WCM/U2 Topic 1 Cutting Edge Technology & Philosophy of World Class Manufacturing
Manufacturing involves technology that has two aspects-technology of the product and technology of the process. The technology of the product determines the qualities that customers look for in the market place, i.e. performance, features, appearance, attractiveness, etc. However, its price, quality and reliability are determined by the technology employed in making the product, i.e. manufacturing processes. One has to be good at both in a competitive world. A cosmetically brilliant product that fails the first time you put it to use will hardly have any buyers. As also will a robust and well-built product which is hideous in appearance and not userfriendly.
Product technology and process technology go hand in hand. Both product technology and process technology can be purchased. However, how we put it to use and exploit it to our advantage, determines our competitiveness.
Furthermore, manufacturing is not merely the conversion process that takes place on the shop floor, but a whole lot of activities preceding and following it, till the product leaves the factory.
Thus, manufacturing is a more comprehensive activity and includes activities, such as materials management, equipment and tooling, fabrication of parts, material handling, assembly, quality control, maintenance of plant and machinery, planning, information systems and human resources. Each of these activities is important and must be done well to achieve manufacturing excellence. But excellence in all the manufacturing activities individually is not sufficient; overall excellence alone guarantees success. Again, one time excellence guarantees only one-time success. For continued success in a competitive market, continuous improvement in all areas of activity is essential. Without it, one may have the best technology and the most modern plant and machinery, but still someone else may be turning out a better product at a lower cost.
To achieve excellence in manufacturing, a manufacturing manager should keep in mind five goals:
- Throughput should go up.
- Inventory should come down.
- Operating expenses should come down.
- Cycle time should come down.
- Yield should go up.
Manufacturing is the bedrock on which the economic wealth of nations is built. The industrial revolution, first in the UK and later in Europe and the US, shifted manufacturing activity from homes and cottages to factories equipped with power-driven machinery and management from owners to professionals. The UK, which pioneered the industrial revolution, lost its competitive edge to Europe, particularly to Germany, and to the US, by failing to upgrade its manufacturing technology and commercialize its scientific research. American manufacturing dominated the world in the 1940s but since then many countries, especially from the South-East Asia and the
Far East, have advanced a long way, giving America tough competition. There may be a number of reasons for this:
- These countries had newer plants and equipment.
- American firms had short-term focus and, therefore, did not reinvest in new plant and equipment.
- American workers demanded high wage rates.
- These countries use unfair trade practices in market access, sharing of technology, or in other ways.
- Young Americans did not want to have a career in manufacturing.
- Americans did not want to work anymore, etc.
- Most American firms measured their company’s progress against their own performance in the last year rather than benchmarking it with competitors.
- The top management of many of these companies did not have a manufacturing background but came from marketing, finance, etc.
More recently, the disappearance of a whole lot of industries in the US, such as consumer electronics, is a symptom of the malaise that results when manufacturing takes a back seat. The loss of competitiveness of the American industry in a number of segments such as automobiles, machine tools, cameras and semi conductors is less due to unfair trade practices adopted by
Japan and more due to a neglect of the essentials of competitive manufacturing. Thus, with the increasing level of globalization and competition, American firms were constrained to regain their competitiveness in the global markets. With manufacturing capability much stronger worldwide, it was not possible for the US to match every other region in every product line.
However, production of a large stable of products competitive in the global market was necessary to maintain an equitable trade balance with other developed nations. This ‘improved competitiveness’ in its broadest context was referred to as manufacturing excellence, and was deemed to be demonstrated by simultaneous improvements in manufacturing performance as well as business performance through indicators, such as productivity (i.e. value added per employee), cost reduction and market share in the world market. If a firm continues to excel in manufacturing, it may dominate world markets, in which case it would be called a World-Class manufacturer (Figure 2.1),. The goals ‘of World-Class manufacturing efforts include maintaining market share, improving profitability and improving the firm’s ability to compete in a global market place.
Whereas the general principles of improving manufacturing performance are well known, in order to establish the relationship between ‘manufacturing performance’ and ‘business performance’ or ‘world-market dominance’, there was a need to develop a conceptual framework to represent the relationship. A number of manufacturing researchers/consultants have published such frameworks, and some of the more prominent and recent ones are described as follow.