http://www.scribd.

com/doc/13159946/World-Class-Manufacturing-Final

Managing IT for world-class manufacturing: the Indian

scenario

Abstract

The success of Indian manufacturing in meeting global competition will depend on its speed to move itself from a
protected domestic to a world-class global manufacturing status. This paper analyses a survey conducted for the
purpose of determining world-class status of Indian manufacturing companies and identifies important issues that
need to be addressed in order to be a world-class manufacturer. The analysis compares the manufacturing intent to
be an agile manufacturer and their information technology (IT) infrastructure in terms of scope of use, extent of use
and integration of IT-based systems. The findings of the analysis are somewhat alarming as they show that most of
the companies have fragmented (rather than integrated) information management systems which may not enable
them to deliver superior value to their customers and lead them to world-class status. They must, therefore, align their
IT initiatives towards facilitating agile manufacturing rather than introducing IT to merely automate their conventional
operations.

Author Keywords: World-class manufacturing; Information technology management; Computer-integrated

manufacturing; Manufacturing strategy

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