World class manufacturing.PPT

WORLD CLASS MANUFACTURING

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

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World class manufacturing.PPT