World Class Manufacturing

This article provides a simple definition of world class manufacturing and provides five simple techniques that a number of "world class" manufacturers have employed. This article should be read in conjunction with the articles referenced on the left.

Links to related training and further reading on left

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. However, as resources are unlikely to allow improvement in all areas, organisations should concentrate on maintaining performance in 'qualifying' factors and improving 'competitive edge' factors (as defined in Focused Improvement Systems especially Note A). The priorities will change over time and must therefore be reviewed.

Factors to be aware of

Though costs will still be monitored and controlled it must be ensured that cost reduction does not remain the overriding priority, as is often currently the case. Organisations should give attention to all of the priorities as stated in the definition of World Class Manufacturing and concentrate on your SWOT (see Previous Technique T013 SWOT).

You need to be selective about what you improve. (See Focused Improvement Systems)

Control of operations

Before commencing implementation of control systems there are always five beneficial things to do which will make any method of control easier to implement and make the system work better operationally: (Generally world class manufacturing businesses have done these things).

1. Reduce time wasted in setting and reduce set up times

Particularly true for Period Batch Control because the technique requires every part to be made every period, but it is beneficial in all circumstances to reduce batch sizes by reducing set up times on the bottleneck processes. There is little extra benefit in reducing set up times on non-bottleneck processes. The technique "Single Minute Exchange of Die" or "SMED" provided a structured approach to doing this. (See Previous Technique T019: Avoiding Set-ups & Reducing Changeover Times)

2. Form Natural Groups (cells)

The processes are divided into groups of families of products or services using Group Technology (See Organisational Redesign)

This technique was later to be reborn as cellular manufacturing. The technique can be applied wholly or partially, i.e. to the whole of the factory or to part of it (usually the runners) and is always beneficial except in pure job shops where product family cells are unstable.

3. Reduce throughput times

By far the easiest way of reducing throughput times is to reduce Work in Process (WIP). It may be fat and comfortable for the production supervisors to keep lots of Work in Progress, but using the simple analogy:

If it takes two men a week to dig two holes how long does it take two men to dig one hole?

Answer: About twice as quick but they may get in each other's way

By the same token if there is less WIP, what is in process can be focused on and move more quickly. Typical results of starving the issue of work until a resource is available to work on it are halving of WIP and manufacturing lead-times at a stroke with no loss in output.

Secondly by only completing parts when they are required to be despatched and invoiced, WIP tends to only contain parts which are required to be finished and are therefore not likely to be overtaken by more urgent work and left behind in WIP or in finished stock. (See Previous Malpractice M006: "Hitting the Numbers: The worst way to manage Operations".)

There is almost never a case for sub-assembly stocks, unless there is very high commonality of sub-assemblies and long sub-assembly lead-times. (See Previous Techniques T002: Commonality Trees and Previous Techniques T008: Lead-Time Analysis). Whole-assembly kitting can reduce assembly WIP by 50% against sub-assembly kitting and manufacture. Stocking sub-assemblies is almost always an open invitation to rob kits and cannibalise built sub-assemblies for more urgent jobs with corresponding total loss of stock control and rampant WIP. (More information can be found at Control Systems for Maintenance Repair and Overhaul).

Here we must raise three notes of caution:

It is possible that the variety of parts to be produced at short notice may actually result in permanent changeovers and no output.
It is at this point that the accountant wants his cake and eat it. He wants less WIP but this can represent less profit if profit is "earned" by producing WIP, and may also result in a reduction in "labour utilisation / efficiency", which actually does not matter unless labour is the bottleneck.
There are also examples of increasing "TAKT Time" (see Previous Technique T021: "TAKT Time") on the main assembly track by whole-assembly kitting, so this technique needs to be judged against this possibility. In particular this technique should be restricted to non-bottleneck workstations on assembly tracks and sub-assemblies controlled via Kanban systems.

Other methods of reducing throughput time include:

Redistributing resources to work the bottleneck harder.
Close scheduling (see Previous Technique T020: Close Scheduling), but also includes "overlapping", i.e. starting op 2 on the first component, before op 1 is finished on the last component of the batch, (reducing the "transfer batch").
Reducing the number of operations per part by either combining operations to form one, or including manual operations inspection or de-burring in the working cycle of automatic machines.

4. Postpone product mutation

(For more detail see Postponement & Mass Customisation)

If this technique is considered at the design stage, the mutation induced by customer requirements can be deferred until the final operation rather than at an early manufacturing stage. This makes sophisticated control of mass customisation unnecessary. A common example of this is packaging where it is often beneficial to stock unpacked items and pack into customer livery to order. I.e. convert to assemble to order from make to order.

A shorter-term possibility is to consider the trade off between lead-time and stock variety. This is a method of reducing end product variety (SKU's) stocked by deliberately stocking common sub-assemblies instead of final assemblies. (See Previous Techniques T002: Commonality Trees). For example if there are common sub-assemblies it may be possible to reduce the final assembly stock holding significantly by stocking instead the common sub-assembly. If lead-time is a key selling success factor this may not be acceptable, but if lead-time is not an order winning criteria it may be practical, to stock sub-assemblies. Obviously if final assembly operation lead-times are short the technique is more readily acceptable.

Another example from the smelting industry is the stocking of intermediate billet, which can be quickly converted into final sizes.

5. Remove the trivial many, to focus on the vital few

Using Pareto Analysis increase batch sizes of the low volume value "C" items (see Previous Questions Q001: Managing "C" class items in a deliver to point-of-use situation) and preferably employ "Supplier Top Up" ("Supplier Top Up" will be covered in a future article) arrangements for these. You do not want to run out of these! But why do you need them on the picking list? (See Previous Techniques T006: Pareto Analysis and Previous Best Practice B014: Effective Bill of Material Design)

We have taken the view that the above should be viewed as prerequisites in almost all situations, until they are proven to be impractical. The beauty of this approach is that all steps are beneficial in their own right and can in most cases be implemented separately (as different projects).

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Whilst great care has been taken to provide relevant, accurate, practical, advice based on our considerable process design and development experience, this will almost certainly require interpretation into the context of your unique business. Please be careful in doing so and if in doubt seek expert advice. We would welcome your feedback!

SM Thacker & Associates

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