BECOMING WORLD CLASS MANUFACTURER-INDIAN PERSPECTIVE

By
Prof R K Gupta
BE (Hons), MBA, FIE
Aravali Institute of Management
Jodhpur
E-mail :
cityju@rediffmail.com / rkgupta_India@hotmail.com
URL :
www.Geocities.com/rkgupta_india

BECOMING WORLD CLASS MANUFACTURER-INDIAN PERSPECTIVE

WHAT IS WORLD CLASS:

According to Schonberger (1986) the WCM status can be achieved by any of the two parallel paths: The quality path, and the JIT production path. He argues that continual improvement in quality, reduced cost, lead-time, customer service and flexibility will lead to "world Class status". If A WCM effort fails to make it easier for marketing to sell the product, then something is wrong.

According to Gunn (1987), World-Class manufacturing rests on three pillars: Computer-integrated manufacturing (CIM), total quality control (TQC) and just-in-time (JIT) production methods

According to Maskell, World-Class manufacturing (WCM) generally includes the following:

A new approach to product quality
Just in time (JIT) production techniques
Change in the way the workforce is managed: and
A flexible approach to customer requirements

In America's best plants, quality is viewed as defect free, wastage free workmanship that derives from product and process quality. Lastly, agility has been defines as lean manufacturing, flexible production structures, fast, clean slate process redesign as advocated in re-engineering and mass customization production strategies.

The three Core strategies are: Customer focus, quality and agility.

The Six supporting competencies are: employee involvement, supply management, technology, product development, environmental responsibility and safety, and corporate citizenship
It, therefore, becomes quite clear that an enterprise has to view its activities as Network of business processes, that are designed to eliminate wastage at each stage, speed up the response time, provide fast and accurate information at various nodes of decision making. It naturally leads to a need for continuous business process analysis in the organization (BPA)

A good benchmark to control material flow in organization could be analogy with supermarket. Where an earlier department can be viewed as supermarket and the next one as customer. This is something similar to pull-system (one of the techniques in Japanese" Kanban"). The supermarket replaces the quantity sold.

The author has successfully applied this concept of internal customer, in his own local conditions in two plants, the one making Cycle tyres and tubes (Poddar Tyres Ltd, 1993) and the other making LPG cooking gas cylinders (Saboo Cylinders Ltd., 1995), in Punjab, with substantial improvement in productivity and quality.


Indian managers tend to be enamored of the term "kanban" without understanding the nature and purpose of the kanban system. A kanban system is supported by the following management practices:

- Smoothing of production
- Reduction of setup time (like SMED)
- Cellular Plant Layout
- Standardization of jobs
- Improvement activities
- Automation

The use of Kanbans is meaningful only when all or most of these fundamentals have been attended to. In world class manufacturing, however, one of the means of continuous improvement on the shop floor is reduction in the number of kanbans being circulated. This reduces WIP and keeps manufacturing personnel on their toes to continually seek ways of eliminating waste (In typical convention Marwari enterprises in India, keeping the supplies a little short has been a long established practice having similar intents)

THE APPROACH

What does it take to be world class? First and foremost, you must be in control-in control of your processes and resources, in control of your markets and customers and in control of your information. Being in control doesn't necessarily mean you make all the decisions, but it does mean you are prepared and will not be thrown by unexpected changes in demand, technology, circumstance or competition.

Why is information on this list? Because, information truly is power. Information is what allows you to know what's happening inside and outside of your enterprise so you can manage what you are able to and otherwise deal with those things you cannot manage. Without accurate, timely information, you are blind.

The Seven keys to success, in no particular order, are:
- Reduce Lead-Time
- Reduce Operational Cost
- Increase Visibility to Business Performance
- Reduce Time-to-Market
- Satisfy Customer Expectations
- Streamline Outsourcing Processes
- Manage Multiple Locations and Global Operations

Each of these objectives is important in and of itself; however, taken together, they describe the focus of the activities and attitudes that define world class.

The Indian Companies can do well in having their 20 point self -assessment exercise as per the criteria given in table below. (Note: Any person interested in getting Questionnaire sheet required for the purpose can obtain the same from Industry Week, USA or from the author , by sending requisition on following e-mail address, mentioning name of the company and product group: cityju@rediffmail.com)

Summary of 2001 returned World Class Manufacturing check-sheets with UK, USA and rest of world comparison (note the sample size for the rest of the world (ROW) is too small to be very meaningful) with a column for you to fill in.

 

All

UK

USA

ROW

You

1 Ship 99% OTIF

21%

20%

22%

25%

 

2 Everyone know key customers

42%

50%

33%

50%

 

3 Empowered staff (CRM)

71%

60%

100%

25%

 

4a Can make kanban shipment

42%

40%

67%

0%

 

4b 90% controlled by kanban

29%

30%

33%

25%

 

4c 75% purchases on kanban

29%

40%

22%

25%

 

5 No central stores

46%

40%

44%

50%

 

6 Flow layout

67%

40%

78%

100%

 

7 Batch size reduction

33%

40%

44%

0%

 

8 Education in WCM

38%

50%

44%

0%

 

9 Move to point of need

21%

40%

11%

0%

 

10 Reduce waste (non-value added)

50%

40%

67%

50%

 

11 Reduce supplier base - qualified

54%

60%

56%

50%

 

12 TQ culture

38%

10%

78%

25%

 

13 Self inspection within limits

54%

40%

78%

50%

 

14 Line stop authority

38%

30%

56%

25%

 

15 Fool proofing

29%

30%

33%

0%

 

16 Self maintenance & TPM

46%

50%

56%

25%

 

17 Housekeeping

63%

60%

67%

75%

 

18 DFM

58%

60%

56%

75%

 

19 CI in customer service

57%

67%

44%

75%

 

20 Suggestions implemented

42%

20%

67%

25%

 
 

Let us now examine the work environment of a manufacturing organization:

Any unit that is engaged in manufacturing would be using many factors of production and shall be interacting with several internal and external environmental factors, some of which are quite predominant. The author suggests the criteria that should be adopted for each category to become world class. These are suitably revised in view of Indian conditions and limitations.

Factors

World Class Manufacturer

Material inputs

Global Procurement, MRP

Manufacturing Systems-Production equipment, Laboratories & Maintenance

Multiple Locations, Outsourcing, State of  art (Continuous reinvestments)

Manufacturing Process

Cellular Layouts, Numerically Controlled, High speed of through put Total Productive Maintenance (TPM)

Power & fuels

Lowest Specific Consumption

Labour-Supervisory and Skilled workers

Multi Ethnic/cross cultural composition, Group targets, duration of Training 10% of the work time, highest Value output per person in industry

Technology

Leadership Status

Production Capacity

Always in top three, globally

Quality systems

TQM/ QS 9000/Six Sigma

Wastage and Effluents from the processes

Lowest Globally. Built in pollution control technology

Design and Engineering

Internal R &D with Capital layout 10% to 30% of projected Turnover

Innovations, product flexibility

At least 30% new product features each Year. Lowest Cycle time

Distribution & Logistics

Guaranteed delivery period/Off-the-shelf

Inventories

JIT/Turnover ratio: 80 and above

Value Addition

At least 33 % or 1/3rd of Manufacturing time in value addition component of product

Information (internal/External)

Data Acquisition  system/ ERP

Response time

Industry Standard

Customer satisfaction

Customer delight

To achieve excellence in manufacturing, a manufacturing manager should keep in mind five goals (Prabhala, 1994)

1. Throughput should go up
2. Inventory should come down
3. Operating expenses should come down
4. Cycle time should come down
5. Yield should go up

The Japanese Management Association (1986) described autonomation and just-in-time material flows as the two pillars of the Toyota Production System, while production leveling, or load-smoothing production, was described as the base of the system.
Therefore, some of the key features of world class manufacturing shop floor practices would be:

- The use of visual controls as aids for problem eradication.
- The use of the SMED (single minute exchange dies) system for quick setups
- The use of kanbans for implementing a pull system of material flow
- The use of autonomation, which enables workers to attend to more than one machine each
- Production Leveling, which ensures the pull system is workable
- Cellular manufacturing, which makes ' single piece flow " or very small batches possible.
- Production Planning and control systems
- Sound new product development practices
(Source: World Class manufacturing; Sahay and Saxena, Macmillan , 2000)

World-Class manufacturers know how to improve business performance visibility

In an environment where change is the rule and not the exception; manufacturers must be vigilant about performance issues. They need to understand which customers, products and sales channels are profitable, and where problems hide in their enterprise.

World-class manufacturers consistently meet and beat their objectives by improving upon their business performance visibility. Understanding what drives their business allows them to improve revenue through competitive advantages, measure performance to set accurate expectations, improve relationships with all stakeholders, and reduce operations costs.

The challenges of improving business performance visibility

Manufacturers face specific business performance visibility challenges that can prevent them from improving performance. Voluminous and/or outdated data, inconsistent performance measurements, and a general lack of access to the right information allow issues to continue unchecked.

Best practices for improving business performance visibility

If you are not already making the transformation to world-class performance; consider the following best practices for improving business performance visibility:

Turn data into summarized, usable information
Provide management with current and accurate data
Establish consistence measurements and objectives
Implement exception alerts

These best practices, driven by suitable software and hiring external services if needed, help world-class manufacturers better understand their business, grow revenue, achieve faster time-to-market, speed customer deliveries and reduce operations costs.

AGENDA FOR INDIAN MANUFACTURING SECTOR

Based on current assessment of Problems of Indian manufacturers, the Infrastructure available in the country, the Indian industry experiences and capability and national economical priorities, it would be appropriate to work on following lines:

- Substantial increase in R &D expenditure to the tune of 5% of GDP with matching investments from Indian manufacturing sector (over next 3 years)

- Privatization of Research in India and dismantling of University research in its present form, which is worthless. Opening of Several IIT like Institutes, Increasing capacity to five times of the present.

- Strengthening of Tool Room sector and Specific Industrial Product development and testing centers, to strengthen SMEs base which is important both for exports and employment generation

- Expeditious privatization of Power Sector and raising National power generation load factor to 90%

- Focus on following sectors in first phase of 10 years: Textiles and Garment Industry, Pharmaceuticals, Machine tools, Automobiles (Passengers and Commercial), Software products (not development contracts), Leather Industry, Food processing and Horticulture, Primary metallurgy including Steel and Aluminum, Defense equipment and Jewellary.

- Strategic marketing alliances with world class trading companies with pro active role of Ministry of commerce

- Right combination of Indigenous technology and the Bought out technology, with the former having at least 25% component (Eventually to become 75% and 25% respectively)

- Developing product based industrial clusters with international level facilities and Regulations in place of present mixed and diluted economic zones like SEZs and EPZs.

- Intensified investment in infrastructure sector taking the benefits to B class city level.

- Encourage movement of Skilled Labor and technologists into and out of the country

There is hardly any other way to make Indian Manufacturing internationally competitive , besides required transformation of the Indian Corporations themselves on suggested lines by various experts.

Prof R K Gupta
BE (Hons), MBA, FIE
Aravali Institute of Management
Jodhpur
E-mail :
cityju@rediffmail.com / rkgupta_India@hotmail.com
URL :
www.Geocities.com/rkgupta_india

Source : E-mail

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