Country economies have a significant dependence on their businesses capability to improve competitiveness. To reduce this economic dependence, companies must aim to implement world class levels of competitiveness. To achieve it, systematic implementation of best practices is critical.
In addition, in today’s highly competitive world, we need to bear in mind that manufacturing business models are changing according to the market needs. Customers not only start to require an increase in customised products with a greater quality production standard but at the same time demand a lower production cost and time to market delivery.
However, all these demands are a constraint to the planning of operations and stress the current manufacturing industry business model in its entirety. For a company to thrive in modern days, it must have a strategical focus on planning, research, development, implementation and adaptability. Adopting a new organisational culture where the vision is no longer that of the last 100 years (Taylor & Ford mass production line philosophy) requires an evolution in to a more flexible, adaptive and agile industry where self-autonomous subsystems should be able to improve continuously through their own decision-making process in order to meet all stakeholders needs and demands.
The evolution and global democratisation of technology in the last decades changed the world. In an open economy, a company will survive the intense global competition only if it is able to use creativity, efficiency, and effectiveness in its manufacturing operation strategy. How can this happen? It is achieved by the ability to create and expand knowledge in an effective and timely way.
The manufacturing industry around the world has been adopting tools and techniques of continuous improvement models to perfect their operations. The result has increased their competitive advantage by decreasing cost and increasing efficiency. Now, these actions are no longer enough in the current digital revolution where the manufacturing operations can be relocated anywhere or quickly copied and developed by the competition, where the labour, raw materials and logistics operations are cheaper.
With the current economic environment, manufacturing companies understood that their strategies need to be re-evaluated and with it, the requirement to conduct fundamental organisational reforms if they want to drive sustainability in the future. Using only standard tools or methodologies in isolation no longer allows a strategical competitive advantage in a world without trade barriers.
In addition, this intensifying international business competition has not only put organisations under extreme pressure to review their traditional manufacturing practices but also to begin considering adopting a continuous integrated benchmarking manufacturing process by an emerging problem-solving philosophy inspired and tested globally by World Class Manufacturing (WCM) organisations.
World Class Manufacturing (WCM)
The WCM approach was introduced in 1984 by Hayes and Wheelwright and was later a term developed by Schonberger where the concept is aimed to enable companies to match their best competitors using an integrated model initially based on the Toyota Production System (TPS), Just-In-Time (JIT) inventory management, Total Quality Control (TQC) and Lean Production. These methodologies are implemented across most business functions of the manufacturing process: product design, sales and marketing, customer and supply chains, logistics, purchasing, costs, technology, factory and equipment, product design, etc.
In summary, the WCM model is built on two major assumptions: organisational principles (to calculate and predict production factors aimed at the full and efficient use of resources) and organisational behaviours (requiring quick independent decisions and near the locations where issues may they arise).
Using WCM methodologies and tools as a management concept, an organisation can define and implement corporate standard manufacturing practices to enhance their operational performance and achieve competitiveness in the global market. These practices allow a comprehensive holistic approach to manufacturing organisation performance improvement due to better understanding of its complex interrelationships.
Companies that incorporate WCM tools and methodologies in their policies, aim to achieve a global competitive advantage by following principles such as no waste, no stock, no defect, no failure, improvement of applied processes, increased productivity, improved security, whilst cost reduction becomes part of the organisational culture.
World Class Manufacturers can be defined as manufacturers who commit to embrace best practice standards allowing the company and their stakeholders to build a sustainable strategical advantage over the competition. This is achieved by using workforce abilities, capacities, technical management skills and incremental change approaches allowing the company to keep ahead of the competition in the global market.
In May 2006, a not-for-profit organisation of manufacturing companies (WCM Association) was founded. Its objective is to share, foster innovations development and promote application of the best production practices among member companies to increase competitiveness and innovation.
As an example, the vehicle Original Equipment Manufacturer (OEM) Fiat Chrysler Automobile, developed their own management redefinition and approach to the WCM by elaborating a model strongly built on technical and managerial pillars: safety, cost deployment, focused improvement, autonomous maintenance, workplace organisation, professional maintenance, quality control, logistics & customer service, early equipment management, early product management, environment, and energy.
The WCM philosophy requires a change of the business mindset and organisational culture. Instead of focusing on a single Quality Standard or Management system, companies are required to interrelate and integrate several systems, tools, and methodologies as well like Competitive Quality, Lean Manufacturing systems, Total Productive Maintenance, Lean Six Sigma, Continuous Improvement, JIT systems (not only in production but also in logistics operations), Kanban and other philosophies.
It is accepted across the years that these systems have already proved to be effective. They not only allow a sustainable cost reduction output but also improve the agility and adaptability of a business to increase a positive status in the global market by fulfilling the customer’s needs. In addition, WCM management systems seem to help to strength the organisation’s internal system and enhance the total involvement of everyone in the organisation improvement.
Figure 1. WCM pillars
Manufacturing Operations performance enhancement
Technological development drives manufacturing evolution and now, with the continuous technological development in areas like the Internet Of Things (IoT), we are entering in a new era where it will require a reorganisation of the current manufacturing philosophy where cost seems to be no longer the main focus. However, cost still is a critical driver in manufacturing environment allowing companies to survive or thrive in future reality.
For years, focusing on efficiency by doing the ‘right things’ would create a strategic leverage on local markets less developed. Now, with companies competing in the global market where technology is becoming more affordable and transmissible, they need not only to focus on efficiency related to the resources used but also on effectiveness by ‘doing the things right’.
As an example, one of the most current popular metrics being used to evaluate the manufacturing output in a WCM company is the interrelationship measurement between time availability, performance, and quality, commonly known as Overall Equipment Effectiveness (OEE). These metrics are commonly measured and assessed individually but their interrelation demonstrates that when one improves the other improves as well, consequently increasing the output delivery. These Key Performance Indicators (KPI) can take several designations depending the organisation in use like OEE, TEEP, OPE, OFE, PEE, OAE, OPR, and others but the end goal is the same; evaluate manufacturing assets (labour, facilities, equipment, product, etc.) under effectiveness and efficiency usage.
Why these metrics are important to be used daily? As Lord Kelvin once stated: “If you cannot measure it, you cannot improve it”. The breakdown of these KPI’s allow manufacturing losses to become more visible, highlighting areas for improvement and redirect the focus for root cause analysis to not only decrease negative events but also become the catalyst of change in a continuous improvement culture.
It is accepted that in an industrial context environment achieving 100% on these metrics is impossible. Some worldwide studies show that the average rate for most manufacturing plants is around 60% and a world class level is between 85% and 92% for non-process industry. However, the most important thing is not to achieve the higher level at random but to do it in a consistent and sustainable way by implementing suitable best practices processes and procedures.
So, how can we have classified WCM companies? These companies are oriented towards people and results through strong and consistent leadership by promoting effective communication and encouraging teamwork with the end goal to exceed customer expectations by improvement in quality and productivity.
When a WCM company promotes critical factors such as top management commitment, investment on education, training and motivation, empowerment, and proper leadership with planning ability employee participation is expectable by working together with innovative ideas and effective decision-making processes. They understand that they are part of the company as well, working for a common cause.
About the author
Miguel da Silva Correia hold a MSc in Mechanical engineering, MSc in Electrical Engineering, and an Executive MBA. He has been working in the automotive industry for an vehicle OEM for the last 6 years and his field of articles research is focused on operations performance enhancement.