WORLD-CLASS COMPANIES AND LEAN MANUFACTURING

WHAT IS A WORLD-CLASS COMPANY?

World-class companies:
 must maintain strategic agility and be able to turn on a dime;
 motivate and treat employees like appreciating assets;
 profitably meets the needs of its customers;
 permeated by the philosophy of customer satisfaction; and
 achieve world-class status by following a philosophy of lean manufacturing.

PRINCIPLES OF LEAN MANUFACTURING

a. Pull Procesing
 involves pulling products from the consumer end (demand), rather than pushing
them from the production end (supply).
 unlike the traditional push process, this approach avoids the creation of batches
of semi-finished inventories at bottlenecks.
b. Perfect Quality
 poor quality is very expensive for a firm.
 quality is a basis on which world-class manufacturers compete.
 quality has ceased to be a trade-off against price.
 consumers demand quality and seek the lowest-priced quality product.
c. Waste Minimization
 all activities that do not add value and maximize the use of scarce resources must
be eliminated.
 waste involves financial, human, inventory, and fixed assets.
 examples of waste in traditional environments:
 overproduction of products
 transportation of products farther than necessary
 bottlenecks of products
 idle workers
 inefficient motion of workers
 islands of technology created by stand-alone processes
 production defects
 safety hazards
d. Inventory Reduction
 the hallmark of lean manufacturing firms is their success in inventory reduction.
 reasons why inventory reduction is important:
 Inventories cost money. They are an investment in materials, labor, and
overhead that cannot be realized until sold. They also contain hidden
costs and lose value through obsolescence.
 Inventories camouflage production problems. Inventories build up when
customer orders and production are out of sync.
 Willingness to maintain inventories can precipitate overproduction.
e. Production Flexibility
 lean companies strive to reduce setup time to a minimum, which allows them to
produce a greater diversity of products quickly without sacrificing efficiency at
lower volumes of production.
f. Established Supplier Relations
 a lean manufacturing firm must have established and cooperative relationships
with vendors.
 late deliveries, defective raw materials, or incorrect orders will shut down
production immediately because this production model allows no inventory
reserves to draw upon.
g. Team Attitude
 lean manufacturing relies heavily on the team attitude of all employees involved
in the process.
 each employee must be vigilant of problems that threaten the continuous flow
operation of the production line.