of R & D• Failure to take advantages of strengths & opportunities

and / or failure to recognize own weakness and competitive threats

• Neglecting production strategy• Too much emphasis on product and service design at

the expense of process design• Neglecting investments in capital and human resources• Lack of good internal communication and cooperation

among different functional areas• Failure to consider customer need and want

Production management contribution to strategy

• Operations Decisions• Quality• Product• Process• Location• Layout• Human resource• Supply chain• Inventory• Scheduling• Maintenance

• Specific Strategy Used• Flexibility

– Design– Volume

• Low Price• Delivery

– Speed– Dependability

• Quality– Conformance– Performance

• After sales Service• Broad Product Line

Quality Maturity

• Level Zero– No consideration for quality

• Level One– A company begins to explore the field of quality often

through the necessity to conform to ISO 9000 standards

• Level Two– Quality begins to be seen as reality. Installation

process is deviced and people are trained & supported about quality and what it will do

• Level Three– Embedded the quality process. Fight to achieve

quality• Level Four– When the CEO starts to make Quality process

sweat. He wants it to use it for business advantage and drives the process accordingly. He sets hard goals, Installs sharp measures, establish benchmarks from external sources and gears up everybody for delivery

• Level Five– Strong returns and widespread success fuels

continuous improvement. Kaizens and break-throughs, leadership and empowerment, the quality process and business objectives all get integrated

• Level Six– The company is receiving accolades from outside. The

company becomes lean, fast and capable. They are consistent in their approach, whenever and what ever they do.

Postwar Japan

• Limited natural resources• Reduced production capacity• Strategy for developing international trade

based on quality and efficient production• Assistance from U.S. occupation forces• Recognition of Deming’s contribu

1. Lead Time ReductionThere is a plant-wide initiative to measure and continually reduce lead times. Non-value-adding steps in the mfg. process are gradually eliminated and dock-to-dock velocity is increasing.

2. Streamlined FlowWhere appropriate, a demand-based flow or "pull" production strategy is adopted, using kanbans and demand flow techniques, to produce to order rather than to stock.

3. Quick ChangeoverQuick changeover methods are employed to increase equipment availability and respond quickly and economically to changing schedules and customer needs.

4. Cellular Mfg. (Focused Factories)The facility is structured into product- or customer-focused work groups housing all operations to manufacture a family of products. Office operations are similarly structured to increase accountability, response time and quality while reducing inventories and backlogs.

5. Empowered TeamsEmployees are multi-skilled members of motivated, capable work groups with clear roles, responsibilities and performance standards.

6. Cross-Functional TeamworkThere is a high level of teamwork and coordination between organizational units and strong internal customer-supplier relationships.

7. Associate Involvement & CommitmentShop floor employees routinely solve problems, suggest and implement improvements and are committed to world-class performance.

8. Process ReliabilityA formalized system is in place to maximize equipment uptime and reduce variation in product quality. Overall Equipment Effectiveness (OEE) measures are at world-class levels.

9. Continuous ImprovementEmployees are engaged in CI and/or Kaizen Events on a regular basis. All teams meet to set goals, solve operating problems and implement corrective action.

10. In-Process QualityProduct quality is built-in at the operating level. Employees have the ability and the authority to make product quality decisions in process and quality management tools (SPC, error-proofing, etc.) are in place.

11. Seamless Shift OperationsContinuity, consistency and communication are maintained across shifts. An effective 24-hour management system provides the necessary support for all shifts. Shift schedules satisfy both operational and employee needs.

12. Standard Operating ProceduresThe plant is ISO (or QS) certified. Operating procedures and quality standards are consistent and a formalized process is used to ensure sustainability.

13. Goal DeploymentKey performance indicators and shop floor goals are in place for each area, developed at the operating level and tied directly to plant goals

14. Visual Management SystemsPlant and team scoreboards and other visual means of controlling and improving operations are used throughout the plant. Operational status information is available quickly and accurately to anyone who needs it.

15. Incentives, Rewards & RecognitionThere is an effective incentive and recognition system that promotes continuous improvement and rewards outstanding individual, team and plant performance.

16. Plant Safety, Loss Prevention & HousekeepingEffective training & awareness, thorough incident investigations and a 5S organization program ensure an orderly, efficient and safe workplace.

17. High-Performance LeadershipAll levels of plant leadership provide coaching, training & mentoring to subordinates, encouraging peak performance and employee involvement.

18. Supplier PartnershipsThe organization collaborates with a few key certified suppliers to continuously improve material cost, quality & delivery, benefitting all involved.

19. Cross-training & Multi-skillingMulti-skilling in each area provides the needed flexibility. Training of all personnel, including the plant leadership team, is a key priority.

• 20. World-Class Performance MeasuresPerformance metrics measure performance against world-class standards, are generated and controlled by shop floor personnel and are successful in rallying the entire organization toward higher performace levels.

Deming Prize Background

• Awarded by Japan: Union of Japanese Scientists and Engineers (JUSE)

• First awarded in 1951• Named after W. Edwards Deming • Most winners before 2001 were Japanese – U.S. winners: Florida Power & Light (1989), AT&T

Power Systems (1994), Sanden International (2006)– Most winners since 2001 Indian, Thai

Deming award

• Instituted in 1951 by the Union of Japanese Scientists and Engineers (JUSE) to recognize and appreciate Deming’s achievements in SQC.

• Organizations tested on CWQC – CompanyWide Quality Control – system.

• No “losers” – Organizations failing to qualify this year automatically considered for the next three years.

• Winners also eligible for Japan Quality Medal.• CWQC requires involvement of everyone in the

company and their understanding of quality aims to accomplish business objectives.

Malcolm Baldrige award (MBNQA)

• Initiated by the then-President Reagan after recognizing the declining productivity and quality standards in USA.

• Law passed in August 1987. • Named after the then-Secretary-of-Commerce.• Based on the Criteria for Performance Excellence.• The criteria consists of a hierarchical set of

categories and areas of address: leadership; strategic planning; customer focus, measurement, analysis and knowledge management; HR; process management.

Deming Award Categories

• Deming Prize for Individuals• Deming Application Prize– For Organizations or– For Divisions of Organizations

• Quality Control Award for Factories

Deming Award Areas – 1

• Policy• Organization and operations• Collecting and using information• Analysis• Planning for the future

Deming Award Areas – 2

• Education and training• Quality assurance• Quality effects• Standardization• Control

American Quality

• Preoccupation with quantity for years• Reliance on inspection (“Quality Control”)• Effect of oil embargos in the 1970s• Malcolm Baldrige Award• President’s Quality Award (PQA)• Six Sigma

Malcolm Baldrige Award

• Awarded by US Department of Commerce (National Institute of Standards and Technology)

• 1987 legislation• Named after Malcolm Baldrige (Howard

Malcolm “Mac” Baldrige - American industrialist and former Secretary of Commerce)

• Administered by ASQ

Baldrige Award Areas

• Original award areas: Manufacturing, Service, Small Business

• Education added in 2001• Health care added in 2002• Local winners– Granite Rock (1992)– Solectron Corp. (1991, 1997)

Baldrige Award Categories

• Leadership• Strategic planning• Customer and market focus• Information and analysis• Human resource focus• Process management• Business results