WORLD CLASS MANUFACTURING-INDIAN PERSPECTIVE

Dr Rajendra K Gupta
BE (Hons), MBA, PhD, FIE Delhi-India

First Published online 2003

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" Kanbans"). 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 50% 40% 67% 50%
added)
11 Reduce supplier base - 54% 60% 56% 50%
qualified
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 Multiple Locations, Outsourcing, State
equipment, Laboratories & Maintenance of art (Continuous reinvestments)
Cellular Layouts, Numerically
Manufacturing Process Controlled, High speed of through put
Total Productive Maintenance (TPM)
Power & fuels Lowest Specific Consumption
Multi Ethnic/cross cultural composition,
Group targets, duration of Training 10%
Labor-Supervisory and Skilled workers
of the work time, highest Value output
per person in industry
Technology
Production Capacity
Quality systems
Wastage and Effluents from the processes
Design and Engineering
Innovations, product flexibility
Distribution & Logistics
Inventories
Value Addition
Information (internal/External)
Response time
Customer satisfaction
To achieve excellence in manufacturing, a manufacturing manager should keep in
mind five goals (Prabhala, 1994)
Leadership Status
Always in top three, globally
TQM/ QS 9000/Six Sigma
Lowest Globally. Built in pollution
control technology
Internal R &D with Capital layout 10%
to 30% of projected Turnover
At least 30% new product features
each Year. Lowest Cycle time
Guaranteed delivery period/Off-the-
shelf
JIT/Turnover ratio: 80 and above
At least 33 % or 1/3rd of Manufacturing
time in value addition component of
product
Data Acquisition system/ ERP
Industry Standard
Customer delight

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 automation 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 automation, 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 Jewelry.

Now new emphasis is on manufacturing of ICs, Mobile handsets, and other

electronic equipment. For this it is important to have a well developed component
industry network which is missing in India. It is matter of regret that instead of
doing these, Indian Government & businesses chose to import products and raw
materials from China at lower cost, High technology equipment from Western
Countries and have focused on services secretor instead.
- 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. High production rate ,
productivity, innovation and patents are only way to become supplier of world class
goods.

Email: cityju@rediffmail.com Copy right : Dr R K Gupta 2003