INDT 565 MANUFACTURING EXCELLENCE:

PRINCIPLES AND APPLICATIONS

BOOK REVIEW:

ATTAINING MANUFACTURING EXCELLENCE

BY ROBERT W. HALL

BACK TO BASISCS: YOUR GUIDE TO MANUFACTURING

EXCELLENCE
BY STEVEN A. MELNYK and R.T. “CHRIS” CHRISTENSEN

November 2, 2008

BY ANTHONY CAPPUCCI
 Book Review 2

ATTAINING MANUFCTURING EXCELLENCE

BY ROBERT W. HALL

Introduction

Attaining Manufacturing Excellence describes what

management champions need to know about contemporary
manufacturing in order to exercise leadership in world class
competition. In this book, Robert Hall takes a global view of the
manufacturing process. He explores new ways for integrating shop for
activities with company strategy and provides a blueprint for improving
operations in all key areas. He sets forth principles of manufacturing
excellence that will guide executives as they create a new corporate
culture that combines the concepts of just-in-time manufacturing, total
quality and total people improvement.

Chapter 1: The Empty Strategy

Manufacturing survival is war, combat on speaking terms

perhaps, but war nonetheless. Every resource must be in readiness and
every skill at full alert. True, some reasons for the difficulty American-
made goods have with foreign competition are labor rate differentials,
trade restrictions, national promotion of various industries, and so
forth, but at some point manufacturing competition comes down to
basics, the infantry tactics of industrial management. The company
that cannot compete in this battle cannot forever be defended. The
real defense is to think aggressively of what it takes to compete in a
world market: world-class manufacturing, even if the company is too
small to actually get world market volumes. If a thriving company waits
for excellent competitors to attack before becoming worried, it will sit
in comfort until this event really happens.
Development of production capability is war on the “home front.”
The first step in recognition that something must be done. This must
be followed by rededication to the art of manufacturing. Rethinking of
techniques is necessary, but not enough. Concern by production
managers is necessary, but not enough. Manufacturers with all their
constituencies must have some degree of concern. Manufacturers
would do well to ponder one of the precepts of the Toyota Motor Co.,
"Win first. Profit later.” Though a little obtuse, this slogan is very
indicative of the attitude necessary to build superior production
capability and thus avoid an empty manufacturing strategy.
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Chapter 2: The Philosophy of Value-Added Manufacturing

The "new approach” to manufacturing is a pragmatic philosophy

distilled from world wide experience in manufacturing. The major
concepts are independent of technology, though they may be applied
differently with technical advances. Taken independently, none of the
concepts are new; all have antecedents dating to the early 20th
century, if not before.
Those long in manufacturing experience who feel that they have
heard it all before have a point--but one that may deceive them into
missing the major point: the novelty of thinking is to combine the best
and simplest practices one can find it into an elegant whole for a given
application.
Anything that broad in scope is a philosophy.
Began with the objectives:

• Eliminate waste.
• Reduce lead times for:
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o Customers.
o Materials.
o Tooling and engineering changes.
o New product introduction.
• Increase quality.
• Reduce costs.
• Develop people: Increase skill, morale, and productivity.
• Improve continuously.

The goals are broad and ambitious. Attaining them demands

basic, fundamental improvement in all aspects of manufacturing. The
mind should not focus narrowly on a particular technology or technique
but should open widely. Many problems stem from non understanding
or non acceptance of all goals, as in believing that the objective of
something called J I T is only to cut inventory. Trivial goal; trivial
achievement.

Chapter 3: Total Quality—A Matter of Detail

This entire chapter is but an overview of the thinking necessary

to attain its superior quality in manufacturing. A poor quality situation
cannot be turned around with one or two ideas, although a good start
can be made in improving quality before developing expertise in
statistics.
Attitude is most important. If a company is hell-bent on
perfecting quality, it will persist in both discovering the methods to do
so and in finding the means to employ them. Crafting a quality
approach for a manufacturing company is not a short-term task. It
requires making quality a centerpiece of the company culture. Many of
the ideas are simple enough, but none are quick and dirty to put into
widespread use, so quality must matter more than turning a quick
profit.
However, quality is not only free, it pays dividends. Many
methods for improving quality also improve productivity. Total quality is
the basis for developing just-in-time manufacturing adapted to the
particular circumstances of a specific manufacturer. To do it on time,
everything, it must be done right.

Chapter 4: Just-in-Time Manufacturing

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To properly understand J I T manufacturing, the objectives need

to be reviewed from time to time: eliminate waste, improve quality,
reduce costs, improve morale, and continue improvement. The subject
cannot be discussed without reference to techniques, but techniques
are not sacrosanct. The importance lies in attaining the objectives in
context of the necessary manufacturing tasks.
Began with people. No matter how automated, the equipment
improvement begins with people, and those who transform their
companies regard the physical changes as manifestations of success
with the workers and managers.
Just-in-time manufacturing may start in many ways, but the
improvement of operations cannot long proceed without the
development of skill in quality improvement.
Just-in-time manufacturing is the pursuit of the very best
management approach possible for a company to meet objectives from
eliminating waste right on through continuous improvement. Usually it
is seen as only picking up techniques or, at best, making in addition to
the management methods known to the company. It really is a way to
run a company.
Not all companies can use all techniques. No one should expect
them to. However, most of the ideas can be used in some combination
by any manufacturer dedicated to manufacturing excellence.

Chapter 5: Attaining the Effect of Automation without the

Expense

Why automate? Because when done well, automation attains

much more than merely substituting machine labor for manual. The
objective is to make overall improvement in manufacturing--to
eliminate waste, improve quality, reduce cost, and increase flexibility
(the same goals as for Manufacturing Excellence).
Automation affects the total company. Many organizational
functions must be closely integrated, starting with product engineering
intertwined with production process engineering. A product designed
for robotic assembly needs parts that can be grasped and orientated
by robot. Seams welded by robots may be different in design than
those welded by a human. A human can compensate for seam flaws,
but a robot can't. However, a robot can reach angles very fatiguing to
the human.
The engineering of automated processes must create the exact
sequence of operations and the positioning of material. It must be
particular on work envelopes, reproducibility of conditions, and
possible exceptions. Variance of process capabilities must be kept
narrow enough to prevent random defects.
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However, this is not enough. Quality problems can come from

anywhere, and one of the more common problems observed in
automated machining cells, for instance, is finding them choked with
cracked or porous castings. Sometimes they are equipped with
automatic sensing to detect these conditions and also to compensate
for dimensional variance in the castings, which should not exist in the
first place.
Design of the total automated process must consider quality in
as well as quality out, product design evolution, maintenance, training,
the versatility of operators (or of programmed equipment), flexibility,
changeover times, scheduling methods, and on and on. Handling and
turnaround of tools is as important as that of material. Lead times are
important. Putting all this together, the conclusion is soon reached that
a company must develop the way automation will fit with the total
organization and the way the organization will fit with automation:
marketing, personnel, scheduling, purchasing--everything, not just
engineering and production.

Chapter 6: Attaining Total People Involvement

Once sure of future direction, the most critical factor of success

is development of people. As soon as they are ready, give the action
point people responsibility and expect performance. Even if the skill
development has not progressed much, the change in work
atmosphere produces improvement.
A Navistar foundry improved quality by giving workers basic
instruction on quality and the responsibility to do the job right. Workers
at the final operation grind castings, inspect them, load them for
shipment, and attach a quality certification tag, which they signed
personally. The tag identifies the part and its source. It proclaims
quality to the user and says that, in case of trouble; telephone the
worker who signed the tag. Next to the grinders there's a telephone--
the workers telephone.
Now the workers know by telephone voice some of the people in
far -off places who use the castings. Their interest in quality perked up.
They do not hesitate to inform other workers in core room, furnace, or
pouring when something is not right. Some of the “bureaucracy“ of
staff and supervisors between customers and workers is gone.
Call it job enrichment, job enlargement, or what you will, the
added responsibility did not increase the work cycle times of the direct
workers and it was real participation, not a make them feel like they
are participating sham. The improved quality made their job easier, not
harder, and it increased the productivity of the "bureaucracy“ also,
provided they understood.
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Management and staff acceptance of a true worker responsibility

comes hard. Most workers welcomed the approach. It is better than
being treated as a child, but they will naturally question the sincerity of
management, and management doubts the capabilities of workers.
Some workers may only be capable of limited development; some are
too immature to accept responsibility; but in general, workers accept
this change easier than management and staff do. The job of
management and staff is to enable the direct-action people to perform
better.
better.

Chapter 7: Synchronizing the Company

Timing is very important in operations. A repeated pattern of

work contributes much to quality and productivity in production and in
other operations as well, including those in marketing and engineering
that feed into production. In fact, organizing a smooth flow of work
there is necessary if a smooth flow is to be obtained in production.
Scheduling and improvement go together. The objective is not to
make some magic form of scheduling work, but to schedule so as to
capture maximum possible advantage of regular cycles to improve
every aspect of operations. This begins with the basic approach to the
business. A passage from a long ago paperback, now forgotten,
suggests the opposite condition: "Harbaugh’s advertisement read, ‘will
do anything legal. Any time. Any place. Fee negotiated.’ Not
surprisingly he was a little disorganized. “
Organizing in the sense is "nonrandomizing“ the part of the world
one wishes to work with. It is done all the time without much thinking
of it, as one developing a set of qualified leads for marketing
enticement, separating the susceptible from the random heard. The
wasteful effects of random activity are easily underestimated, as is the
power of dispelling randomness so that wasteful work is much reduced.

Chapter 8: The external Factory—Suppliers

Half of the average manufacturer’s production cost is purchased

material. If internal production is mostly assembly, as much of 80% of
cost of goods sold is pass-through from suppliers. Competitive
manufacturers must manage this external factory by the same
philosophy as the internal one.
Think of a material supplier in the operating sense. The true
supplier is the last operation touching material in a remote facility. The
true customer is the first operation to use the material received.
Anything that unnecessarily complicates a simple hand-off of material
from one to the other is superfluous--waste.
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Other activities are necessary to make the actual material transfer

smooth and simple: product design, certainty of quality, schedule,
containerization, transport, and financing. If one is trying to eliminate
waste, detailed decisions on all these should not be necessary for each
shipment.
This simple concept mightily contradicts established business
practice. American companies find it difficult to strip away the layers of
custom that smother operation-to-operation supplier relationships with
different ownership at each end of the line. Doing so is not easy if the
supply relations are inside the same company.

Chapter 9: Taking It to Them—Marketing Power

All this would be beautiful were it not for the needs of real
customers, or so it is feared by marketing representatives. By their
instinct, if inventories are reduced, surely customer service will
deteriorate. The promises are seductive but with little assurance how
soon, and meantime a disaster might occur.
With the exception of champions of change, almost everyone
fears this, so companies temper a there adventuring with self-imposed
marketing restrictions: Never shall customers be worse served than at
present. Improvement targets shall include customer service -things a
customer can see. Whatever pain the organization must endure for
internal reform, the customer shall see none of it.
To allay marketing fears, companies safeguard customers from
operating changes at first. Finished goods inventories temporarily
increase until customer service from lower inventory levels can be
demonstrated. Make-to-order product may be actually built ahead to
demonstrate shorter lead times, then held for shipment. Extra
inspectors check the final products to be sure that responsibility at the
source is working.
Sooner or later, marketing must decide that it is part of the
movement to manufacturing excellence--and sooner the better,
because marketing is vital to it. It can no more afford to be
independent of engineering and production than those two functions
can be independent of it. J I T/T Q brings changes in how to think
about marketing.

Chapter 10: Reforming Permanently

The concepts of total quality, of just-in-time manufacturing, and

people
involvement make up the substance of manufacturing excellence. By
their implications they represent a different way of operating a
company and are not techniques to be grafted onto a present
existence.
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A few observations about the leaders in manufacturing progress

may be helpful. First, they seldom work only 40 hours a week. Some
work hard and play hard, but all have a dedication, and none think
they face anything less than a supreme challenge.
Second, a little experience with attempting low inventories and
zero defects removes a great deal of braggadocio. The manager learns
to compare performance with what could be and to not be self
congratulatory on prior achievements for long. In this they are like
runners who compete more against the clock than against other
runners.
Third, they understand manufacturing and a broad sense:
technical, behavioral, marketing, and financial. Almost automatically
they begin to think of manufacturing as very challenging, long run
competition--challenging as almost of any human activity short of
global politics or war.
The importance of considering these things is in how to build the
right kind of enthusiastic fire for manufacturing excellence. Sustained
enthusiasm is necessary, and it differs from adolescent cheerleading. A
large group of people must combine their talents in a fashion superior
to a loose federation of independent agents. Manufacturing is often
seen narrowly as a dull trade; but, done with excellence, it demands
almost every talent humans possess.

BACK TO BASICS: YOUR GUIDE TO MANUFACTURING EXCELLENCE

BY STEVEN A. MELNYK AND R.T. “CHRIS” CHRISTENSEN

Introduction

As organizations move into the future, the operations

environment needs to expand into a collaborative planning and
forecasting replenishment (CPFR), vendor managed inventory (VMR),
and Enterprise Resource Planning (ERP). These innovative and complex
methods require an unprecedented degree of accuracy and knowledge
of the basics in operations management. Once you grasp key concepts,
you can expertly apply such new procedures as CPFR, VMI, and ERP.
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Back to Basics: Your Guide to Manufacturing Excellence

provides a comprehensive reference for the fundamental principles of
manufacturing. Not only do you get a solid definition of basic
operational requirements, but also an easy-to-understand approach to
resolving management problems.

Chapter 1: Why the Basics?

In the first chapter of the book, they explore some of the

foundations on which this book and the various topics discussed in it
are based. It is here that they show how important the basics are, in
that everything we do in operations management, in general, and in
manufacturing, specifically, are built on them. They show that, when it
comes to technology, it is best to work on the basics first, before
seriously considering implementation of the latest and best
technology, be it hardware or software. In fact, we might consider the
following hierarchy:(1) basics, (2) simplification--taking the basics and
making them work better by simplifying them and making them easier
to utilize, (3) integration--making sure that the basics in each area of
the operations management/manufacturing system are working with
each other rather than against each other, (4) focus--making sure
that the basics we are implementing are consistent with the strategic
stance of the firm, and (5) technology--after we have done everything
that we can on the preceding four dimensions, we are ready and able
to successfully implement technology and take it advantage of it

Chapter 2: Understanding Management: The Basics of

Problem-Solving

Managers do more than simply manage. They are intensely

involved in the process of directing resources and organizing activities
in achievement of corporate or organizational objectives. Ultimately,
what this means is that managers are problem solvers and decision
makers. They must be able to bring order into chaotic situations.
Furthermore, they must be able to examine the situation facing them
and distinguish between the symptoms and underlying root causes.
They must avoid the tendency of attacking symptoms and instead
focus their attention on the problems.
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The problem with problem solving and decision making is that,

for most managers, they are activities and processes that have been
learned only after a great deal of experience and postgraduate work in
the School of "hard knocks.“ This approach allows the new manager to
learn the necessary skills of problem solving only after numerous
periods of trial and error. This process is time-consuming, costly, and
painful (for the new manager, the firm, and those working with that
person). What this approach overlooks is that there are certain skills
that can be learned by reading, rather than trial and error.

Chapter 3: What Type of Company Are We?

Most firms know that they build products and deliver services.
They recognize that they embody some form of manufacturing or
transformation process. However, when questioned, most managers
would have difficulty in describing what type of firm or process that
they have. In fact, if we were to ask the manager of a "typical" firm to
described their processes and to identify the extent to which they are
similar to other systems, we would find that they would see
themselves as being unique. While it is true that every company is, to
some extent, unique, it is also and more importantly true that every
companies manufacturing/transformation processes can be
categorized as belonging to one of a finite set of possible systems.
This commonality is critical because it allows managers to learn
from the experiences of others. It is also critical because it helps us to
develop expectations of how a specific system should perform, what its
bottle necks are, and the type of flows, type of equipment, and type of
planning and control systems that we should expect to see. We can
then use these expectations to evaluate systems and to look for gaps
between what we expect to see and what we actually observe. These
gaps often flag opportunities for improvements. Further, this
commonality is important because it helps to guide our selection and
evaluation of potential software packages.

Chapter 4: Understanding the Importance of Metrics

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If you had tried some five years ago to develop a list of topics
that formed the basics of operations management, you probably would
never have included the topic of metrics. Until recently, metrics, the
process for capturing, measuring, reporting, and addressing the
performance of activities, were largely overlooked. As a result, this
process was often considered after the fact ("now that we have the
system in place, how do we measure and report its performance?“) and
often was carried out by other groups (typically accounting). It was also
an activity that was assumed to be more punitive for than corrective.
After all, measurement being done after the fact often meant that the
factors that created the problem in the first place had passed. Because
they were history, there was little opportunity for correction.
In the last five years, however, there has been a significant
increase in the interest in metrics. This increased interest is a result of
several factors. First is a new awareness of the costs created by poor
metrics. With poorly thought out and poorly integrated metrics, we find
that there is often a great deal of confusion on the part of the users. In
addition, managers have encountered numerous situations in which
the metrics develop and used within one area of ran counter to the
metrics being used by another group or area. The result of this
situation is inevitably conflict and frustration. Furthermore, managers
have found numerous instances where what their systems were
measuring was what they could measure, not what they should
measure.

Chapter 5: Process Thinking: Key to the Basics

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Increasingly, we are seeing the emergence of a new approach to

the challenge of attaining manufacturing excellence--process thinking.
Process thinking is a structured approach that views a firm and its
various activities and functions in terms of the underlying processes.
With this approach, managers design, and change the various
processes with the goal of ensuring that these processes make the
"desired " results inevitable. For example, when we look at McDonald's
or Burger King Restaurant we see process thinking in action.
McDonald's can offer us fast delivery of a consistent quality product
because it has standardized both the product and process ( the proof
of this can be seen when we ask for a Big Mac made without the sauce
and find ourselves waiting forever--why?) Until recently, McDonald's
built standard products to stock. When we entered the restaurant and
placed our order, we probably looked at the bins containing the
burgers to make sure that the items we wanted were in stock. In
contrast, Burger King has organized its processes and products on an
assemble-to-order approach. It builds components (buns and cooked
burgers) to stock. When we enter and give of our order, the preparer
can assemble the burger our way. To ensure that it is hot, it is
microwaved. The reason why McDonald's had difficulty satisfying
special orders but Burger King easily could was the structure of their
processes.

Chapter 6: Capacity: You Can’t Build It if You Don’t Have the

Capacity

Capacity is central to nearly everything that is done in

manufacturing. Whenever a decision is made to change a process or to
reschedule work, there is also an accompanying implication for
capacity. We define or evaluate the feasibility of a schedule or a
proposed change in terms of capacity. In many ways, the development
of manufacturing excellence is really the story of the development and
maintenance of effective capacity planning and management.
Effective capacity planning and management are not easy to
develop and implement. In part, this is because the concept of capacity
is not an easy one to define and understand. There is not just one type
of capacity; rather, a there are multiple different types of capacity that
we must be aware of. In addition, there is the issue of assessing
capacity in isolation and within the context of a process. Finally, there
is deeper into relationship between capacity planning management
and production scheduling.

Chapter 7: Understanding the Nature of Setups

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Before the advent of just-in-time (J I T) manufacturing, with its

emphasis on short, predictable lead times, set up was viewed as a
given. Set up times were often given to manufacturing people after
being determined by the engineering group. This time allowance
determined what resources we needed and when. When process
improvements were sort, setups were often overlooked (after all, they
were a given); however, this view of setups has now radically changed.
We are now beginning to see setups for what they are--a
necessary but not value adding activity. Our customers do not pay us
to do setups. Setups are rarely, if ever, seen as being something of
value to the customers; however, we need setups so that we can carry
out the operations necessary to convert inputs into outputs of value to
our customers. Furthermore, we now recognize that setups have major
implications for the attainment of manufacturing excellence. They
consume capacity and time. In addition, they can be a major source of
manufacturing variability. Variability, in turn, leads to lead times that
are not predictable. As a result, a task for many manufacturing
systems has been to reduce setups. Yet, before we can reduce setups,
we must first understand what is meant by the concept of set up. This
challenge is easier said than done. In reality, there is a great deal of
confusion surrounding this concept.

Chapter 8: Inventory: The Most Misunderstood Corporate Asset

We all have inventories in our operations and have lived with

inventory ever since man first began to make more than one of
anything. Inventory record accuracy was not an issue to us even as
recently as a few years ago because we always had inventory, and we
always talked about the accuracy of our records but did little to
improve their record accuracy. Inventory provides a cushion or
insurance policy to protect us from Poor inventory record accuracy. We
are beginning to think that one way to protect ourselves from problems
arising from poor inventory record accuracy is to just put more
inventory in our warehouses to compensate.
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So what is the big deal about how accurate records are, anyway?
We have the situation covered with our inventory. Why bother with
record accuracy? In the past, we saw that we were running on of
something, we just bought more. And if we found that we still ran on of
stuff, we bought even more. No big deal, right? Not so. What are
accounting friends have told us is that inventory is a fixed investment
that generates no revenue. The accountants have always been after us
to lower the amounts that we have in inventory so they could spend
the money elsewhere (something about investment opportunities or
profit, or something like that). But isn't inventory something that we
need to stay in business? Without any inventory, we would be in a
position of not being able to supply our customers. Where would
McDonald's be if they did not have any inventory of hamburgers to
give us when we came in the restaurant? Isn’t the same thing true at
your company? Don't we really need inventory to be in business?
Yes, we do need inventory of some sort to stay in business but
not as much as we had in the past because now we have systems that
can plan our operations and eliminate the need to carry as much
inventory. By lowering the inventory that we have at our disposal,
though, we have less protection from the unknowns. Let's take a look
at how things have changed. Inventory is a buffer against the
unpredictable. It protects us from variations in our ability to
manufacture, as well as variations in our customers' ability to
determine demand and give us an accurate forecast. Inventory also
protects us from supplier quality and delivery problems, which are very
important to us in the light of today's demand for quick delivery.
What about our inventory record accuracy, though? There are
four things we need to do correctly in today's manufacturing arena.
We need accurate bills of materials, accurate route sheets, excellent
capacity definition, and inventory record accuracy. We need accurate
bills of materials to tell us what we need to meet the order, and we
need good route sheets to tell us how to assemble that product and
how much time will need to do the work. It is also important to define
our demonstrated capacity and the capacity we have available to
complete the order.

Chapter 9: Odds and Ends of Manufacturing Basics

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We have focused on certain central themes; however, these

themes, while critical to manufacturing excellence, are not sufficient by
themselves. There are other elements that contribute to manufacturing
excellence. In this chapter, we have brought together all of those
elements of excellence, and our attention will be directed primarily to
two major areas: part numbering and bills of materials. These two
areas that are central to every production system--be it in
manufacturing or the services. For many firms and managers,
however, these two elements are poorly understood. As a result, they
have generated a great deal of confusion in many systems, especially
as firms undertake the upgrading of their Manufacturing Resources
Planning (MRPII) systems or have made the move to Enterprise
Resource Planning (E R P) systems.

Chapter 10: Getting Things Done, and Done Right, the First
Time: The Basics of Implementation

No discussion of the process of generating savings would be

complete without a discussion of how we go about identifying savings
potential and achieving savings. Every organization goes through the
steps every year to plan for changes that will generate savings through
the annual goal and objective planning process, but that is just where
we fail in our attempts to generate savings. We look at the savings that
we think we can get and set our goals on achieving those savings.
There of a lot of business books that are written on just that premise:
Identify the savings potential and implement. That is the problem,
though. We tend to look at the savings that we can be achieved
without ever defining the process that needs to be implemented to
generate the anticipated savings.
When we look at the goals and objectives of our corporations, we
sometimes get the feeling that those goals really are the anticipating
savings. Most companies have a goal that might sound something like
this: "It is our goal to reduce the work in progress inventory by 10
percent this year." A lofty goal but one that most companies set for
themselves. Then we spend the rest of the year trying to attain that
goal and usually fail because we do not know how to achieve the
savings. We have a really easy way to achieve this goal--stop buying
materials for about a month, which should pretty much achieve the
goal of a 10% inventory reduction. We have accomplished the goal that
the company established and have met the objectives and the needs
of the company, but this is the wrong solution to the problem.
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This example, while obviously not being a valid solution to the

problem, does illustrate the problem quite well. What we really did was
to implement the savings. The goal was to reduce inventory, and that's
just what we did. What we did not do was to implement the tools
necessary for us to reduce inventory the proper way. We selected the
wrong tools to generate the savings in inventory. There is no doubt that
there really was a reduction in the inventory level, but the corporation
is not able to sustain operations at that lower inventory level based on
the method that was used to generate the reduction. This was a case
of implementing the savings, which is not the way to achieve
excellence in our operation.