World Class

Manufacturing
Chapter 1
Historical 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 breakthroughs, 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 Demings contribu

1. Lead Time Reduction

There 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 Flow
Where 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 Changeover
Quick 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 productor 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 Teams
Employees are multi-skilled members
of motivated, capable work groups
with clear roles, responsibilities and
performance standards.

6. Cross-Functional Teamwork
There is a high level of teamwork and
coordination between organizational
units and strong internal customersupplier relationships.

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

8. Process Reliability
A 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 Improvement
Employees are engaged in CI
and/orKaizen Events on a regular
basis. All teams meet to set goals,
solve operating problems and
implement corrective action.

10. In-Process Quality

Product 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 Operations

Continuity, 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

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

13. Goal Deployment

Key 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 Systems

Plant 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 &

Recognition
There is an effective incentive and
recognition system that promotes
continuous improvement and
rewards outstanding individual, team
and plant performance.

16. Plant Safety, Loss Prevention

&Housekeeping
Effective training & awareness,
thorough incident investigations and
a 5S organization program ensure an
orderly, efficient and safe workplace.

17. High-Performance Leadership

All levels of plant leadership provide
coaching, training & mentoring to
subordinates, encouraging peak
performance and employee
involvement.

18. Supplier Partnerships

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

19. Cross-training &Multi-skilling

Multi-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

Measures
Performance 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
Demings 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
Presidents 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