IJQRM

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International Journal of Quality &
Reliability Management,
Vol. 17 No. 2, 2000, pp. 132-143.
# MCB University Press, 0265-671X
Challenge to world-class
manufacturing
H. Yamashina
Kyoto University, Kyoto, Japan
Keywords World-class manufacturing, Total productive maintenance, TQM, Just-in-time
Abstract Deals with the basic requirements for world-class manufacturing and discusses the
role of total productive maintenance (TPM) in helping to achieve world-class manufacturing.
Examines the roles of TPM in TQM and JIT. Finally, impacts of TPM on the culture and
structure of the organization are discussed and pitfalls of TPM implementation are dealt with.
Provides an in-depth look at the development of Japanese manufacturing strategy and concludes
with the view that the first step to world-class manufacturing is to implement TPM successfully
and to create an active organization.
Introduction
It is Japanese policy to create prosperity through industrialization and there is
little doubt that the development of the Japanese economy has been well
supported by the growth of manufacturing industry. In Japan it is firmly
believed that the prosperity of a nation depends on the excellence of its
production capability and that those who conquer manufacturing will eventually
conquer technical innovation. It has been the Japanese commitment to
continuous technical innovation in manufacturing industry that has allowed it to
become a leading economic power. Currently, however, Japanese manufacturing
companies are facing very tough competition primarily due to the appreciation
of the yen and the dramatic improvements in competitiveness from both the
advanced countries and the rapidly growing still-developing countries. The
objective of this paper is to provide an insight into the strategies currently being
adopted by Japanese manufacturers in an effort to meet the challenge of
obtaining world-class manufacturing status to cope with these very serious
issues. First, the basic understanding for competitive manufacturing from the
viewpoints of organization and human resources are discussed. Second, the
strategies used by Japan in the past are considered, combined with a discussion
of the strategies being implemented by Japanese manufacturing firms to
help maintain and strengthen Japan's competitive edge toward world-class
manufacturing. Third, the role of total productive maintenance (TPM) to help
reach world-class manufacturing is discussed and the roles of TPM in TQM and
JIT are examined. Finally, impacts of TPM on the culture and structure of the
organization are discussed and pitfalls of TPMimplementation are dealt with.
Organization and human resources
Product technology and process technology
One way of looking at the continuing evolution of the Japanese approach is indeed
to consider the techniques that have been adopted in the West just-in-time
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World-class
manufacturing
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production, total quality management, statistical process control, total
productive maintenance, etc. They are certainly important, and Japanese firms
are continuing to refine and perfect them. But confining the study to the
mechanics of production risks discounts the importance of more subtle, long-
term factors of organization and human resources in the pattern. In this light, it
is more useful to think of the future of competitive manufacturing as human-
integrated manufacturing (Yamashina, 1994). To understand what this means,
it is necessary to step back and look at the wider manufacturing picture. Unlike
firms in the West, the Japanese have always believed that products and the
processes by which they are made are two sides of the same coin. Process
technology is as important as product technology. The two go together. In the
same way, they also believe that creative development goes together with, and
is as important as, creativity in invention. Table I shows five examples of
important consumer products which were developed by Japanese firms after
having been originated in the West. Far from more ``copycatting'', as some
Western businessmen like to think, Japanese companies consider these as
textbook examples of commercial creativity.
It is true that, since World War II, Japan has been able to license or buy
patents of attractive products from the West. This is especially the case for
consumer goods. For that reason, in the pursuit of competitive manufacturing,
its companies have been able to focus more attention and channel more
resources into production techniques than their Western counterparts.
Japan has made a concerted effort to strengthen its manufacturing capability
over the last three decades. Over the last 30 years manufacturing techniques
sections, departments, centers, headquarters and R&D have been added to
organizational structures to support manufacturing capability through
improvements in manufacturing technique.
Japanese companies actively employ engineers. Japanese Ministry of
Education figures from 1990 show that Japanese staff with science degrees
totaled 14,217 (1990) compared with 68,520 in the USA (1988). Even after
adjusting for the difference in population (the USA is about double Japan's
population) science graduates are far more common in the USA. In the UK the
number of science graduates was 21,900 in 1988 the UK's population is half
that of the Japanese but still the UKhas more science graduates. This, however,
is in stark contrast to the situation in engineering 86,115 in Japan versus
15,200 in the UK. Even in the USA the number of engineering graduates still
totaled only 126,341.
Table I.
Invention and
development
Item Originator Developer
Transistor radio Regency Sony
VCR Ampex Sony, Victor
TV RCA Matsushita
Rotary engine Vanchel Mazda
CD Philips Sony
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A closer look at the production process
To be able to manufacture attractive products at attractive prices, companies
need not only plant and equipment but also different types of production staff.
Competitive Japanese firms identify the key categories as :
.
basic research engineers;
.
applied research engineers;
.
product development and design engineers;
.
production design engineers;
.
process improvement engineers; and
.
operators.
Japanese companies generally concede that in basic research they are inferior to
the West. In applied research and product development, honors are about even.
In preproduction and process improvement, however i.e. on the factory floor
the advantage shifts decisively to Japan (see Figure 1). In particular, Japanese
engineering skills have been applied more consistently and intensively than in
the West to the three crucial areas of quality management, value added per
employee and the shortening of lead times.
These policies are reflected in company organization. Comparing companies of
similar size and business area in Japan and the West, the Japanese firm uses more
engineers in applied research, product development and design and process
improvement and far fewer operators in daily work. It is not just that there are more
engineers in the ``applied'' areas; in each category the level of knowledge required is
higher than in the West. The inevitable conclusion is that, as a total production
resource, the Japanese company is much stronger than its Western counterpart.
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Traditional
World Class
Number of people
Number of people
Key categories
(a) Basic research
(b) Applied research
(c) Product development and design
(d) Process Engineer (pre-production)
(e) Process Engineer (improvement)
(f) Operator
(a) (b) (c) (d)
(e)
(f)
(a)
(b) (c) (d) (e) (f)
Figure 1.
Six categories of
production staff
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Japanese manufacturing strategy
Four periods of Japanese manufacturing strategy
From 1945 to 1996, four periods of Japanese manufacturing strategy emerged.
The first period from 1945 to 1974 was the ``product out'' phase, when
demand exceeded supply and Japan focused on increased production volume.
The measurement of various factors such as output per hour, lost time due to
machine breakdowns and defect rates, was undertaken to ensure that
competitiveness in manufacturing and improvements to production capability
were made. In 1973/74 the first oil crisis struck, and markets for consumer
goods like washing machines, refrigerators and vacuum cleaners started to
show saturation. After all, all the markets eventually become saturated! The
second period began and was known as the ``market-in'' phase. Japanese
manufacturing companies needed new strategies to cope with the fall in
demand, and diversification theory emerged.
Diversification theory encompassed the idea that if a certain product can sell
a given volume, then if the good is differentiated produced with many
variations to fit every different kind of market need there is an opportunity of
an increase in demand. If people were all the same we would not need to make
so many kinds of printers; but people are different. Based on this principle
many companies started to produce goods with many variations, and firms
began to develop an appreciation of customer needs and satisfaction levels.
Diversification undeniably increases sales; it also carries costs. It requires more
work in design. In addition, if production cannot cope with changing market
requirements quickly enough, it can lead to waste as a result of mismatches
between production and sales overproduction and inventory pile-ups of
products in low demand, together with inability to supply products in high
demand. In short, it is vital for the manufacturing company to provide
customers with the right products at the right time at the right price in other
words to implement just-in-time manufacturing.
Increasing emphasis was placed on shortening the time between
manufacture and distribution in order to create productivity improvements.
This whole process was exacerbated by the improvements in information
technology. The production-led years gave way to a marketing-led period. As a
result, additional performance measurement techniques were introduced such
as the number of claims from the customers the thinking was that if the
customer was not happy with what they bought then they would not buy it
again. Other measures included the direct going rate, manufacturing lead
times, delivery lead time, set-up times and stock turns.
Japan had been quite successful in supplying and creating market needs up
to 1988 primarily due to strategies based on the theory of diversification. But
there was a limit to this idea. The Japanese manufacturing philosophy, based
on the concept of mass production of better products at lower prices in large
volume, had come to saturation. During the ``market-in'' period, high level
industrialization, strong competition and the maturity of particular markets
resulted in a ``squeezing'' of the product life cycle and in 1988 a new period
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emerged known as the ``constantly launching new products'' period. It became
an imperative for Japanese firms to secure profits earlier than their competitors.
At the end of the decade, a variety of manufacturers responded to growing
competition by launching a barrage of new products with even shorter
lifecycles.
Companies could launch newproducts using the media as a tool for the rapid
and comprehensive transmission of their product information to the customer
base, significantly assisting in the maintenance of old and the creation of new
markets. In time, however, markets decline, so it becomes critical that the whole
process from design, to manufacture, to distribution is shortened. The growth
of information technology made productivity improvements a domestic
necessity.
To improve the process of launching and designing new products,
measurement of product development lead times was introduced. For example,
data taken from 1 April 1991 up to 31 March 1992 show that 89 of the 211
television models available during the year underwent model changes this
translates into a life cycle shorter than one year (MITI, 1992). The lifetime of the
products became shorter and shorter.
To align production methods to the changing face of industry, changes in
resource allocations were needed. In the 1960s most people were engaged in
either direct manufacturing or production areas, with only a handful engaged
in the research/system development areas. In the 1970s change was occurring;
fewer people were in manufacturing and distribution and by the 1990s very
few people, around 25 percent, were engaged in direct manufacturing and
distribution (see Figure 2). This is reflected in the change in organizational
structure of Japanese firms, dedicating more and more people to research/
system development areas or product/business development areas of the
company (see Figure 3). At an organization like Toshiba, the number of
employees has remained fairly static since the 1970s, but engineers involved in
the indirect division have risen from 39 percent to 69 percent. This means that
the company structure has changed from a business where technology is quite
stable to one where the speed of technical innovation is fast that is from a
labor-intensive industry of assembly to a technology-intensive industry of
development and application of electronic engineering. This shift is in line with
the changing pattern of consumer goods. The first generation was mass
production. The second generation was the production of many variations to
meet diversified needs, with higher quality than is possible through mass
production. The third generation is a separate model for every customer in
other words, mass customization. Industry needs to be ready to meet these
market changes with competitive manufacturing capability.
But, in 1991/92, manufacturing companies faced major fluctuations in
demand, both in content and quantity, and the market no longer had enough
capacity to absorb all the new incoming products. To make matters worse,
intense competition fromboth developed countries and the newly industrialized
economies started to seriously challenge Japanese manufacturing. This was
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137
exacerbated by the strength of the yen because the stronger yen translated into
higher cost. Japanese manufacturing firms were forced to refocus on cost
reduction. Intensified economic friction with America, Europe and Asia
required an increased focus on international co-operation.
After 1991, the fourth period emerged and was entitled the ``period of
launching prospective profit-making products and manufacturing profit-
making products''. This phase also developed in response to various new
market trends that emerged during the 1990s. One such change was the need
for Japanese manufacturers to face the increasing problems related to the
protection of the ecological environment and the disposal of industrial waste,
by developing resource-saving factories producing less waste and little or no
pollutants. Moreover, Japanese firms recognized the need to match market
demand by manufacturing products which were energy saving, produced no
pollutants and were recyclable at the time of disposal.
Vision 2000
During the period of launching prospective profit-making products and
manufacturing profit-making products, Japan has learned very important
lessons on the necessary conditions for prosperity. They are:
(1) the need to have growing products in line with market needs and in
accordance with megatrends;
Key
Research/system development
Product/business development
Sales/management
Manufacture/distribution
Source: Nomura Research Institute (1990)
1960s 1970s 1980s 1990s
Figure 2.
Change of human
resource allocation
regarding periods
of creativity
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(2) very active R&D;
(3) needs-orientated product development;
(4) development of original and creative product techniques;
(5) further improvement of manufacturing techniques;
(6) very active organizations;
(7) progressive development of newbusinesses;
(8) extensive utilization of information technology;
(9) extensive use of cost management; and
(10) clear and easy management policy able to be implemented from the
shopfloor to senior management.
It was time to reassess the manufacturing philosophy.
After 1996/97, the fifth period emerged and was entitled the ``constantly launching
many newdistinctive products period''. This phase developed in response to the
lessons Japan learned. All the signs are that this trend many new distinctive
products with shorter and shorter product development time will spread.
Table II shows the Japanese strategies toward the twenty-first century to
respond to various new social and market trends that emerged during the
1990s, to combat the appreciation of the yen and to prepare for entering upon
the twenty-first century.
Productivity improvement
by creativity
Maturity of
industrialization
Development
of information
oriented society
Period of creativity
Productivity
improvement by
rationalization
of processes
Productivity
Improvement
by logistics
Productivity improvement
by concept development
of technology, products,
systems and business
R&D
Product
develop-
ment
System
develop-
ment
Business
develop-
ment
Manufacture Distribution Sales
Management
Product improvement
by industrialization
Product improvement
by information
Source: Nomura Research Institute (1990)
Figure 3.
Production
improvement by
industrialization:
information and
creativity
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The basic requirements for world-class manufacturing
The basic role of TPM in world-class manufacturing
As has been discussed above, market demand is highly variable in the current
mature economic climate. From the manufacturing viewpoint, this climate
generates three unfavorable conditions: diversified demand, greater difficulty
of forecasting demand, and shorter product life cycles. Thus, the competitive
power of the manufacturing company increasingly depends on the speeds of
obtaining market information, and of creating advanced production
engineering to develop new attractive products and to establish an appropriate
production process, the production lead times and the speed of distribution.
Particularly in manufacturing, this requires quality management, competitive
pricing and product variety flexibility with short and accurate delivery. These
pressures demand excellent maintenance practice in such a way that machines
and processes are available whenever needed and produce wanted products
with a required quality level. Good maintenance practices are essential to
produce world-class manufacturers. These are the basic role of TPM.
TPM in TQM and JIT
In Japan it is said that in order to be strong enough in manufacturing one has to
have good brains which require total quality management (TQM), but one also
needs to have strong muscles or, in other words, strong manufacturing
capability which requires total productive maintenance (TPM). Moreover, one
has to have a good nervous system to connect the brains with the muscles,
which means just-in-time production. So, in manufacturing, one needs to have
TQM, JIT and TPM. TPM focuses more on hardware, and TQM more on
software. From the conceptual viewpoint, TPM is a part of TQM. For JIT, it
cannot be implemented without TPM. Thus, TPMis a base of JIT.
The basic requirements for world-class manufacturing
Manufacturing industries can only maintain international competitiveness by
repeating the cycle of developing new technology, making continuous technical
innovations and creating newmarkets.
Think of production as an iceberg as shown in Figure 4. The innovative,
diversified products which consumers see in the shops are the visible tip. Below
the waterline is the necessary infrastructure of, in descending order, applied
research, production technology and, right at the bottom, the bases on which
Table II.
Japanese strategies
towards the twenty-
first century
Development and design Production Usage Renewal/disposal
Knowledge-intensive
products
High-value-added
products
High-quality engineering
products
Autonomy
Clean factory
Resource-saving
factory
Long durability
Easy to dismantle
Recyclable
Modularity
Easy to dismantle
Recyclable
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everything else floats, improvement capability and detailed shopfloor production
know-how. Unless such infrastructure exists, new and attractive products that
are produced quickly and efficiently will not result. Thus, what a world-class
manufacturing company means is that it is strong enough in each of these four
areas compared with its world competitors and that they also integrate these
areas so that they can successfully launch many newdistinctive products.
In other words, the basic requirements for world-class manufacturing are:
(1) to be outstanding in applied research, production engineering,
improvement capability and detailed shopfloor know-how involving
good maintenance; and
(2) to integrate themas a system.
The new roles of TPM
Figure 5 shows how TPM has been developed. This process has taken place in
response to various manufacturing needs that emerged over the years. TPM is
often understood as autonomous maintenance in the West. But, obviously,
there is a limit to the benefits of autonomous maintenance and, far from
mere autonomous maintenance, today's TPM aims to be integral to the
infrastructure shown in Figure 4. Because of this, TPM is often referred to as
``total productive manufacturing'' or even ``total productive management''.
The major reason for the current popularity of TPM is because the benefits
of any activity become more visible and tangible as one goes to a lower level
of the infrastructure shown in Figure 4. In total, 954 plants in Japan have
received TPM awards as of 1 December 1998 (JIPM, 1998a). Many world-class
manufacturers are reporting dramatic improvements in product quality,
operating effectiveness, and profitability fromTPM(for example, see JIPM-TPM,
1997; 1998b). The magnitude of the improvement is staggering: quality
1. Applied research
2. Production technology
3. Improvement capability
4. Detailed floor-level
know-how
Importance of (1),(2),(3) and (4) to support new
innovative product development
New innovative products
Figure 4.
Functions to support
new innovative product
development
World-class
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141
improvement up to 100 percent, breakdowns reduced by 99 percent and profit
increases in the millions. Fewother programs provide such opportunities.
Today's TQM aims, in the process of developing new products, to integrate
the four areas of the infrastructure shown in Figure 4, giving more priority to
the areas of upper level.
Impacts of TPM on the culture and structure of the organization
Very active organization
To become a world-class manufacturer, the organization itself must be active.
From the viewpoint of competence, any organization can be divided into the
following five levels:
Level 1. People deny that there are problems or don't want to see them.
Level 2. People admit that there are problems but find excuses for not being
able to solve them.
Level 3. People accept the fact that there are problems but are unable to solve
thembecause they don't knowhowto attack them.
Level 4. People want to see potential problems and for this try to visualize
them. They will attack themby learning proper methods.
Level 5. People know their problems, methods to solve them and how to
involve all the people to attack them. They are ready to attack any problem and
to change their organization if needed after solving the problem.
By focusing on strengthening the last two improvement capabilities and
detailed shopfloor production know-how (see Figure 4), TPM tries to raise the
level of organization froma lower level to a higher level, hopefully to the fifth level.
To make this movement possible requires definite cultural changes of the
organization. The top has to create an environment for accepting changes and
making continuous improvement. Generally, the top can manage this by:
Cost reduction
Clean factory
Unmanned operation
Concurrent engineering
TPM in the office
Safety/hygiene and working environments
Quality maintenance
Development of early equipment management program
Scheduled maintenance
Education and training
Autonomous Maintenance
Improvement of equipment effectiveness
5 S
1961 1971 1981 1986 1991 Year
Figure 5.
Activated TPM
development
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(1) obtaining competent leaders and managers;
(2) investing in people through education and training; and
(3) empowering and facilitating people under their supervision and
constantly following up results and taking proper measures for support
and freedomin terms of time, resources, etc.
Structural changes of the organization
If TPM has been successfully implemented, it will eventually create excess
people. Thus, reallocation of people will be required.
The author strongly believes that the structure of those companies which
have successfully implemented TPMwill gradually followthe pattern of world-
class organizations shown in Figure 1.
Pitfalls of TPM implementation
Those companies which try to implement TPM often face the following
problems:
(1) lack of long-termcommitment of the top management;
(2) howto relate TPMactivities to cost reduction;
(3) difficulty in obtaining a good and competent consultant;
(4) how to get competent maintenance and quality managers because they
are the key people to the success of the TPMjourney;
(5) shortage of process improvement engineers;
(6) howto convince senior managers who are not interested in TPM, who do
not believe in such a collective measure as TPM, who do not want to
understand what TPM is all about, and who react politically against
TPM;
(7) resistance or indifference of managers and engineering staff as regards
empowering the people of lower levels in the hierarchy;
(8) how to convince workers, especially when they are unionized, because
TPMeventually creates excess people;
(9) risk of losing core people after giving extensive education and training;
(10) risk of the leakage of confidential information via the consultant.
To obtain substantially tangible and intangible benefits from TPM, these
problems must carefully be tackled and resolved.
Conclusion
The first step to world-class manufacturing is to implement TPM successfully
and to create a very active organization. When TPM has become a common
practice in daily production, it can be said that the company has just
commenced a journey to world-class manufacturing.
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References
JIPM-TPM (1997), Proceedings of the Japan Institute of Plant Maintenance Total Productive
Maintenance Conference, Japan Institute of Plant Maintenance Total Productive
Maintenance, June, Paris, France.
JIPM (1998a), The List of TPM Excellence Awarded Companies as of 1998, December, Japan
Institute of Plant Maintenance, Tokyo, Japan.
JIPM-TPM (1998b), Proceedings of the Japan Institute of Plant Maintenance Total Productive
Maintenance Conference, Japan Institute of Plant Maintenance Total Productive
Maintenance, April, London, UK.
MITI (1992), The Survey of Lifetime of Japanese TV Sets, April, Ministry of Internal Trade and
Industry, Tokyo, Japan.
Nomura Research Institute (1990), Strategy for Creativity, March, Tokyo, Japan.
Yamashina, H. (1994), ``Human factors in AMTmaintenance'', in Salverdy, G. and Karwowski, W.
(Eds), Design of Work and Development of Personnel in Advanced Manufacturing, John
Wiley &Sons, NewYork, NY, Ch. 30.