WORLD CLASS

MANUFACTURING

(FOR PRIVATE CIRCULATION ONLY)

2022
PROGRAMME COORDINATOR
Prof. Shashank Bhandakkar

COURSE DESIGN AND REVIEW COMMITTEE

Prof. Ranjan Joshi Prof. Dr. Shailesh Kasande
Prof. Madhup Gandhi Prof. Manisha Ketkar
Prof. Viraj Atre Prof. Rajiv Shirke
Prof. D.H. Joshi Prof. Ashok Chaudhari
Prof. Sudeep Limaye Prof. Sudhir Deshpande

COURSE WRITER
Mr. Kamalakar Mutalik

EDITOR
Mr. Yogesh Bhosle

Published by Symbiosis Centre for Distance Learning (SCDL), Pune

July 2007 (Revision 02, 2015)

Copyright © 2022 Symbiosis Open Education Society

All rights reserved. No part of this book may be reproduced, transmitted or utilised in any form or by any
means, electronic or mechanical, including photocopying, recording or by any information storage or retrieval
system without written permission from the publisher.

Acknowledgement
Every attempt has been made to trace the copyright holders of materials reproduced in this book. Should any
infringement have occurred, SCDL apologises for the same and will be pleased to make necessary corrections
in future editions of this book.
 PREFACE

It is my pleasure to write this SLM on “World Class Manufacturing” for students of SCDL. With
the globalisation and consequent intensifying of competition, the demands on industry to become
fully customer oriented is continuously increasing. Pressure on commodity prices necessitates never
heard of efforts for cost reductions to remain profitable. Every move the company makes has to have
involvement of customers and suppliers while keeping a close watch on the competitors’ initiatives.
Under these circumstances, organisations have to use every conceivable means to be better than its
competitors.
In the last few decades, new technologies have emerged at an ever-increasing rate, so also newer
techniques in management. By the time you start implementing something new, it is likely to become
obsolete and is replaced by a newer technique. In this kind of a situation, a practicing manager has
to keep himself abreast with what is happening around and adapt the new methods in his area of
operation to help his organisation to remain competitive. Effort of this SLM is to keep the student of
management abreast with the current trends and help him choose what is best for the organisation.
Each unit in this SLM is written to appraise the reader about the latest techniques in management in
a simple language, which can be easily comprehended. Live examples are cited at many places to
support the theoretical aspects. Every unit explains the objective, structure, key words and summary.
After every topic in the unit, a list of questions for self-assessment are included.
I sincerely hope that this SLM will be interesting and useful and will help students and readers to
learn this subject in a more meaningful and useful manner. I take this opportunity to sincerely extend
my thanks to the SCDL staff for giving me an opportunity to write this book.
Finally, I have to thank all those world famous management experts whose pioneering work in the
field of management is the primary source for the thoughts expressed in this SLM.
Kamalakar Mutalik

iii
 ABOUT THE AUTHOR

Mr. Kamalakar Mutalik is a Mechanical Engineering Graduate with more than 45 years of industrial
experience.
He started his career with Cooper Engineering Ltd. but after a brief stint of one year joined Tata
Engineering and Locomotive Company Ltd (now known as Tata Motors) in the first batch of Graduate
Trainees (1967). He continued with TELCO for next 23 years and by 1987 rose to the position of
Divisional Head of Auto Division. In 1987, he was transferred to Human Resource Division as its
Head and handled the Industrial Relations during the most turbulent IR situation in the company’s
history. In 1990, he left TELCO for better prospects and joined Indian Seamless Metal Tubes as
General Manager (Works). His tenure with this company was 2.5 years.
In 1992, Mr. Mutalik decided to start his own consultancy services under the name of “ConsulTotal”.
His area of consultancy includes: Quality and Productivity Improvements, Quality Standard (ISO 9000,
TS 16949, ISO 14000) Certification, Need-Based Training, HR Matters and Project Implementation.
He has many well-known organisations in his list of clientele.
Mr. Mutalik has also a wide experience in educational field and serves as a visiting faculty in
some of the premium management institutes in Pune. The subjects he covers include Production
& Operations Management, TQM, WCM, Production Planning & Control, Project Management,
Materials Management and Supply Chain Management.

iv
 CONTENTS
Unit No. TITLE Page No.
1 World Class Manufacturing: An Overview 1-14
1.1 Introduction
1.2 World Class Manufacturing − History
1.3 World Class Manufacturing − Philosophy
1.4 World Class Manufacturing Defined
1.5 Building Blocks for World Class Manufacturing
1.6 Examples of World Class Manufacturing Firms
Summary
Key Words
Self-Assessment Questions
Answers to Check your Progress
Suggested Reading
2 Changing Scenario and Measures for WCM 15-38
2.1 Introduction
2.2 Changing Scenario in Manufacturing
2.3 Framework for Continuous Improvement
2.4 Imperatives for Increased Productivity
2.5 Opportunities for Improvement
2.6 Actual Company Performance Improvements
2.7 Measurement Parameters for WCM
2.8 Comparison between Baldrige and Deming Awards
Summary
Key Words
Self-Assessment Questions
Answers to Check your Progress
Suggested Reading
3 Productivity and Work Study 39-72
3.1 Introduction
3.2 Productivity − Meaning
3.3 Types of Productivity
3.4 Misconceptions about Productivity
3.5 Productivity Related Factors
3.6 Improving Productivity
3.7 Work Study
3.8 Work Study in Manufacturing Management
3.9 Principles of F.W. Taylor on Work Study
3.10 Method Study
3.11 Motion Study
3.12 Work Measurement
3.13 Time Study
3.14 Predetermined Motion Time Systems (PMTS)
3.15 Ergonomics
Summary
Key Words
Self-Assessment Questions
Answers to Check your Progress
Suggested Reading
v
 Unit No. TITLE Page No.
4 Manufacturing Strategy 73-92
4.1 Introduction
4.2 Concept of Strategy
4.3 Corporate Strategy
4.4 Business Strategy
4.5 Manufacturing Strategy
Case Study
Summary
Key Words
Self-Assessment Questions
Answers to Check your Progress
Suggested Reading
5 Product and Process Design 93-118
5.1 Introduction
5.2 Concept of Product
5.3 New Product Development
5.4 New Product Review System
5.5 Product Design
5.6 Modern Approaches to Product Design and Development
5.7 Concept of Process
5.8 Process Capability
Summary
Key Words
Self-Assessment Questions
Answers to Check your Progress
Suggested Reading
6 Waste Elimination 119-156
6.1 Introduction to Waste Elimination
6.2 Seven Wastes
6.3 Five ‘S’
6.4 Flexible Work Force
6.5 Equipment Maintenance
6.6 Total Productive Maintenance (TPM)
6.7 Statistical Process Control
6.8 Poka-Yoke
6.9 Total Quality Control
6.10 Reducing Setup Time
6.11 Just-In-Time (JIT)
6.12 Kanban System
6.13 Three M’s - Muda, Muri and Mura
Summary
Key Words
Self-Assessment Questions
Answers to Check your Progress
Suggested Reading
vi
Unit No. TITLE Page No.
7 Toyota Production System (TPS) 157-176
7.1 Introduction
7.2 Underlying Principles of TPS
7.3 The 14 Principles
7.4 Essential Features of TPS
7.5 Techniques used in TPS
7.5.1 Flexible Work Force – Toyota Way
7.5.2 Cellular Manufacturing
7.5.3 Jidoka (Autonomation)
7.5.4 Root Cause Analysis
Summary
Key Words
Self-Assessment Questions
Answers to Check your Progress
Suggested Reading
8 Views of Experts 177-208
8.1 Introduction
8.2 Dr. Edward Deming
8.3 Philip Crosby
8.4 Shigeo Shingo
8.5 Kaoru Ishikawa
8.6 Michael Porter
8.7 C.K. Prahlad
8.8 Stephen Covey
8.9 Peter Senge
Summary
Key Words
Self-Assessment Questions
Answers to Check your Progress
Suggested Reading
9 Lean Six Sigma 209-244
9.1 Introduction
9.2 Lean Manufacturing
9.3 Concept of Six Sigma
9.4 Execution Infrastructure for Lean Six Sigma Application
9.5 Tools for Lean Six Sigma
Summary
Key Words
Self-Assessment Questions
Answers to Check your Progress
Suggested Reading

vii
 Unit No. TITLE Page No.
10 Modern Techniques 245-274
10.1 Introduction
10.2 Theory of Constraints (TOC)
10.3 Synchronous Manufacturing
10.4 Business Process Re-engineering (BPR)
10.5 Benchmarking
10.6 Knowledge Management
10.7 Game Theory
10.8 Flexible Machining System
Summary
Key Words
Self-Assessment Questions
Answers to Check your Progress
Suggested Reading
11 World Class Indian Companies 275-292
11.1 Introduction
11.2 TVS Group
11.3 Infosys Technology
11.4 Tata Iron & Steel Company (TISCO)
Summary
Key Words
Self-Assessment Questions
Answers to Check your Progress
Suggested Reading

viii
World Class Manufacturing: An Overview
UNIT

1
Structure:

1.1 Introduction
1.2 World Class Manufacturing − History
1.3 World Class Manufacturing − Philosophy
1.4 World Class Manufacturing Defined
1.5 Building Blocks for World Class Manufacturing
1.6 Examples of World Class Manufacturing Firms
Summary
Key Words
Self-Assessment Questions
Answers to Check your Progress
Suggested Reading

World Class Manufacturing: An Overview 1

 Notes
Objectives
----------------------

---------------------- After going through this unit, you will be able to:
• Outline the characteristics of a world class manufacturing
----------------------
organisation
---------------------- • Describe the history of world class manufacturing (WCM)
---------------------- • State the philosophy of WCM

---------------------- • Define WCM

• Analyse various levels for building a world class manufacturing
---------------------- organisation
----------------------

---------------------- 1.1 INTRODUCTION

---------------------- The American Productivity & Quality Centre (APQC) invited its
International Benchmarking Clearinghouse members to share their definitions
----------------------
for a “high-performing, world-class organisation” in a brief survey. Overall,
---------------------- five categories emerged as the most common characteristics of a world class
organisation: employee focus, customer focus, leadership, profit and process.
----------------------
1. Employee Focus: Organisations that focus on their employees create
---------------------- invigorating environments where employee participation and development
are key. This category, which significantly outweighed the other issues in
---------------------- the survey, illustrates the emphasis organisations are placing on cultivating
and maintaining happy employees.
----------------------
2. Customer Focus: “A world-class organisation delivers what customers
---------------------- want, when they want it, with an appearance that enhances the
customers’ perception of the product/service,” one respondent says.
----------------------
“This is accomplished by an organisation that is continually focused
---------------------- on the customer and on continuous improvement in all aspects of the
organisation.”
----------------------
Customer focus can only be effective if the organisation decides to
---------------------- truly listen to the customer. Employees who project that they know
the customers’ wants better than the customer will never survive in a
---------------------- customer-focused environment.
---------------------- 3. Leadership: “A world-class organisation has top leadership that
provides, communicates, and demonstrates vision, direction, and a
---------------------- sense of teamwork.” All of these verbs - “provides, communicates, and
---------------------- demonstrates” - from one respondent are key terms that are essential for
a world-class organisation. All three words go hand in hand. If a leader
---------------------- provides a direction for an organisation but does not “communicate”
or “demonstrate” its message, the message is lost. It boils down to that
----------------------

2 World Class Manufacturing

 overused, but often overlooked, phrase - “walking the talk”. Employees Notes
are proud when they can say their organisation’s leader uses actions to
support its verbiage about quality. ----------------------
4. Profit: Without profit, organisations cannot survive for the long term. ----------------------
But to be world class, organisations cannot allow profits to be the focal
point. As one respondent says, “A balance must exist between profits/ ----------------------
employees/customer satisfaction.” If a focus on profits tramples the
----------------------
customer focus, the organisation will make decisions for the wrong reason
- strictly financial, rather than customer oriented. ----------------------
5. Process: Organisations that understand their processes can more
----------------------
effectively produce their products and/or give superior customer service.
Without this basic knowledge, anything can go wrong at any time in the ----------------------
process.
----------------------
Processes are one of the hidden secrets of successful organisations. If
something is not functioning correctly, it usually translates into a faulty ----------------------
process.
----------------------
1.2 WORLD CLASS MANUFACTURING − HISTORY ----------------------
For years, manufacturing was internally focused and operationally ----------------------
compartmentalised. Workers often completed their jobs without understanding
the impact of their work on the whole operation, and whether or not their labour ----------------------
has an important impact on customers.
----------------------
Before, critical functions such as quality control, engineering, purchasing,
and other preoccupations were clearly separated and often described as a “wall ----------------------
approach” to manufacturing.
----------------------
These so-called “walls” inhibited direct and continuous interaction
between functions and isolated decision-makers from both the inside and ----------------------
outside worlds. ----------------------
The results of this isolation were concretely felt on products that did not
meet customer expectations, not to mention internal operational snags such as ----------------------
losses in time, money, opportunities, etc. ----------------------
The goal of implementing a lean word-class enterprise is to improve
all aspects of business and capitalise on the advances gained from applying ----------------------
technically proven trade methods and principles to be profitable and eventually ----------------------
be globally competitive.
----------------------
The motivating factor behind the World Class Manufacturing (WCM)
initiative is two-pronged: First, is to put into action operations management ----------------------
improvements across all functional units, departments or sectors and second
is to equip companies of tool that will enable them to become competitive and ----------------------
responsive to the changing market landscape.
----------------------
The term “world-class manufacturer” is popularly used to denote a
standard of excellence: the best of the best manufacturers at the international ----------------------

World Class Manufacturing: An Overview 3

 Notes level. It came into prominence following the 1986 publication of World Class
Manufacturing: The Lessons of Simplicity Applied by Richard J. Schonberger,
---------------------- which was his follow-up to Japanese Management Techniques: Nine Hidden
Lessons in Simplicity.
----------------------
World marketplace events during the 1970s and 1980s caused
---------------------- competition to grow to such an intense level that many firms were forced to
re-examine their concept of manufacturing strategy, especially in terms of
----------------------
the right choice among the four competitive priorities: cost, quality, delivery/
---------------------- service and flexibility. Managers began to realise that rather than having trade-
offs, they could instead compete on several competencies. It was necessary to
---------------------- capture the breadth and the essence of the fundamental changes taking place
in larger industrial enterprises, with their overriding goal and underlying mind
----------------------
set of continual and rapid improvements and relentless pursuit of competitive
---------------------- excellence.
Richard Schonberger states that the emphasis on world-class
----------------------
manufacturing may someday be chronicled as the third major event in the
---------------------- history of manufacturing management, following the use of standard methods
and times espoused by Frederick Taylor and Frank Gilbreth, and the findings of
---------------------- the Hawthorne experiments at Western Electric, which proved that motivation,
to a significant degree, comes from recognition. For simplicity’s sake, a world-
----------------------
class manufacturer can be described as a company that is able to compete
---------------------- effectively in a global market.
Clearly, there are some demands placed on individuals and organisations
----------------------
that desire world-class status. Peter Stonebreaker and Keong Leong presented
---------------------- a hierarchy of steps, appearing as different levels that lead to world-class
operations as shown below. This series of steps will be used to describe the
---------------------- characteristics of world-class manufacturers.
----------------------
1.3 WORLD CLASS MANUFACTURING − PHILOSOPHY
----------------------
A manufacturing firm achieves world-class status when it has successfully
---------------------- developed manufacturing capabilities to support the entire company in gaining
a sustained competitive advantage over its competitors in such areas as cost,
----------------------
quality, delivery, flexibility and innovation. World-class manufacturers regard
---------------------- their manufacturing operations as being externally supportive, that is, playing a
key role in helping the entire company to achieve an edge over its competitors.
---------------------- They seek to outperform their global competitors in targeted areas; they are
not content simply to copy their competition. They dislike being dependent
----------------------
on outside organisations for expertise; they want to develop their own work
---------------------- force, equipment, and systems, but they also respect the capabilities of others.
Therefore, they continually scrutinise the outside world, particularly their top
---------------------- competitors, to ensure that they are aware of the newest ideas and approaches.
---------------------- The most recognisable characteristic of world-class manufacturers is their
ability to adapt quickly to changing customer and market requirements and
---------------------- to get their new products designed, produced, and delivered to the customers

4 World Class Manufacturing

better and faster than their competitors. The company that has this ability tends Notes
to grow faster and be more profitable than its competitors.
----------------------
Activity 1 ----------------------

1. According to you how does the manufacturing philosophy help the ----------------------
organisation to be competitive?
----------------------
2. Give your suggestions related to the actions an organisation should
take to grow faster and be more profitable. ----------------------

----------------------
1.4 WORLD CLASS MANUFACTURING DEFINED ----------------------
World Class Manufacturing (WCM) is defined as a manufacturing ----------------------
philosophy or ideology that is used to achieve world-class manufacturer status.
----------------------
WCM is a process that integrates key cross-functional operations in
ways that meet precisely what the customers specifically need and want from a ----------------------
product.
----------------------
WCM is not an end, so they say but a definitive process. Since it is a
process, companies are likely to achieve favourable results associated with ----------------------
successful implementation of industry-tested methods.
----------------------
The essence of WCM philosophy is continuous improvement involving
everyone in the organisation. Organisations that adopt this philosophy constantly ----------------------
seek opportunities for improvement in such key competitive areas as quality,
cost, delivery, flexibility, and innovation. Such improvements are essential to ----------------------
survival and profitability. ----------------------
The emphasis on continual improvement is the ultimate test of a world-
----------------------
class organisation. Robert Hayes, Steven Wheelwright, and Kim Clark, the
authors of Dynamic Manufacturing, explain that any well-run and adventurous ----------------------
company may seize a temporary advantage over its competitors by adopting
a particular innovative product or process design, or by investing in a state- ----------------------
of-the-art production facility. It may appear initially that such a company
----------------------
has achieved parity with those other companies that truly compete through
their manufacturing capability, but if this new design or facility comes to be ----------------------
regarded as a goal in and of itself, if the organisation does not immediately
begin experimenting and trying new things, the advantage is soon lost. Richard ----------------------
Schonberger, author of World Class Manufacturing, suggests continual and rapid
----------------------
improvement as an overriding goal for world class manufacturing. Masaaki
Imai, the author of KAIZEN, points out that KAIZEN (which means gradual, ----------------------
never-ending improvement, doing “little things” better; setting and achieving
ever-higher standards) is the key to Japan’s competitive success. ----------------------

----------------------

----------------------

World Class Manufacturing: An Overview 5

 Notes
Check your Progress 1
----------------------
Fill in the blanks.
----------------------
1. The emphasis on __________ improvement is the ultimate test of a
---------------------- world-class organisation.
---------------------- 2. For years, manufacturing was internally focused and operationally
______________.
----------------------
3. The term _____________ ____________ is popularly used to denote
---------------------- a standard of excellence: the best of the best manufacturers at the
international level.
----------------------
4. Without _________, organisations cannot survive for the long term.
---------------------- 5. ____________ are one of the hidden secrets of successful organisations.
----------------------

---------------------- 1.5 BUILDING BLOCKS FOR WORLD CLASS

----------------------
MANUFACTURING

---------------------- Business and Operations Strategy

↓
---------------------- Technology, Performance Management
---------------------- ↓
Organisational Design, Human Resource
----------------------
↓
---------------------- Information System Management/Operations Capabilities
---------------------- ↓
Quality
----------------------
↓
---------------------- Customer Focus
↓
----------------------
World Class Manufacturing
----------------------
Fig. 1.1: World Class Manufacturing Stages
---------------------- Level 1: Business and Operations Strategy
---------------------- All world-class manufacturers have an explicit, formal manufacturing
strategy, which explicitly supports their business strategy, which in turn is aimed
----------------------
at remaining competitive. Within this strategy are the operating goals to become
---------------------- world class. They use competitive information to establish organisational goals
and objectives, which they communicate to all members of the enterprise.
---------------------- They regularly assess the appropriateness of these objectives to attaining and
maintaining world-class status.
----------------------

6 World Class Manufacturing

 World-class manufacturing requires an overall willingness to establish Notes
closer connections with everyone, from suppliers to workers. It requires an
unwavering commitment to self-analysis and improvement. It requires an ----------------------
aggressive approach to technology that can turn visionary strategies into reality.
All of these must be reflected in the firm’s business and operations strategy if ----------------------
world-class status is to be attained. ----------------------
Level 2: Organisation Design, Human Resource, Technology and Performance
----------------------
Measurement
1. Organisation design: World-class manufacturers integrate all elements ----------------------
of the manufacturing system in such a way that the needs and wants of its
----------------------
customers are satisfied in an effective, timely manner. This requires the
commitment and the expenditure of efforts and resources by all elements ----------------------
within the system to ensure their proper integration. This commitment
extends to outside elements as well, as the world-class manufacturer ----------------------
encourages and motivates its suppliers and vendors to attain equal status
----------------------
with the other elements of the manufacturing system.
World-class manufacturers work to eliminate organisational barriers ----------------------
to communication and to organise the firm in such a way that the core
----------------------
values needed to reach world-class status take precedence. In fact, most
companies that have succeeded in implementing many of the world-class ----------------------
tools—such as Just-In-Time production (JIT), Total Quality Management
(TQM), Manufacturing Resource Planning (MRP II) and Total Productive ----------------------
Maintenance (TPM)—already had the core values well in place. Companies
----------------------
that are already world class are able to quickly absorb other world-class
manufacturing concepts as they are developed and publicized. ----------------------
2. Human resource: World-class manufacturers recognise that employee ----------------------
involvement and empowerment are critical to achieving continuous
improvement in all elements of the manufacturing system. The continuity ----------------------
of organisational development and renewal comes primarily through
the involvement of the employees. World-class companies invest ----------------------
comparatively more in their relationships with their workers, providing ----------------------
significantly more training than their competitors. Firms approaching
world-class status invest three to five times more in human resources ----------------------
programmes than other firms. Some analysts note that combining lean
manufacturing principles with employee participation can help firms ----------------------
become world-class manufacturers. ----------------------
3. Technology: A great deal of emphasis is placed on technology, equipment,
and processes by those trying to attain world-class status. World-class ----------------------
manufacturers view technology as a strategic tool for achieving and ----------------------
maintaining their world-class status. A high priority is placed on the
discovery, development, and timely implementation of the most relevant ----------------------
technology available and the identification and support of those who can
communicate and implement this technology. The most highly competitive ----------------------
firms have made significantly more progress than others in implementing ----------------------

World Class Manufacturing: An Overview 7

 Notes TQM, reengineering, simultaneous engineering, group technology,
Computer-Assisted Manufacturing (CAM), Material Resources Planning
---------------------- (MRP), and the use of Local Area Networks (LANs).
---------------------- 4. Performance measurement: World-class manufacturers recognise
the importance of measurement in defining the goals and performance
---------------------- expectations for their organisation. They routinely adopt or develop
the appropriate performance measurements needed to interpret and
----------------------
quantitatively describe the criteria used to measure the effectiveness of
---------------------- their manufacturing system and its interrelated components.
Use of the proper measurements allows world-class manufacturers to
----------------------
assess their performance against themselves (internal benchmarking),
---------------------- their competitors (competitive benchmarking), and against other world-
class manufacturing firms that are not competitors (generic and functional
---------------------- benchmarking). World-class status is achieved through a relentless
commitment to continuous improvement, which cannot be achieved
----------------------
without measurement.
---------------------- Level 3: Information Systems, Management Direction and Operations
Capabilities
----------------------
1. Information systems: World-class manufacturers require world-class
---------------------- information systems for collecting, processing, and disseminating data
---------------------- and for providing the feedback mechanism that is necessary for meeting
their objectives. Information systems are fully integrated into the business
---------------------- processes of firms that adhere to continuous improvement and TQM
strategies. Capturing and analysing customer feedback and designing,
---------------------- manufacturing and delivering world-class quality products and services
---------------------- is rooted in superior information systems. Richard Schonberger states
that functions within a world-class firm all have a common language and
---------------------- signalling system. World-class firms embrace computerized maintenance
management and computer-integrated manufacturing. Additionally,
---------------------- organisational commitment to continuous improvement is supported by
---------------------- the strategic use of information systems.
2. Management direction: Management is responsible for directing the
---------------------- manufacturing organisation’s journey to world-class status and for creating
---------------------- an organisational culture committed to all that is necessary for achieving
continuous improvement. Corporate culture and values are the foundation
---------------------- for superior manufacturing, which in turn reflects and is reflected by the
calibre of corporate management. This implies that personal commitment,
---------------------- involvement, and a sense of direction by management are critical to the
---------------------- success of world-class firms.
The manufacturing excellence needed for world-class status is nurtured
---------------------- by direction from superior management, which must penetrate the
---------------------- manufacturing function, viewing and managing it as an integral,
indivisible part of the firm. It cannot tolerate mediocrity or even average
---------------------- manufacturing performance.

8 World Class Manufacturing

 Management must seek to describe and understand the interdependency Notes
of the multiple elements of their manufacturing system, to discover new
relationships, to explore the consequences of alternative decisions, and ----------------------
communicate unambiguously within the organisation and with the firm’s
customers and suppliers. Stimulating and accommodating continuous ----------------------
change forces management to experiment and assess outcomes. They ----------------------
must be able to translate knowledge acquired in this way into some sort
of direction, framework, or model that leads to improved operational ----------------------
decision making, while incorporating a learning process into their
fundamental operating philosophy. The objective of world-class status ----------------------
tests management’s ability to learn, adapt, and innovate faster in the face ----------------------
of an intensely competitive global market.
----------------------
3. Operations capabilities: World-class manufacturers are concerned
with whether their operations systems have the ability to meet design ----------------------
specifications, rather than with evaluating the quality and quantity
of products after the fact. In order to attain world-class status, the ----------------------
manufacturing firm has to be given the proper resources. With these
----------------------
resources, the firm must have the capability to produce the right quantity,
the right quality, at the right time (often just in time), and at the right price. ----------------------
The proper technology must be on hand or readily attainable. In addition,
the firm must have the necessary managerial capabilities to compete ----------------------
successfully on a global basis. For many firms, the necessary operational
----------------------
capability involves the ability to provide customers with a large degree
of flexibility of either product or volume, or exceptional response time to ----------------------
orders, changes in orders, or new product development.
----------------------
Beyond the firm itself, operations capability implies a superior interactive
relationship with all vendors and suppliers. World-class firms have ----------------------
extensively implemented JIT, are heavily involved with programmes that
contractually commit suppliers to annual cost cuts, and are making efforts ----------------------
to involve the supplier early in the new product development process.
----------------------
Level 4: Quality
----------------------
World-class manufacturers place an emphasis on quality. Firms in this
category are usually in an advanced state of TQM implementation, continually ----------------------
seeking to enhance their business. All quality costs (prevention costs, appraisal
costs, and cost of defects—both internal and external) are evaluated and held ----------------------
to the lowest reasonable sum. “Zero defects” is the goal of the world-class ----------------------
manufacturer. In order to achieve zero defects, the world-class firm is educated
in and has fully implemented Statistical Quality Control (SQC), sometimes ----------------------
called Statistical Process Control (SPC) or quality at the source. Hence,
quality is maintained and elevated through quality planning, quality control ----------------------
and quality improvement. In conjunction with this effort to improve processes ----------------------
and products, world-class firms utilise an activity called benchmarking. This
involves comparing the firm’s performance, either overall or in a functional ----------------------
area, with that of other world-class organisations. The use of TQM techniques,
according to some analysts, is the most striking differentiator between world- ----------------------

World Class Manufacturing: An Overview 9

 Notes class and non-world-class firms. Quality has also been found to be the most
important competitive differentiator in the eyes of the customer.
----------------------
Level 5: Customer Focus
---------------------- World-class manufacturers instil within their organisation and constantly
reinforce the idea that all who are a part of the organisation must know
----------------------
their customers and must seek to satisfy the wants and needs of not only the
---------------------- customers, but also all other stakeholders. The goal of satisfaction is pursued in
regards to the product, order processing, delivery, quick response to changes,
---------------------- and service after the sale. After all, the goal of continuous improvement is to
improve processes and add value to products and services in such a way as to
----------------------
increase customer satisfaction and loyalty and ensure long-term profitability.
---------------------- Level 6: World Class Manufacturing
---------------------- While world class manufacturing may be difficult for manufacturers to
define, many say they know it when they see it. Whatever it is, it must be from
---------------------- the customer’s vantage point. World class manufacturing firms show large cost
---------------------- reductions over the previous years, as well as increased revenues, higher capacity
utilisation, higher sales per employee, and Returns on Invested Capital (ROIC)
---------------------- that exceed that of other manufacturers. Daniel F. Baldwin states that truly world-
class firms are always examining their business processes and continuously
---------------------- seeking solutions to improve in key areas, such as lead time reduction, cost
---------------------- cutting, exceeding customer expectations, streamlining processes, shortening
time to market for new products, and managing the global operation.
---------------------- World-class manufacturers are the ones that possess the knowledge and
---------------------- technology to provide products and services of continually improving quality. It is
what separates practitioners of the new paradigm from the industrialist dinosaurs.
----------------------

---------------------- Check your Progress 2

---------------------- State True or False.

---------------------- 1. World-class manufacturers are the ones that possess the knowledge
and technology to provide products and services of continually
---------------------- improving quality.
---------------------- 2. Quality has also been found to be the most important competitive
differentiator in the eyes of the customer.
----------------------
3. World-class manufacturing does not require an overall willingness
---------------------- so as to establish closer connections with everyone, from suppliers to
workers.
----------------------
4. Companies that are already world class find it difficult to quickly
---------------------- absorb other world-class manufacturing concepts as they are
developed and publicised.
----------------------

----------------------

10 World Class Manufacturing

1.6 EXAMPLES OF WORLD CLASS MANUFACTURING FIRMS Notes

General Electric ----------------------

The company goes to great lengths to make people care by manufacturing ----------------------
high-performance products that consumers don’t need to worry about. GE
has invested millions of dollars in turning customer responses into business ----------------------
opportunities. The company’s Answer Centre, located in Louisville, KY, receives
----------------------
customer inquiries 24 hours a day, 365 days a year, and handles 15,000 calls a
day from people considering the purchase of a GE product. Their computerised ----------------------
database contains more than 650,000 responses to a variety of inquiries, which
allows customer representatives to provide knowledgeable answers at the touch ----------------------
of a button. GE sees its investment in managing customer inquiries as just as
----------------------
important as investments in production capacity, technology and personnel.
From a communication standpoint, Jack Welch challenges managers to turn ----------------------
complex business initiatives into simple concepts so employees and customers
can understand and contribute to their successful implementation. GE is also a ----------------------
forerunner in implementing six sigma concept.
----------------------
FedEx
----------------------
CEO Fred Smith gave people a reason to care about FedEx because it
took the unusual step of providing a guarantee in an uncertain world. FedEx has ----------------------
become synonymous with overnight delivery, much like Xerox is for copiers
and Kleenex is for tissues. The company is built around a reputation to not only ----------------------
deliver packages worldwide, but also to deliver excellent customer service.
Customers trust that when the FedEx guy comes to pick up their package, he’s ----------------------
personally taking it to the plane that flies to the truck that drives to the van ----------------------
that delivers the package. With more than 2.8 million packages going to 212
countries every day, FedEx can still guarantee overnight delivery (now even ----------------------
on Sundays) while offering time and cost savings and customized logistics
solutions to its customers. ----------------------

Baxter Healthcare Corporation ----------------------

Baxter is a global healthcare company that provides critical life-saving ----------------------
therapies for the treatment of complex medical conditions including haemophilia,
immune disorders, kidney disease, cancer and trauma. The plant earned its ----------------------
first Shingo Prize in 2000. By maintaining a relentless focus on continuous
improvement and lean enterprise implementation, Baxter’s North Cove facility ----------------------
is recognised as the only plant awarded the prize for a second time. Through ----------------------
its Quality Leadership Process emphasising total employee involvement, North
Cove has reduced work in process inventory by 80 per cent, reduced its lost ----------------------
time incident rate by 81 per cent, reduced manufacturing cycle time by 58 per
cent and reduced unplanned scrap by 38 per cent. ----------------------

DENSO Manufacturing ----------------------

DENSO Corporation is the world’s second largest manufacturer of advanced ----------------------
technology, components, and systems for major automakers. The Instrument
Cluster Division’s 700 Associates are dedicated to using lean manufacturing ----------------------

World Class Manufacturing: An Overview 11

 Notes concepts to produce high quality instrument clusters, centre displays, and air-
conditioning panels. Specific results of their efforts include the following: TS
---------------------- 16949 and ISO 14001 certifications; Tennessee Pollution Prevention Program’s
highest award due to 95 per cent recycling of manufacturing process wastes;
----------------------
DENSO Global President’s Award for Kaizen; a defect rate reduction of 32 per
---------------------- cent; warranty cost reduction of 60 per cent; and multiple quality, delivery, and
service awards.
----------------------
Solectron Manufactura de Mexico, Guadalajara, Mexico
----------------------
Solectron Guadalajara has successfully transformed its traditional
---------------------- production system into the Solectron Production System, effectively applying
lean manufacturing and a strong Kaizen culture throughout its organisation
---------------------- of more than 5,000 associates. Some achievements during our lean journey
---------------------- (2003−2006) included more than $75 million USD in savings from kaizen
Teams, 220 poka-yokes, reduction by 29 per cent on scrap versus revenue, 88 per
---------------------- cent manufacturing lead-time reduction, space optimisation of 115,044 square
feet, and a 43 per cent labour productivity improvement. These improvements
----------------------
resulted in higher customer satisfaction and revenue growth.
---------------------- Intel Corp. (Santa Clara, CA)
---------------------- The company is best known as a producer of microprocessors for IBM
PCs and PC clones, but the firm also manufactures boards and complete systems.
----------------------
At one point, Intel reported a second quarter net income of $131 million, a
---------------------- 181 per cent increase over the same period in the previous year. Intel set four
objectives: (1) extend architecture and technology leadership, (2) be the vendor
---------------------- of choice, (3) be a world-class manufacturer, and (4) make Intel a great place
---------------------- to work. Recent emphasis has been placed on productivity improvement rather
than building more factories. Quality control has been improved through key
---------------------- supplier purchasing and by promoting a harmonious relationship among the
engineering, design, and manufacturing functions. Management roles have been
----------------------
redefined and streamlined to make the factory improvement process complete.
---------------------- Today, new plant equipment is run through a mock manufacturing procedure
to test it under plant conditions in a continuing effort to guarantee the highest
---------------------- possible quality.
----------------------
Activity 2
----------------------

---------------------- 1. Mention the factors common to all these WCM firms?

---------------------- 2. List down the distinguishing characteristics of each firm?

3. What conclusions can you draw after studying these firms?
----------------------

----------------------

----------------------

12 World Class Manufacturing

 Summary Notes

●● A survey indicated that “high-performing, world class organisation” has ----------------------

following characteristics: employee focus, customer focus, leadership,
----------------------
profit, and process.
●● Instead of having the right choice among the four competitive priorities: ----------------------
cost, quality, delivery/service, and flexibility, managers began to realise
----------------------
that they could compete on several competencies.
●● It is necessary to capture the breadth and the essence of the fundamental ----------------------
changes taking place in larger industrial enterprises, with their overriding
----------------------
goal and underlying mind set of continual and rapid improvements and
relentless pursuit of competitive excellence. ----------------------
●● World Class Manufacturing facilities are built through flowing levels:
Level 1 – Business and Operations Strategy. ----------------------

Level 2 – Organisational Design, Human Resource, Technology, ----------------------

Performance Management
----------------------
Level 3 – Information System Management/Operations Capabilities
----------------------
Level 4 – Quality
Level 5 – Customer Focus ----------------------
Level 6 – World Class Organisation ----------------------

----------------------
Keywords
----------------------
●● Employee focus: Creating an invigorating environment where employee
participation and development are key focus. ----------------------
●● Customer focus: Delivering what customers want, when they want ----------------------
it, with an appearance that enhances the customers’ perception of the
product/service. ----------------------
●● Leadership: Management that provides communicates and demonstrates ----------------------
vision, direction, and a sense of teamwork.
●● Processes: Activities, which convert inputs into the desired outputs. ----------------------
●● Information system: System for collecting, processing and disseminating ----------------------
data and for providing the feedback mechanism that is necessary for
meeting organisation’s objectives. ----------------------
●● Management direction: Directing the manufacturing organisation’s ----------------------
journey to world-class status and for creating an organisational culture
committed to all that is necessary for achieving continuous improvement. ----------------------
●● Manufacturing philosophy: Developing manufacturing capabilities to ----------------------
support the entire company in gaining a sustained competitive advantage
over its competitors in such areas as cost, quality, delivery, flexibility and ----------------------
innovation.
----------------------

World Class Manufacturing: An Overview 13

 Notes ●● Quality: Meeting and exceeding customer expectations.
●● Operational strategy: Manufacturing strategy, which explicitly supports
---------------------- organisation’s business strategy, which in turn is aimed at remaining
competitive.
----------------------
●● Operational capabilities: Operations systems, which have the ability to
---------------------- meet design specifications with superior interactive relationship with all
vendors and suppliers.
----------------------

---------------------- Self-Assessment Questions

---------------------- 1. What do you understand by world class manufacturing organisations?
---------------------- 2. What are the characteristics of WCM?
3. Why world class manufacturing is necessary?
----------------------
4. What is the philosophy underlying WCM?
---------------------- 5. How a world class manufacturing organisation is built?
6. What is the role of management in WCM?
----------------------

---------------------- Answers to Check your Progress

---------------------- Check your Progress 1
---------------------- Fill in the blanks.

---------------------- 1. The emphasis on continual improvement is the ultimate test of a world-

class organisation.
---------------------- 2. For years, manufacturing was internally focused and operationally
compartmentalised.
----------------------
3. The term world-class manufacturer is popularly used to denote a standard
---------------------- of excellence: the best of the best manufacturers at the international level.
4. Without profit, organisations cannot survive for the long term.
----------------------
5. Processes are one of the hidden secrets of successful organisations.
----------------------
Check your Progress 2
---------------------- State True or False.
---------------------- 1. True
2. True
----------------------
3. False
---------------------- 4. False
----------------------
Suggested Reading
----------------------
1. Schonberger, Richard J. World Class Manufacturing. Simon and Schuster
---------------------- Publication.
---------------------- 2. Szwejczewski, Marek and Malcolm Jones. Learning From World Class
Manufacturers. Palgrave Macmillan.
14 World Class Manufacturing
Changing Scenario and Measures for WCM
UNIT

2
Structure:

2.1 Introduction
2.2 Changing Scenario in Manufacturing
2.3 Framework for Continuous Improvement
2.4 Imperatives for Increased Productivity
2.5 Opportunities for Improvement
2.6 Actual Company Performance Improvements
2.7 Measurement Parameters for WCM
2.8 Comparison between Baldrige and Deming Awards
Summary
Key Words
Self-Assessment Questions
Answers to Check your Progress
Suggested Reading

Changing Scenario and Measures for WCM 15

 Notes
Objectives
----------------------
After going through this unit, you will be able to:
----------------------
• Recognise the changing manufacturing scenario
----------------------
• Discuss the framework for continuous improvement
---------------------- • Analyse the essentials for high productivity
---------------------- • Explain the various ways for achieving continuous improvement

---------------------- • Outline the measuring parameters for WCM incorporated in few

international awards
----------------------

---------------------- 2.1 INTRODUCTION

---------------------- For years, manufacturing was internally focused and operationally
compartmentalised. . Workers often completed their jobs without understanding
---------------------- the impact of their work on the whole operation, and whether or not their labour
---------------------- had an important impact on customers.
Before, critical functions such as quality control, engineering, purchasing,
---------------------- and other preoccupations were clearly separated to such an extent that invisible
---------------------- ‘walls’ were created between departments. This was often described as a “wall
approach” to manufacturing.
---------------------- These so-called “walls” inhibited direct and continuous interaction between
---------------------- functions and isolated decision-makers from both the inside and outside worlds.
The results of this isolation were concretely felt on products that did not
----------------------
meet customer expectations, not to mention internal operational snags such as
---------------------- losses in time, money, opportunities, etc.
The goal of implementing a lean world-class enterprise was to improve
----------------------
all aspects of business and capitalise on the advances gained from applying
---------------------- technically proven trade methods and principles to be profitable and eventually
be globally competitive.
----------------------

---------------------- 2.2 CHANGING SCENARIO IN MANUFACTURING

---------------------- The motivating factors behind the World Class Manufacturing (WCM)
initiative were two-pronged: first, to put into action operations management
---------------------- improvements across all functional units, departments or sectors and second,
to equip companies of tools that would enable them to become competitive and
----------------------
responsive to the changing market scenario.
---------------------- As the manufacturing sector faces new challenges in the midst of
competition, WCM organisation strives continuously to improve on the areas
----------------------
of delivery, safety, quality, operating cost and profit margins simultaneously,
----------------------

16 World Class Manufacturing

eliminating waste in the production system by applying appropriate tools and Notes
techniques at all levels within the organisation.
----------------------
By examining their strengths and weaknesses, manufacturing organisations
are taking positive steps to respond to the challenges of becoming world-class ----------------------
competitors.
----------------------
Current challenge for all manufacturers is to regain and maintain a
competitive advantage in the global market. To meet this challenge, various ----------------------
philosophies and approaches for managing manufacturing and technology are
required. This philosophy focuses first and foremost on continual and rapid ----------------------
improvement.
----------------------

Activity 1 ----------------------

----------------------
According to you, what are the new challenges faced by a manufacturing
organisation in the current scenario? ----------------------

----------------------
2.3 FRAMEWORK FOR CONTINUOUS IMPROVEMENT ----------------------
Companies that are pursuing world-class status may take different paths ----------------------
that, in turn, require different precepts. There are four dominant principles from
which these companies may choose one or more. ----------------------
1. Just-in-Time (JIT): The JIT principle focuses on the elimination of ----------------------
waste, with waste defined as anything other than the minimum amount of
equipment, materials, parts, space, and workers’ time, that are absolutely ----------------------
essential to add value to the product.
----------------------
2. Total Quality Control (TQC): Under the TQC principle, everyone in the
organisation must be involved in improving the product’s quality to meet ----------------------
customer needs. The emphasis is placed on defect prevention rather than
----------------------
defect detection and development of an attitude of “do it right the first
time.” ----------------------
3. Total Preventive Maintenance (TPM): With the TPM principle,
----------------------
machines and equipment are maintained so often and so thoroughly that
they rarely ever break down, jam, or not perform during a production run. ----------------------
4. Computer Integrated Manufacturing (CIM): CIM involves the
----------------------
integration of the company’s operations from design, production, and
distribution to after-sales service and support in the field through the use ----------------------
of computer and information technologies.
----------------------

----------------------

----------------------

----------------------

Changing Scenario and Measures for WCM 17

 Notes
Check your Progress 1
----------------------
Match the following.
----------------------
i. Total Preventive a. Defect prevention rather than
---------------------- Maintenance defect detection
ii. Just-in-Time b. Use of computer and information
---------------------- technologies in all the processes
---------------------- of an organisation
iii. Computer Integrated c. Elimination of waste
---------------------- Manufacturing
iv. Total Quality Control d. Regular and frequent maintenance
---------------------- of the machines so that they rarely
---------------------- break down

----------------------
2.4 IMPERATIVES FOR INCREASED PRODUCTIVITY
----------------------
Productive performance of the organisation in future will be influenced
---------------------- by the following factors:
---------------------- ●● Internationalisation of economic activity with an accompanying
intensification of global competition.
----------------------
●● Increased market sophistication is anticipated, including trend towards
---------------------- more segmentation and specialisation, with a growing emphasis on
product quality.
---------------------- ●● Product requirements will become more customised, which will increase
---------------------- the need for more flexible manufacturing processes.
●● Technological advances are expected to continue at their current pace.
----------------------
●● As market integration continues, information systems will become critical
---------------------- to providing timely market response through flexible production systems.
As a response to these long-term trends, following five imperatives must
----------------------
be adopted by industry
---------------------- 1. Focus on the “New Fundamentals of Manufacturing”
---------------------- ●● Place production ahead of finance and planning.
●● Adopt new measures to accurately reflect long-term performance.
----------------------
●● Support company’s strategic objectives by new technology
---------------------- integration.

---------------------- ●● Make manufacturing processes flexible and innovative, with a

strategic move away from the outdated mass production system.
---------------------- 2. Developing a “New Economic Citizenship”
---------------------- The work force must bear responsibility for increasing productivity. New
technologies impose a need for new work force capabilities. The automated
---------------------- process cannot replace human creativity and skill in the workplace, and

18 World Class Manufacturing

 increased process flexibility depends on a well-trained, involved, and Notes
empowered work force.
----------------------
3. Combining Individualism and Cooperation
●● Organise to enhance both cooperation and individualism. ----------------------
●● Improve relations both within the firm and among suppliers and ----------------------
domestic competitors.
----------------------
●● Encourage joint ventures and partnerships.
●● Develop or strengthen labour/management relations. ----------------------
4. Focusing on World Economy ----------------------
Businesses must develop an international focus to compete successfully.
There should be an increased educational emphasis on foreign languages, ----------------------
cultures, and business methods. Purchasing and distribution networks ----------------------
should be internationalised and should reflect a willingness to trade fairly
in an international market. ----------------------
5. Providing for the future ----------------------
Investment strategies should focus on long-term profitability through
----------------------
business unit retention, research and development, and education and
training. Monetary policies that stimulate investment and provide new ----------------------
support infrastructures should be developed.
----------------------
Activity 2 ----------------------

What steps would you take to improve the productive performance of your ----------------------
organisation? ----------------------

----------------------
2.5 OPPORTUNITIES FOR IMPROVEMENT
----------------------
World Class Manufacturing practices are all integrated by identifying
opportunities for improvements in the functional areas of manufacturing ----------------------
discussed below. ----------------------
1. Product Design: Although many areas in manufacturing can be improved,
none is more important than product design because of its significant ----------------------
impact on both product quality and productivity. Better product design is ----------------------
an initial requirement for producing a high quality product at a competitive
cost. Quality must be designed and built into the product; it cannot be ----------------------
inspected into the product. Inspection adds nothing to product quality,
and statistical sampling techniques only make inspection procedures ----------------------
more rational. ----------------------
Whether companies design and produce products for the mass market or
----------------------
the specialty market, a good product design must meet the customer’s
requirements on a timely basis and should be easily produced with high ----------------------

Changing Scenario and Measures for WCM 19

 Notes quality. Companies must also ensure that design has a customer focus and
is closely integrated with the rest of the organisation. The following is a
---------------------- list of ways that companies can improve product design:
---------------------- i. Develop an effective information and communication system
to track customer requirements. Distribute this information to
---------------------- everyone involved in product design on a timely basis.
---------------------- ii. Provide design engineers with effective design tools, such as
Computer-Assisted Design (CAD) and Computer-Assisted
---------------------- Engineering (CAE) that can reduce design lead time and improve
design quality and productivity.
----------------------
iii. Reduce part complexity through design modularity and simplicity
---------------------- concepts.
---------------------- iv. Develop strong horizontal relationships throughout the company so
that product design is integrated with other functions.
----------------------
v. Develop strong horizontal relationships throughout the company
---------------------- so that product design is integrated with other functions (e.g.,
process design, purchasing, production planning and control, and
---------------------- marketing).
---------------------- 2. The Manufacturing System: The physical transformation of materials
into finished products occurs on the shop floor. This is where most of the
---------------------- symptoms of manufacturing problems such as excessive work-in-process,
---------------------- long manufacturing lead time, and high defect rate show themselves.
The equipment by itself is rarely the primary source of a factory’s
----------------------
competitive advantage. What matters is how that equipment is used and
---------------------- how it is integrated with materials, people, and information through the
policies, rules, and procedures that direct and control the factory’s activities.
----------------------
A fundamental idea behind the JIT principle is to develop a synchronised
---------------------- production system in which materials flow smoothly through a plant. Any
causes that may disrupt the smooth flow of production, such as long setup
---------------------- times, inefficient layout, high process variations, defects, and machine
breakdowns, must be removed. The following checklist offers clear steps
----------------------
towards improving a company’s production system.
---------------------- i. Improve material flows on the production floor: Reorganise
---------------------- equipment and operations into manufacturing cells consisting of
only machines and equipment required for the production of a
---------------------- certain set of parts. This form of layout is called a Group Technology
(GT) or Cellular Manufacturing (CM) layout. Utilising cells takes
---------------------- advantage of high-volume production, even when the specific
---------------------- demand for parts produced at the cells is low per unit of time.
Such a change will substantially reduce transportation, materials
---------------------- handling and production lead time within the plant. Additional
benefits include ease in scheduling and prioritizing work and quick
---------------------- feedback of information about defects.

20 World Class Manufacturing

 ii. Improve flexibility to meet changing market demand through Notes
setup reduction: Reducing setup times leads to a reduction in lot
sizes, inventory levels and production lead times so that the factory ----------------------
operation will become flexible enough to respond to changing
market demand. ----------------------

iii. Upgrade machine capability through low-cost automation and ----------------------

automation: If a company uses a particular machine the same way
----------------------
its competitors do, it is not differentiating its capability from theirs.
The challenge is to creatively develop inexpensive and simple ideas ----------------------
to improve a given machine’s capacity rather than to buy expensive
state-of-the-art equipment off the shelf. Two concepts developed ----------------------
in Japan are very helpful in guiding machine capacity efforts:
----------------------
Jidoka (autonomation) and Poka-Yoke (fail-safe mechanisms). The
autonomation concept suggests that we can upgrade the machine’s ----------------------
capabilities by giving it human-like intelligence features to detect
abnormal conditions and stop its operation automatically when ----------------------
such abnormal conditions arise.
----------------------
iv. Upgrade employee skills through job rotation and cross-
functional training: Each employee can handle more than one ----------------------
type of operation (e.g., pressing, welding, shearing, assembling
----------------------
and inspecting). With multi-functional skilled workers, the
manufacturing system can easily be fine-tuned to handle variations ----------------------
in demand. This is done by increasing or decreasing the number of
operators on a given line as demand fluctuates. ----------------------
v. Improve communication throughout the plant using visual ----------------------
methods:
----------------------
Most factories in Japan are equipped with trouble light boards hung
from the ceiling just above the production lines. These light boards ----------------------
are used as a tool to send a visual signal to inform operators when
abnormal conditions occur so that appropriate corrective action ----------------------
can be taken immediately. A production control board is another ----------------------
visual control tool. It is used to visually convey actual production
activities as contrasted with the production schedule. Its purpose ----------------------
is to measure conformance to the plan and to make discrepancies
between actual and planned production visible to everyone. The ----------------------
production control board helps supervisors and operators pinpoint ----------------------
problems occurring on the production line so that corrective action
can be taken to remedy the problems in a timely manner. ----------------------
vi. Improve process reliability: An ability to control process variability ----------------------
is essential to achieve a higher level of conformance quality. One set
of tools that is particularly effective in improving process reliability ----------------------
is Statistical Process Control (SPC). SPC includes, for example,
the process control chart, the cause-and-effect diagram, the Pareto ----------------------
diagram, and the histogram. Process control charts are used to ----------------------

Changing Scenario and Measures for WCM 21

 Notes monitor various characteristics of the process to detect abnormal
variations. Cause-and-effect diagrams can help a work group
---------------------- categorically and systematically explore the major possible sources
of process variations. Given information about sources of variation,
---------------------- Pareto diagrams rank them by size and provide some indication of
their relative importance (effect). Histograms provide an indication
----------------------
of the frequency of variable values over time. A key point here is
---------------------- that a company seeking to improve process reliability must train
people to understand SPC techniques and be able to use these
---------------------- techniques to distinguish between normal and abnormal variation
in the production process. Once this is accomplished, workers may
---------------------- pursue increasing levels of control over the process.
---------------------- vii. Eliminate machine problems: A fundamental principle in
preventing machine breakdown is Total Preventive Maintenance
---------------------- (TPM). TPM is a concept of proactive maintenance aimed at
---------------------- achieving overall effectiveness in the manufacturing system by
involving all of the people in the manufacturing organisation in
---------------------- maintenance activities. Under the TPM concept, machines and
equipment are maintained so often and so thoroughly that they
---------------------- hardly ever break down, jam, or not perform during a production
run.
----------------------
viii. Train production people to achieve zero production failures through:
----------------------
a. Routine housekeeping, oiling, bolt tightening, etc., to prevent
---------------------- forced deterioration of machines.

---------------------- b. Giving instruction in proper operating procedures.

c. Developing an enhanced awareness of signs of early machine
---------------------- deterioration by performing easy maintenance, daily checks,
---------------------- setups.
ix. Train maintenance people to:
----------------------
a. Help the production people with self-maintenance activities.
---------------------- b. Restore deteriorating equipment through inspection,
---------------------- disassembly and readjustment.
c. Determine weaknesses in machine design, take corrective
---------------------- action, and specify operating conditions.
---------------------- d. Help operators increase maintenance skills.
---------------------- 3. Managing Materials and the Supply Chain: A supply chain consists of all
stages directly or indirectly involved in fulfilling a customer’s request.
---------------------- This includes manufacturing, transportation, warehousing, suppliers,
retailers, and finally the customer.
----------------------
An important internal stage of the supply chain, materials management,
---------------------- is concerned with managing the movement of materials through the production
and logistics process. Three major functional areas are particularly important
----------------------

22 World Class Manufacturing

for materials management: purchasing, production planning and control, and Notes
distribution. In this unit, purchasing and production planning and control will
be discussed briefly. ----------------------
To improve overall manufacturing capabilities, it is essential that the ----------------------
supplier/customer relationship change from the traditional arm’s length
adversarial relationship to that of a partner. Under the partner view, the buyer ----------------------
organisation seeks a close working relationship with a few key suppliers over
----------------------
the long term. The rationale for developing close relationships with suppliers
is simple: product quality is best ensured by maintaining quality upstream. ----------------------
This concept extends to relationships between the plant and its suppliers, as
well. Competition is not simply a matter of one company trying to dominate ----------------------
others in the industry. Rather, it is often a matter of one group of companies that
----------------------
function as an integrated manufacturing system competing with another group
of companies. ----------------------
The development of synchronous flows of materials within a plant
----------------------
demands changes in not only plant design and the configuration of equipment
and production processes in the factory but also the way we plan, schedule ----------------------
and control production and inventories that flow through the factory. The plant
becomes much simpler to manage, and there is no need for a complicated ----------------------
production planning and control system.
----------------------

Check your Progress 2 ----------------------

----------------------
Fill in the blanks.
1. The physical transformation of materials into finished products occurs ----------------------
on the ______ ________. ----------------------
2. Better ________________ is an initial requirement for producing a
----------------------
high quality product at a competitive cost.
3. _________ provide an indication of the frequency of variable values ----------------------
over time.
----------------------
4. Businesses must develop an ___________ focus to compete
successfully. ----------------------
5. Two concepts developed in Japan are very helpful in guiding machine ----------------------
capacity efforts - _______ and ___________
----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

Changing Scenario and Measures for WCM 23

 Notes 2.6 ACTUAL COMPANY PERFORMANCE
IMPROVEMENTS
----------------------

---------------------- CalComp Inc. (Anaheim, CA)

Its manufacturing philosophy involves rationalising how manufacturing
---------------------- operations are conducted, simplifying those operations, and continuously
---------------------- improving them. CalComp puts into action the following concepts:
●● Discussing improvements with the labour force
----------------------
●● Eliminating inventory where possible
---------------------- ●● Increasing work flow
---------------------- ●● Avoiding automation, which can hinder flexibility
In recent years at CalComp, quality has risen 70 per cent, no personnel
---------------------- have been added, inventory has been reduced by 50 per cent, space requirements
---------------------- have dropped by 30 per cent, production units have increased by 300 per cent,
and revenues are up by 33 per cent.
---------------------- Dakotah Inc. (Webster, SD)
---------------------- The company is meeting the challenge of providing higher quality
products and faster service by adopting world-class manufacturing principles.
---------------------- The guiding principles in force at Dakotah are:
---------------------- ●● Total people involvement
---------------------- ●● Total quality control
●● Total just-in-time manufacturing
---------------------- ●● Total preventive maintenance
---------------------- ●● Total customer responsiveness
Initial results show a 15−25 per cent reduction in labour costs and an
----------------------
80−85 per cent drop in work-in-process inventories.
---------------------- Intel Corp. (Santa Clara, CA)
---------------------- At one point, Intel reported a second quarter net income of $131 million,
a 181 per cent increase over the same period in the previous year. Intel set four
---------------------- objectives: (1)
---------------------- ●● Extend architecture and technology leadership.
---------------------- ●● Be the vendor-of-choice.
●● Be a world-class manufacturer.
---------------------- ●● Make Intel a great place to work.
---------------------- Norfield Manufacturing Co. (Chico, CA)

---------------------- The company’s first step toward world-class manufacturing was

management’s decision to move data gathering to the shop floor, thereby
---------------------- involving production workers in monitoring their own performance. The
company then established five main goals:
----------------------

24 World Class Manufacturing

●● Encourage employee involvement. Notes
●● Implement just-in-time production techniques.
----------------------
●● Institute total quality control.
●● Operationalise total preventive maintenance. ----------------------
●● Aim for continual and rapid improvement.
----------------------
Harley-Davidson Inc. (Milwaukee, WI)
----------------------
A small, grossly undercapitalised company was able to recover from a
series of attacks by its Japanese competitors and go on to achieve first place ----------------------
in its chosen markets. Although many elements contributed to the company’s
success, the basis for the recovery was a rededication to quality in all aspects of ----------------------
the business, combined with a successful employee involvement programme.
----------------------
In 1976, a team of engineering, manufacturing, and service supervisors was
created to inspect the new Cafe Racer as it came off the line. Even though the ----------------------
first 100 motorcycles off the line cost $100,000 to repair, the message was out
that Harley-Davidson had a new emphasis on quality. In 1978, quality circles ----------------------
were established at the engine plant. Today, there are 117 circles throughout the
----------------------
plants and administrative areas, involving about 50 per cent of the employees.
Motorola, Inc. (Schaumburg, Illinois) ----------------------
Won the Malcolm Baldrige Award and now insists that its vendors apply for ----------------------
the award. Having set a five-year quality goal of 3.4 defects-per-million, Motorola
experienced a 150-fold improvement in manufacturing, with defects falling from ----------------------
6,000 per million in 1987 to about 40-per-million in 1992. Customer service centres ----------------------
have been established to provide more on-site repair which has reduced repair times
from 12 days to four days since 1987. Improvement efforts have been expanded to ----------------------
the other functional areas of the business, with similar positive results, including a
three-fold decrease in time required to close the monthly books. ----------------------

Summary of actions ----------------------

World-Class Cal-Comp Dakotah Harley Intel Norfield Motorola ----------------------
Principle Davidson
Technology ----------------------
Leadership X
Work force ----------------------
Involvement X X X X X
Inventory ----------------------
Reduction X
Increased ----------------------
Throughput X X
Total Quality ----------------------
Control X X X X X
Total Prev. ----------------------
Maintenance X X
----------------------
Just-in-Time X X X X
Customer ----------------------
Response X X X
Vendor ----------------------
Involvement X

Changing Scenario and Measures for WCM 25

 Notes
Activity 3
----------------------
According to you, what are the factors which have made these manufacturers
----------------------
world class?
----------------------

---------------------- 2.7 MEASUREMENT PARAMETERS FOR WCM

---------------------- So far we have seen various aspects of World Class Manufacturing. But
how would you know whether any organisation can legitimately claim the
---------------------- status of WCM Manufacturer? Some internationally known awards, which are
---------------------- given to the applicant company after thorough scrutiny of stringently laid down
parameters, can serve as a pointer to establish this status. Three such standards
---------------------- are discussed in more detail below. Many large conglomerates have also created
their own systems based on these internationally known awards for their own
---------------------- group companies.
---------------------- 1. Malcolm Baldrige National Quality Award: It is an annual award that
recognises US organisations in the business, health care, education, and
---------------------- non-profit sectors for performance excellence. The Baldrige Award is the
---------------------- only formal recognition of the performance excellence of US organisations
given by the President of the United States. It is administered by the
---------------------- Baldrige National Quality Program, which is based at and managed by
the National Institute of Standards and Technology, an agency of the US
---------------------- Department of Commerce.
---------------------- The Baldrige National Quality Program and the associated Award were
established by the Malcolm Baldrige National Quality Improvement Act
----------------------
of 1987 (Public Law 100–107). The Program and Award were named for
---------------------- Malcolm Baldrige, who served as United States Secretary of Commerce
during the Reagan administration, from 1981 until Baldrige’s 1987 death
---------------------- in a rodeo accident.
---------------------- The Award promotes awareness of performance excellence as an
increasingly important element in competitiveness and information
---------------------- sharing of successful performance strategies and the benefits derived
from using these strategies. To receive a Baldrige Award, an organisation
----------------------
must have a role-model organisational management system that ensures
---------------------- continuous improvement in the delivery of products and/or services,
demonstrates efficient and effective operations, and provides a way of
---------------------- engaging and responding to customers and other stakeholders. The Award
is not given for specific products or services. Up to 18 Awards may be
----------------------
given annually across six eligibility categories − manufacturing, service,
---------------------- small business, education, health care, and non-profit. As of 2013, 184
organisations have received the Award.
----------------------

----------------------

26 World Class Manufacturing

 Criteria for Performance Excellence: Notes
The seven categories are:
----------------------
1. Leadership
2. Strategic Planning ----------------------
3. Customer Focus ----------------------
4. Measurement, Analysis, and Knowledge Management
----------------------
5. Work force Focus
6. Process Management ----------------------
7. Results ----------------------
The main uses of the Baldrige Criteria for Performance Excellence are
education and organisational self-assessment and self-improvement. The ----------------------
criteria are also the basis for giving Baldrige Awards and giving feedback ----------------------
to Baldrige Award applicants. In addition, the criteria have the following
three roles in strengthening US competitiveness: ----------------------
●● To help improve organisational performance practices, capabilities, ----------------------
and results
●● To facilitate communication and sharing of information on best ----------------------
practices among US organisations of all types ----------------------
●● To serve as a working tool for understanding and managing
performance and for guiding planning and opportunities for learning ----------------------
The Baldrige Criteria for Performance Excellence provide organisations ----------------------
with an integrated approach to organisational performance management
that results in ----------------------
●● Delivery of ever-improving value to customers and stakeholders, ----------------------
contributing to organisational sustainability
●● Improvement of overall organisational effectiveness and capabilities ----------------------
●● Organisational and personal learning ----------------------
Eight Critical Factors for Baldrige Award
----------------------
●● A plan to keep improving all operations continuously.
----------------------
●● A system for measuring these improvements accurately.
●● A strategic plan based on benchmarks that compare the company’s ----------------------
performance with the world’s best.
----------------------
●● A close partnership with suppliers and customers that feeds
improvements back into operations. ----------------------
●● A deep understanding of the customers so that their wants can be
translated into products. ----------------------
●● A long-lasting relationship with customers, going beyond the ----------------------
delivery of the product to include sales, service, and ease of
maintenance. ----------------------
●● A focus on preventing mistakes rather than merely correcting them. ----------------------

Changing Scenario and Measures for WCM 27

 Notes ●● A commitment to improving quality that runs from the top of the
organisation to the bottom.
---------------------- Checklist of application for Malcolm Baldrige National Quality Award
---------------------- Maximum Score Per
centage of
----------------------
sub-total
---------------------- 1.0 Leadership 150
1.1 Leadership of top-ranking managers 50 15%
---------------------- 1.2 Policy 30
1.3 Management control system and quality
----------------------
improvement process 30
---------------------- 1.4 Allocation and utilization of resources 20
1.5 Responsibility to society 10
---------------------- 1.6 Unique and creative leadership technique 10
2.0 Information and analysis 75 7.5%
---------------------- 2.1 Utilisation of analysis technique or system 15
---------------------- 2.2 Utilisation of information about product and servicing
quality 10
---------------------- 2.3 Customer data and analysis 20
2.4 Analysis of quality and data of subcontractor 10
---------------------- 2.5 Analysis of quality and data of distributor or sales agent 10
---------------------- 2.6 Employee-related data and analysis 5
2.7 Unique and innovative analysis of information 5
---------------------- 3.0 Quality of strategy planning 75 7.5%
3.1 Operation target and strategy target 20
---------------------- 3.2 Function of planning 20
---------------------- 3.3 Quality improvement plan 30
3.4 Unique and innovative planning for strategy 5
----------------------
4.0 Utilisation of human resources 150 15%
---------------------- 4.1 Control and operation 30
4.2 Quality-consciousness and participation of employees 50
---------------------- 4.3 Training and education concerning quality 30
---------------------- 4.4 Personnel assessment, motivation, award system 30
4.5 Unique and innovative strategy concerning utilisation
---------------------- of human resource 10
5.0 Quality assurance of product and servicing 150 15%
---------------------- 5.1 Reflection of customer’s opinion on product and
---------------------- servicing 20
5.2 Development of new product and new servicing 20
---------------------- 5.3 Design of new product and new servicing 30
5.4 Measurement, standardisation, data system 10
---------------------- 5.5 Engineering 10
---------------------- 5.6 Audit 15
5.7 Recording 10
---------------------- 5.8 Safety, health and sanitation, environment 10

28 World Class Manufacturing

Maximum Score Per Notes
centage of
sub-total ----------------------
5.9 Assurance/effectiveness 15
----------------------
5.10 Unique and innovative approach to quality assurance
of product and servicing 10 ----------------------
6.0 Result of quality assurance of product and servicing 100
10% ----------------------
6.1 Reliability and achievement of product and servicing 25
6.2 Reduction of scrap, rework, rejection concerning
----------------------
product and servicing 20
6.3 Reduction of complaint and claim suit concerning ----------------------
quality 25
6.4 Reduction of assurance- or site-related assistance ----------------------
operation 20
----------------------
6.5 Innovative index and economic gain for quality
improvement 10 ----------------------
7.0 Customer satisfaction 300 30%
7.1 Quality of product and servicing from customer’s viewpoint 100 ----------------------
7.2 Comparison of competitiveness of product and servicing 50
7.3 Customer servicing and countermeasure for complaint 75 ----------------------
7.4 Assurance from customer’s viewpoint 50
7.5 Unique (or innovative) technique to grasp customer ----------------------
satisfaction 25
----------------------
Total 100 100%
2. The Deming Prize: The Deming Prize is Japan’s national quality award ----------------------
for industry. It was established in 1951 by the Japanese Union of Scientists ----------------------
and Engineers (JUSE) and it was named after W. Edwards Deming. He
brought statistical quality control methodology to Japan after WWII. ----------------------
The Deming Prize is the world’s oldest and most prestigious of such
awards. Its principles are a national competition to seek out and commend ----------------------
those organisations making the greatest strides each year in quality, or ----------------------
more specifically, TQC. The prize has three award categories. They
are Individual Person, the Deming Application Prizes, and the Quality ----------------------
Control Award for factory. The Deming Application prizes are awarded to
private or public organisations and are subdivided into small enterprises, ----------------------
divisions of large corporations, and overseas companies. There are 143 ----------------------
companies who won the prize. The first non-Japanese company to get
this award was Florida Power and Light in 1989. Amongst the Indian ----------------------
companies who initially got this award are:
----------------------
1. Rane Brake Linings – First to get Deming Award in 2001
----------------------
2. Mahindra & Mahindra (Tractor & Farm Equipment)
3. Brakes India (Foundry) ----------------------
4. Sona Koyo Steering Systems ----------------------
5. Grasim Industries ----------------------

Changing Scenario and Measures for WCM 29

 Notes 6. Sundaram Clayton Brakes – First to get Japan Quality Medal
7. Hi-Tech Carbon
----------------------
Checklist of application for Deming Award
----------------------
Item Particulars Item Particulars
---------------------- 1. Policy 1. Policies pursued for 1. Standardisation 1. Systematisation of
management quality, standards
---------------------- and quality control 2. Method of establishing,
2. Method of establishing revising, and abolishing
---------------------- policies standards
3. Justifiability and 3. Outcome of the
---------------------- consistency of policies establishment, revision,
4. Utilisation of statistical or abolition of standards
---------------------- methods 4. Contents of the
5. Transmission and standards
---------------------- diffusion of policies 5. Utilisation of statistical
6. Review of policies and methods
---------------------- the results achieved 6. Accumulation of
7. Relationship between technology
---------------------- policies and long- and 7. Utilisation of standards
short-term planning
---------------------- 2. Organisation and 1. Explicitness of the 1. Control 1. Systems for the control
its Management scopes of authority and of quality and such
---------------------- responsibility related matters as cost
2. Appropriateness of and quantity
---------------------- delegations of authority 2. Control items and
3. Interdivisional control points
---------------------- cooperation 3. Utilisation of such
4. Committees and their statistical control
---------------------- activities methods as control
charts and other
---------------------- statistical concepts
3. Education and 1. Utilisation of staff 1. Quality 1. 1. Contribution to
---------------------- Dissemination 2. Utilisation of QC Circle Assurance performance of QC
activities circle activities
---------------------- 3. Quality control 2. Actual conditions of
diagnosis control activities
---------------------- 3. State of matters under
control
---------------------- 4. Collection, 1. Education programmes 1. Results 1. Procedure for the
Dissemination and results development of new
---------------------- and Use of 2. Quality- and control- products and services
Information of consciousness, degrees (analysis and upgrading
Quality of understanding of of quality, checking of
----------------------
quality control design, reliability, and
3. Teaching of statistical other properties)
----------------------
concepts and methods, 2. Safety and immunity
and the extent of their from product liability
----------------------
dissemination 3. Customer satisfaction
---------------------- 4. Grasp of the 4. Process design,
effectiveness of quality process analysis, and
control process control and
----------------------
improvement
----------------------

30 World Class Manufacturing

Item Particulars Item Particulars Notes
5. Education of related 5. Process capability
company (particularly 6. Instrumentation, ----------------------
those in the same gauging, testing, and
group, sub-contractors, inspecting ----------------------
consignees, and 7. Equipment maintenance,
distributors) and control of ----------------------
6. QC circle activities subcontracting,
7. System of suggesting purchasing, and services ----------------------
ways of improvements 8. Quality assurance
and its actual system and its audit ----------------------
conditions 9. Utilisation of statistical
methods ----------------------
10. Evaluation and audit of
quality ----------------------
11. Actual state of quality
assurance ----------------------
5. Analysis 1. Collection of external 1. Planning for the 1. Measurements of results
information Future 2. Substantive results ----------------------
2. Transmission of in quality, services,
information between delivery time, cost, ----------------------
divisions profits, safety,
3. Speed of information environments, etc. ----------------------
transmission (use of 3. Intangible results
computers) 4. Measures for ----------------------
4. Data processing overcoming defects
statistical analysis 5. Grasp of the present ----------------------
of information and state of affairs and the
utilisation of the results concreteness of the plan ----------------------
1. Selection of key 6. Measures for
problems and themes overcoming defects ----------------------
2. Propriety of the 7. Plans for further
analytical approach advances ----------------------
3. Utilisation of statistical 8. Linkage with the long-
methods term plans ----------------------
4. Linkage with proper
technology ----------------------
5. Quality analysis,
process analysis ----------------------
6. Utilisation of analytical
results ----------------------
7. Assertiveness
of improvement ----------------------
suggestions
----------------------
Caselet
Rane Brake Linings was the first company in India to get Deming Award ----------------------
in the year 2001. The company’s WCM journey started under the guidance of ----------------------
Prof. Yasutoshi Washio who set following goals for the company:
1. Develop a business model to generate business for long term period ----------------------
through uniqueness of product and technology. ----------------------
2. Reduce technology dependence on others.
----------------------

Changing Scenario and Measures for WCM 31

 Notes 3. Create new markets and also seek drastic expansion of the existing
markets.
----------------------
4. Achieve unique and enhanced utilisation of human resources.
---------------------- For achieving the above goals, focus was placed on:
---------------------- 1. Policy Deployment

---------------------- 2. Daily Routine Management (DRM)

3. Redefining Management Process
----------------------
4. New Product Development
----------------------
5. Quality at Source
---------------------- For point no. 3 above, each manager was required to:
---------------------- 1. Define his role in full details.

---------------------- 2. Decide on the measuring parameters of his performance.

3. Measure his performance on the decided norms at regular intervals.
----------------------
4. Take steps to improve.
----------------------
Results:
---------------------- PLANT REJECTIONS BEFORE AFTER
2.1% 0.85%
----------------------
CUSTOMER REJECTIONS 16000 PPM 1750 PPM
---------------------- SALES PER EMPLOYEE $22,000 $40,000
Study the case and comment on following points:
----------------------
1. Significance of each goal set for the organisation.
----------------------
2. Relationship between goals and the focus.
---------------------- 3. Role of managers in the whole exercise.
----------------------
2.8 COMPARISON BETWEEN BALDRIGE AND
---------------------- DEMING AWARD
----------------------
Baldrige Award Deming Prize
---------------------- “Customer-driven quality”- it views “Conformance to specifications” -
quality as defined by the customer it views quality as defined by the
---------------------- producers
Customer satisfaction and quality Statistical quality control
----------------------
Quality of management Management of quality
---------------------- Promote competitiveness through total Promote quality assurance through
quality management statistical techniques
---------------------- Manufacturing, service and small Essentially private or public
business manufacturing
---------------------- 60% result, 40% process 60% process, 40% results
---------------------- Different weight for each criteria Equal weight in 10 criteria

32 World Class Manufacturing

Baldrige Award Deming Prize Notes
Less concern Concern in productivity, delivery, safety
and environment ----------------------
Heavily concern Less concern
----------------------
N/A Japan Quality Control Medal
Maximum of two per category All firms meeting standard ----------------------
US firms only Firms for any country
$2500 and 75 pages packet 1000 pages and one year working with ----------------------
consultant from the union of Japanese
Scientist & Engineers ----------------------
Six months One year ----------------------
1987 1951
National Institutes Standards Union of Japanese Scientists and ----------------------
and Technology Engineers
1. Leadership 1. Policy and Objectives ----------------------
●● Of top-ranking managers ●● Pursued for management quality & ----------------------
●● Policy QC method of establishing quality
----------------------
●● Management control system & ●● Justifiability and consistency of
quality improvement process policies ----------------------
●● Allocation and utilisation of resources ●● Review of policies and the result
achieved ----------------------
●● Responsibility to society
●● Unique and creative leadership ●● Relationship between policies and ----------------------
technique long-term & short-term planning
----------------------
2. Information and Analysis 2. Organisation and its Management
●● Utilisation of analysis technique or ●● Explicitness of the scopes of authority ----------------------
system and responsibility
----------------------
●● Utilisation of information about ●● Interdivisional cooperation
product quality and servicing quality ●● Committees and their activities ----------------------
●● Customer data and analysis ●● Utilisation of staff
----------------------
●● Analysis of quality and data of ●● Utilisation of QC Circle activities
subcontractor and distributor or sales ●● QC diagnosis ----------------------
agent
3. Quality of Strategy Planning 3. Education and dissemination ----------------------
●● Operation target and strategy target ●● Education program and results ----------------------
●● Function of planning ●● Degrees of understanding of
QC teaching of statistical concepts ----------------------
●● Quality improvement plan
●● Unique and innovative planning for and methods ----------------------
strategy ●● Grasp of the effectiveness of QC
●● QC circle activities ----------------------
●● System of suggesting ways of ----------------------
improvements and its actual
conditions ----------------------

----------------------

Changing Scenario and Measures for WCM 33

 Notes Baldrige Award Deming Prize
4. Utilisation of Human Resource 4. Collection, Dissemination and use of
---------------------- ●● Control and operation Information on Quality
---------------------- ●● Quality consciousness and participation ●● Collection of external information
of employees ●● Transmission of information between
---------------------- ●● Training and education concerning divisions
quality ●● Speed of information transmission
----------------------
●● Personnel assessment, motivation, ●● Data processing, statistical analysis
---------------------- award system of information and utilisation of the
●● Innovative strategy concerning results
---------------------- utilization of human resource
---------------------- 5. Quality Assurance of Product and 5. Analysis
Servicing ●● Selection of key problems and themes
---------------------- ●● Reflection of customer’s opinion on ●● Propriety of the analytical approach
product and servicing ●● Utilisation of statistical methods
----------------------
●● Design and development of new ●● Linkage with proper technology
---------------------- product and new servicing ●● Quality analysis, process analysis
●● Measurement, standardisation, data ●● Utilisation of analytical results
---------------------- system ●● Assertiveness of improvement
---------------------- ●● Engineering, audit, recording suggestions
●● Safety, health and sanitation,
---------------------- environment
---------------------- ●● Approach to quality assurance of
product and servicing
---------------------- 6. Result of Quality Assurance of 6. Standardisation
Product and Servicing ●● Systematisation of standards
---------------------- ●● Reliability and achievement of ●● Method of establishing, revising,
---------------------- product and servicing and abolishing standards and their
●● Reduction of scrap, rework, rejection, outcome
---------------------- concerning product and servicing ●● Utilisation of statistical methods
●● Reduction of complaint and claim contents of the standards
----------------------
suit concerning quality ●● Accumulation of technology
---------------------- ●● Innovative index and economic gain ●● Utilisation of standards
for quality improvement
---------------------- 7. Customer Satisfaction 7. Control
---------------------- ●● Quality of product and servicing ●● System for the control of quality and
from customer’s viewpoint related matters
---------------------- ●● Comparison of competitiveness of ●● Control items and control points
product and servicing ●● Utilisation of such statistical control
----------------------
●● Customer servicing and methods as control charts and other
---------------------- countermeasure for complaint statistical concepts
●● Assurance from customer’s viewpoint ●● Contribution to performance of QC
---------------------- circle
●● Technique to grasp customer
---------------------- satisfaction ●● Actual conditions of control activities

34 World Class Manufacturing

Baldrige Award Deming Prize Notes
8. Quality Assurance
●● Procedure for the development of ----------------------
new products and services ----------------------
●● Safety and immunity from product
liability ----------------------
●● Customer satisfaction
----------------------
●● Process design, analysis, control and
improvement ----------------------
●● Process capability
●● Instrumentation, gauging, testing and ----------------------
inspecting
----------------------
●● Equipment maintenance and control
of subcontracting, purchasing, and ----------------------
services
9. Results ----------------------
●● Measurement of results ----------------------
●● Substantive results in quality,
services, delivery time, cost, profits, ----------------------
safety environments
●● Intangible results ----------------------
●● Measures for overcoming defects ----------------------
10. Planning for the Future
●● Grasp of the present state of affairs ----------------------
and the concreteness of the plan
----------------------
●● Measures for overcoming defects
●● Plans for further advances ----------------------
●● Linkage with the long-term plans
----------------------
Check your Progress 3 ----------------------

Multiple Choice Multiple Response. ----------------------

1. Some of the critical factors for Baldrige Award are: ----------------------
i. A plan to keep improving all operations continuously.
----------------------
ii. A deep understanding of the customers so that their wants can
be translated into products. ----------------------
iii. A system for measuring these improvements accurately.
----------------------
iv. A focus on correcting mistakes rather than preventing them.
2. CalComp puts into action the following concepts: ----------------------
i. Discussing improvements with the labour force
----------------------
ii. Eliminating inventory where possible
iii. Increasing automation, so as to prevent flexibility ----------------------
iv. Increasing work flow ----------------------

Changing Scenario and Measures for WCM 35

 Notes
Activity 4
----------------------
1. Which Award in your opinion is more suitable for Indian conditions?
----------------------
Why?
---------------------- 2. Would you like to add any more points to get better results for the
---------------------- organisation?
Explain your views.
----------------------

---------------------- Summary
----------------------
●● Manufacturing organisations are moving from traditional
---------------------- compartmentalised ‘wall approach to a lean world-class enterprise to
improve all aspects of business and capitalise on the advances gained from
---------------------- applying technically proven trade methods and principles to be profitable
and eventually be globally competitive. The manufacturing philosophy
----------------------
focuses first and foremost on continual and rapid improvement.
---------------------- ●● Companies that are pursuing world-class status may take different paths
that, in turn, require different precepts. The four dominant principles from
----------------------
which these companies may choose one or more are JIT, TQC, TPM and
---------------------- CIM.
●● As a response to the long-term trends, following five imperatives must be
----------------------
adopted by industry:
---------------------- 1. Focus on the “New Fundamentals of Manufacturing”
---------------------- 2. Developing a “New Economic Citizenship”
3. Combining Individualism and Cooperation
----------------------
4. Focusing on World Economy
----------------------
5. Providing for the future
---------------------- ●● Opportunities for continuous improvements are available in the areas of
---------------------- Product Design, Manufacturing Systems and Materials and Supply Chain
Management.
---------------------- ●● Performance measurement parameters to know whether a manufacturing
---------------------- company is world class or not are provided by two well-known
international quality awards, Baldrige Award (USA) and Deming Award
---------------------- (Japan), which are based on TQM principles.
----------------------
Keywords
----------------------
●● Wall approach: Departments working in isolation to their own agenda
---------------------- without consideration to the requirements of other departments and
overall organisational objectives.
----------------------

36 World Class Manufacturing

●● Just-In-Time: A pull type of production system based on the Japanese Notes
concept of Kan-Ban, where every work station works to satisfy the
demand generated by the next work station with external customer as ----------------------
the last in the sequence, thus resulting in minimum inventory through the
supply chain. ----------------------

●● Total quality control: Application of quality management principles to ----------------------

all areas of business from design to delivery instead of confining them
only to production activities. ----------------------
●● Total productive maintenance: A maintenance programme which ----------------------
involves production operatives for maintaining plants and equipment.
----------------------
●● Computer integrated manufacturing: The manufacturing approach of
using computers to control the entire production process. ----------------------
●● Computer-aided design: The use of computer technology for the design
----------------------
of objects, real or virtual.
●● Group technology: A manufacturing philosophy in which the parts ----------------------
having similarities (Geometry, manufacturing process and/or function)
----------------------
are grouped together to achieve higher level of integration between the
design and manufacturing functions of a firm. ----------------------
●● Jidoka: Used in the Toyota Production System (TPS) and Lean
----------------------
Manufacturing, it may be described as “intelligent automation” or
“automation with a human touch.” This type of automation implements ----------------------
some supervisory functions rather than production functions.
----------------------
●● Poka Yoke: Any mechanism in a lean manufacturing process that helps
an equipment operator avoid (yokeru) mistakes (poka). ----------------------
●● Statistical process control: Is the application of statistical methods to
the monitoring and control of a process to ensure that it operates at its full ----------------------
potential to produce conforming product. ----------------------
●● Pareto diagram: A statistical technique in decision-making that is used
for selection of a limited number of tasks that produce significant overall ----------------------
effect. ----------------------
●● Supply chain: A system of organisations, people, technology, activities,
information and resources involved in moving a product or service from ----------------------
supplier to customer. ----------------------

Self-Assessment Questions ----------------------

----------------------
1. What steps should be taken to eliminate machine problems?
2. What actions need to be taken to get the best from the employees? ----------------------
3. Why is supplier partnership necessary? ----------------------
4. Briefly explain Baldrige and Deming Awards. What are the advantages of ----------------------
these awards?
----------------------

Changing Scenario and Measures for WCM 37

 Notes Answers to Check your Progress
---------------------- Check your Progress 1
---------------------- Match the following.

---------------------- i. − d.
ii. − c.
----------------------
iii. − b.
----------------------
iv. − a.
---------------------- Check your Progress 2
---------------------- Fill in the blanks.

---------------------- 1. The physical transformation of materials into finished products occurs on

the shop floor.
---------------------- 2. Better product design is an initial requirement for producing a high quality
---------------------- product at a competitive cost.
3. Histograms provide an indication of the frequency of variable values over
----------------------
time.
---------------------- 4. Businesses must develop an international focus to compete successfully.
---------------------- 5. Two concepts developed in Japan are very helpful in guiding machine
capacity efforts - Jidoka and Poka-Yoke.
----------------------
Check your Progress 3
---------------------- Multiple Choice Multiple Response.
---------------------- 1. Some of the critical factors for Baldrige Award are:
---------------------- i. A plan to keep improving all operations continuously.
ii. A deep understanding of the customers so that their wants can be
----------------------
translated into products.
---------------------- iii. A system for measuring these improvements accurately.
---------------------- 2. CalComp puts into action the following concepts

---------------------- i. Discussing improvements with the labour force

ii. Eliminating inventory where possible
----------------------
iv. Increasing work flow
----------------------

---------------------- Suggested Reading

---------------------- 1. Mabin, Victoria and Steven Balderstone. The World of the Theory of
Constraints. CRC Press Publication.
----------------------
2. 
Maskell, Brian H. Performance Measurement for World Class
---------------------- Manufacturing. Productivity Press Publication.

38 World Class Manufacturing

Productivity and Work Study
UNIT

3
Structure:

3.1 Introduction
3.2 Productivity − Meaning
3.3 Types of Productivity
3.4 Misconceptions about Productivity
3.5 Productivity Related Factors
3.6 Improving Productivity
3.7 Work Study
3.8 Work Study in Manufacturing Management
3.9 Principles of F.W. Taylor on Work Study
3.10 Method Study
3.11 Motion Study
3.12 Work Measurement
3.13 Time Study
3.14 Predetermined Motion Time Systems (PMTS)
3.15 Ergonomics
Summary
Key Words
Self-Assessment Questions
Answers to Check your Progress
Suggested Reading

Productivity and Work Study 39

 Notes
Objectives
----------------------
After going through this unit, you will be able to:
----------------------
• Explain the meaning of productivity
----------------------
• Analyse different methods of calculating productivity
---------------------- • Evaluate related factors of productivity
---------------------- • Specify the ways to improve productivity

---------------------- • Examine the concept of work study and its constituents

• Explain the concept of ergonomics and its role in productivity
----------------------

----------------------
3.1 INTRODUCTION
----------------------
Though everyone talks about ‘productivity, the term means different things
---------------------- to different persons. As a concept, it varies from efficiency to effectiveness,
to rates of turnover and absenteeism to output measures to measure of client
---------------------- or consumer satisfaction, to intangibles such as disruption in workflow and to
further intangibles such as morale, loyalty and job satisfaction.
----------------------

---------------------- 3.2 PRODUCTIVITY − MEANING

---------------------- Definition of productivity is complex and this is because it is both a
technical and managerial concept.
----------------------
The least controversial definition of productivity is that it is a quantitative
---------------------- relationship between output and input. This definition enjoys general
acceptability because of two reasons:
----------------------
1. The definition suggests what productivity is thought of to be in the context
---------------------- of an enterprise, an industry or an economy as a whole.
---------------------- 2. Regardless of the type of production, economic or political system, this
definition of productivity remains the same as long as the basic concept
---------------------- is the relationship between the quantity and quality of goods and services
---------------------- produced and the quantity of resources used to produce them.
Productivity is nothing more than the arithmetic ratio between the amount
---------------------- produced and the amount of any resources used in the course of production. In
---------------------- effect, productivity becomes the attainment of the highest level of performance
with the lowest possible expenditure of resources. It represents the ratio of the
---------------------- quality and quantity of products to the resources utilised. Productivity is a ratio
of some measure of output to some index of input used. This conception of
---------------------- productivity goes to imply that it can indeed be perceived as the output per
---------------------- unit of input or the efficiency with which resources are utilised It is evident
that almost all the definitions of productivity centre on ‘outputs’ and ‘inputs’.
---------------------- Unfortunately, definition of either output or input or both may sometimes pose

40 World Class Manufacturing

more difficulty to the understanding of what productivity is. For output, it is in Notes
the form of goods if visible and services if invisible. Input on the other hand is
less easily defined. ----------------------
Since production (creation of goods and services) is a team effort thereby ----------------------
making the demand for inputs to be interdependent, various elements (inputs)
are involved in the production of output. This makes the definition of input ----------------------
more complex than that of output. To ease this problem of defining inputs, it
----------------------
is a common practice to classify inputs into labour (human resources), capital
(physical and financial assets), and material. Again, in an attempt to overcome ----------------------
the difficulty of defining inputs, productivity is sometimes defined as goods and
services produced by an individual in a given time. In this sense, time becomes ----------------------
the denominator of output with the assumption that capital, energy and other
----------------------
factors are regarded as aids, which make individuals more productive.
----------------------
3.3 TYPES OF PRODUCTIVITY
----------------------
Productivity as a concept can be of three types:
----------------------
1. Total Factor Productivity (TFP): Productivity that is defined as the
relationship between output produced and an index of composite inputs, ----------------------
meaning the sum of all the inputs of basic resources notably labour, capital
----------------------
goods and natural resources.
2. Partial Productivity: Output is related to any factor input implying that ----------------------
there will be as many definitions of productivity as inputs involved in
----------------------
the production process whereby each definition fits a given input. For
example, when output is associated to per man-hour or per unit of labour, ----------------------
this definition of productivity is a partial one and it relates to labour
productivity. ----------------------
3. Cumulative Total Productivity Model (CTPM): This productivity ----------------------
type takes into account tangible as well as intangible factors affecting the
productivity. Method of calculating Cumulative Total Productivity Index ----------------------
(CTPI) based on this model is given below.
----------------------
Total Productivity Index (TPI):
----------------------
Ratio of Total Output to the sum of all inputs
OI + OII + OIII ----------------------
TPI =
H + M + FC + WC + E + X ----------------------
Where: ----------------------
OI – Finished units completed
O II – Partial units completed ----------------------

O III – Other income ----------------------

H – Expenses on workers + Staff + Managers ----------------------

----------------------

Productivity and Work Study 41

 Notes FC – Expenses on fixed capital

---------------------- WC – Expense on working capital

ME – Value of materials (Raw + Bought outs)
---------------------- X – Energy costs
---------------------- – Miscellaneous expenses
---------------------- All the above factors are in money value.
Cumulative Productivity index at time period ‘t’:
----------------------
CTPIt = TPIt × Intangible factor index
----------------------
Intangible factor value at time ‘t’
Intangible factor index =
---------------------- Intangible factor value at base period

---------------------- Intangible values are calculated by giving weighted averages to customer

survey results.
----------------------
Intangible Factors considered in CTPM
---------------------- 1. Customer related factors
---------------------- ●● Product quality
●● Product reliability
----------------------
●● Service quality
----------------------
●● Price competitiveness
---------------------- ●● Product/Service loyalty
---------------------- ●● Customer loyalty
2. Market related factors
----------------------
●● Market standing
---------------------- ●● Company image
---------------------- ●● Market saturation

---------------------- 3. Society related factors

●● Community attitude
----------------------
●● Pollution
---------------------- ●● Environmental consciousness
---------------------- 4. Employee related factors

---------------------- ●● Job satisfaction

●● Employee morale
----------------------
●● Job security
---------------------- ●● Productivity gain sharing
---------------------- ●● Employee loyalty
●● Employee turnover
----------------------

42 World Class Manufacturing

5. Vendor related factors Notes
●● Price and payment satisfaction
----------------------
●● Vendor quality
●● Timeliness ----------------------
●● Vendor loyalty ----------------------
6. Process related factors
----------------------
●● Process timeliness
●● Process time ----------------------
●● Process effectiveness ----------------------
●● Process efficiency
----------------------
7. Owner related factors
●● Owner’s financial benefits ----------------------
●● Owner loyalty ----------------------
Advantages of ‘CTPM’
----------------------
1. It is truly comprehensive as both tangible and intangible factors are taken
into consideration. ----------------------
2. It shows how profitability is affected by both operational and administrative ----------------------
functions.
----------------------
3. It is a powerful strategic tool as it shows the impact of decisions made in
past and present. ----------------------
4. It pinpoints the problem areas making it easier for management to optimise
----------------------
its efforts.
5. It links total productivity to profits. ----------------------
6. Allocation of resources can be optimised. ----------------------
7. Impact of any change can be gauged quickly. ----------------------

Activity 1 ----------------------

----------------------
Which method is used in your organisation for calculating productivity? What
is the reason for using the method? Discuss with your manager and specify. ----------------------

----------------------
3.4 MISCONCEPTIONS ABOUT PRODUCTIVITY
----------------------
Some of the misconceptions about productivity are: ----------------------
1. Productivity is only labour efficiency or labour productivity: Though
labour productivity statistics are essentially useful policy-making data, ----------------------
productivity is much more than just labour productivity and needs to ----------------------
take into account other inputs involved in the production process. (See
problems with labour productivity below.) ----------------------

Productivity and Work Study 43

 Notes 2. Increase in output or performance is an indication of better
productivity: Output may increase without an increase in productivity if,
---------------------- for example, input costs have risen disproportionately. One useful way to
combat this misconception is to be conscious of the trend of input costs,
---------------------- particularly by relating output increases to price increases and inflation.
---------------------- This approach is often the result of being process oriented at the expense
of paying attention to final results.
----------------------
3. Productivity is synonymous with efficiency or effectiveness: Efficiency
---------------------- means producing high-quantity goods in the shortest possible time. It is
important to ask if goods produced efficiently are actually needed. Also,
---------------------- effectiveness refers more to the production of results. In the private sector
for instance, effectiveness could mean making profit and preserving
----------------------
future market share. Efficiency and effectiveness are actually additional
---------------------- measures of performance along with productivity.
4. Cost cutting always improves productivity: Whenever cost cutting is
----------------------
done indiscriminately, it can even bring about productivity decline in the
---------------------- long run.
5. Productivity is only relevant to production: In reality, productivity
----------------------
is relevant to any kind of organisation or system including services,
---------------------- particularly information. For example, improved information technology
alone can give new dimensions to productivity concepts and measurement.
---------------------- Recent advancement in information technology seems to be suggesting
that labour productivity may actually be subordinate to the productivity
----------------------
of capital and other scarce resources such as energy or raw materials.
---------------------- In a nutshell, productivity is concerned with efficiency and effectiveness
---------------------- simultaneously. Productivity is comprehensive measure of how efficient and
effective an organisation or economy satisfies five aims: objectives, efficiency,
---------------------- effectiveness, comparability and progressive trends. No matter how it is
perceived, productivity implies that there is an incremental gain in what is
---------------------- produced as compared with the expenditure on measures utilised.
---------------------- Problems with the Labour Productivity Index

---------------------- 1. Output is the result from many inputs and not only labour inputs.
2. High labour productivity does not necessarily mean that the organisation
----------------------
is competitive.
---------------------- 3. Focus on labour productivity can be a major obstacle in team building.
---------------------- 4. Time and money spent in building labour productivity measures may not
give commensurate results.
----------------------
5. Emphasis on labour productivity can kill the innovative spirit of workers.
---------------------- 6. Labour productivity has no direct relationship with profitability of the
---------------------- organisation.
7. In most manufacturing companies, labour accounts for very small
----------------------
percentage of total expenses.

44 World Class Manufacturing

3.5 PRODUCTIVITY RELATED FACTORS Notes

Some of the myths related to productivity and some of its related factors ----------------------
are mentioned below.
----------------------
1. Quality
----------------------
●● Improvement in quality need not be at the expense of productivity.
●● Total productivity actually improves in the long run when quality ----------------------
improves.
----------------------
●● Quality and productivity are actually two sides of the same coin.
2. Technology ----------------------

●● Only appropriate technology can improve productivity. ----------------------

●● Managing technology is a complex issue for the top management. ----------------------
3. Sales Revenue
----------------------
●● Increase in sales revenue does not necessarily mean increase in
productivity. ----------------------
4. Production
----------------------
●● Increase in production does not necessarily mean increase in
productivity. ----------------------
5. Efficiency ----------------------
●● Improvements in efficiency do no guarantee improvement in
----------------------
productivity.
●● Effectiveness is the degree to which the goals and objectives are ----------------------
achieved.
----------------------
●● Efficiency has to be coupled with effectiveness to improve
productivity. ----------------------

----------------------
Activity 2
----------------------
According to you what is the relationship of productivity with other factors
----------------------
for an organisation’s performance?
----------------------
3.6 IMPROVING PRODUCTIVITY ----------------------
Organisation using a combination of the below methods including ----------------------
performance indicators and standards for measuring efficiency, effectiveness,
human resources planning productivity analysis, work measurement among ----------------------
others are successful in improving productivity. ----------------------
●● Cost saving resulting from the introduction of new technologies.
----------------------
●● Management improvement measured by attendance at management
training courses and seminars. ----------------------

Productivity and Work Study 45

 Notes ●● Improved methods of accomplishing certain work tasks.
●● Increased morale and satisfaction on the part of the employees.
----------------------
●● More and better products and services.
---------------------- ●● Focus on quantitative and qualitative indicators of productivity.
---------------------- ●● Unit of analysis in terms of people, work group, programmes.

----------------------
Check your Progress 1
----------------------
Multiple Choice Multiple Response.
---------------------- 1. Some of the methods to improve productivity are:
---------------------- i. Cost saving resulting from the introduction of new technologies.
ii. Improved methods of accomplishing certain work tasks.
----------------------
iii. Focus only on the qualitative indicators of productivity.
---------------------- iv. Increased morale and satisfaction on the part of the employees.
---------------------- 2. Some of the misconceptions about productivity are:
i. Productivity is only relevant to production.
---------------------- ii. Cost cutting always improves productivity.
---------------------- iii. Productivity is not just labour efficiency or labour productivity.
iv. Increase in output or performance is an indication of better
----------------------
productivity.
---------------------- 3. Some of the advantages of CTPM are:
i. It pinpoints the problem areas making it easier for management
----------------------
to optimise its efforts.
---------------------- ii. It does not link total productivity to profits.
iii. Allocation of resources can be optimised.
----------------------
iv. Impact of any change can be gauged quickly.
----------------------

----------------------
3.7 WORK STUDY
----------------------
Work study is the systematic examination of the methods of carrying
---------------------- out activities such as to improve the effective use of resources and to set up
standards of performance for the activities carried out.
---------------------- WORK STUDY

----------------------

---------------------- METHOD STUDY WORK MEASUREMENT

----------------------
MOTION STUDY TIME STUDY
---------------------- Fig. 3.1: Work Study & Method Study
----------------------

46 World Class Manufacturing

Another definition of Work Study could be: Notes
A generic term for those techniques, particularly method study and work
----------------------
measurement, which are used in the examination of human work in all its
contexts, and which lead systematically to the investigation of all the factors ----------------------
which affect the efficiency and economy of the situation being reviewed, in order
to effect improvement. This has to do not only with productivity improvement, ----------------------
but also improvement of quality and safety.
----------------------
3.8 WORK STUDY IN MANUFACTURING MANAGEMENT ----------------------

Managing people within manufacturing involves actual decisions about ----------------------

jobs, methods, relationships between jobs and machines and systems of control
and communication. Work design involves complex “people” relationships ----------------------
between operative staff, supervisors and specialists, e.g., engineering managers ----------------------
and staff who commission new machines and maintain them. Other specialists
may co-ordinate health and safety systems or monitor performance and plan ----------------------
maintenance. People are not mere extensions to machines or horsepower to be
switched on and off. A worker’s performance may be better than a machine’s ----------------------
capability - yet a machine may outstrip the human being for many tasks. People ----------------------
can be hurt/injured physically by operating environments or trapped socially
and psychologically in them/by them. How operational systems are designed ----------------------
and the jobs and performance relationships established within them are of great
operational, economic and social importance. In this context then work study is: ----------------------

“A collection of techniques used to examine work – what is done and ----------------------

how it is done – so that there is systematic analysis of all the elements, factors,
----------------------
resources and relationships affecting the efficiency and effectiveness of the
work being studied. ----------------------
Considerable diplomacy and sensitivity is needed by the industrial
----------------------
engineer or operations manager who becomes involved in work study (or
business process improvement) investigations. ----------------------
In the 1950s and 1960s the work study officer or O&M (organisation and
----------------------
methods) person gathered the data and gave advice. In the 1970s, work study
and methods study came within the scope of the industrial engineer. Today the ----------------------
techniques of method study are inclusive within the tool-kits and applications of
the business systems analyst. The scope for work study definition and evaluation ----------------------
is useful for operations managers in a general sense. Such roles require data
----------------------
on operational capacities and effectiveness and the use of time and resources.
Methods need regular re-evaluation. Some may have evolved and changed over ----------------------
time to become disjointed, patch works that no longer fully serve requirements.
The case may need to be put for more staff or new methods and equipment. ----------------------
Such arguments call for data and measurement.
----------------------
“How many extra hours/people are needed? Why? What will the new
method offer? Is it possible to change methods? What will be the costs/benefits?” ----------------------

----------------------

Productivity and Work Study 47

 Notes Thus, the techniques, assumptions and weaknesses of work study
reflect important know-how for the operations manager generally and not just
---------------------- those working in engineering or manufacturing environments. However, the
assumptions, difficulties and limitations of the claims must be understood.
----------------------
Efficiency Indices
----------------------
Using data on measured work, unmeasured work and idle time we can
---------------------- attempt to derive effectiveness indices.
1. Efficiency
----------------------
While performing measured work (ratio of standard/measured hours of
---------------------- work produced and the actual time taken)
---------------------- 2. Effectiveness
---------------------- Which includes:
●● Accounting for work done for which no measured time exists. Such
----------------------
work is typically paid for by an agreed hourly/day rate, i.e., there is
---------------------- no direct, measured relationship between pay and how much work
is actually completed in that hour. Of course, a supervisor may pass
---------------------- a judgement or state that the amount of work and its quality are
inadequate.
----------------------
●● Recognition of possible idle time caused, e.g., by management not
---------------------- allocating any work, supplier/materials delays, machine breakdowns,
etc.
----------------------
Conclusion
----------------------
In simple terms, work study measures work and defines (some) performance
---------------------- standards. There are many uses for time estimates for tasks. Operations managers
can guess or assume that a job is done in the correct time (whatever that is!) or they
---------------------- can be systematic and use time data gathered by a systematic technique which has
reasonable accuracy. Whether or not the worker likes it - pushed hard in trying to
----------------------
complete a job with very tight measured work standards which don’t anticipate
---------------------- the knotty problem encountered with a particular task - is another matter.
Work study/industrial engineers need time data to plan and evaluate
----------------------
production/ transformation processes. Rewards systems need such data for
---------------------- performance related bonuses. Cost calculations need to incorporate operative
and machine job times. Costing systems reference work study data.
----------------------
Work study data contributes to:
---------------------- ●● Improved methods to raise output, quality, reduce wastage, enhance
---------------------- reliability and ensure safety.
●● Standard time data contributes to capacity planning, scheduling, control
---------------------- of staff, asset utilisation and quality improvement. Service and after-sales
---------------------- method improvements may be obtained as well as process improvement
and better raw materials usage.
----------------------

48 World Class Manufacturing

●● Implementation planning for product/service and process design requires Notes
a detailed understanding of methods and timings. In a distribution/
transport system we can evaluate logistical efficiencies. We need to ----------------------
remember always that performance inefficiency may arise from many
reasons outside of worker control − a cumbersome planning system, a ----------------------
slow computer system with heavy overheads, lack of investment or ----------------------
uninformed, disorganised management. It is crass to assume that the
problems will only be due to staff inefficiencies or inappropriate methods. ----------------------

----------------------
Activity 3
----------------------
Do you think work study can be of use in any other industry other than the
----------------------
manufacturing industries? If yes, specify giving example. If no, then specify
the reasons for it. ----------------------

----------------------
3.9 PRINCIPLES OF F.W. TAYLOR ON WORK STUDY
----------------------
Method study and work measurement are two principal activities of work
study which originated in the work of F.W. Taylor. His “scientific management” ----------------------
imperatives are: ----------------------
●● Investigate the work situation and identify weaknesses – where and why
is poor performance happening? The “scientific” title for this approach to ----------------------
management means placing emphasis on: ----------------------
●● Data gathering and rational analysis.
----------------------
●● Certain narrow assumptions about the objectivity of efficiency criteria.
●● Existence of direct, deterministic relationships between worker ----------------------
performance and incentive payments. ----------------------
●● Consideration of the worker to some extent as a machine.
----------------------
Thus, we can evaluate and introduce improvements in operating methods.
This includes type of equipment, its use, layout of operations, supply and use ----------------------
of materials, materials handling, work organisation, effectiveness of planning
procedures and so on. ----------------------
Select staff with characteristics that fit the job, train and reward them ----------------------
using payment schemes, then offer particular economic incentive by linking
payment to measured performance. ----------------------

----------------------
3.10 METHOD STUDY
----------------------
Method study is the process of subjecting work to systematic, critical
scrutiny in order to make it more effective and/or more efficient. ----------------------
It was originally designed for the analysis and improvement of repetitive, ----------------------
manual work, but it can be used for all types of activity at all levels of an
organisation. ----------------------

Productivity and Work Study 49

 Notes The process is often seen as a linear, described by its main steps of:
●● Select (the work to be studied);
----------------------
●● Record (all relevant information about that work);
---------------------- ●● Examine (the recorded information);
---------------------- ●● Develop (an improved way of doing things);

---------------------- ●● Install (the new method as standard practice);

●● Maintain (the new standard proactive).
----------------------
Although this linear representation shows the underlying simplicity of
---------------------- method study, in practice the process is much more of iterations around the
above steps with each step dominating at a different stage of the investigation.
----------------------
The cyclic process often starts with a quick, rough pass in which
---------------------- preliminary data are collected and examined, before subsequent passes provide
and handle more comprehensive and more detailed data to obtain and analyse a
---------------------- more complete picture.
---------------------- Work is selected for method study on the basis of it being an identified
problem area or an identified opportunity (resulting from a systematic review
---------------------- of available data, normal monitoring or control processes, high levels of
---------------------- dissatisfaction and complaint or as part of a management-derived change in
policy, practice, technology or location), and usually because it meets certain
---------------------- conditions of urgency and/or priority.

---------------------- Before any method study investigation is begun, it is necessary to establish

clear terms of reference which define the aims, scale, scope and constraints
---------------------- of the investigation. This should also include an identification of who “owns”
the problem or situation and ways in which such “ownership” is shared. This
---------------------- may lead to a debate on the aims of the project, on reporting mechanisms
---------------------- and frequencies, and on the measures of success. This process is sometimes
introduced as a separate and distinct phase of method study, as the “define”
---------------------- stage. It leads to a plan for the investigation which identifies appropriate
techniques, personnel and timescale.
----------------------
The Record stage of method study is to provide sufficient data (in terms
---------------------- of both quality and quantity) to act as the basis of evaluation and examination. A
wide range of techniques are available for recording; the choice depends on the
----------------------
nature of the investigation and the work being studied, and on the level of detail
---------------------- required. Many of the techniques are simple charts and diagrams, but these may
be supplemented by photographic and video recording, and by computer based
---------------------- techniques.
---------------------- Especially with “hard” (clearly defined) problems, method study often
involves the construction and analysis of models, from simple charts and
---------------------- diagrams used to record and represent the situation to full, computerised
simulations. Manipulation of and experimentation on the models leads to ideas
----------------------
for development.
----------------------

50 World Class Manufacturing

 The recorded data are subjected to examination and analysis; formalised Notes
versions of this process are critical examination and systems analysis. The aim
is to identify, often through a structured, questioning process, those points of ----------------------
the overall system of work that require improvements or offer opportunity for
beneficial change. ----------------------

The ‘Examine’ stage merges into the ‘Develop’ stage of the investigation ----------------------
as a thorough analysis leads automatically to identified areas of change. The
----------------------
aim here is to identify possible actions for improvement and to subject these to
evaluation in order to develop a preferred solution. ----------------------
Sometimes it is necessary to identify short-term and long-term solutions
----------------------
so that improvements can be made (relatively) immediately, while longer-term
changes are implemented and come to fruition. ----------------------
The success of any method study project is realised when actual change
----------------------
is made ‘on the ground’ - change that meets the originally specified terms of
reference for the project. Thus, the Install phase is very important. Making ----------------------
theoretical change is easy; making real change demands careful planning and
handling of the people involved in the situation under review. They may need ----------------------
reassuring, retraining and supporting through the acquisition of new skills.
----------------------
Install, in some cases will require a parallel running of old and new systems, in
others, it may need the build-up of buffer stocks, and in others, what matters is ----------------------
that the introduction of new working methods is successful. There is often only
one chance to make change! ----------------------
Sometime after the introduction of new working methods, it is necessary ----------------------
to check that the new method is working, that it is being adhered to, and that
it has brought about the desired results. This is the Maintain phase. Method ----------------------
drift is common - when people start to either revert to old ways of working, ----------------------
or introduce new changes. Some of these may be helpful (and should formally
be incorporated); others may be inefficient or unsafe. A methods audit can be ----------------------
used to formally compare practice with the defined method and identify such
‘irregularities’. ----------------------

To sum up: ----------------------

Method Study aims at improving ways and means of doing a job through ----------------------
elimination, combination or simplification of work elements.
----------------------
Objectives of Method Study
●● Improve layout ----------------------
●● Simplify procedures ----------------------
●● Improve work environment
----------------------
●● Improve material handling
●● Upgrade equipment ----------------------
●● Improve quality ----------------------

----------------------

Productivity and Work Study 51

 Notes Areas of Method Study
●● Reduction in time and costs
----------------------
●● Work enrichment and reduction of fatigue
---------------------- ●● Standardisation
---------------------- ●● Improvement in safety and quality

---------------------- Method Study is an analysis of ways of doing work. The mnemonic

SREDIM (a common-sense heuristic or general problem solving strategy)
---------------------- represents the method study stages.

---------------------- 1. Select the tasks to study

2. Record the facts about it
----------------------
3. Examine them
----------------------
4. Develop a new method
---------------------- 5. Install/implement it
---------------------- 6. Maintain it

---------------------- Components of Method Study

1. Gaining information about process, men, machines, tools and working
----------------------
conditions
---------------------- 2. Seeking information and understanding about various components of
process, e.g., human, material and machine movements and present them
----------------------
in graphical form
---------------------- 3. Analysing critically through systematic questioning:
---------------------- i. What: Operations, delays, inspection, etc.

---------------------- ii. When: Sequence, time, schedules, etc.

iii. Who: Number of people, skills, knowledge
----------------------
iv. Where: Location
----------------------
v. How: Material, tools, consumables
---------------------- 4. Finding alternate ways
---------------------- 5. Deciding on the best alternate

---------------------- 6. Implementing the best alternate method

7. Monitoring to ensure that the new method gives the desired results
----------------------

----------------------

----------------------

----------------------

----------------------

52 World Class Manufacturing

 Notes
Check your Progress 2
----------------------
Fill in the blanks.
----------------------
1. _________ Study is an analysis of ways of doing work.
----------------------
2. ______ _______ is common when people start to either revert to old
ways of working, or introduce new changes. ----------------------
3. The ____________ of method study is to provide sufficient data to
----------------------
act as the basis of evaluation and examination.
4. ___________ planning for product/service and process design ----------------------
requires a detailed understanding of methods and timings.
----------------------
5. In simple terms _______ study measures work and defines performance
standards. ----------------------

----------------------
3.11 MOTION STUDY ----------------------
Motion study is a technique of analysing the body motions employed in ----------------------
doing a task in order to eliminate or reduce ineffective movements and facilitate
effective movements. By using motion study and the principles of motion ----------------------
economy, the task is redesigned to be more effective and less time-consuming.
----------------------
Principles of Motion Economy
----------------------
1. Effective and efficient use of human body
●● Synchronising movement of both hands ----------------------
●● Reducing idle time for both hands ----------------------
●● Movement of hands symmetrically in opposite directions
----------------------
●● Keeping arm movements below shoulder height
●● Ballistic movements ----------------------

●● Rhythmic movements for smooth and efficient performance ----------------------

2. Arrangement of work ----------------------
●● Place for everything and everything in its place
----------------------
●● As near to work place as possible
●● Effective utilisation of gravitational force ----------------------
●● Arranging location in sequence of movements/motion ----------------------
●● Adequate illumination
----------------------
●● Alternate sitting and standing position while working
----------------------
●● Postures to avoid strain on body
3. Design of tools and equipment ----------------------
●● Assistance of jigs/fixtures/work-aids to reduce manual work ----------------------

Productivity and Work Study 53

 Notes ●● Use of combination tools
●● Pre-positioning/pre-setting of tools
----------------------
●● Uniform work distribution
---------------------- ●● Use of leverages to reduce fatigue
---------------------- The Gilbreths pioneered the study of manual motions and developed basic
laws of motion economy that are still relevant today. They were also responsible
---------------------- for the development of detailed motion picture studies, termed as Micro Motion
Studies, which are extremely useful for analysing highly repetitive manual
----------------------
operations. With the improvement in technology, of course, video camera has
---------------------- replaced the traditional motion picture film camera.

---------------------- In a broad sense, motion study encompasses micro motion study and both
have the same objective: job simplification so that it is less fatiguing and less
---------------------- time- consuming while motion study involves a simple visual analysis, micro
motion study uses more expensive equipment. The two types of studies may
---------------------- be compared to viewing a task under a magnifying glass versus viewing the
---------------------- same under a microscope. The added detail revealed by the microscope may
be needed in exceptional cases when even a minute improvement in motions
---------------------- matters, i.e., on extremely short repetitive tasks.

---------------------- Taking the cine films @ 16 to 20 frames per second with motion picture
camera, developing the film and analysing the film for micro motion study had
---------------------- always been considered a costly affair. To save on the cost of developing the
film and the cost of film itself, a technique was used in which camera took
---------------------- only 5 to 10 frames per minute. This saved on the time of film analysis too.
---------------------- In applications where infrequent shots of camera could provide almost same
information, the technique proved fruitful and acquired the name Memo Motion
---------------------- Study.
---------------------- Traditionally, the data from micro motion studies are recorded on a
Simultaneous Motion (simo) Chart while that from motion studies are recorded
---------------------- on a Right Hand - Left Hand Process Chart.
---------------------- Therbligs
As result of several motion studies conducted, the Gilbreths concluded
----------------------
that any work can be done by using a combination of following 18 basic
---------------------- motions, called Therbligs (Gilbreth spelled backward).

---------------------- 1. Search
2. Find
----------------------
3. Select
----------------------
4. Grasp
---------------------- 5. Hold
---------------------- 6. Position

---------------------- 7. Assemble

54 World Class Manufacturing

8. Use Notes
9. Disassemble
----------------------
10. Inspect
----------------------
11. Transport loaded
12. Transport unloaded ----------------------

13. Pre-position for next operation ----------------------

14. Release load ----------------------
15. Unavoidable delay
----------------------
16. Avoidable delay
----------------------
17. Plan
18. Rest to overcome fatigue ----------------------

These can be classified as effective therbligs and ineffective therbligs. ----------------------

Effective therbligs take the work progress towards completion. Attempts can
be made to shorten them but they cannot be eliminated. Ineffective therbligs ----------------------
do not advance the progress of work and therefore attempts should be made to ----------------------
eliminate them by applying the Principles of Motion Economy.
----------------------
SIMO Chart
It is a graphic representation of the sequence of the therbligs or group of ----------------------
therbligs performed by body members of operator. It is drawn on a common
----------------------
time scale. In other words, it is a two-hand process chart drawn in terms of
therbligs and with a time scale. A video film or a motion picture film is shot ----------------------
of the operation. The film is analysed frame by frame. For the left hand, the
sequence of therbligs (or group of therbligs) with their time values are recorded ----------------------
on the column corresponding to the left hand. The symbols are added against
----------------------
the length of column representing the duration of the group of therbligs. The
procedure is repeated for the right and other body members (if any) involved in ----------------------
carrying out the operation.
----------------------
From the motion analysis shown about the motions of the two hands (or
other body members) involved in doing an operation, inefficient motion pattern ----------------------
can be identified and any violation of the principle of motion economy can be
easily noticed. The chart, therefore, helps in improving the method of doing ----------------------
the operation so that balanced two-handed actions with coordinated foot and
----------------------
eye motions can be achieved and ineffective motion can be either reduced or
eliminated. The result is a smoother, more rhythmic work cycle that keeps both ----------------------
delays and operator fatigue to the minimum extent.
----------------------
Cycle Graph and Chrono Cycle Graph
These techniques of analysing the paths of motion made by an operator ----------------------
were developed by the Gilbreths. To make a cycle graph, a small electric bulb ----------------------
is attached to the finger, hand, or any other part of the body whose motion is
to be recorded. By using still photography, the path of light of bulb (in other ----------------------

Productivity and Work Study 55

 Notes words, that of the body member) as it moves through space for one complete
cycle is photographed by keeping the working area relatively less illuminated.
---------------------- More than one camera may be used in different planes to get more details.
The resulting picture (cycle graph) shows a permanent record of the motion
---------------------- pattern employed in the form of a closed loop of white continuous line with the
---------------------- working area in the background. A cycle graph does not indicate the direction
or speed of motion. It can be used for improving the motion pattern and for
---------------------- training purposes in that two cycle graphs may be shown with one indicating a
better motion pattern than the other.
----------------------
The chrono cycle graph is similar to the cycle graph, but the power supply
---------------------- to the bulb is interrupted regularly by using an electric circuit. The bulb is thus
made to flash. The procedure for taking photograph remains the same. The
----------------------
resulting picture (chrono cycle graph), instead of showing continuous line of
---------------------- motion pattern, shows short dashes of line spaced in proportion to the speed
of the body member photographed. Wide spacing would represent fast moves
---------------------- while close spacing would represent slow moves. The jumbling of dots at one
point would indicate fumbling or hesitation of the body member. A chrono
----------------------
cycle graph can thus be used to study the motion pattern as well as to compute
---------------------- velocity, acceleration and retardation experienced by the body member at
different locations.
----------------------

---------------------- 3.12 WORK MEASUREMENT

---------------------- Work measurement is the process of establishing the time that a given
task would take when performed by a qualified worker working at a defined
---------------------- level of performance.
---------------------- There are various ways in which work may be measured and a variety
of techniques have been established. The basic procedure, irrespective of the
---------------------- particular measurement technique being used, consists of three stages:
---------------------- ●● An analysis phase in which the job is divided into convenient, discrete
components, commonly known as elements;
----------------------
●● A measurement phase in which the specific measurement technique is
---------------------- used to establish the time required (by a qualified worker working at a
defined level of performance) to complete each element of work;
----------------------
●● A synthesis phase in which the various elemental times are added, together
---------------------- with appropriate allowances (see below), to construct the standard time
for the complete job.
---------------------- The techniques used to measure work can be classified into those that rely
---------------------- on direct observation of the work, and those that do not. For example, some
techniques, such as predetermined motion-time systems and the use of synthetic
---------------------- or standard data can provide times from simulation or even visualisation of
the work. However, the data on which such techniques are based were almost
---------------------- certainly based on earlier observation of actual work.
----------------------

56 World Class Manufacturing

Rating Notes
Direct observation techniques (such as time study and analytical
----------------------
estimating) include a process for converting observed times to times for the
“qualified worker working at a defined level of performance.” The commonest ----------------------
of these processes is known as rating.
----------------------
This involves the observer (after appropriate training) making an assessment
of the worker’s rate of working relative to the observer’s concept of the rate ----------------------
corresponding to standard rating. This assessment is based on the factors involved
in the work, such as effort, dexterity, speed of movement and consistency. The ----------------------
assessment is made on a rating scale, of which there are three or four in common
----------------------
usage. Thus, on the 0−100 scale, the observer makes a judgement of the worker’s
rate of working as percentage of the standard rate of working (100). ----------------------
The rating is then used (in a process known as “extension” in time study)
----------------------
to convert the observed time to the basic time using the simple formula:
Basic time = observed time × observed rating/standard rating ----------------------
Rating is regarded by many as a controversial area of measurement since ----------------------
it is a subjective assessment. Where different observers rate differently, the
resulting basic times are not comparable. However, practiced rating practitioners ----------------------
are remarkably consistent. It is important that those undertaking the rating ----------------------
are properly trained, and that this training is regularly updated (to maintain a
common perception of standard rating) through rating ‘clinics’. ----------------------
Allowances ----------------------
When carrying out work over a complete shift or working day, workers
----------------------
obviously suffer from the fatigue imposed both by the work undertaken and the
conditions under which they are working. The normal practice is to make an ----------------------
addition to the basic time (commonly referred to as an “allowance”) to allow
the worker to recover from this fatigue and to attend to personal needs. The ----------------------
amount of the allowance depends on the nature of the work and the working
----------------------
environment, and is often assessed using an agreed set of guidelines and scales.
It is usual to allow some of the recovery period inherent in these allowances ----------------------
to be taken away from the workplace (and it is essential in adverse working
----------------------
conditions). Thus, work design should include the design of an effective work-
rest regime. The addition of allowances should never be used to compensate for ----------------------
an unsafe or unhealthy working environment.
----------------------
One minority school of thought suggests that relaxation allowances are
unnecessary. With work which involves, say, the carrying of heavy weights, this ----------------------
school suggests that the observer automatically adjusts the concept of standard
rating to allow for the weight. Thus, if the standard rate of performance for ----------------------
walking on level ground carrying no weight is equivalent to four miles per
----------------------
hour, then an observer rating a worker walking while carrying a weight will not
expect the equivalent rate. Thus, it is argued that the weight has been allowed ----------------------
for in the adjustment of standard rating and any relaxation allowance is simply
a duplication of this adjustment. ----------------------

Productivity and Work Study 57

 Notes In many jobs there are small amounts of work that may occur irregularly
and inconsistently. It is often not economic to measure such infrequent work
---------------------- and an additional allowance is added to cover such work and similar irregular
delays. This allowance is known as a contingency allowance and is assessed
---------------------- either by observation, by analysis of historical records (for such items as tool
---------------------- sharpening or replacement), or by experience. The end-result is a standard time
which includes the time the work “should” take (when carried out by a qualified
---------------------- worker) plus additional allocations in the form of allowances, where appropriate,
to cover relaxation time, contingency time and, perhaps, unoccupied time
---------------------- which increases the overall work cycle (such as waiting for a machine to finish
---------------------- a processing cycle).
Choosing a measurement technique
----------------------
The choice of a suitable measurement technique depends on a number of factors
---------------------- including the:
---------------------- ●● Purpose of the measurement
●● Level of detail required
----------------------
●● Time available for the measurement
----------------------
●● Existence of available predetermined data
---------------------- ●● Cost of measurement
---------------------- To some extent there is a trade-off between some of these factors. For
example, techniques which derive times quickly may provide less detail and
---------------------- be less suitable for some purposes, such as the establishment of individual
performance levels on short-cycle work.
----------------------
The advantage of structured and systematic work measurement is that
---------------------- it gives a common currency for the evaluation and comparison of all types
of work. The results obtained from work measurement are commonly used as
----------------------
the basis of the planning and scheduling of work, manpower planning, work
---------------------- balancing in team working, costing, labour performance measurement, and
financial incentives. They are less commonly used as the basis of product
---------------------- design, methods comparison, work sequencing, and workplace design.
----------------------
Activity 4
----------------------

---------------------- How is work measurement done in your organisation?

----------------------
3.13 TIME STUDY
----------------------
Time study is a structured process of directly observing and measuring
---------------------- (using a timing device) human work in order to establish the time required for
completion of the work by a qualified worker when working at a defined level
----------------------
of performance.
----------------------

58 World Class Manufacturing

 The observer first undertakes preliminary observation of the work (a Notes
pilot study) to identify suitable elements which can be clearly recognised
on subsequent occasions and are convenient, in terms of their length, for ----------------------
measurement.
----------------------
Subsequent studies are taken during which the observer times each
occurrence of each element (using a stopwatch or other timing device) while ----------------------
at the same time making an assessment of the worker’s rate of working on an
----------------------
agreed rating scale. One of the prime reasons for measuring elements of work,
rather than the work as a whole is to facilitate the process of rating. The rate at ----------------------
which a worker works will vary over time; if elements are carefully selected,
the rate of working should be consistent for the relatively short duration of ----------------------
the element. More information on rating is given within the entry on work
----------------------
measurement. This assessment of rating is used to convert the observed time
for the element into a basic time − a process referred to as “extension”. It is ----------------------
essential that a time study observer has been properly trained in the technique
and especially in rating. ----------------------
Time study, when properly undertaken, involves the use of specific control ----------------------
mechanisms to ensure that timing errors are within acceptable limits. Increasingly,
timing is by electronic devices rather than by mechanical stopwatch; some of ----------------------
these devices also assist in subsequent stages of the study by carrying out the
----------------------
process of “extending” or converting observed times into basic times.
The number of cycles that should be observed depends on the variability ----------------------
in the work and the level of accuracy required. Since time study is essentially
----------------------
a sampling technique in which the value of the time required for the job is
based on the observed times for a sample of observations, it is possible using ----------------------
statistical techniques to estimate the number of observations required under
specific conditions. This total number of observations should be taken over a ----------------------
range of conditions (where these are variable) and, where possible, on a range of
----------------------
workers. Once a basic time for each element has been determined, allowances
are added (for example, to allow the worker to recover from the physical and ----------------------
mental effects of carrying out the work) to derive a standard time.
----------------------
Time study is a very flexible technique, suitable for a wide range of work
performed under a wide range of conditions, although it is difficult to time jobs ----------------------
with very short cycle times (of a few seconds). Because it is a direct observation
technique, it takes account of specific and special conditions but it does rely on ----------------------
the use of the subjective process of rating. However, if properly carried out, ----------------------
it produces consistent results and it is widely used. Additionally, the use of
electronic data-capture devices and personal computers for analysis makes it ----------------------
much more cost-effective than previously.
----------------------
Time study involves assessing the time a job should take to do. Following
steps are involved: ----------------------
1. Select the tasks ----------------------
2. Record the facts
----------------------

Productivity and Work Study 59

 Notes 3. Analyse them
4. Calculate basic and standard times for the task
----------------------
5. Agree the method and its related time
----------------------

---------------------- 3.14 PREDETERMINED MOTION TIME SYSTEMS (PMTS)

---------------------- Predetermined Motion Time Systems (PMTS) are work measurement

systems based on the analysis of work into basic human movements, classified
---------------------- according to the nature of each movement and the conditions under which it
is made. Tables of data provide a time, at a defined rate of working, for each
----------------------
classification of each movement.
---------------------- The first PMTS (since designated as “first-level” systems) were designed
to provide times for detailed manual work and thus consisted of fundamental
----------------------
movements (reach, grasp, move, etc.) and associated times.
---------------------- Large amounts of research, data collection, analysis, synthesis, and
validation are required to produce PMTS data and the number of such systems
----------------------
is very low. “Higher level” systems have since been devised, most commonly by
---------------------- combining these fundamental movements into common, simple manual tasks.
Such higher level systems are designed for faster standard setting of longer
---------------------- cycle activity.
---------------------- Criticisms of PMTS relate to their inability to provide data for movements
made under “unnatural” conditions (such as working in cramped conditions or
---------------------- with an unnatural body posture) or for mental processes and their difficulty in
---------------------- coping with work which is subject to interruptions. However, various systems
have been derived for “office work,” which include tasks with a simple and
---------------------- predictable mental content.

---------------------- Conversely, one of the significant advantages of PMTS is that they require
a detailed description of the working method - and are thus useful for studying
---------------------- how work is done (and how it can be improved) as well as measuring the time
it should take.
----------------------
Many PMTS are proprietary systems and users must either attend a
---------------------- designated and approved training course and/or pay a royalty for use of the
data.
----------------------
One of the major PMTS systems is Methods-Times Measurement
---------------------- (MTM) which is actually a ‘family’ of systems operating at different levels
and applicable to different types of work. MTM1 − the ‘highest-level’ or most
----------------------
detailed member of the family − was developed in the 1940s by analysing large
---------------------- numbers of repetitive cycles of manual work on film. MTM gives values for such
basic hand/arm motions as: Reach, Move, Turn, Grasp, Position, Disengage,
---------------------- and Release, together with a small set of full body motions. The time taken to
Reach to an object is then given by a table based on the kind of Reach (e.g.,
----------------------
whether the object is in a fixed location - such as a tool in a tool holder - or
---------------------- is a single object located on a bench, or jumbled together with other objects,

60 World Class Manufacturing

etc.) and the distance to be Reached. Similar tables give times for each of the Notes
other basic movements categorised and measured similarly. MTM is suitable
for measuring short cycle, highly repetitive work. Other members of the MTM ----------------------
family use lower level motions (so that in MTM2, for example, the MTM1
motions of Reach and Grasp are combined into a composite motion, GET). ----------------------
MTM2 is thus quicker to apply, but more suited to longer-cycle work where ----------------------
the fine level of discrimination of MTM1 is unnecessary in terms of meeting
accuracy requirements. ----------------------
Another popular PMTS is the ‘Maynard Operation Sequence Technique’ ----------------------
(MOST), which was first released in 1972. This method also has several
variations, with the most commonly used being Basic MOST, and others being ----------------------
Mini MOST, Maxi MOST, and Admin MOST. The variations of both systems
----------------------
differ from each other based on their level of focus. MTM-1 and Mini MOST
are optimal for short processes with only small hand motions. Basic MOST, ----------------------
MODAPTS and MTM-UAS are more suitable for processes that average
around 1 to 5 minutes, while MTM-B and Maxi MOST are more properly used ----------------------
for longer processes that are less repetitive.
----------------------
Yet another popular PMTS used today in the automotive, sewing
and healthcare industries is the MODAPTS technique. This technique was ----------------------
introduced in 1966 by G.C. “Chris” Heyde who originally learned the MTM-
----------------------
1 and MTM-2 methods in the 1950s and sought a simpler technique to use
and apply. Unlike the MTM and MOST standards, MODAPTS uses a MOD ----------------------
as its basic unit of measurement (1 MOD = 0.129 seconds). However, like
Basic-MOST, MODAPTS uses a coding technique that consists of a letter and ----------------------
an integer number (all but 1 code), where the integer numbers each represent
----------------------
MODS that can be easily added to determine a coded task’s time.
Unlike time studies, in which an analyst uses a stopwatch and subjectively ----------------------
rates the operator’s effort to calculate a standard time, a PMTS requires that the
----------------------
analyst break apart the process into its component actions, assign time values to
each action, and sum the times to calculate the total standard time. ----------------------
Most predetermined motion time systems (MTM and MOST) use time ----------------------
measurement units (TMU) instead of seconds for measuring time. One TMU
is defined to be 0.00001 hours, or 0.036 seconds. These smaller units allow for ----------------------
more accurate calculations without the use of decimals. In the most in-depth
PMT systems, motions observed will be on the level of individual TMUs, like ----------------------
toss (3 TMUs in Mini MOST) and simple pick-up (2 TMUs in MTM-1). More ----------------------
general systems simplify things by grouping individual elements, and thus have
larger time values – for example, a bend and arise (61 TMUs in MTM-2) and ----------------------
one or two steps (30 TMUs in Basic MOST). Systems with even less detail
work with TMU values in the hundreds, like climbing 10 rungs on a ladder (300 ----------------------
TMUs in Maxi MOST) or passing through a door (100 TMUs in Maxi MOST). ----------------------
The choice of which variation of a certain PMTS to use is dependent
on the need for accuracy in contrast to the need for quick analysis, as well as ----------------------
the length of the operation, the distances involved in the operation, and the ----------------------

Productivity and Work Study 61

 Notes repetitiveness of the operation. Longer operations often take place on a larger
spatial scale, and tend to be less repetitive, so these issues are often treated as
---------------------- one. For longer, less repetitive operations, statistical analysis demonstrates that
the accuracy of less detailed systems will generally approach the accuracy of
---------------------- more detailed systems. Thus, in order to reduce the time required for analysis,
---------------------- less detailed systems (like MTM-B and Maxi MOST) are usually used when
possible. Conversely, very short, repetitive processes are commonly analysed
---------------------- with more exact methods like MTM-1 and Mini MOST because of the need for
accuracy.
----------------------
An extract of MTM Analysis is shown below.
----------------------
MTM Analysis
---------------------- Job description: Analyst: EJH
Assemble r.f. transformer to base-plate Date: 3 May
---------------------- EI. Description LH tmu’s RH Description
1 Move hand to washer R14C 15.6 R14B Move hand to transformer
---------------------- 2 Grasp first washer G4B 9.1 G1A Grasp transformer
3 Move hand clear of container M2B – – Hold in box
---------------------- 4 Palm washer G2 5.6 – Ditto
5 To second washer R2X 5.9 – Ditto
---------------------- 6 Grasp washer G4B 9.1 – Ditto
7 Move washers to area M10B 16.9 M14C Transformer to plate
----------------------
Examples of some Codes used in the extract:
----------------------
1. R14C: Reach 14 inches to an object mixed up in a group so that search
---------------------- and select occur (Class C reach).
2. R14B: Reach 14 inches to a single object in location which may vary
----------------------
slightly from cycle to cycle.
---------------------- 3. G2: Grasp.
----------------------
3.15 ERGONOMICS
----------------------
Ergonomics is the science of designing the job, equipment, and workplace
---------------------- to fit the worker. Proper ergonomic design is necessary to prevent repetitive
strain injuries, which can develop over time and can lead to long-term disability.
----------------------
The International Ergonomics Association defines ergonomics as follows:
----------------------
Ergonomics (or human factors) is the scientific discipline concerned
---------------------- with the understanding of interactions among humans and other elements of a
system, and the profession that applies theory, principles, data and methods to
---------------------- design in order to optimise human well-being and overall system performance.
---------------------- Ergonomics is employed to fulfil the two goals of health and productivity.
It is relevant in the design of such things as safe furniture and easy-to-use
---------------------- interfaces to machines.
---------------------- Ergonomics is concerned with the ‘fit’between people and their technological
tools and environments. It takes account of the user’s capabilities and limitations
----------------------

62 World Class Manufacturing

in seeking to ensure that tasks, equipment, information and the environment suit Notes
each user.
To assess the fit between a person and the used technology, ergonomists ----------------------
consider the job (activity) being done and the demands on the user; the ----------------------
equipment used (its size, shape, and how appropriate it is for the task), and
the information used (how it is presented, accessed, and changed). Ergonomics ----------------------
draws on many disciplines in its study of humans and their environments,
including anthropometry, biomechanics, mechanical engineering, industrial ----------------------
engineering, industrial design, kinesiology, physiology and psychology.
----------------------
Domains
----------------------
Ergonomics is broadly divided into three domains:
●● Physical ergonomics: It is concerned with human anatomical, and some ----------------------
of the anthropometric, physiological and biomechanical characteristics ----------------------
as they relate to physical activity. (Relevant topics include working
postures, materials handling, repetitive movements, lifting, work related ----------------------
musculoskeletal disorders, workplace layout, safety and health.)
----------------------
●● Cognitive ergonomics: It is concerned with mental processes, such
as perception, memory, reasoning, and motor response, as they affect ----------------------
interactions among humans and other elements of a system. (Relevant
topics include mental workload, decision-making, skilled performance, ----------------------
human-computer interaction, human reliability, work stress and training
as these may relate to human-system and Human-Computer Interaction ----------------------
design.) ----------------------
●● Organisational ergonomics: It is concerned with the optimisation
of socio-technical systems, including their organisational structures, ----------------------
policies, and processes. (Relevant topics include communication, crew
----------------------
resource management, work design, design of working times, teamwork,
participatory design, community ergonomics, cooperative work, new ----------------------
work programmes, virtual organisations, and quality management.)
History of Ergonomics ----------------------

The term ergonomics is derived from the Greek words ergon (work) ----------------------
and nomos (natural laws) and first entered the modern lexicon when Wojciech
Jastrzêbowski used the word in his 1857 article, ‘The Outline of Ergonomics, ----------------------
i.e., Science of Work, Based on the Truths Taken from the Natural Science’. ----------------------
Later, in the 19th century, Frederick Winslow Taylor pioneered the
“Scientific Management” method, which proposed a way to find the optimum ----------------------
method for carrying out a given task. Taylor found that he could, for example, ----------------------
triple the amount of coal that workers were shovelling by incrementally
reducing the size and weight of coal shovels until the fastest shovelling rate ----------------------
was reached. Frank and Lillian Gilbreth expanded Taylor’s methods in the early
1900s to develop “Time and Motion Studies”. They aimed to improve efficiency ----------------------
by eliminating unnecessary steps and actions. By applying this approach, the
----------------------
Gilbreths reduced the number of motions in bricklaying from 18 to 4.5, allowing
bricklayers to increase their productivity from 120 to 350 bricks per hour. ----------------------

Productivity and Work Study 63

 Notes However, the coining of the term Ergonomics is now widely attributed to
Hywel Murrell, a psychologist in a meeting at the UK admiralty in 1949. He
---------------------- used it to encompass the studies on which he had been engaged during and after
the Second World War.
----------------------
Design of Ergonomics Experiments
----------------------
There is a specific series of steps that should be used in order to properly
---------------------- design an ergonomics experiment. First, one should select a problem that has
practical impact. The problem should support or test a current theory. The user
---------------------- should select one or a few dependent variable(s) which usually measures safety,
health, and/or physiological performance. Independent variable(s) should also
----------------------
be chosen at different levels. Normally, this involves paid participants, the
---------------------- existing environment, equipment, and/or software. When testing the users,
one should give careful instructions describing the method or task and then
---------------------- get voluntary consent. The user should recognise all the possible combinations
and interactions to notice the many differences that could occur. Multiple
----------------------
observations and trials should be conducted and compared to maximise the best
---------------------- results. Once completed, redesigning within and between subjects should be
done to vary the data. A mathematical model should be used so that the data will
---------------------- be clear once the experiment is completed.
---------------------- The experiment starts with a pilot test. Make sure in advance that the
subjects understand the test, the equipment works, and that the test is able to
---------------------- be finished within the given time. When the experiment actually begins, the
subjects should be paid for their work. All times and other measurements
----------------------
should be carefully measured and recorded. Once all the data is compiled, it
---------------------- should be analysed, reduced, and formatted in the right way. A report explaining
the experiment should be written. It should often display statistics including an
---------------------- ANOVA table, plots, and means of central tendency. A final paper should be
written and edited after numerous drafts to ensure an adequate report is the final
----------------------
product.
---------------------- Outside of the discipline itself, the term ‘ergonomics’ is generally used
---------------------- to refer to physical ergonomics as it relates to the workplace (as in for example
ergonomic chairs and keyboards). Ergonomics in the workplace has to do
---------------------- largely with the safety of employees, both long- and short-term. Ergonomics
can help reduce costs by improving safety. This would decrease the money
---------------------- paid out in workers’ compensation. For example, over five million workers
---------------------- sustain overextension injuries per year. Through ergonomics, workplaces can
be designed so that workers do not have to overextend themselves and the
---------------------- manufacturing industry could save billions in workers’ compensation.

---------------------- Workplaces may either take the reactive or proactive approach when
applying ergonomics practices. Reactive ergonomics is when something needs
---------------------- to be fixed, and corrective action is taken. Proactive ergonomics is the process
of seeking areas that could be improved and fixing the issues before they
---------------------- become a large problem. Problems may be fixed through equipment design,
---------------------- task design, or environmental design. Equipment design changes the actual,

64 World Class Manufacturing

physical devices used by people. Task design changes what people do with the Notes
equipment. Environmental design changes the environment in which people
work, but not the physical equipment they use. ----------------------
Fields of Ergonomics ----------------------
Engineering Psychology
----------------------
Engineering psychology is an interdisciplinary part of ergonomics and
studies the relationships of people to machines, with the intent of improving ----------------------
such relationships. This may involve redesigning equipment, changing the way
----------------------
people use machines, or changing the location in which the work takes place.
Often, the work of an engineering psychologist is described as making the ----------------------
relationship more “user-friendly.” Engineering psychology is an applied field
of psychology concerned with psychological factors in the design and use of ----------------------
equipment. Human factors are broader than engineering psychology, which is
----------------------
focused specifically on designing systems that accommodate the information-
processing capabilities of the brain. ----------------------
Macro-ergonomics ----------------------
Macro-ergonomics is an approach to ergonomics that emphasises a broad
system view of design, examining organisational environments, culture, history, ----------------------
and work goals. It deals with the physical design of tools and the environment. ----------------------
It is the study of the society/technology interface and their consequences for
relationships, processes, and institutions. It also deals with the optimisation of ----------------------
the designs of organisational and work systems through the consideration of
personnel, technological and environmental variables and their interactions. ----------------------
The goal of macro-ergonomics is a completely efficient work system at both the ----------------------
macro and micro-ergonomic level which results in improved productivity, and
employee satisfaction, health, safety, and commitment. It analyses the whole ----------------------
system, finds how each element should be placed in the system, and considers
all aspects for a fully efficient system. A misplaced element in the system can ----------------------
lead to total failure. ----------------------
Macro-ergonomics deals with the overall design of work systems. This
domain did not begin to receive recognition as a sub-discipline of ergonomics ----------------------
until the beginning of the 1980s. The idea and current perspective of the ----------------------
discipline was the work of the U.S. Human Factors Society Select Committee
on the Future of Human Factors, 1980-2000. This committee was formed ----------------------
to analyse trends in all aspects of life and to look at how they would impact
ergonomics over the following 20 years. The developments they found include: ----------------------

●● Breakthroughs in technology that would change the nature of work, such ----------------------
as the desktop computer.
----------------------
●● The need for organisations to adapt to the expectations and needs of this
more mature work force. ----------------------
●● Differences between the post-World War II generation and the older ----------------------
generation regarding their expectations about the nature of the new
workplace. ----------------------

Productivity and Work Study 65

 Notes ●● The inability of solely micro-ergonomics to achieve reductions in lost-
time accidents and injuries and increases in productivity.
----------------------
●● Increasing workplace liability litigation based on safety design deficiencies.
---------------------- ●● These predictions have become and continue to become reality. The macro-
ergonomic intervention in the workplace has been particularly effective
----------------------
in establishing a work culture that promotes and sustains performance
---------------------- and safety improvements.
Methods
----------------------
●● Cognitive Walk-through Method: This method is a usability inspection
---------------------- method in which the evaluators can apply user perspective to task scenarios
---------------------- to identify design problems. As applied to macro-ergonomics, evaluators
are able to analyse the usability of work system designs to identify how
---------------------- well a work system is organised and how well the workflow is integrated.
---------------------- ●● Kansei Method: This is a method that transforms consumer’s responses to
new products into design specifications. As applied to macro-ergonomics,
---------------------- this method can translate employee’s responses to changes to a work
---------------------- system into design specifications.
●● High Integration of Technology, Organisation, and People (HITOP):
---------------------- This is a manual procedure done step-by-step to apply technological
---------------------- change to the workplace. It allows managers to be more aware of the
human and organisational aspects of their technology plans, allowing
---------------------- them to efficiently integrate technology in these contexts.
---------------------- ●● Top Modeler: This model helps manufacturing companies identify
the organisational changes needed when new technologies are being
---------------------- considered for their process.
---------------------- ●● Computer-integrated Manufacturing, Organisation, and People
System Design (CIMOP): This model allows for evaluating computer-
---------------------- integrated manufacturing, organisation, and people system design based
---------------------- on knowledge of the system.
●● Anthropo-technology: This method considers analysis and design
---------------------- modification of systems for the efficient transfer of technology from one
---------------------- culture to another.
●● Systems Analysis Tool (SAT): This is a method to conduct systematic
----------------------
trade-off evaluations of work-system intervention alternatives.
---------------------- ●● Macro-ergonomic Analysis of Structure (MAS): This method analyses
the structure of work systems according to their compatibility with unique
----------------------
socio-technical aspects.
---------------------- ●● Macro-ergonomic Analysis and Design (MEAD): This method assesses
---------------------- work-system processes by using a ten-step process.

----------------------

66 World Class Manufacturing

Example – Sitting on Chair Notes
The best way to reduce pressure on the back is to be in a standing position.
----------------------
However, there are times when you need to sit. When sitting, the main part of
the body weight is transferred to the seat. Some weight is also transferred to the ----------------------
floor, backrest and armrests. Where the weight is transferred is the key to a good
seat design. When the proper areas are not supported, sitting in a seat all day can ----------------------
put unwanted pressure on the back, causing pain. ----------------------
The lumbar (bottom five vertebrate in the spine) needs to be supported to
----------------------
decrease disc pressure. Providing both a seat back that inclines backwards and
has a lumbar support is critical to prevent excessive low back pressures. The ----------------------
combination which minimises pressure on the lower back is having a backrest
inclination of 120 degrees and a lumbar support of 5 cm. The 120-degree ----------------------
inclination means the angle between the seat and the backrest should be 120 ----------------------
degrees. The lumbar support of 5 cm means the chair backrest supports the
lumbar by sticking out 5 cm in the lower back area. ----------------------
One drawback to creating an open body angle by moving the backrest ----------------------
backwards is that it takes one’s body away from the tasking position, which
typically involves leaning inward towards a desk or table. One solution to this ----------------------
problem can be found in the kneeling chair. A proper kneeling chair creates the ----------------------
open body angle by lowering the angle of the lower body, keeping the spine in
alignment and the sitter properly positioned to task. The benefit of this position ----------------------
is that if one leans inward, the body angle remains 90 degrees or wider. One
----------------------
misperception regarding kneeling chairs is that the body’s weight bears on the
knees, and thus users with poor knees cannot use the chair. ----------------------
This misperception has led to a generation of kneeling chairs that attempt ----------------------
to correct this by providing a horizontal seating surface with an ancillary knee
pad. This design wholly defeats the purpose of the chair. In a proper kneeling ----------------------
chair, some of the weight bears on the shins, not the knees, but the primary
----------------------
function of the shin rests (knee rests) are to keep one from falling forward out
of the chair. Most of the weight remains on the buttocks. Another way to keep ----------------------
the body from falling forward is with a saddle seat. This type of seat is generally
seen in some sit stand stools, which seek to emulate the riding or saddle position ----------------------
of a horseback rider, the first “job” involving extended periods of sitting. ----------------------
Another key to reducing lumbar disc pressure is the use of armrests. They
help by putting the force of your body not entirely on the seat and back rest, but ----------------------
putting some of this pressure on the armrests. Armrest needs to be adjustable in ----------------------
height to assure shoulders are not overstressed.
----------------------

----------------------

----------------------

----------------------

Productivity and Work Study 67

 Notes
Check your Progress 3
----------------------
State True or False.
----------------------
1. Reactive ergonomics is when something needs to be fixed, and
---------------------- corrective action is taken.
---------------------- 2. Proactive ergonomics is the process of seeking areas that could be
improved and fixing the issues before they become a large problem.
----------------------
3. Time study does not consider the time a job should take to do.
---------------------- 4. Effective therbligs do not advance the progress of work.
---------------------- 5. Ineffective therbligs take the work progress towards completion.

----------------------

---------------------- Activity 5
---------------------- Read about ergonomics and apply what you have learnt to another repetitive
work posture of your choice.
----------------------

----------------------
Summary
----------------------
●● Definition of productivity is complex and this is because it is both a
---------------------- technical and managerial concept. The least controversial definition
of productivity is that it is a quantitative relationship between output
----------------------
and input. Productivity becomes the attainment of the highest level of
---------------------- performance with the lowest possible expenditure of resources.
●● Productivity as a concept can be of three types: 1. Total Factor Productivity
----------------------
(TFP) 2. Partial Productivity 3. Cumulative Total Productivity Model
---------------------- (CTPM). Intangible factors considered for CTPM are customer, vendor,
product, process, society, employee, market and owner related. CTPM
---------------------- is more comprehensive and can reflect real productivity in terms of
competitiveness of the organisation.
----------------------
●● Productivity many a times gets misconstrued with other parameters
---------------------- of performance measurement like production, output, efficiency,
effectiveness, cost reduction, etc. Relationship of productivity with other
---------------------- factors like quality, technology, sales revenue, production, efficiency, etc.
---------------------- is complex and needs proper understanding.
●● Work Study is the systematic examination of the methods of carrying out
---------------------- activities such as to improve the effective use of resources and to set up
---------------------- standards of performance for the activities carried out and has method
study, motion study, work measurement (time study and predetermined
---------------------- motion and time study) as its constituents. In simple terms, work study
measures work and defines (some) performance standards. The techniques,
---------------------- assumptions and weaknesses of work study reflect important know-how

68 World Class Manufacturing

 for the operations manager generally - and not just those working in Notes
engineering or manufacturing environments. However the assumptions,
difficulties and limitations of the claims must be understood. ----------------------
●● Method study is the process of subjecting work to systematic, critical ----------------------
scrutiny in order to make it more effective and/or more efficient. Method
Study aims at improving ways and means of doing a job through ----------------------
elimination, combination or simplification of work elements. The
mnemonic SREDIM (a common-sense heuristic or general problem ----------------------
solving strategy) represents the method study stages. ----------------------
●● Motion study is a technique of analysing the body motions employed in
doing a task in order to eliminate or reduce ineffective movements and ----------------------
facilitates effective movements. By using motion study and the principles ----------------------
of motion economy, the task is redesigned to be more effective and less
time-consuming. In a broad sense, motion study encompasses micro ----------------------
motion study and both have the same objective: job simplification so that
it is less fatiguing and less time consuming while motion study involves ----------------------
a simple visual analysis, micro motion study uses more expensive ----------------------
equipment.
●● Work measurement is the process of establishing the time that a given task ----------------------
would take when performed by a qualified worker working at a defined ----------------------
level of performance. Time study is a structured process of directly
observing and measuring (using a timing device) human work in order ----------------------
to establish the time required for completion of the work by a qualified
worker when working at a defined level of performance. ----------------------
●● Predetermined Motion Time Systems (PMTS) are work measurement ----------------------
systems based on the analysis of work into basic human movements,
classified according to the nature of each movement and the conditions ----------------------
under which it is made. Tables of data provide a time, at a defined rate
----------------------
of working, for each classification of each movement. Large amounts of
research, data collection, analysis, synthesis, and validation are required ----------------------
to produce PMTS data.
----------------------
●● Ergonomics (or human factors) is the scientific discipline concerned with
the understanding of interactions among humans and other elements ----------------------
of a system, and the profession that applies theory, principles, data and
methods to design in order to optimise human well-being and overall ----------------------
system performance.
----------------------
●● Ergonomics is broadly divided into three domains: Physical, Cognitive,
Organisational. ----------------------

----------------------
Keywords
----------------------
●● Productivity: Ratio of outputs to inputs.
----------------------
●● Total productivity factor: Ratio of all the outputs to sum of all the inputs
of basic resources notably labour, capital goods and natural resources. ----------------------

Productivity and Work Study 69

 Notes ●● Partial productivity: Ratio of output to one input resource.
●● Cumulative total productivity measure: Ratio of outputs to all tangible
---------------------- and intangible inputs.
---------------------- ●● Total productivity index: Ratio of total output to the sum of all inputs.

---------------------- ●● Work study: Systematic examination of the methods of carrying out

activities such as to improve the effective use of resources and to set up
---------------------- standards of performance for the activities carried out.
●● Method study: The process of subjecting work to systematic, critical
----------------------
scrutiny in order to make it more effective and/or more efficient.
---------------------- ●● Motion study: A technique of analysing the body motions employed in
doing a task in order to eliminate or reduce ineffective movements and
----------------------
facilitate effective movements.
---------------------- ●● Work measurement: The process of establishing the time that a given
task would take when performed by a qualified worker working at a
----------------------
defined level of performance.
---------------------- ●● Rating: Observer’s assessment (after appropriate training) of the
worker’s rate of working relative to the observer’s concept of the rate
----------------------
corresponding to standard rating.
---------------------- ●● Allowances: Time added to studied time for factors like fatigue, shift
change, tool change, etc.
----------------------
●● Time study: A structured process of directly observing and measuring
---------------------- (using a timing device) human work in order to establish the time required
for completion of the work by a qualified worker when working at a
---------------------- defined level of performance.
---------------------- ●● Therbligs: Result of several motion studies conducted by Gilbreths
concluded that any work can be done by using a combination of 18 basic
---------------------- motions, called Therbligs (Gilbreth spelled backward).
---------------------- ●● Simo charts: A graphic representation of the sequence of the therbligs or
group of therbligs performed by body members of operator.
----------------------
●● Cycle graphs: Techniques of analysing the paths of motion made by an
---------------------- operator.
●● Predetermined motion time study: Work measurement systems based
----------------------
on the analysis of work into basic human movements, classified according
---------------------- to the nature of each movement and the conditions under which it is made.
●● Methods-times measurement: A ‘family’ of systems operating at
----------------------
different levels and applicable to different types of work.
---------------------- ●● Ergonomics: Science of designing the job, equipment, and workplace to
fit the worker.
----------------------

----------------------

----------------------

70 World Class Manufacturing

 Notes
Self-Assessment Questions
----------------------
1. What are the advantages of CTPM?
2. What are the objectives of Method Study? ----------------------
3. Which intangible factors are considered for CTPM? ----------------------
4. Why labour productivity does not reflect the real productivity of the ----------------------
organisation?
5. Explain the term ‘SREDIM’. ----------------------

6. Why are rating and allowances controversial issues? ----------------------

7. Explain how ‘Therbligs’ are used to improve operational efficiency. ----------------------
8. Briefly explain Simo Charts, Cycle Graphs and Chrono Cycle Graphs. ----------------------
9. What are the advantages and disadvantages of PMTS?
----------------------
10. What is Ergonomics? How is it useful in improving worker’s efficiency?
----------------------
Answers to Check your Progress ----------------------
Check your Progress 1 ----------------------
Multiple Choice Multiple Response.
----------------------
1. Some of the methods to improve productivity are:
----------------------
i. Cost saving resulting from the introduction of new technologies.
ii. Improved methods of accomplishing certain work tasks. ----------------------
iv. Increased morale and satisfaction on the part of the employees. ----------------------
2. Some of the misconceptions about productivity are: ----------------------
i. Productivity is only relevant to production.
----------------------
ii. Cost cutting always improves productivity.
----------------------
iv. Increase in output or performance is an indication of better
productivity. ----------------------
3. Some of the advantages of CTPM are ----------------------
i. It pinpoints the problem areas making it easier for management to
optimise its efforts. ----------------------

iii. Allocation of resources can be optimised. ----------------------

iv. Impact of any change can be gauged quickly. ----------------------

----------------------

----------------------

----------------------

Productivity and Work Study 71

 Notes Check your Progress 2
Fill in the blanks.
----------------------
1. Method Study is an analysis of ways of doing work.
----------------------
2. Method drift is common when people start to either revert to old ways of
---------------------- working, or introduce new changes.

---------------------- 3. The record stage of method study is to provide sufficient data to act as the
basis of evaluation and examination.
---------------------- 4. Implementation planning for product/service and process design requires
---------------------- a detailed understanding of methods and timings.
5. In simple terms, work study measures work and defines performance
---------------------- standards.
---------------------- Check your Progress 3
---------------------- State True or False.
1. True
----------------------
2. True
----------------------
3. False
----------------------
4. False
---------------------- 5. False
----------------------
Suggested Reading
----------------------
1. Kanawaty, George. Introduction to Work Study. International Labour
---------------------- Organization.
---------------------- 2. Prokopenko, Josheph. Productivity Management: A Practical Handbook.
International Labour Organization.
----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

72 World Class Manufacturing

Manufacturing Strategy
UNIT

4
Structure:

4.1 Introduction
4.2 Concept of Strategy
4.3 Corporate Strategy
4.4 Business Strategy
4.5 Manufacturing Strategy
Case Study
Summary
Key Words
Self-Assessment Questions
Answers to Check your Progress
Suggested Reading

Manufacturing Strategy 73
 Notes
Objectives
----------------------
After going through this unit, you will be able to:
----------------------
• Explain the role of strategy in manufacturing and the position of
---------------------- manufacturing strategy in the hierarchy of strategies
---------------------- • Specify meaning of strategy and its different components
• Analyse how corporate strategy is formulated and different factors
----------------------
taken into consideration while doing so
---------------------- • Determine business strategy and how it influences other functional
---------------------- strategies like manufacturing strategy
• Identify the significance in building a competitive organisation and
---------------------- different aspects involved
----------------------

---------------------- 4.1 INTRODUCTION

---------------------- Strategy has been defined as the determination of the basic long-term
goals and the objectives of an enterprise, and the adoption of courses of action
---------------------- and the allocation of resources necessary for carrying out these goals.
---------------------- Such a broad definition of strategy covers a multitude of decisions from
“What business should we be in?” to “How can manufacturing contribute to the
---------------------- competitive advantage of this business?”
---------------------- Recognising this has led to the idea of following hierarchy of strategies:

---------------------- ●● Corporate Strategy

●● Business Strategy
----------------------
●● Functional Strategy
---------------------- Manufacturing strategy is one such functional strategy. The concept of
---------------------- manufacturing strategy is often traced to Skinner’s 1969 Harvard Business
Review article, “Manufacturing - Missing Link in Corporate Strategy”. Skinner
---------------------- suggested a top-down approach to manufacturing. Manufacturing objectives
should be derived from business objectives, and then manufacturing policies
---------------------- developed to address these objectives.
---------------------- Manufacturing objectives cover such things as cost, quality, delivery and
flexibility and usually there are trade-offs between them. Trade-off decisions
---------------------- are also required in a number of key areas in order to support the manufacturing
---------------------- objectives. Skinner identified five decision areas:
1. Plant and equipment
----------------------
2. Production planning and control
----------------------
3. Labour and staffing
---------------------- 4. Product design/engineering

74 World Class Manufacturing

5. Organisation and management Notes
These basic ideas (trade-offs and consistency of objectives/policies) have
----------------------
formed the foundation from which the current understanding of manufacturing
strategy has developed. ----------------------
Before going into further details about manufacturing strategy, it is
----------------------
necessary to fully understand the meaning of strategy and also something
about corporate and business strategy which provide the guiding principles for ----------------------
manufacturing strategy.
----------------------
4.2 CONCEPT OF STRATEGY ----------------------
Strategy, as already defined, is a way of designing and implementing ----------------------
manufacturing operations to achieve a world class position which includes all
the best practices adopted by organisations. We discuss the various dimensions ----------------------
of strategy as follows:
----------------------
Definitions of Strategy
----------------------
●● Determination of basic long-term goals and objectives of the Enterprise
and adoption of course of action and allocation of resources – Chandler. ----------------------
●● The broad program of defining and achieving the organisation’s goals and
----------------------
implementing its mission – Evert.
●● Determination and evaluation of alternative paths to achieve organisation’s ----------------------
goals and objectives and eventually a choice of alternatives to be adopted
----------------------
– Wheelan & Hunger.
●● Process of continuous information gathering and awareness where ----------------------
analysis, choice, implementation together with feedback mechanisms;
----------------------
work together to position the firm at its most competitive standpoint.
Characteristics of Strategy ----------------------
●● Long-term impact ----------------------
●● Formed by Top Management
----------------------
●● Focus on Mission
●● Availability of options ----------------------
Key Points for Successful Strategy ----------------------
●● Choice of area of concentration ----------------------
●● Preparedness for retaliation
----------------------
●● Keeping away from dangerous areas
●● Involvement of everyone ----------------------
●● Correct timing ----------------------
●● Right choice of alliances
----------------------

----------------------

Manufacturing Strategy 75
 Notes Interactive Elements of Strategy
1. Analysis – Resource awareness, environmental audit, appreciation of
----------------------
corporate expectations.
---------------------- 2. Choice – Generating, evaluating and choosing options.
---------------------- 3. Implementation – Organisational restructuring and planning resources.
Analysis
----------------------

----------------------

---------------------- Choice Implementation

---------------------- Macro Factors Affecting Strategy

●● PEST (Political, Economic, Social, Technological) factors
----------------------
●● Demographics
---------------------- ●● Labour
---------------------- ●● Ecology

---------------------- ●● Competitors
●● Government
----------------------
●● Balance of power between buyer and supplier
---------------------- ●● General economic growth
---------------------- ●● Inflation
●● Unemployment
----------------------
●● Disposable incomes
---------------------- Hunger and Wheelan’s Strategy Formulation Model
---------------------- ●● Evaluation of Organisation’s current performance
---------------------- ●● Examination and Evaluation of current Mission, Objectives and Policies
●● A scan of internal environment (Strengths and Weaknesses)
----------------------
●● A scan of external environment (Threats and Opportunities)
---------------------- ●● Analysis of strategic factors and revision of Mission and Objectives
---------------------- ●● Generation, evaluation and selection of the best strategy
●● Implementation
----------------------
●● Monitoring the results and installing controls
---------------------- Setting of Strategy
---------------------- Strategy

----------------------
Mission →Goals Management →Operations
----------------------

---------------------- Policy

76 World Class Manufacturing

Mission Notes
●● States specific purpose of enterprise and the path it will take to accomplish
----------------------
it
●● Is anchor point for goals and policies ----------------------
●● Identifies customers ----------------------
●● Spells out benefits provided by enterprise, to whom and how
----------------------
Goals
●● Amplification of mission ----------------------
●● Provides focus and motivation ----------------------
●● Serves as basis for strategy development, planning and implementation
----------------------

Activity 1 ----------------------

----------------------
1. According to you, what are the decision areas which are necessary to
support manufacturing strategy? ----------------------
2. Which points influence the successful formulation of strategy in your ----------------------
department?
----------------------

4.3 CORPORATE STRATEGY ----------------------

Corporate strategy will ask you to answer fundamental questions such as ----------------------
“Why are you in business?” and “Why are you in this particular business?” This
----------------------
may appear to be a strange starting point but unless you can answer these type
of questions your Corporate Strategy cannot produce vision statements and ----------------------
mission statements that have any real meaning.
----------------------
Vision, Mission, Competitive Advantage
The first critical strategy element is Vision, Mission and Competitive ----------------------
Advantage, which describe the business a company is its current and long-
----------------------
term market objectives and the manner in which it differentiates itself from the
competition. ----------------------
1. Focused Purpose
----------------------
●● Clearly defining short-term purpose
----------------------
●● Ensuring mission is realistic
●● Serving the best interests of all stakeholders ----------------------
●● Defining a point of differentiation ----------------------
3. Future Perspective
----------------------
●● Clearly defining long-term outlook
●● Appealing to the long-term interests of the company’s stakeholders ----------------------
●● Providing a foundation for decision-making ----------------------

Manufacturing Strategy 77
 Notes 3. Strategic Advantage
●● Competitive advantage is a key driver to forming an organisational
---------------------- strategy.
---------------------- ●● Competitive advantage is clearly understood by all stakeholders.
---------------------- ●● Employees clearly understand how their role supports the company’s
organisational strategy.
---------------------- External Assessment
---------------------- A second key strategy element is external assessment, which reflects
an organisation’s approach to gathering and analysing essential market data.
---------------------- Included in this data are developing competitive profiles, studying macro and
micro-economic information, identifying industry opportunities and threats,
----------------------
and understanding what it takes to be successful in a given market.
---------------------- 1. Customer Profile
---------------------- ●● Clearly defining reasons why customers buy products or services
●● Clearly defining benefits that customers seek
----------------------
●● Clearly defining reasons why customers would not buy products or
---------------------- services
---------------------- ●● Assessing customer bargaining power
●● Knowing customer preferred choice of distribution channel
----------------------
2. Industry and Competitive Analysis
---------------------- ●● Identifying primary competitors
---------------------- ●● Identifying potential and indirect competitors
●● Clearly defining strengths, weaknesses and strategies of competitors
----------------------
●● Assessing the threat of substitute products or services or new
---------------------- entrants into the marketplace
●● Understanding what it takes to be successful in a given market
----------------------
●● Comparing customer growth rate with industry standards
----------------------
●● Ongoing market evaluation process
---------------------- 3. Environmental Assessment
---------------------- ●● Defining and clarifying regulatory requirements
●● Assessing vulnerability to adverse business cycles
----------------------
●● Summarising opportunities and threats due to:
---------------------- ●● Economic conditions
---------------------- ●● New technology
●● Demographic structure
----------------------
●● Legal or political events
---------------------- ●● The natural environment
---------------------- ●● Socio-cultural norms

78 World Class Manufacturing

4. Key Success Factors are identified with a Critical Thinking Process Notes
●● Implementing a critical thinking process
----------------------
●● Clearly measuring competitive intensity
●● Clearly defining product or service demand within your market ----------------------
●● Clearly defining drivers to success within your industry ----------------------
●● Consistently monitoring key influences within your industry ----------------------
Internal Assessment
----------------------
Internal assessment is the third key strategy element that reflects the
company’s ability to objectively evaluate its own strengths and weaknesses. ----------------------
This would include evaluating the company’s management processes and
how effectively it utilises a “value chain” analysis approach. (Value Chain ----------------------
components are Research & Development, Production, Marketing, Sales and ----------------------
Customer Service)
1. Finance ----------------------

●● Adequate funding of key initiatives ----------------------

●● Utilising a comprehensive pricing model ----------------------
●● Consistently performing within a range of financial goals
----------------------
●● Having a targeted long-range financial plan
●● Employing a “Cost/Benefit” approach to resource allocation ----------------------
●● Financial plan allowing for economic or environmental disruption ----------------------
●● Financial plan allowing for flexibility
----------------------
●● Employing the “If/Then” model when forming organisational
strategy ----------------------
2. Research and Development ----------------------
●● Fully integrating all appropriate departments with R&D
----------------------
●● Maintaining a creative and innovative process
----------------------
●● Ensuring R&D has all required resources to successfully fulfil its
function ----------------------
3. Production
----------------------
●● Fully integrating all departments to support production
----------------------
●● Strategic partners consistently fulfilling production commitments
●● Making Production process cost-effective ----------------------
●● Ensuring Production process is flexible, fast and responsive ----------------------
4. Marketing
----------------------
●● Coordinating with all departments to support marketing
●● Having a clearly defined marketing plan ----------------------
●● Branding plays a critical role ----------------------

Manufacturing Strategy 79
 Notes ●● Utilising a marketing system or database to track customer and
market information
---------------------- ●● Employing an effective product/service management process
---------------------- ●● “Competitive advantage” is a key driver for all marketing decisions

---------------------- ●● Employees taking pride in the ability to promote products and

services
---------------------- ●● Monitoring the ROI of all marketing campaigns
---------------------- 5. Sales/Distribution
●● Consistently achieving sales goals
----------------------
●● Ensuring that sales teams/channels possess required skills to achieve
---------------------- plan
---------------------- ●● Ensuring that sales teams/channels are provided with the necessary
information to achieve their goals
----------------------
●● Employing a well-defined sales management process
---------------------- ●● Coordinating all departments to support our sales process
---------------------- ●● Tracking sales activity from lead generation through close
6. Customer Service
----------------------
●● Clearly defining customer service standards
---------------------- ●● Meeting or exceeding customer expectations
---------------------- ●● Measuring customer satisfaction

---------------------- ●● Managers and employees sharing a high commitment to achieving

customer loyalty
---------------------- ●● Maintaining a customer relationship management system that
---------------------- provides critical service information to make the best decision
●● Maintaining a high rate of repeat business, customer loyalty and
---------------------- referrals
---------------------- Objectives, Initiatives and Goals
Company should have ability to articulate what it wants to accomplish,
----------------------
how it will do it, and when it will be achieved. Included in this process
---------------------- are defining direction, aligning financial and human resources, instilling
accountability and determining critical measurements.
----------------------
7. Direction
---------------------- ●● Identifying key strategic objectives
---------------------- ●● Prioritizing action items by their importance to strategic intent

---------------------- ●● Ensuring objectives are quantifiable and measurable

●● Those responsible for implementation participate in the strategic
---------------------- planning process
---------------------- ●● Plans must specify how each area will contribute to achieving
strategic plan
80 World Class Manufacturing
8. Resource Alignment Notes
●● Allocating sufficient resources to achieve strategic intent
----------------------
●● Clearly defining resources necessary for each objective
●● Evaluating individual or group capacity prior to assigning workload ----------------------
9. Organisation Accountabilities ----------------------
●● Ensuring that employees understand how their roles and ----------------------
responsibilities relate to strategic objectives
●● Holding individuals accountable for their work ----------------------
●● Employee goals reflecting accountabilities and timeliness ----------------------
●● Employing an internal system to routinely review the status of key ----------------------
objectives
●● Measuring key financial indicators ----------------------
●● Utilising a uniform format to measure and report performance ----------------------

Check your Progress 1 ----------------------

----------------------
Fill in the blanks.
1. __________ ________ is the third key strategy element that reflects ----------------------
the company’s ability to objectively evaluate its own strengths and ----------------------
weaknesses.
2. ____________________ reflects an organisation’s approach to ----------------------
gathering and analysing essential market data. ----------------------
3. _________ states the specific purpose of enterprise and the path it
----------------------
will take to accomplish it.
4. ____________ objectives cover such things as cost, quality, delivery ----------------------
and flexibility and usually there are trade-offs between them.
----------------------
5. _______ provide focus and motivation.
----------------------

4.4 BUSINESS STRATEGY ----------------------

----------------------
For chalking out the business it is first necessary to find out the current
status of the business by asking a question: ----------------------
Where is business? (Three aspects): ----------------------
●● Stage of growth: Start-up, consolidation, internationalisation,
professionalisation of management, vertical integration, diversification. ----------------------
●● Assessment of technological environment. ----------------------
●● Comparison with competitors.
----------------------
Business strategy describes how a particular business intends to succeed in
its chosen marketplace against its competitors. It, therefore, represents the best ----------------------

Manufacturing Strategy 81
 Notes attempt that the management can make at defining and securing the future of
that business. A business strategy should provide clear answers to the questions:
----------------------
●● What is the scope of the business (or offering) to which this strategy
---------------------- applies?
●● What are the current and future needs of customers and potential customers
---------------------- of this business?
---------------------- ●● What are the distinctive capabilities or unique competence that will give
us competitive advantage in meeting these needs now and in the future?
----------------------
●● What in broad terms needs to be done to secure the future of our business?
---------------------- A good business strategy will meet six tests of quality:
---------------------- ●● It will be correctly scoped.
---------------------- ●● It will be appropriately documented.
●● It will address real customer needs.
----------------------
●● It will exploit genuine competencies.
---------------------- ●● It will contribute to competitive advantage.
---------------------- It will lay the ground for implementation.
Contents of Business
----------------------
Strategy Document
----------------------
1. Statement of strategic intent for the business: This should describe in
---------------------- general terms the business as it expects to become in the future. It should
outline in practical and tangible terms how this future is different from
---------------------- the present. Clearly, the strategic intent for the business has to relate to
---------------------- the strategic intent for the enterprise as a whole and be coherent with any
other corporate strategies.
---------------------- 2. Principal findings of strategic assessment: Typically, the strategic
---------------------- assessment will involve detailed analysis of both the external business
environment and the capabilities of the enterprise. Only the most
---------------------- important or most surprising results need to be recorded. However, this
section should provide a reasoned assessment of current status and future
---------------------- prospects of the business if present strategies were to be continued. This
---------------------- then makes the case for change in business terms.
3. Strategic choices which have been made and supporting rationale:
----------------------
This section has to summarise the options that have been identified and
---------------------- the choices made. The reasons for preferring one direction to another
have to be spelt out and must be persuasive. The rationale for strategic
---------------------- choice should be based on a rigorous analysis of the basis of competitive
advantage and how that will relate to the demonstrable capabilities of
----------------------
the enterprise. It is also desirable to show how the choice matches the
---------------------- strategic intent of the enterprise as a whole.
4. Statement of goals and objectives: The overall goal is to realise the
----------------------

82 World Class Manufacturing

 strategic intent of the business. More measurable supporting goals are Notes
also very valuable. Objectives should not all be financial. It is important
that some objectives set measures that relate to the fundamental nature of ----------------------
the business and to meeting customer and stakeholder needs.
----------------------
5. Outline of strategic initiatives: This section will outline the principal
actions to be undertaken to make the strategy happen. ----------------------
Classification of Business Strategies (Three types) ----------------------
Initiative based
----------------------
●● Research & Development: Development of new/innovative products/
processes. ----------------------
●● Entrepreneurial: Managerial initiatives to improve quality, productivity, ----------------------
market share and reduce costs.
----------------------
●● Acquisitions: Acquiring competitor’s or related businesses to establish
market leadership. ----------------------
Market based
----------------------
●● Responding: Responding positively to new products/processes/
technology available in the market. ----------------------
●● Customer requests: Specific request from the customers for product ----------------------
modifications, updating or improvements.
----------------------
●● Imitative: Imitating competitors’ products to fill up the demand gap or
adopting processes/technologies successfully deployed by others. ----------------------
●● Competitor influenced: Based on actions/decisions taken by the
----------------------
competitor, which may adversely affect company’s business.
●● Second but better type: Unable to beat the best in the market but still the ----------------------
next best.
----------------------
Defensive
----------------------
●● To protect market share: When competition is fierce.
●● For survival: In adverse market conditions, which may arise due to ----------------------
recession, natural calamities, etc.
----------------------
Types of strategic change
●● Diversification: Opting for different type of products/business. ----------------------

●● Expansion: Expand existing facilities or create new facilities to cater to ----------------------

increasing demand.
----------------------
●● Transformation: Re-invent the organisation through new technology or
new managerial initiatives like JIT, Business process reengineering, etc. ----------------------
●● Adoption: Adapt to changes in market, customer perceptions, competitor’s ----------------------
initiatives, etc.
●● Abandonment: When nothing succeeds, give up and quit. ----------------------

----------------------

Manufacturing Strategy 83
 Notes 4.5 MANUFACTURING STRATEGY
---------------------- Manufacturing strategy can be defined as a set of coordinated objectives
and action programmes applied to a firm’s manufacturing function and aimed
----------------------
at securing medium and long-term sustainable advantage over that firm’s
---------------------- competitors. The manufacturing function requires a strategy to ensure a match,
or congruence, between the company’s markets and the existing and future
---------------------- abilities of the production system. Manufacturing strategy generally addresses
issues including:
----------------------
●● Manufacturing capacity
----------------------
●● Production facilities
---------------------- ●● Use of technology
---------------------- ●● Vertical integration
●● Quality
----------------------
●● Production planning/materials control
---------------------- ●● Organisation
---------------------- ●● Personnel
Although it has not always been the case, it is now generally accepted
----------------------
that the health of the manufacturing function in a company is at the heart of
---------------------- its success, and that having a manufacturing strategy which aligns with overall
business strategy and other functional strategies in an organisation is essential.
----------------------
In practice, having a manufacturing strategy which shapes the structure,
---------------------- infrastructure and capabilities of a firm’s manufacturing function does not
ensure the success of a business. The strategic approach must be combined
---------------------- with a pragmatic approach to continuous improvement at an operational level
---------------------- if a company is to produce products at the rate, quality and cost that ensure
competitiveness in their chosen markets.
---------------------- Current Issues
---------------------- 1. Low Cost Countries (LCCs): A key part of a manufacturing strategy is
the definition of whether products are to be manufactured at the traditional
---------------------- manufacturing sites of an organisation or if the cost benefits offered
---------------------- make it beneficial to set up manufacturing in geographic areas with a
low cost base (e.g., Eastern Europe, South America, China). Although it
---------------------- may often look appealing to set-up in low cost base areas, full account
needs to be taken of the practical and logistical difficulties and the full
---------------------- financial implications of setting up and operating facilities in remote,
---------------------- underdeveloped countries.
2. Outsourcing manufacturing: With the advent of e-commerce and the
----------------------
relative ease with which suppliers across the world can be identified and
---------------------- contracted to manufacture parts or complete products, many companies
are including outsourcing of manufacturing in their strategy. Again, this
---------------------- can look appealing if part or product cost is the only factor considered

84 World Class Manufacturing

 but great care needs to be taken to ensure that product quality issues are Notes
properly addressed in the outsourcing exercise and the requirement for
active management and control of outsourced manufacture needs to be ----------------------
recognised.
----------------------
3. Mass customisation: It is accepted wisdom that a route to achieving
reduced costs and improving profitability in a company is to focus its ----------------------
activities on a limited range of technologies, volumes, products and
----------------------
markets.
However, customers are becoming ever more demanding about the cost, ----------------------
quality and performance of the products that they buy and expect more
----------------------
variety and product customisation rather than less. An example of this is
in the automotive sector. Customers now expect to be able to choose from ----------------------
a long list of vehicle options and thus to specify a vehicle which best suits
their requirements. In other industry sectors, there is similar customer ----------------------
pressure for products that are truly optimised for their specified end use.
----------------------
In the future, companies will need to adopt manufacturing strategies and
production technologies (programmable automation, flexible robotics, ----------------------
etc.), which will allow increased manufacturing flexibility and the
----------------------
capability to respond quickly and cost-effectively to demands for product
variants or truly customised products. ----------------------
Threefold Approach to Manufacturing Strategy ----------------------
Strategically oriented
----------------------
●● To be formulated at top level.
●● Should have long time horizon. ----------------------
●● Exploit opportunities to get competitive advantage. ----------------------
Focused ----------------------
●● Targeted market segment.
----------------------
●● Customer requirements.
●● Dedicated capacities of the plant. ----------------------
Holistic ----------------------
●● Involve all functions in decision-making. ----------------------
●● Give consideration to all stakeholders.
----------------------
●● Support overall organisational goals.
●● Have same time frame as corporate and marketing strategies. ----------------------
Why Manufacturing Strategy? ----------------------
●● Of the five Ps of Marketing (Price, Place, Product, Pace and Promotion),
----------------------
first four depend on ‘Manufacturing’ capabilities
●● Manufacturing utilises 80% of assets ----------------------

----------------------

Manufacturing Strategy 85
 Notes ●● Accounts for 80% of costs
●● Uses substantial part of Human Resources
----------------------
Manufacturing is generally perceived in a wrong way at top management,
---------------------- managed in the wrong way at plant and taught in the wrong way in Business
Schools – Skinner.
----------------------
Problems of past attitudes to manufacturing
----------------------
●● Exclusion from corporate level decisions.
---------------------- ●● Perceived lack of strategic importance to manufacturing.
---------------------- ●● Emphasis on Marketing and Finance at the expense of manufacturing/
technological resources.
---------------------- ●● Problem of image of manufacturing within the organisation.
---------------------- Reasons for low image of manufacturing

---------------------- ●● Traditional view of manufacturing in a reactive role.

●● Exclusion of manufacturing from corporate debates on long-term
---------------------- planning.
---------------------- ●● Lack of shared language between manufacturing and other functions.
Attributes of competitiveness for the organisation
----------------------
●● Product quality
----------------------
●● Process quality
---------------------- ●● Delivery speed and reliability
---------------------- ●● Flexibility
●● Rapid product innovation and new product development
----------------------
●● Managing ‘Waste’
---------------------- ●● Other Market specific requirements
---------------------- Formulation of Manufacturing Strategy
---------------------- 1. Areas for consideration
●● Capacity – Capabilities and volume.
----------------------
●● Facilities – Size, location, specialisation.
---------------------- ●● Technology – Equipment, automation.
---------------------- ●● Vertical integration.
---------------------- ●● Work force – Remuneration, training, motivation.
●● Quality – Customer orientation.
----------------------
●● Production Planning/Material Control – MRP, JIT.
---------------------- ●● Organisation – Culture, climate, structure.
---------------------- 2. Determining manufacturing’s current phase
●● Reactive – Respond to demands, keep costs under control.
----------------------

86 World Class Manufacturing

 ●● Supportive – Support organisation’s corporate strategy. Notes
●● Proactive – Play an important role in sustaining competitive
advantage. ----------------------
3. Process model for manufacturing strategy ----------------------
●● Analyse environment. ----------------------
●● Make internal appraisals.
----------------------
●● Formulate corporate strategy.
●● Determine implications for operations. ----------------------
●● Examine financial and technological limitations. ----------------------
●● Design operation systems.
----------------------
●● Plan operations.
----------------------
●● Manage and control operations.
4. Competitive profiling for manufacturing strategy ----------------------
Competitive grid is created for following factors: ----------------------
Costs, Quality, Technology, Total lead time, Manufacturing lead time,
----------------------
Delivery reliability, Delivery flexibility, Design flexibility, Volume
flexibility. ----------------------
Each factor is scored on 1−9 scale with following consideration: Score:
----------------------
1 – Consistently better than competitor.
----------------------
5 – Same as the competitor.
----------------------
9 – Consistently worse than the competitor.
----------------------
Check your Progress 2
----------------------
State True or False. ----------------------
1. Of the five Ps of Marketing − Price, Place, Product, Pace and
----------------------
Promotion − only Product depends on ‘manufacturing’ capabilities.
2. Business strategy describes how a particular business intends to ----------------------
succeed in its chosen market place against its competitors.
----------------------
3. Objectives should only be financial.
----------------------
4. The strategic assessment will involve detailed analysis of both the
external business environment and the capabilities of the enterprise. ----------------------
5. The overall goal is to realise the strategic intent of the business. ----------------------

----------------------

----------------------

----------------------

Manufacturing Strategy 87
 Notes
Case Study
----------------------

---------------------- Manufacturing Strategy of Toyota

Toyota operates 80 plants in 28 countries not counting Daihatsu and
----------------------
Hino. Of these, 45 are assembly plants including several with adjoining engine
---------------------- manufacturing operations. Plants range in size and operational scale from
Toyota’s Tahara plant in Japan and Georgetown, KY, plant in the US, which
---------------------- have capacity to produce upwards of 500,000 vehicles and make most major
body stampings and injection molding in-house, to the automaker’s Philippine
----------------------
and Vietnamese plants where monthly output stands at around 1,600 units.
---------------------- With global auto demand possibly falling 10 million units in 2009 and with
the US market contracting to as low as 10 million, down nearly 40%, Toyota
----------------------
finds itself with two million and up to three million units of idle production
---------------------- capacity.
Short of shutting down several plants or laying off thousands of workers,
----------------------
both options unlikely, given the automaker’s long-term commitment to insuring
---------------------- job security, there is little the automaker can do in the near term to remedy the
situation. In Japan, it will not renew at least half of 6,000 employees currently on
---------------------- one-year contracts when their contracts expire on March 31st every year while in
North America the automaker will cut shifts and idle plants for special training
----------------------
days to keep workers busy. However, if losses continue to mount indefinitely
---------------------- at their current pace of more than $1 billion per month, management may be
forced to consider (as Nissan in North America) some sort of early retirement
---------------------- scheme. But nothing has been announced.
---------------------- That said, once production levels settle, Toyota is relatively well positioned
to reorganise its global manufacture structure in whatever configuration
---------------------- management deems necessary - more models per line, smaller lots, more
---------------------- variants per model.
Dating back to the start of the decade, the automaker deployed its ‘Global
---------------------- Body’ welding line at all major vehicle plants around the world. In total,
---------------------- an estimated 50 flexible lines have been installed at more than 25 assembly
plants, enabling substantially lower tooling costs and faster start up times
---------------------- when launching new models. Moreover, Toyota has had great success in Japan
with supplying components to the final assembly line in ‘kits’ - usually 5- 10
---------------------- components in a plastic or cardboard box, made offline in a staging area, that go
---------------------- straight to a work station.
Apart from eliminating much of the clutter traditionally seen alongside the
----------------------
final assembly line, the operation tends to reduce operator error. It also creates a
---------------------- structure whereby smaller lots can be assembled with minimal loss of productivity.
Toyota introduced the process at its Tsutsumi plant in 2002. Meanwhile, the
---------------------- automaker has shortened the time needed to develop a model (upper body or
‘skin’) to under ten months from freezing the design to production.
----------------------

88 World Class Manufacturing

Domestic Plants & Strategy Notes
Toyota builds vehicles at 17 plants in Japan including 13 operated by
----------------------
affiliated assemblers such as Daihatsu, Hino, Toyota Auto Body Co. and Kanto
Auto Works Ltd. This structure, along with the fact that nearly one-fourth of ----------------------
production workers are seasonal or on one-year contracts, offers the automaker
considerable flexibility to adjust to market downturns. Besides, Toyota Motor ----------------------
Kyushu Inc. and Central Motor Co., both wholly owned subsidiaries, affiliated
----------------------
assemblers build nearly half of Toyota and Lexus vehicles made in Japan.
Meanwhile, so-called ‘global’ models like the Camry, Corolla and Vitz are ----------------------
divided between Toyota plants and affiliate plants with Toyota generally responsible
----------------------
for main models and affiliates for derivatives. Examples: the Corolla Sedan is built
at Toyota’s Takaoka plant while the Corolla Fielder and Corolla Axio are produced ----------------------
respectively at the Higashi-Fuji plant of Kanto Auto Works and the Sagamihara
plant of Central Motor. Elsewhere, Toyota produces Vitz and Yaris hatchbacks at ----------------------
its Takaoka plant and the Nagakusa plant of Toyota Industries while the automaker
----------------------
consigns production of the Vitz/Yaris derivative, the Belta Sedan, to the Iwate plant
of Kanto Auto Works. And Daihatsu Motor Kyushu Co., a subsidiary of Daihatsu ----------------------
Motor Co., assembles the Rush SUV at its No. 2 Nakatsu plant in Kyushu.
----------------------
The Rush is a Toyota-badged derivative of the Daihatsu Be-Go, the main
model produced at the plant which opened a year ago in December. Toyota ----------------------
estimates that ‘global’ models account for around 30% of global sales. So-called
‘regional’ models - including the Tundra pickup truck in North America, Avensis ----------------------
Sedan and Aygo Hatchback in Europe, Reiz and Vios Sedans in Asia, and Estima
----------------------
Minivan in Japan - account for the bulk of the remainder.
Outside Japan, Toyota operates nearly 20 plants that make Corollas and ----------------------
Camrys as it strives to maintain stable production volumes for these global ----------------------
models. The objective of this manufacturing structure is flexibility, making it
possible for the automaker to shift models quickly between plants to deal with ----------------------
sharp fluctuations in demand at minimal cost. Toyota estimates that ‘global’
models account for around 30% of worldwide sales. ----------------------
Overseas Plants & Strategy ----------------------
Toyota’s strategy, like Japanese rivals Honda and Nissan, is to build cars ----------------------
in the markets where it sells them. This strategy was born in the early 1980s
following pressure from the US to reduce exports. Then when the yen surged ----------------------
in the mid-1980s and again in the mid-1990s, the automaker began investing
heavily in a manufacturing base in North America and Europe to reduce the ----------------------
bottom line risk from forex fluctuations. ----------------------
Key suppliers like Denso, Aisin Seiki and Koyo Seiko (now JTEKT)
----------------------
followed in short order. At present, Toyota has 14 vehicle plants in North
America and Europe (not counting Hino plants) along with seven dedicated ----------------------
power-train plants. Since 1984, when Toyota entered into a joint-venture with
General Motors in Fremont, CA, it has invested nearly $30 billion in North ----------------------
American and European production. It has capacity to build three million
----------------------
vehicles, approximately 30% of its global total.

Manufacturing Strategy 89
 Notes In response to the current business downturn, management has delayed
the start-up of its $1.3 billion plant in Blue Springs, MS, to build the Prius. The
---------------------- plant was scheduled to begin operation in 2010.
---------------------- Ironically, critics of the automaker’s rapid build-up since the start of
the decade see a possible silver lining in the current slowdown. They feel that
---------------------- Toyota had grown too big to manage effectively, especially stretching its quality
assurance systems and giving competitors an opening to catch and pass the
----------------------
automaker in the quality area.
---------------------- Questions
---------------------- 1. What actions are taken by Toyota to overcome economic slowdown?

---------------------- 2. Write a critical note on Toyota’s manufacturing strategy.

---------------------- Summary
---------------------- ●● Manufacturing objectives should be derived from business objectives,
and then manufacturing policies developed to address these objectives.
----------------------
Manufacturing objectives cover such things as cost, quality, delivery and
---------------------- flexibility and usually there are trade-offs between them.
●● Hierarchy of strategies are Corporate Strategy, Business Strategy and
----------------------
Functional Strategy. Manufacturing strategy is a functional strategy.
---------------------- ●● Corporate strategy spells out the reasons for being in the particular
business and plans for long-term future. Business strategy describes how a
----------------------
particular business intends to succeed in its chosen marketplace against its
---------------------- competitors and manufacturing strategy is a set of coordinated objectives
and action programmes applied to a firm’s manufacturing function and
---------------------- aimed at securing medium and long-term, sustainable advantage over that
firm’s competitors.
----------------------
●● For corporate strategy, the first critical strategy element is Vision, Mission
---------------------- and Competitive Advantage, which describe the business a company is
in, its current and long-term market objectives and the manner in which it
----------------------
differentiates itself from the competition. A second key strategy element
---------------------- is External Assessment, which reflects an organisation’s approach to
gathering and analysing essential market data and Internal Assessment
---------------------- is the third key strategy element that reflects the company’s ability to
objectively evaluate its own strengths and weaknesses.
----------------------
●● Business strategy describes how a particular business intends to succeed
---------------------- in its chosen marketplace against its competitors. It therefore represents
the best attempt that the management can make at defining and securing
---------------------- the future of that business.
---------------------- ●● The manufacturing function requires a strategy to ensure a match or
congruence between the company’s markets and the existing and future
---------------------- abilities of the production system. The strategic approach must be
----------------------

90 World Class Manufacturing

 combined with a pragmatic approach to continuous improvement at an Notes
operational level if a company is to produce products at the rate, quality
and cost that ensure competitiveness in their chosen markets. ----------------------

----------------------
Keywords
----------------------
●● Strategy: Blueprint for action for achieving set goals.
●● Corporate strategy: Strategy, which spells out the reasons for being in ----------------------
the particular business and plans for long-term future. ----------------------
●● Business strategy: Strategy, which describes how a particular business
intends to succeed in its chosen marketplace against its competitors. ----------------------
●● Manufacturing strategy: A set of coordinated objectives and action ----------------------
programmes applied to a firm’s manufacturing function and aimed at
securing medium and long-term, sustainable advantage over that firm’s ----------------------
competitors. ----------------------
●● Mission: A statement which explains the purpose of the organisation and
the path it wants to take. ----------------------
●● Vision: A statement which spells out where the organisation will be in a ----------------------
defined time frame.
----------------------
●● PEST: Political, Economic, Social, Technological factors.
●● Outsourcing: Off-loading the activities required for organisation’s ----------------------
working to external agencies.
----------------------
●● Mass customisation: Providing wider variety of products to cater to
varying demands of customers. ----------------------

----------------------
Self-Assessment Questions
----------------------
1. What is the hierarchy of strategies?
----------------------
2. What are the macro-factors affecting strategy formulation?
3. Explain Hunger & Wheelan’s model for strategy formulation. ----------------------

4. Why must organisations have corporate strategy? ----------------------

5. What are the features of a good business strategy? ----------------------
6. What are the contents of a business strategy document?
----------------------
7. How are business strategies classified?
----------------------
8. Explain threefold approach to manufacturing strategy.
9. Why is it necessary to have a manufacturing strategy and what are the ----------------------
roadblocks in doing so? ----------------------

----------------------

----------------------

Manufacturing Strategy 91
 Notes Answers to Check your Progress
---------------------- Check your Progress 1
---------------------- Fill in the blanks.

---------------------- 1. Internal assessment is the third key strategy element that reflects the
company’s ability to objectively evaluate its own strengths and weaknesses.
---------------------- 2. External assessment reflects an organisation’s approach to gathering and
---------------------- analysing essential market data.
3. Mission states the specific purpose of enterprise and the path it will take
----------------------
to accomplish it.
---------------------- 4. Manufacturing objectives cover such things as cost, quality, delivery and
flexibility and usually there are trade-offs between them.
----------------------
5. Goals provide focus and motivation.
----------------------
Check your Progress 2
---------------------- State True or False.
---------------------- 1. False
---------------------- 2. True
3. False
----------------------
4. True
----------------------
5. True
----------------------

---------------------- Suggested Reading

---------------------- 1. Miltenburg, John. Manufacturing Strategy: How to Formulate and
Implement a Winning Plan. Productivity Press.
----------------------
2. Nagel, Roger N. and Rick Dove. 21st Century Manufacturing Enterprise
---------------------- Strategy: An Industry-Led View. DIANE Publishing.

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

92 World Class Manufacturing

Product and Process Design
UNIT

5
Structure:

5.1 Introduction
5.2 Concept of Product
5.3 New Product Development
5.4 New Product Review System
5.5 Product Design
5.6 Modern Approaches to Product Design and Development
5.7 Concept of Process
5.8 Process Capability
Summary
Key Words
Self-Assessment Questions
Answers to Check your Progress
Suggested Reading

Product and Process Design 93

 Notes
Objectives
----------------------
After going through this unit, you will be able to:
----------------------
• Explain the features of a modern product and various aspects of
---------------------- product design and development
---------------------- • Analyse the phases of maturity of the organisation in product
development
----------------------
• Examine the various R & D strategies
---------------------- • Justify the importance of cost-effectiveness in product design
---------------------- • Determine how to achieve product reliability, maintainability and
safety while designing a product
----------------------
• Assess the modern approaches to product design
----------------------
• Examine the various aspects of process design
---------------------- • Evaluate the methods of process analysis and elements of process
performance
----------------------
• Measure process capability
----------------------

----------------------
5.1 INTRODUCTION
----------------------
Product design is an integral part of any manufacturing operation.
---------------------- Products should be designed in such a way that manufacturing operations are
---------------------- streamlined, sequenced and scheduled without having to compromise in quality
and reliability of the product or service at any stage during operations and post-
---------------------- operational usage by the end-user. Quality of the product often depends upon
two factors: design and reliability engineering. Reliability engineering at the
---------------------- very starting stage, inception stage of a product is extremely necessary which
---------------------- decide the complete life cycle of the product.

---------------------- 5.2 CONCEPT OF PRODUCT

---------------------- Product is the output of any process and can take any of the following three
forms:
----------------------
Goods – Physical or tangible form of a product.
----------------------
Software instructions or information, e.g. computer software package.
---------------------- Service – Work performed for someone else.
---------------------- ●● High precision
---------------------- ●● Durable
●● Low user costs
----------------------

94 World Class Manufacturing

●● Prone to misuse Notes
●● Easily maintainable
----------------------
●● Competitively priced
Features of Modern Products ----------------------
●● Complex ----------------------
●● Interchangeable ----------------------
●● Environment friendly
----------------------
●● Short life cycle
●● Highly reliable ----------------------
●● Readily available ----------------------

5.3 NEW PRODUCT DEVELOPMENT ----------------------

Main criteria for successful new product development ----------------------

●● Involvement of Top Management ----------------------

●● Long-term perspective ----------------------
●● Creation of competitive advantage
----------------------
Focused market segments for competitive advantage
●● Geographical gaps ----------------------
●● Areas where marketing efforts are weak ----------------------
●● Added quality features
----------------------
●● Lack of brand loyalty
----------------------
●● Gap in product range
Categories of new product development ----------------------
●● Creation of new market ----------------------
●● New product in an existing market
----------------------
●● Supplementing existing portfolio of the firm
●● Replace current products by offering enhancement ----------------------

●● Compete on cost advantage ----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

Product and Process Design 95

 Notes

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

---------------------- Fig. 5.1: New Product Development Process

Phases of maturity of the organisation in new product development
----------------------
Phase 1 – Laggards – Show no interest in R & D. Satisfied with existing products.
----------------------
Phase 2 – Late majority – Join the bandwagon late and mostly copy design of
---------------------- others with minor modifications.
---------------------- Phase 3 – Early majority – Are fast in grasping new ideas and come up with
their own versions of similar products quickly.
----------------------
Phase 4 – Early developers – Come up with new products before old products
---------------------- become obsolete.
Phase 5 – Innovators – Surprise the market with entirely new concepts, which
----------------------
are path breaking.
96 World Class Manufacturing
 Notes
Activity 1
----------------------
List down the differences between any two modern products and traditional
----------------------
products you use at home.
----------------------

5.4 NEW PRODUCT REVIEW SYSTEM ----------------------

When a new product is being developed there are many unknowns and ----------------------
hence it is necessary to sort out all the problems and doubts at each important
----------------------
stage of the product development before you embark on the next stage of
development. This is achieved by a thorough formal review by a team of experts ----------------------
formed for this purpose. The important stages for the review are:
----------------------
Review Purpose
No. ----------------------
1. Review of Market Feedback ----------------------
2. Confirmation of Customer Requirements
3. Review of Fundamental Design ----------------------
4. Review of Detailed Design ----------------------
5. Review of Trial Run Plan
----------------------
6. Review of Trial Run Results
7. Review of Test/Inspection Procedure ----------------------
8. Review of Product Quality ----------------------
9. Over-all Review
----------------------
10. Review of Manufacturing Plan
----------------------
5.5 PRODUCT DESIGN
----------------------
A creative process resulting in specifications, drawings, software and/or
procedures forms the basis for product features which are required to satisfy the ----------------------
customer requirements. ----------------------
Optimum Design:
----------------------
●● Should meet the entire set of customer requirements.
----------------------
●● Minimise the combined costs for manufacturer and customer.
These two aspects of the optimum product design are termed as concept ----------------------
of “Cost Effectiveness” of product design and is schematically shown in Figure
5.1. ----------------------

Life cycle costs are made up of costs for the manufacturer and costs for ----------------------
the customer from the moment he buys the product till the point where it is
----------------------
useful life is over and the product is disposed of. Thus broadly speaking, concept
studies, product development (R & D + prototypes) and production (Material + ----------------------

Product and Process Design 97

 Notes processing) costs are the costs of the manufacturer whereas operating, servicing,
repairing, training and disposal costs are borne by the customer. Thus, in order
---------------------- to maximise value for both manufacturer and customer, designer has to ensure
that costs for both are minimised through proper choice of material, easy
---------------------- manufacturability, minimum operating, repair and maintenance costs. However,
while doing so he cannot compromise on performance, reliability and durability
----------------------
of the product. All these factors and their constituents are summarised in a
---------------------- schematic diagram of ‘Cost-Effectiveness’ concept in Figure 5.2.
R & D Strategies
----------------------
Research & Development is the activity, through which the product
---------------------- development is carried out.
---------------------- Organisation can follow one of the following strategies for their R & D
activity:
----------------------
●● Internal development
---------------------- ●● Acquisition
---------------------- ●● Contractual
●● Licensing
----------------------
●● Trading
----------------------
●● Joint venture/collaboration
----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

---------------------- Fig. 5.2: Concept of Cost-Effectiveness

Availability
----------------------
Availability is defined as probability that a product, when used under given
---------------------- conditions will perform satisfactorily when called upon.

98 World Class Manufacturing

 Notes

----------------------

----------------------

----------------------

----------------------
Fig. 5.3: Concept of Availability
----------------------
Availability is a function of reliability and maintainability.
Reliability ----------------------
Reliability is defined as probability of a product performing without ----------------------
failure, a specific function under given conditions for a specified period of time.
----------------------
Elements of Reliability Programme
1. Setting overall reliability goals: Achievement of goals becomes much ----------------------
more easy when the set goals are quantifiable and hence measurable. ----------------------
There are many ways of quantifying reliability. Some methods are:
----------------------
●● MTBF (Mean Time between Failures): Average time between
successive failures of a repairable product. ----------------------
●● MTBM (Mean Time between Maintenance): Average time ----------------------
between successive specified maintenance.
----------------------
●● MTTF (Mean Time to First Failure): Average time for the first
failure of products in a population. ----------------------
●● Longevity: Wear out time of the product.
----------------------
●● B10 Life: Life during which 10% of the population would fail.
●● Repair/100: Number of repairs in 100 hours of operation. ----------------------
2. Apportionment of reliability goals: Process of allocating reliability ----------------------
objectives amongst various elements, which collectively make up a
higher level product. For example, for overall reliability of a car, higher ----------------------
product objectives for reliability of its constituent parts like engine, gear ----------------------
box, braking system, suspension, etc. are to be decided and the process
continues till lowest level individual parts are allocated with their ----------------------
reliability goals.
----------------------
3. Reliability predictions: Reliability prediction is the process of collecting
prior performance data and using probability theory to calculate the ----------------------
expected failure rate of various sub-parts. Failure Mode Effect Analysis
(FMEA) is one of the popular tools used for this. FMEA is discussed in ----------------------
more detail elsewhere in this book. ----------------------
4. Design reviews: Design review is a team concept and calls for involvement
of other functional heads during the design stage to ensure a trouble-free ----------------------
and effective design. ----------------------

Product and Process Design 99

 Notes Following aspects are normally involved:
●● Saleability: Customers’ exact needs must get reflected in design.
----------------------
Early involvement of customers or marketing men who are in direct
---------------------- contact with customers at design stage is necessary.
●● Procurability: Designer must ensure use of easily procurable and
---------------------- less costly material in the product. Purchasing people can guide
---------------------- designer in this respect.
●● Manufacturability: Designed product must be easily manufactured
---------------------- with available capacities and capabilities of the organisation and
---------------------- production in-charge is the right person to advice designer in these
matters.
---------------------- ●● Verifiability: The product should be easily verifiable during
---------------------- production stages and at the final point before dispatch to ensure
that all the quality characteristics of the product are achieved.
---------------------- Quality Assurance head is the right person to help in this.

---------------------- The normal practice for design review is to form a team, which meets
formally at each important stage of design to discuss and sort out all the
---------------------- above-stated matters before proceeding to the next stage of design. Thus,
design reviews should be:
----------------------
●● Mandatory and formal.
---------------------- ●● Conducted by a committee of functional experts.
---------------------- ●● Conducted at every major stage of design.
●● Able to cover all quality related parameters.
----------------------
●● Done to a defined criteria.
----------------------
5. Stress Analysis: Identification of strong and weak portions of design to
---------------------- serve as basis for improvements, trade-offs, etc.
6. FMEA and Fault Tree Analysis:
----------------------
FMEA: In a complex product, which is made up of many parts and sub-
---------------------- assemblies, every item has a role to play and failure of any one of these
---------------------- can have a negative effect on working of the final product. However, the
intensity of impact of failure of any of these items on the final product will
---------------------- not be the same. For example, failure of wiper motor of a car will have
much less impact on working of the car than failure of brakes. FMEA
---------------------- is a powerful tool used to identify the parts/sub-assemblies used in the
---------------------- final product, which will have significant impact on the working of the
end product so that extra precautions can be taken while designing and
---------------------- manufacturing these items in order to reduce the risk to the final product.

---------------------- Product is examined in all possible ways in which a failure can occur in
its constituent parts. Past data, market feedback, competitors’ products
---------------------- or brain- storming in FMEA team can be the useful avenues to identify
potential failure risks of each item. For each potential failure, an estimate
---------------------- is made about the seriousness of its effect on the end product. The “Failure

100 World Class Manufacturing

 Mode” represents the ‘Symptom’. Proved reason (cause) for the symptom Notes
is recorded. Ranking procedure is applied to assign priorities for all the
failure modes. Ranking can be based on 1) Probability of occurrence, and ----------------------
2) Severity of the effect. Scale of 1-5 is used for each of these two. Risk
Priority Number (RPN), which is a product of 1) and 2) is then assigned ----------------------
to each failure mode. Failure Mode with highest RPN is given priority for ----------------------
investigations and finding solutions. Investigations can cover the aspects
of: ----------------------
1. Safety. ----------------------
2. Effects on down-time in terms of direct costs (costs involved in
----------------------
repair, change of parts capacities lost, etc.) and opportunity costs
involved. ----------------------
3. Repair Planning.
----------------------
4. Design changes necessary.
----------------------
Standard format used for recording for FMEA is given below.
Sr. Part Failure Proved Probability Severity Effect RPN P Alternate
----------------------
No. description Mode cause of failure o failure xS
P S
----------------------

----------------------

----------------------

Fault Tree Analysis: This tool is used primarily to identify safety ----------------------
risks for a product. A comprehensive list of possible hazards during ----------------------
use of the product is prepared. The list takes into consideration the past
history as well as design weaknesses. Each hazard becomes a potential ----------------------
‘Failure Mode’, which will necessitate analysis. The analysis takes into
consideration direct causes that could lead to the hazard. Next step is to ----------------------
hunt for the root of the cause/s. This is followed by finding solutions for ----------------------
eliminating these causes. Graphic representation of these steps resembles
a tree diagram due to branching out of origins and causes and hence the ----------------------
name, ‘Fault Tree Analysis’. This tool works in exactly reverse direction
of FMEA as it starts with the effect and traces back the origin. ----------------------

7. Identification of critical parts: Parts can be termed as critical when: ----------------------

●● Population of the parts is high. ----------------------
●● Source of supply is only one.
----------------------
●● Precision required is high.
●● Part is detrimental to performance/quality of final product. ----------------------

●● Parts are unproved. ----------------------

8. Parts selection and control: Reliability of final product primarily rests ----------------------
on the reliability of the constituent parts. Recommended steps for ensuring
reliability of individual parts are: ----------------------

Product and Process Design 101

 Notes A. Parts application study:
●● Assessment of specifications and information given by the
----------------------
supplier of the parts.
---------------------- ●● Previous history of used parts.
---------------------- ●● Qualification tests in case of new applications. These tests
can include stress test, thermal analysis, destructive tests, de-
---------------------- rating, etc.
---------------------- B. Approved parts list: Parts which are proved for quality/performance
C. Critical component list: See point 7 above
----------------------
D. De-rating of functionally critical parts: Parts designed for higher
---------------------- stress levels are used
---------------------- E. Use of higher safety factor in design
9. Reliability testing: Parameters covered are:
----------------------
●● Performance
----------------------
●● Environment
---------------------- ●● Stress
---------------------- ●● Reliability
●● Maintainability
----------------------
●● Total life
---------------------- Methods used for reliability testing are:
---------------------- ●● Accelerated testing: Products are made to perform at abnormally high
levels of stress and severe environment. Extrapolation is then used to
----------------------
convert the short life under severe conditions to expected life under
---------------------- normal conditions.
●● Computer simulations: Computer software packages are used to convert
---------------------- the available data into test results. This can eliminate the trouble of
---------------------- physical testing.
●● Field tests: Products are extensively tested in actual working conditions
---------------------- to reveal design/ manufacturing weaknesses.
---------------------- Maintainability
---------------------- Maintainability is defined as ease and speed at which a repairable product,
which has failed, can be repaired, keeping the costs of repair at minimum.
----------------------
Elements of Maintainability
---------------------- ●● Setting maintainability goals.
---------------------- ●● Apportionment of goals.
●● Identification of critical parts of the equipment.
----------------------
●● FMEA & Fault Tree Analysis.
----------------------

102 World Class Manufacturing

●● Maintainability predictions. Notes
●● Failure reporting and corrective action system.
----------------------
These steps are similar to those discussed above for reliability programme.
However, for setting maintainability goals, a few of quantification factors are: ----------------------
MTTR – (Mean Time to Repair): Average time taken for repairs considering ----------------------
that the spare parts and skilled technicians are available.
----------------------
Mean Down-time: Average time for repairs during a specified time span.
Repair/100 hours: Total repair time during 100 hours of operation. ----------------------
Trade-offs for maintainability ----------------------
In order to strike balance between maintenance costs against the costs incurred ----------------------
due to equipment down time, following factors are to be considered.
Reliability v/s Maintainability ----------------------

Modular v/s Non-modular construction ----------------------

Repairable parts v/s throw away parts ----------------------
Person v/s machine
----------------------
Safety
----------------------
Safety has two dimensions:
Hazard: Attribute of a product that is capable of harmful result. ----------------------

Risk: Probability of injury occurring or product getting damaged due to hazard ----------------------
during the use of the product.
----------------------
Classification of hazards
----------------------
Class I – Negligible – Will not cause any injury to the user or damage to the
product. ----------------------
Class II – Marginal – Can cause minor injury to user or damage to the product. ----------------------
Class III – Critical – Will cause fairly serious injury to the person or major
damage to the product. ----------------------

Class IV – Catastrophic – Will cause death or loss of limb. ----------------------

General Approach to Safety Analysis ----------------------
●● Review of available historical data on similar and predecessor products.
----------------------
●● Study the ways in which the product has actually been used or misused.
----------------------
●● Assess the risk that injury to the user or damage to the product will
actually occur. ----------------------

----------------------

----------------------

----------------------

Product and Process Design 103

 Notes
Check your Progress 1
----------------------
Multiple Choice Multiple Response.
----------------------
1. Some of the features of modern products are:
---------------------- i. Simple
ii. Inter-changeable
----------------------
iii. Environment friendly
---------------------- iv. Short life cycle
---------------------- 2. Parts can be termed as critical when:
i. Population of the parts is high.
----------------------
ii. Precision required is high.
---------------------- iii. Parts are unproved.
---------------------- iv. Source of supply is more than one.

----------------------
5.6 MODERN APPROACHES TO DESIGN AND
---------------------- DEVELOPMENT
----------------------
Design and development function has gone through many changes in the
---------------------- recent past due to globalisation and foreign players, new entrants in the markets.
Any organisation must focus on design and development as the foundation stage
---------------------- of building blocks of its product or services. We now discuss the dimensions of
design and development by making use of various tools in quality and reliability
----------------------
principles
---------------------- 1. Quality Function Deployment/House of Quality
---------------------- Quality Function Deployment or QFD is a method used to identify critical
customer attributes and to create a specific link between customer attributes
---------------------- and design parameters. Matrices are used to organise information to help
marketers and design engineers answer three primary questions:
----------------------
●● What attributes are critical to our customers?
----------------------
●● What design parameters are important in driving those customer
---------------------- attributes?
●● What should the design parameter targets be for the new design?
----------------------
QFD is a systematic process of motivating a business to focus on its
---------------------- customers. Correct use of QFD lowers costs, improves quality, cuts down
throughput time, improves productivity.
----------------------
Two basic steps to be taken prior to QFD application are:
----------------------

----------------------

----------------------

104 World Class Manufacturing

 1. Identification of customers through: Notes
●● Market research
----------------------
●● Customers served by the competitor
●● Customers previously neglected ----------------------
●● Current customers ----------------------
2. Fully assess following customer requirements: ----------------------
●● Stated and real needs
----------------------
●● Perceived needs
●● Cultural needs ----------------------
●● Needs arising out of unintended use ----------------------
●● Emotional needs
----------------------
Four phases of QFD
----------------------
Phase I – Product Planning: Defining customer requirements in relation
to product parameters. ----------------------
Phase II – Design & Development: Converting the required product ----------------------
parameters into a set of specifications, drawings and/or instructions and
test their viability through prototypes, pilot runs and extensive testing. ----------------------
Phase III – Process Planning: Decide on the processes required to ----------------------
convert the design specifications into product characteristics.
Phase IV – Production Planning: Involving all employees and plan ----------------------
their activities and interactions to achieve customer expectations. ----------------------
Steps in building House of Quality:
----------------------
1. Gather all information about customer/non-customer requirements.
----------------------
2. Assign values for importance of each requirement on a scale of 1–5.
3. Convert customer requirements into design specifications. ----------------------

4. Build a relationship matrix for customer requirements v/s ----------------------

specifications and rate each relationship.
----------------------
5. Get from the customer, evaluation of competitor’s product against
each of his requirements. ----------------------
6. Compare customer’s evaluation against rating of importance given ----------------------
by customer to set target values for customer’s requirements.
----------------------
7. Give overall customer importance number, which is the product of
values attained in steps 2 and 6. ----------------------
Example for building House of Quality ----------------------
The organising framework for the QFD process is a planning tool called
the “house of quality” (simplified example shown in Figure 5.3 below). ----------------------
Working as a team, design engineers and marketers first establish critical ----------------------

Product and Process Design 105

 Notes customer attributes for the product. These attributes become the rows of
the central matrix of the house of quality. The team may group attributes
---------------------- into broader categories in order to simplify planning and analysis.
---------------------- In the example below, six attributes have been singled out for analysis:
speed, quiet operation, crisp and accurate sound, cost, size, and reliability.
---------------------- The team now establishes weightings that represent the relative importance
of each attribute from the customers’ perspective. The complete set of
----------------------
weightings adds up to 100%.
---------------------- The second step is to establish the critical design parameters that drive
system performance (in measurable terms and directly linked to customer
----------------------
attributes). In the example, these are: number of teeth, lubricant, tooth
---------------------- thickness, and manufacturing precision.
The third step is to fill in the body of the central matrix. Each cell represents
----------------------
a potential link between a design parameter and a customer attribute. This
---------------------- “relationship matrix” indicates both the direction and strength of the
relationship.
----------------------
The fourth step focuses on customer perceptions of the company’s
---------------------- existing product as compared to its competitors. This may give insight
into market problems and opportunities. The fifth and last piece of
---------------------- analysis is the interaction or relationship between design parameters. In
---------------------- the cells of the “roof” matrix is indicated the strength and direction of the
interrelationships among design parameters.
----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------
Fig. 5.4: House of Quality & QFD Diagram
----------------------

106 World Class Manufacturing

2. Theory of inventive problem solving in design (TRIZ) Notes
Structured, technology based methodology for resolving technical
----------------------
problems during design process. Russian scientist Dr. Genrich Altschuller
studied 400,000 patents and concluded that similar problems in different ----------------------
industries using different science and technology are solved with similar
solutions. Thus he concluded that: ----------------------
“Inventing is the removal of a technical contradiction with the help of ----------------------
certain principles”. To develop a method for inventing, he argued, one
must scan a large number of inventions, identify the contradictions ----------------------
underlying them, and formulate the principle used by the inventor for
----------------------
their removal. Hence, finite number of principles can be used to solve
problems or conflicts within a finite number of technical parameters. ----------------------
Thus, if the problem is defined in generic terms to match the conflict
between two of the design parameters, you could learn how others have ----------------------
solved conflicts between same two parameters and apply their solution to
----------------------
your problem.
His results are being applied to solve creative invention problems not just ----------------------
within all branches of engineering, but within many other technical and
----------------------
non-technical fields as well.
3. Taguchi Principle (Robust Design) ----------------------

Quality is the loss imparted to the society from the time the product is ----------------------
shipped.
----------------------
Taguchi Loss is measured by “Loss Function”.
----------------------
Loss Function = Loss constant × Variation of process.
Loss Function ----------------------
The model introduced by Dr. Genichi Taguchi is used to approximate ----------------------
the financial loss for any particular deviation in a product using the best
specification target and for the amount of variation in any process. ----------------------
The model argues that there is an increasing loss (both for producers and for ----------------------
society at large), which is a function of the deviation or variability from the
best or perhaps target value of a parameter. The greater the deviation from ----------------------
target, the greater is the loss. The notion that loss is dependent on variation ----------------------
is very well established in some design theories, and at a technique level is
associated with the assistance and the cost related to dependability. ----------------------
Formulas: ----------------------
Loss at a point: L(x) = k*(x-t)^2
----------------------
k = loss coefficient
----------------------
x = measured value t = target value
Average Loss of a sample set: L = k*(s^2 + (pm - t)^2) s = standard ----------------------
deviation of sample ----------------------

Product and Process Design 107

 Notes pm = process mean
Total Loss = Avg. Loss × number of samples
----------------------
The Taguchi methodologies are sometimes linked with moderately
---------------------- limited aspects of design, for example, single piece parts, rather than very
complicated products, procedures and/or services. Some professionals
----------------------
will also argue that the net results of the Taguchi methodology may not
---------------------- always offer enhanced design resolutions than what could be achieved by
using standard methods.
----------------------
Basic Principles of Taguchi Method
---------------------- ●● Costs cannot be reduced without affecting the quality.
---------------------- ●● Quality can improve without increasing the costs.
●● Costs can be reduced by improving quality.
----------------------
●● Costs can be reduced by reducing the variation, which in turn will
---------------------- improve performance and quality.
---------------------- Two sets of factors cause variation:
1. Controllable – Control factors.
----------------------
2. Difficult or impossible to control – Noise factors.
----------------------
Concept of robust design is to find the best combination of the controllable
---------------------- factors in order to minimise the negative effects of noise factors.

---------------------- Control factors are identified during design of product parameters with an
intention to find the best combination of material, processes and specifications
---------------------- by maximising:
---------------------- “Signal to Noise ratio (S/N Ratio)” Where,
Signal – Desired output.
----------------------
Noise – Whatever gets in the way of getting the desired output.
----------------------
High S/N ratio means that the product design is more robust.
---------------------- Every designer develops a nominal process/product that has the desired
---------------------- functionality as demanded by users. Beginning with these nominal
processes, he wishes to optimise the processes/products by varying
---------------------- the control factors at his disposal, such that the results are reliable and
repeatable (i.e., show less variations).
----------------------
In Taguchi Method, the word “optimisation” implies “determination
---------------------- of BEST levels of control factors”. In turn, the BEST levels of control
factors are those that maximise the Signal-to-Noise ratios. The Signal-
----------------------
to-Noise ratios are log functions of desired output characteristics. The
---------------------- experiments, that are conducted to determine the BEST levels are based
on “Orthogonal Arrays”, are balanced with respect to all control factors
---------------------- and yet are minimum in number. This in turn implies that the resources
(materials and time) required for the experiments are also minimum.
----------------------

108 World Class Manufacturing

 Taguchi method divides all problems into two categories - Static or Notes
Dynamic. While the Dynamic problems have a SIGNAL factor, the
Static problems do not have any signal factor. In Static problems, the ----------------------
optimisation is achieved by using 3 Signal-to-Noise ratios - smaller-the-
----------------------
better, larger-the-better and nominal-the-best. In Dynamic problems, the
optimisation is achieved by using 2 Signal-to-Noise ratios - Slope and ----------------------
Linearity.
----------------------
Taguchi Method is a process/product optimisation method that is based
on 8-steps of planning, conducting and evaluating results of matrix ----------------------
experiments to determine the best levels of control factors. The primary
----------------------
goal is to keep the variance in the output very low even in the presence
of noise inputs. Thus, the processes/products are made robust against all ----------------------
variations.
----------------------
Eight steps in Taguchi Method
1. Identify the main function, side effects, and failure mode. ----------------------

2. Identify the noise factor, testing conditions and quality characteristics. ----------------------
3. Identify the objective function to be optimised. ----------------------
4. Identify the control factors and their levels.
----------------------
5. Select the orthogonal array matrix experiment.
6. Conduct the matrix experiment. ----------------------

7. Analyse the data. Predict the optimum levels and performance. ----------------------
8. Perform the verification experiment and plan for the future action. ----------------------
4. Design for Manufacture
----------------------
Design for Manufacture (DFM) is a series of guidelines to achieve
higher quality, lower cost, improved application of automation and better ----------------------
maintainability. Examples of these DFM guidelines are as follows: ----------------------
●● Reduce the number of parts to minimise the opportunity for a
----------------------
defective part or an assembly error, to decrease the total cost of
fabricating and assembling the product, and to improve the chance ----------------------
to automate the process
----------------------
●● Fool proof the assembly design (poka-yoke) so that the assembly
process is unambiguous. ----------------------
●● Design verifiability into the product and its components to provide ----------------------
a natural test or inspection of the item.
●● Avoid tight tolerances beyond the natural capability of the ----------------------
manufacturing processes and design in the middle of a part’s ----------------------
tolerance range.
----------------------
●● Design “robustness” into products to compensate for uncertainty in
the product’s manufacturing, testing and use. ----------------------

Product and Process Design 109

 Notes ●● Design for parts orientation and handling to minimise non-value-
added manual effort, to avoid ambiguity in orienting and merging
---------------------- parts, and to facilitate automation.
---------------------- ●● Design for ease of assembly by utilising simple patterns of
movement and minimising fastening steps.
---------------------- ●● Utilise common parts and materials to facilitate design activities to
---------------------- minimise the amount of inventory in the system and to standardise
handling and assembly operations.
---------------------- ●● Design modular products to facilitate assembly with building block
---------------------- components and sub-assemblies.
●● Design for ease of servicing the product
----------------------
Designer has to know company’s production system, i.e., its capabilities
---------------------- and limitations, in order to establish company-specific design rules
to further guide and optimise their product design to the company’s
---------------------- production system. For example, they need to understand the tolerance
---------------------- limitations of certain manufacturing processes.
Evaluation of Design Alternatives
----------------------
DFM requires that the designer start the process by considering various
---------------------- design concept alternatives early in the process. Using some of the
previous design rules as a framework, the designer needs to creatively
---------------------- develop design alternatives. Then alternatives are evaluated against DFM
---------------------- objectives.
Design automation tools can assist in the economic development of
----------------------
multiple design alternatives as well as the evaluation of these alternatives.
---------------------- These design tools include Computer-Aided Design (CAD), Computer-
Aided Engineering (CAE), solids modelling, finite element analysis,
---------------------- Group Technology (GT) and Computer-Aided Process Planning
(CAPP). CAD/CAE aids the designer in cost effectively developing and
----------------------
analysing design alternatives. CAD/CAE and expert system tools can
---------------------- utilise manufacturing guidelines to develop producible designs. Solids
modelling helps the designer visualize the individual part; understand
---------------------- part relationships, orientation and clearances during assembly; and
detect errors and assembly difficulties. Finite element analysis and other
----------------------
design analysis tools can be used to assess the ability of the design to
---------------------- meet functional requirements prior to manufacture as well as assess a
part’s or product’s robustness. Computer-aided process planning can be
---------------------- used during the development of the product design to help the designer
assess the manufacturability of a design. Without CAPP, this level of
----------------------
manufacturing assessment would not usually be performed until after
---------------------- the design was released for production. However, the use of these design
productivity tools must be managed because they may create a temptation
---------------------- for the designer to exercise too much creativity and design a slightly
improved part rather than opt for part standardisation.
----------------------

110 World Class Manufacturing

 In addition to these design productivity tools, there are a variety of Notes
DFM analysis tools to evaluate designs and suggest opportunities for
improvement. These can be used to analyse design symmetry; ease of part ----------------------
handling, feeding and orientation; and the number of parts. They can also
analyse assembly operations, evaluate designs against design practices ----------------------
and analyse tolerance requirements. ----------------------
Once the designer acquires a basic DFM background, the designer must
----------------------
learn to work more closely with manufacturing engineers and others who
can provide him with feedback on DFM design issues. In summary, this ----------------------
design approach and the supporting engineering tools should:
----------------------
●● Identify design alternatives and develop these alternatives
economically. ----------------------
●● Evaluate these alternatives against DFM objectives.
----------------------
●● Establish standardised designs based on DFM principles which can
be readily retrieved for new products ----------------------
●● Utilise design reviews and include participation of manufacturing ----------------------
in the design process to evolve the producibility guidelines.
5. Concurrent Engineering ----------------------

Concurrent engineering is an approach that brings many people together ----------------------

in the early phase of product design in order to simultaneously design the
product and the process. This type of approach has been found to achieve ----------------------
a smooth transition from the design stage to actual production in a shorter ----------------------
amount of development time with improved quality results. Concurrent
engineering allows everyone to work together so these problems do not ----------------------
occur. When product and process design are made together, much of the
work is done in parallel rather than in sequence. In today’s markets, new ----------------------
product introductions are expected to occur faster than ever and concurrent ----------------------
engineering reduces the time for new product development.
----------------------
With concurrent engineering, the team is responsible for designing and
getting the product to market. Team members continue working together ----------------------
to resolve problems with the product and improve the process. This
approach also improves the team spirit amongst people from different ----------------------
functions.
----------------------
5.7 CONCEPT OF PROCESS ----------------------

There are a number of ways to define a process: ----------------------

●● A systematic series of activities directed at converting inputs into desired ----------------------
outputs.
----------------------
●● The organisation of people, equipment, energy, procedures and material
into work activities needed to provide a specific end-result. ----------------------
●● A sequence of repeatable activities characterised as having measurable
inputs, value adding activities and measurable outputs. ----------------------

Product and Process Design 111

 Notes ●● It is a set of interrelated work activities characterised by a set of specific
inputs and value added tasks that result in a set of specific outputs.
---------------------- Process Development
---------------------- It is a generic term, which includes following activities:
---------------------- ●● Product design review
●● Choice of processes
----------------------
●● Process design
---------------------- ●● Provision of facilities
---------------------- ●● Provision of software (Methods, procedures, information)

---------------------- ●● Setting standards for process performance

●● Monitoring, evaluating, correcting and improving
----------------------
Process Design
---------------------- Process design is an activity of defining the specific means to be used by
---------------------- the operating people for meeting the product goals. These specific means are:
●● Physical equipment and associated software to be used.
----------------------
●● Information on how to operate, control and maintain the equipment.
---------------------- ●● Information on:
---------------------- ●● The inputs required
●● Process performance standards
----------------------
●● Variables influencing the process
---------------------- ●● Sequence of activities
---------------------- ●● Internal/external customer requirements
---------------------- The main process requires many supporting processes to deliver desired
results in terms of efficiency and effectiveness. These supporting processes are:
---------------------- ●● Waste reduction
---------------------- ●● Selection and training of employees
---------------------- ●● Communication and recording of data
●● Development of supplier capability
----------------------
●● Infrastructure building and improvement
---------------------- ●● Problem prediction and prevention
---------------------- ●● Monitoring
Features of Operating Plan of Process
----------------------
Operating plan of the process, which is normally in the form of a
---------------------- documented procedure has following contents:
---------------------- ●● Purpose of the process.
●● Relationship of the process with other processes within the organisation.
----------------------

112 World Class Manufacturing

●● Input and output requirements. Notes
●● Persons responsible for the correct operation of the process and their
commensurate authorities. ----------------------
●● Input and output requirements. ----------------------
●● Full description of activities within the process. ----------------------
●● Verification and validation requirements.
----------------------
●● Analysis including dependability.
●● Identification, assessment and mitigation of risk. ----------------------
●● Correction and prevention actions. ----------------------
●● Opportunities and actions for improvements.
----------------------
●● Control of changes in the process.
Features of a Well-designed Process ----------------------

●● Simplicity ----------------------
●● Flexibility ----------------------
●● Speed
----------------------
●● Accuracy
●● Economy ----------------------
●● Customer focus ----------------------
Parameters for Measurement of Process Performance
----------------------
●● Process Capability
----------------------
●● Reaction Time
●● Throughput Time or Cycle Time ----------------------
●● Dependability ----------------------
●● Yield, i.e., Ratio of ‘output’ to ‘input’
----------------------
●● Utilisation of relevant technologies
●● Waste reduction ----------------------
●● Cost allocation and cost reduction ----------------------
Process Analysis
----------------------
It is systematic examination of “Process Model” to establish a
comprehensive understanding of the existing process with a view to simplify ----------------------
the process, eliminate unwanted/redundant elements and explore possibilities ----------------------
of combining with other processes.
Process analysis should aim at: ----------------------

●● Reducing: time, costs, complexity, fatigue and monotony. ----------------------

●● Improving: safety, reliability, flexibility and quality of output. ----------------------

----------------------

Product and Process Design 113

 Notes Concept of Dominance
A process normally has numerous variables but variables associated with
---------------------- a particular factor may dominate and influence the process.
---------------------- Some major factors, which can dominate a process, are:
---------------------- ●● Setup of equipment – Punching and pressing operations.
●● Machine – Process has inherent rate of change as time passes, e.g., wear
---------------------- of tool.
---------------------- ●● Operator – Skill level of operator.
●● Component – Quality of purchased parts.
----------------------
●● Information – Proper understanding of customer requirements.
---------------------- Fool-proofing
---------------------- An activity aimed at bringing the output defectives from a process to
‘zero’. This can be achieved in the following way:
----------------------
Making it impossible for the machine to continue to produce, the moment
---------------------- a defect is sensed, by incorporating suitable hardware and software in the
machine. This can be achieved through:
----------------------
●● Redundancy – Multiple impossible events are required to occur
---------------------- simultaneously before a defect can be made to escape.
---------------------- ●● Helping human abilities, e.g.. Optical magnification.
●● Eliminating error-prone elements while designing.
----------------------
●● Autonomation – Making the machines intelligent to sense a problem
---------------------- before it occurs and take appropriate decision.

----------------------
Activity 2
----------------------
Explain the various activities involved in Process Design related to your
----------------------
organisation.
----------------------

---------------------- 5.8 PROCESS CAPABILITY

---------------------- Process capability is a measure of the inherent uniformity of the process.
Every process is subject to variation due to two distinct sets of causes:
----------------------
●● Assignable causes: Causes which are external to the process.
---------------------- ●● Random causes: Causes which are part of the process.
---------------------- When assignable causes are removed and process is influenced only by
random causes, it is in ‘Statistical Equilibrium’.
----------------------
Steps in calculating Process Capability Index
---------------------- ●● Ensure that the process is in a state of statistical equilibrium.
---------------------- ●● Determine the size of sample group and sample size.

114 World Class Manufacturing

●● Design a suitable tally sheet. Notes
●● Collect data under standard operating conditions without adjustments.
----------------------
●● From every sample, calculate average (X) of all readings and Range
(R) which is the difference between largest and smallest reading in the ----------------------
sample.
----------------------
●● Calculate average of averages of all groups (X) and average of range (R).
R ----------------------
●● Calculate standard deviation (s) by formula s = d2 where d2 is a constant
depending on group size ----------------------
Group size - 4 5 6 8 10 ----------------------
Value of d2 2.06 2.33 2.53 2.85 3.85
----------------------
●● Calculate Potential Process Capability Index (Cp)
----------------------
Specification tolerance USL – LSL
Cp = =
Process spread 6xs ----------------------
●● Calculate Process Capability Location Index (Cpk)
----------------------
USL – X X – LSL
Cpk = or whichever is lower ----------------------
3xs 3xs
----------------------
Conclusions:
----------------------
If Cp is more than or equal to 1: Process is capable.
If Cpk is more than or equal to 1: Process is meeting the specification ----------------------
requirements. ----------------------
If Cp is more than or equal to 1 but Cpk is less than 1: Process is capable
but does not meet the specifications due to poor centering. ----------------------

Multiple uses of Process Capability ----------------------

●● To predict extent to which the process will be able to hold tolerances. ----------------------
●● To choose the best suited process for the requirements.
----------------------
●● To plan interrelation of sequential processes.
●● To decide on periodic process control charts. ----------------------

●● To assign the machines to classes of work for which these are best suited. ----------------------
●● To test the theories of causes of defects during quality improvement ----------------------
programmes.
----------------------

----------------------

----------------------

----------------------

----------------------

Product and Process Design 115

 Notes
Check your Progress 2
----------------------
Fill in the blanks.
----------------------
1. __________________________ is a systematic process of motivating
---------------------- a business to focus on its customers.
---------------------- 2. Taguchi method divides all problems into two categories − ______ or
_______.
----------------------
3. _________is a systematic series of activities directed at converting
---------------------- inputs into desired outputs.
4. An activity aimed at bringing the output defectives from a process to
----------------------
‘zero is __________.
---------------------- 5. ________ __________ is a measure of the inherent uniformity of the
---------------------- process.

----------------------
Summary
----------------------
●● A modern product is a complex product, which needs careful attention
---------------------- during design and development stage in order to satisfy the needs of an
aware and exacting customer. Review of requirements must be done at
----------------------
every important stage of product development.
---------------------- ●● While designing the product, the concept of cost-effectiveness where
lifecycle costs are weighted against the overall effectiveness of the product
----------------------
is an important aspect. The product should also be easily maintainable
---------------------- and safe to use.
●● The tools used during design and development are design reviews, fault
----------------------
tree analysis, FMEA, reliability programme, etc. to ensure customer
---------------------- satisfaction.
●● Modern tools to ensure customer satisfaction at design stage of the product
----------------------
are:
---------------------- ●● Quality Function Deployment (QFD), which identifies critical
customer requirements and matches these with design parameters.
----------------------
This method is practiced by building a House of Quality.
---------------------- ●● TRIZ method tries to use experience of others to solve design
problems while Taguchi method works on the principle of minimising
---------------------- losses through a Loss Function approach. Design for Manufacture
---------------------- ensures that the designed product is easily manufacturable at least
costs.
---------------------- ●● Process Design ensures that the designed product is economically
---------------------- produced without any defects at least possible costs and delivered
to customer at the right time and in the right quantities.
----------------------

116 World Class Manufacturing

 Keywords Notes

----------------------
●● Product: Output of a process.
●● Product design: A creative process resulting in specifications, drawings, ----------------------
software and/or procedures which form the basis for product features
which are required to satisfy the customer requirements. ----------------------
●● Life cycle costs: Total costs during the life of a product from concept to ----------------------
disposal after use.
●● Availability: Probability that a product, when used under given conditions ----------------------
will perform satisfactorily when called upon. ----------------------
●● Reliability: Probability of a product performing without failure, a specific
function under given conditions for a specified period of time. ----------------------
●● Maintainability: Ease and speed at which a repairable product, which ----------------------
has failed, can be repaired, keeping the costs of repair at minimum.
●● Design review: A team concept and calls for involvement of other ----------------------
functional heads during the design stage to ensure a trouble-free and ----------------------
effective design.
●● Failure mode effect analysis: Tool used to identify the parts/sub- ----------------------
assemblies risk to the final product.
----------------------
●● Fault tree analysis: A tool is used primarily to identify safety risks for a
product. ----------------------
●● Quality function deployment: A method used to identify critical customer
----------------------
attributes and to create a specific link between customer attributes and
design parameters. ----------------------
●● Loss function: Financial loss for any particular deviation in a product
using the best specification target and for the amount of variation in any ----------------------
process. ----------------------
●● Design for manufacture: A series of guidelines to achieve higher quality,
lower cost, improved application of automation and better maintainability. ----------------------
●● Concurrent engineering: An approach that brings many people together ----------------------
in the early phase of product design in order to simultaneously design the
product and the process. ----------------------
●● Process: A systematic series of activities directed at converting inputs ----------------------
into desired outputs.
●● Process capability: A measure of the inherent uniformity of the process. ----------------------

----------------------
Self-Assessment Questions
----------------------
1. What are the criteria for successful product development?
----------------------
2. What are the different ways for exploiting market for competitive
advantage through appropriate new product development? ----------------------
3. What are the elements of reliability programme? Explain each element ----------------------
briefly.

Product and Process Design 117

 Notes 4. Why is maintainability important? How it is achieved?
5. How safety features are incorporated in a product at design stage?
----------------------
6. What is Loss Function? How is it calculated?
----------------------
7. Explain the concept of Design for Manufacture.
---------------------- 8. What is Operating Plan of Process? What are its contents?
---------------------- 9. How process performance is evaluated?
---------------------- 10. Explain the terms Dominance and Fool-proofing with respect to a process.

---------------------- Answers to Check your Progress

---------------------- Check your Progress 1
---------------------- Multiple Choice Multiple Response.
---------------------- 1. Some of the features of modern products are:
ii. Inter-changeable
----------------------
iii. Environment friendly
----------------------
iv. Short life cycle
---------------------- 2. Parts can be termed as critical when:
---------------------- i. Population of the parts is high
ii. Precision required is high
----------------------
iii. Parts are unproved
----------------------
Check your Progress 2
---------------------- Fill in the blanks.
---------------------- 1. Quality Function Deployment (QFD) is a systematic process of motivating
a business to focus on its customers.
----------------------
2. Taguchi method divides all problems into 2 categories − static or dynamic.
----------------------
3. Process is a systematic series of activities directed at converting inputs
---------------------- into desired outputs.
4. An activity aimed at bringing the output defectives from a process to
----------------------
‘zero’ is fool-proofing.
---------------------- 5. Process capability is a measure of the inherent uniformity of the process.
----------------------
Suggested Reading
----------------------
1. Magrab, Edward and Satyandra Gupta. Integrated Product and Process
----------------------
Design and Development: The Product Realization Process. CRC Press
---------------------- Publication.
2. Thompson, Rob. Manufacturing Processes for Design Professionals.
----------------------
Thames & Hudson Publication.
118 World Class Manufacturing
Waste Elimination
UNIT

6
Structure:

6.1 Introduction to Waste Elimination

6.2 Seven Wastes
6.3 Five ‘S’
6.4 Flexible Work Force
6.5 Equipment Maintenance
6.6 Total Productive Maintenance (TPM)
6.7 Statistical Process Control
6.8 Poka-Yoke
6.9 Total Quality Control
6.10 Reducing Setup Time
6.11 Just-In-Time (JIT)
6.12 Kanban System
6.13 Three M’s - Muda, Muri and Mura
Summary
Key Words
Self-Assessment Questions
Answers to Check your Progress
Suggested Reading

Waste Elimination 119

 Notes
Objectives
----------------------
After going through this unit, you will be able to:
----------------------
• Explain the meaning of waste in manufacturing
----------------------
• Analyse different paths and tools used to minimise/eliminate waste
---------------------- • Specify the meaning and importance of workplace organisation
---------------------- • Explain the meaning of equipment efficiency

---------------------- • Discuss how to build equipment ownership

• Analyse the Japanese way of fool-proofing the operations
----------------------
• Evaluate the features of Total Quality Control (TQC)
----------------------

---------------------- 6.1 INTRODUCTION TO WASTE ELIMINATION

---------------------- Each function of an organisation is basically a ‘conversion process’ to
convert inputs into outputs which either directly or indirectly contributes to the
----------------------
final output, i.e., satisfaction of organisation’s customer. While carrying out
---------------------- this conversion process, the function is engaged in performing a number of
activities which can be segregated in two basic types:
----------------------
1. Activities, which add value.
---------------------- 2. Activities, which do not add value
---------------------- Value-adding activities are those which:

---------------------- a. Change shape/size/form of the product as necessary steps for converting

it into the final product.
----------------------
b. Add/delete a feature/characteristic/property of the product to enhance
---------------------- customer satisfaction
c. Improve quality or reduce costs leading to improvement in performance
----------------------
of the organisation.
---------------------- d. Are specifically requested by the customer.
---------------------- Applying the above criteria, it can be seen that at best, only 20% of the
total time is used for value addition. This ratio of value-added time to total time
---------------------- is known as ‘cycle efficiency. Thus:
---------------------- Time taken for value addition
Cycle Efficiency = × 100
Total time taken
----------------------
Value-adding activities are essential features of the function and cannot
---------------------- be eliminated but may have scope for improvement in terms of time taken or
the costs incurred by ‘simplifying’ the activity or ‘combining’ two or more
---------------------- activities into one.
----------------------

120 World Class Manufacturing

Activities which do not add any value are again divided into two types: Notes
i. Activities, which do not add any value but are essential as part of a
----------------------
process, e.g., transportation of material, inspection, etc.
ii. Activities, which do not add value and are also not necessary but are done ----------------------
as an established practice due to some historical factors, e.g., sending a
----------------------
document copy to a department, which has no use for it.
The second type needs immediate elimination. ----------------------
Non-value adding activities of the first type need continuous efforts to ----------------------
reduce their necessity till they reach a point of elimination, e.g. elimination of
mass inspection by making the process foolproof. ----------------------

Above points can be summed up in the diagram below. ----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------
Fig.6.1: Activities for identifying Waste ----------------------
The key to a successful organisation lies in tackling the solutions part
----------------------
effectively. Every modern organisation develops its own way for tackling the
solutions part but a very popular and widely used method is the one developed by ----------------------
Japanese industry for identifying and eliminating ‘wasteful’ practices. Towards
this, they have listed down ‘Seven Wastes’, which are commonly observed ----------------------
in any organisation. They have also developed a methodology to minimise/
----------------------
eliminate these.
----------------------
6.2 SEVEN WASTES
----------------------
Three essential and immediately visible resources in any operational area
are material, men and machines. A careful observer while visiting an operational ----------------------
area will, many a times, find either or all of these resources waiting, i.e., not ----------------------
under active use at a number of places. If questioned, he is likely to get very
plausible and convincing reasons for their idleness. Some very commonly heard ----------------------
excuses are (and this is not a comprehensive list):
----------------------
1. For idle machines:
----------------------
●● Material not available.
●● Machine under setting. ----------------------

Waste Elimination 121

 Notes ●● Machine under maintenance.
●● Operator absent.
----------------------
●● Machine not scheduled for work.
---------------------- ●● Machine waiting for clearance from inspection authorities.
---------------------- 2. For idle material:

---------------------- ●● Excess/wrong material issued.

●● Material under inspection.
----------------------
●● Material under rework waiting for the next batch.
---------------------- ●● Machine under setting/maintenance.
---------------------- 3. Material awaiting transportation
●● Right operator not available.
----------------------
●● Finished goods waiting for customer clearance.
----------------------
4. For idle operator:
---------------------- ●● Machine under maintenance/clearance from inspection.
---------------------- ●● Automatic operation, operator has very little to do.
●● Operator awaiting instructions.
----------------------
●● Waiting for material.
---------------------- ●● Suitable job not available for the operator.
---------------------- It must be appreciated that in spite of so many routine problems listed
above, most of the time the production targets are met. However, a little
---------------------- introspection can bring out two points very clearly:
---------------------- 1. If production targets are met in spite of so much idleness of these
resources, it is quite obvious that these resources are available in excess
---------------------- and this excess comes at extra costs.
---------------------- 2. With careful planning and vigilance, time wasted due to majority of the
reasons for idleness can be substantially reduced and in some cases can
----------------------
even get eliminated.
---------------------- This is precisely what the Japanese industry realised when they came up
with their famous theory of ‘Seven Wastes’.
----------------------
Definition of ‘Waste’
----------------------
Anything other than the minimum amount of equipment, materials, parts,
---------------------- space and time which is absolutely necessary to add value to the product – Fujio
Cho of Toyota.
----------------------
Seven Wastes
---------------------- 1. Waste from “Over Production”: Any quantity produced more than what
---------------------- is exactly needed by the next operation/customer adds to waste as it results
in extra-handling, space, interest charges on investments made in material
----------------------

122 World Class Manufacturing

 and machinery, product defects, overheads, people and paperwork. It also Notes
adds to confusion and can obscure presence of fundamental problems.
----------------------
2. Waste resulting from “Waiting Time”: Any resource lying unused or
waiting to be used is obviously a waste as it is indicative of unnecessarily ----------------------
extra investments made in that resource. Thus, waiting time for machine
indicates extra capacity; for people it indicates extra manpower and for ----------------------
material it indicates excess material.
----------------------
3. Waste of “Transportation”: Any transportation resulting from poor
layouts, improperly coordinated processes, poor housekeeping, improper ----------------------
production planning and inefficient workplace organisation has to be
----------------------
treated as waste.
4. “Processing Waste”: Rejections, rework and yield losses contribute to ----------------------
this category of waste.
----------------------
5. Waste resulting from extra “Inventories”: This waste is considered
as ‘mother of all evils’ on the shop floor, as besides the extra running ----------------------
costs incurred, it obscures problems like poor schedules, breakdowns of ----------------------
machines, poor quality, extra transportation, delayed vendor deliveries,
line imbalances, longer setup times, absenteeism, poor housekeeping and ----------------------
poor communication.
----------------------
6. Waste of “Motion”: Personnel engaged in activities which do not add
any value are obviously going through motions which do not contribute ----------------------
to the performance of the organisation and thus add to the waste. Many
service function personnel who rather than giving service are engaged in ----------------------
controlling, are examples of this type. Equipment/machinery, which are ----------------------
run for purposes other than that for adding value also fall in this category,
e.g., testing of product on test rigs. ----------------------
7. Waste resulting from “Defective Products”: Defective products are not ----------------------
only direct waste in terms of material loss and loss of time, efforts and
other resources spent on them but also contribute to opportunity costs ----------------------
resulting from loss of capacity, which otherwise could be gainfully
utilised. Most importantly, defective products shipped out may result in ----------------------
loss of customer confidence. ----------------------
Well-planned and sustained efforts are necessary if the organisation has
----------------------
to minimise/ eliminate these ‘seven wastes’. Figure 6.2 below gives a guideline
for this planning. ----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

Waste Elimination 123

 Notes

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

---------------------- Fig. 6.2: Waste Elimination Steps chart

As can be seen, the wasteful practices adversely affect the performance
----------------------
of the organisation and can be minimised by concentrating the efforts on three
---------------------- important areas, viz., Material, Equipment and Product Quality.
For material, it is ‘Just-in-Time’ approach. ‘Total Productive Maintenance’
----------------------
is the most effective method for reducing waste occurring due to equipment
---------------------- and ‘Total Quality Control’ is necessary for achieving ‘zero defect’ and gain
customer confidence and eventually the market leadership.
----------------------
All the three approaches use certain important tools, which are shown
---------------------- in the diagram above and will be discussed in more details in the subsequent
pages. For effectively using any of these tools, it is necessary to first instill basic
---------------------- discipline in the workforce and at the same time make the work force more
---------------------- flexible.
The whole exercise has to start with ‘Workplace Organisation’ and the
---------------------- tool used for this is ‘5S’. This tool is the foundation for all further efforts and
---------------------- unless this foundation is made strong, the ultimate goal of ‘Waste Elimination’
cannot be reached.
---------------------- Installing and perfecting the ‘5S’ culture creates basic discipline and
---------------------- perseverance in the workforce which is so very essential for the disciplined and
sustained efforts needed for minimising and ultimately eliminating the ‘seven
---------------------- wastes’. A clean and well-organised workplace is a great motivating factor for
the workforce and is also a visible sign of an efficient and effective organisation.
----------------------

124 World Class Manufacturing

 The second common tool for the above-mentioned three approaches is Notes
the multi-skilled and flexible work force, which can easily and speedily adapt
to changing environment and customer needs. It can also quickly master the ----------------------
new tools for the waste elimination and take an active part in the ongoing
improvement process. ----------------------

All the tools needed for ‘waste elimination’ are discussed in more details in ----------------------
the ensuing pages. The order of presentation of these tools is in the chronological
----------------------
order of its implementation. For example, prerequisite for implementing any
new tool is a disciplined work force. The first sign of work discipline is a well- ----------------------
organised and clean workplace and hence, ‘5S’ becomes the first topic for this
book, which will be followed by ‘Flexible Work Force’. ----------------------
Implementation of ‘Just-in-Time’ needs ‘Zero Breakdown’ and ‘Zero ----------------------
Defect’ and without reliable machines, ‘Zero Defect’ may not become feasible
and hence, these three approaches along with their respective tools are ----------------------
sequentially discussed in the following paragraphs:
----------------------
1. Total Productive Maintenance
----------------------
2. Total Quality Control
3. Just in Time. ----------------------

----------------------
Activity 1
----------------------
List down some of the wastes which can be prevented or eliminated in your ----------------------
organisation.
----------------------

6.3 FIVE ‘S’ ----------------------

----------------------
The 5S Process, or simply “5S”, is a structured programme to
systematically achieve total organisation, cleanliness, and standardisation in ----------------------
the workplace. A well-organised workplace results in a safer, more efficient,
and more productive operation. It boosts the morale of the workers, promoting ----------------------
a sense of pride in their work and ownership of their responsibilities.
----------------------
“5S” was invented in Japan, and stands for five (5) Japanese words
that start with the letter ‘S’: Seiri, Seiton, Seiso, Seiketsu, and Shitsuke. An ----------------------
equivalent set of five ‘S’ words in English have likewise been adopted by many,
----------------------
to preserve the “5S” acronym in English usage. These are: Sort, Set (in place),
Shine, Standardise and Sustain. ----------------------
Seiri ----------------------
The first step of the “5S” process, seiri, refers to the act of throwing away
all unwanted, unnecessary, and unrelated materials in the workplace. People ----------------------
involved in Seiri must not feel sorry about having to throw away things. The ----------------------
idea is to ensure that everything left in the workplace is related to work. Even
----------------------

Waste Elimination 125

 Notes the number of necessary items in the workplace must be kept to its absolute
minimum. Because of seiri, simplification of tasks, effective use of space, and
---------------------- careful purchase of items follow.
---------------------- Seiton
Seiton, or orderliness, is all about efficiency. This step consists of putting
----------------------
everything in an assigned place so that it can be accessed or retrieved quickly,
---------------------- as well as returned in that same place quickly. If everyone has quick access to
an item or materials, work flow becomes efficient, and the worker becomes
---------------------- productive. The correct place, position, or holder for every tool, item, or
material must be chosen carefully in relation to how the work will be performed
----------------------
and who will use them. Every single item must be allocated its own place for
---------------------- safekeeping, and each location must be labelled for easy identification of what
it’s for.
----------------------
Seiso
---------------------- Seiso, the third step in “5S”, says that ‘everyone is a janitor’. Seiso
---------------------- consists of cleaning up the workplace and giving it a ‘shine’. Cleaning must be
done by everyone in the organisation, from operators to managers. It would be a
---------------------- good idea to have every area of the workplace assigned to a person or group of
persons for cleaning. No area should be left uncleaned. Everyone should see the
---------------------- ‘workplace’ through the eyes of a visitor - always thinking if it is clean enough
---------------------- to make a good impression.
Seiketsu
----------------------
The fourth step of “5S”, or seiketsu, more or less translates to ‘standardised
---------------------- clean-up’. It consists of defining the standards by which personnel must
measure and maintain ‘cleanliness’. Seiketsu encompasses both personal and
---------------------- environmental cleanliness. Personnel must, therefore, practice ‘seiketsu’ starting
---------------------- with their personal tidiness. Visual management is an important ingredient of
seiketsu. Colour-coding and standardised coloration of surroundings are used
---------------------- for easier visual identification of anomalies in the surroundings. Personnel
are trained to detect abnormalities using their five senses and to correct such
---------------------- abnormalities immediately.
---------------------- Shitsuke
---------------------- The last step of “5S”, Shitsuke, means ‘Discipline.’ It denotes commitment
to maintain orderliness and to practice the first 4S as a way of life. The emphasis
---------------------- of shitsuke is elimination of bad habits and constant practice of good ones.
Once true shitsuke is achieved, personnel voluntarily observe cleanliness and
----------------------
orderliness at all times, without having to be reminded by management.
----------------------

----------------------

----------------------

----------------------

126 World Class Manufacturing

 Notes
Check your Progress 1
----------------------
Match the following.
----------------------
i Seiri/Sort a Discipline
----------------------
ii Seiton/Set (in place) b Cleaning up the workplace
iii Seiso/Shine c Throwing away all unwanted, ----------------------
unnecessary, and unrelated materials in ----------------------
the workplace
iv Seiketsu/Standardise d Putting everything in an assigned place ----------------------
so that it can be accessed or retrieved ----------------------
quickly
v Shitsuke/Sustain e Personal and environmental cleanliness ----------------------

----------------------

6.4 FLEXIBLE WORK FORCE ----------------------

The definition of flexible work force is: One that allows, encourages or ----------------------
otherwise mandates employees to know and work a variety of different jobs and ----------------------
duties.
The implication of worker cross-training is that skilled labour becomes ----------------------
a flexible resource that can be assigned dynamically to a number of machines, ----------------------
work centres, or manufacturing cells. This is typically implemented either
through a team concept where employees cycle through a set number of jobs, ----------------------
or employees are assigned duties based upon varying daily work force needs.
----------------------
For the organisation to have a ‘flexible work force’, maximum number
of employees needs to be ‘multi-skilled’. A multi-skilled employee is the one ----------------------
who possesses or acquires a range of skills/knowledge and can apply these
----------------------
voluntarily to work tasks that may fall outside the traditional boundaries of
his regular work. The person may not possess high level of skill/knowledge in ----------------------
every task but can be an effective and productive contributor in multiple areas.
----------------------
This multi-skilling needs to be practiced at every level of the organisation.
At lower level, a multi-skilled worker may be able to handle different types ----------------------
of machines with reasonable skill and efficiency, perform allied tasks like
inspection, machine maintenance, etc. during his idle time or operate multiple ----------------------
machines for optimum utilisation of his available time. At supervisory and
----------------------
managerial levels, people should possess adequate knowledge about the allied
areas of operations so that they can understand and can contribute positively ----------------------
in solving problems of others and also fill in the gaps caused by variety of
reasons like absenteeism, separation or sudden increase in work load in some ----------------------
operational area.
----------------------

----------------------

Waste Elimination 127

 Notes Advantages of a ‘flexible work force’ can be summarised as:
1. Brings down the total processing time by reducing the waiting time,
----------------------
which in turn results in
---------------------- a. Better utilisation of equipment and men.
---------------------- b. Timely deliveries as time required for processing can be predicted
with a much better accuracy.
----------------------
c. Better customer satisfaction.
---------------------- d. Reduction in processing costs.
---------------------- 2. Removes monotony of work by allowing people to practice variety of
skills.
----------------------
3. Enhances employee self-esteem as his capabilities cover a wider sphere
---------------------- of operations.
---------------------- 4. Leads to job enrichment and eventually to job satisfaction.
5. Improves communication as everyone has working knowledge of allied
----------------------
areas of operations.
---------------------- 6. Employees from different areas of operations can come together to solve
---------------------- each other’s problems, which leads to effective teamwork.
7. Increased knowledge and skills coupled with better job satisfaction can
---------------------- bring out innovative spirit of employees in solving chronic problems and
---------------------- suggesting better methods.
8. Employment security increases as employee can be used in a different
----------------------
area if his traditional work becomes redundant.
---------------------- 9. Management functions like planning, organising, delegating and motivating
become easier and senior managers can spare more time for improvements.
----------------------
10. Administrative costs are reduced.
----------------------
11. Organisation becomes more resilient and can manage ‘change’ effectively.
---------------------- 12. Efficiency and effectiveness of the organisation improves making it more
---------------------- competitive.

----------------------
Activity 2
----------------------
Should an organisation have a flexible work force? According to you, what
---------------------- are the advantages and disadvantages of having a flexible work force?
----------------------

----------------------

----------------------

----------------------

128 World Class Manufacturing

6.5 EQUIPMENT MAINTENANCE Notes

One major source of ‘waste’ in any organisation is ‘waiting time’. ----------------------

When material, men or machine wait without getting productively utilised,
----------------------
it is naturally a waste. Non-availability or problem in any one of these vital
resources invariably causes waiting time in other two also. Flexible work force ----------------------
brings in considerable reduction in waiting time of employees as they can now
be deployed on alternate tasks if there is a problem for material or machine. ----------------------
However, unless solutions for ‘waiting time waste’ for material and machines are
----------------------
found, eliminating or minimising total ‘waiting time waste’ will not be possible.
In this unit, we will discuss a widely practiced concept of maintaining plant ----------------------
and equipment through a maintenance programme known as “Total Productive
Maintenance (TPM)”. ----------------------
But before we move on to TPM, let us discuss some fundamentals about ----------------------
Maintenance Management.
----------------------
Problems faced in Maintenance Management
1. Failures are unpredictable. ----------------------

2. Problems and their solutions cannot be standardised. ----------------------

3. Equipment is normally of heterogeneous nature, i.e., there are many ----------------------
different types and makes of the machines.
----------------------
4. Maintaining an inventory of the spares is a complex job.
Goals of Maintenance Management ----------------------

1. To improve availability (The concept is discussed in some details below). ----------------------

2. Extend useful life of the machine. ----------------------
3. Maintain process capability of the machines.
----------------------
4. Ensure safety and health of the operating personnel.
----------------------
5. Ensure proper environment protection.
Phases of Maintenance ----------------------

Phase I: Forced Deterioration ----------------------

Basics like cleaning, oiling and tightening are not taken care of, ----------------------
which results in rapid deterioration of the machine condition. In this phase,
unscheduled maintenance due to sudden breakdown is frequent and time taken ----------------------
for repairs is also high. Operators and supervisors are responsible only for the
----------------------
numbers produced and hence neglect the machine upkeep. Responsibility of
machine lies with the maintenance staff. They have no stake in numbers and ----------------------
take their own sweet time for repairs. Bad condition of machines and pressure
for numbers are also responsible for deterioration of quality of the products ----------------------
produced. Organisations, which are in this phase of maintenance, should try to
----------------------
advance to the next phase before making any attempt to implement TPM.
----------------------

Waste Elimination 129

 Notes Phase II: Normal Deterioration
In this phase, basics are taken care of mostly through the maintenance
---------------------- staff. They now have the responsibility of scheduling and executing a program
of ‘Preventive Maintenance’ as per laid down system. A good preventive
----------------------
maintenance schedule should include:
---------------------- ●● A schedule for visual inspection of machine to find out any abnormalities,
loosening of moving parts, premature ware, extra vibrations, condition
---------------------- of parts critical for performance of machine and quality of the product,
---------------------- abnormal noise, etc.
●● A schedule for lubrication of moving parts.
----------------------
●● Change/topping up oil in oil chambers.
---------------------- ●● Tightening/replacement of parts like drive belts, air filters, oil filters, etc.
●● Generating data by keeping records. Analysing the data for further
----------------------
corrective/preventive actions.
---------------------- ●● Management of spares.
---------------------- ●● Checking and confirming that the machines are running at recommended
speeds and feeds.
---------------------- Taking care of basics through a good preventive maintenance programme
brings down the breakdown rate as also the time taken for repairs. This brings
---------------------- availability of the machine close to its rated capacity. Efforts are now necessary
---------------------- to slowly involve the production operators in the routine preventive maintenance
activities like daily cleaning and oiling of machines, tightening of loosening
---------------------- parts, etc. This can prepare grounds for the next phase of maintenance.
Phase III: Restoration (Time based maintenance)
----------------------
In this phase, there is a continuous effort to restore machines to their
---------------------- designed operating performance and accuracy. Operators are involved in
promptly identifying abnormal conditions to allow timely corrective actions to
---------------------- be taken to prevent deterioration in machine condition. For this, the operators
---------------------- are trained to use their five sensory organs. Operators are also trained and
encouraged to correct the abnormal condition on their own, as soon as they find
---------------------- it. Continuous inputs are given to improve skills, knowledge and motivation
levels of operators as well as maintenance staff so that mistakes that can cause
---------------------- machine and quality problems can be avoided. Improvement ideas for mistake
proofing are generated and implemented. Machine modifications are done to
---------------------- compensate for any weaknesses in the basic design of the machine.
---------------------- Phase IV: Condition Based Maintenance
In this phase, machine condition is monitored continuously so that any
----------------------
potential problem is identified and corrected promptly. For monitoring the
---------------------- machine condition, operators’ five senses are continued to be used, but they are
now supported by specially designed diagnostic tools. Many modern machines
---------------------- have these gadgets incorporated in machine design. These tools can include
shock pulse meter, vibration measuring device, ampere meter, ultrasonic meter,
---------------------- pressure gauges, etc. Prerequisite for using such instruments are:
---------------------- 1. Machines need to be operated on recommended parameters.

130 World Class Manufacturing

2. Functions of such equipment must be properly understood and interpreted Notes
by the operators.
As the organisation advances from Phase I to Phase IV, Overall Equipment ----------------------
Efficiency goes up. ----------------------
Overall Equipment Efficiency (OEE)
----------------------
OEE takes into account three factors.
----------------------
1. Availability (A): ‘Proportion of time the machine is actually available for
operation out of the time it should be available’. ----------------------
MTBF – MTTR
A= ----------------------
MTBF
Where ----------------------
Total running time ----------------------
MTBF = Mean Time Between Fialures =
Number of failures during this time
----------------------
MTTR = Mean Time to Repairs = Average time taken for repairs.
2. Performance Efficiency (PE): ‘It is the ratio of designed cycle time to ----------------------
the actual cycle time’. In actual practice, the cycle time per component
----------------------
may be more than the theoretical cycle time due to various factors like
material, tools, operator skills, deterioration in machine condition, etc. ----------------------
Thus:
----------------------
Tth Where: Tact = Actual cycle time
----------------------
Tact Tth = Theoretical cycle time
3. Quality Rate (Q): ‘It is the ratio of number of good parts produced to the ----------------------
total number of parts produced during the period under consideration’.
----------------------
This is sometimes referred to as yield.
Overall Equipment Efficiency (OE) is then given as: ----------------------
OEE = A × PE × Q × 100 ----------------------
To improve the OEE, TPM aims at eliminating ‘7 losses’.
----------------------
Seven Losses
----------------------
Following seven factors are identified as those responsible for causing
losses and bringing down the equipment efficiency: ----------------------
●● Breakdowns. ----------------------
●● Changeovers and adjustments.
----------------------
●● Changing of dies/fixtures/tools.
●● Start-up of equipment (e.g., initial heating time required for furnaces). ----------------------
●● Minor stoppages due to variety of reasons. ----------------------
●● Lower speeds/feeds used due to factors like lack of skills of operators,
bad machine condition, inferior material, low quality tools, etc. ----------------------
●● Defects and repairs. ----------------------

Waste Elimination 131

 Notes 6.6 TOTAL PRODUCTIVE MAINTENANCE (TPM)
---------------------- ‘Total Productive Maintenance’ refers to a management system for
optimising the productivity of manufacturing equipment through systematic
----------------------
equipment maintenance involving employees at all levels. Under TPM,
---------------------- everyone is involved in keeping the equipment in good working order to
minimise production losses from equipment repairs, assists, set-ups, and the
---------------------- like.
---------------------- Under TPM, operators no longer limit themselves to simply using the
machine and calling the technician when a breakdown occurs. Operators can
---------------------- inspect, clean, lubricate, adjust, and even perform simple calibrations on their
respective equipment. This frees the technical work force for higher-level
----------------------
preventive maintenance activities that require more of their technical expertise.
---------------------- Management should also show interest in data concerning equipment up-time,
utilisation, and efficiency. In short, everyone understands that zero breakdowns,
---------------------- maximum productivity, and zero defects are goals to be shared by everyone
under TPM.
----------------------
History of TPM
----------------------
Historically, maintenance is considered as a non-value adding activity.
---------------------- TPM tries to change this perspective and brings maintenance into focus as a
necessary and vitally important part of the business. Philosophy of TPM is
---------------------- to utilise the services of production operators for maintenance by scheduling
---------------------- maintenance as an integral part of manufacturing process and bringing
unscheduled maintenance to zero.
---------------------- Credit for starting TPM goes to a Japanese company named Nippondenso,
---------------------- which is a Toyota group company manufacturing automotive electrical
parts. The company introduced plant-wide preventive maintenance in 1960.
---------------------- Introduction of automation left operators with some spare time. In order to
utilise this spare time, the routine maintenance was handed over to operators.
---------------------- Quality circle activity, which was introduced at around the same time, played a
---------------------- major role in making operators voluntarily agree to this additional responsibility.
Maintenance staff, which was relieved off some of their routine work, took over
---------------------- the task of equipment modifications and improvements in reliability. The whole
concept was called ‘autonomous maintenance’. Nippondenso was awarded
---------------------- the distinguished prize for developing and implementing TPM by Japanese
---------------------- Institute of Plant Engineers and thus became the first company to obtain TPM
certification.
----------------------
Seiichi Nakajima, an officer with Institute of Plant Maintenance in Japan
---------------------- is credited with defining the concept of TPM and helping hundreds of plants in
Japan in implementing it.
----------------------
TPM cannot be implemented overnight. Normally it takes an organisation
---------------------- at least two years to set an effective TPM system in place. TPM activities
are carried out in small teams with specific tasks. Every level in the overall
---------------------- organisation must be represented by a team or more.

132 World Class Manufacturing

Foundation for TPM Notes
Total Productive Maintenance is built on the foundation of ‘5S’. As
----------------------
already seen, any new technique for its success needs basic work discipline
and perseverance in the work force. These qualities are immediately visible in ----------------------
the way place of work is organised and maintained. An immaculately clean and
well-organised workplace is indicative of a competent, disciplined and highly ----------------------
motivated work force, which is the basic requirement for implementing TPM
----------------------
programme. ‘5S’ is a potent tool for creating such a work force and hence serves
as the foundation for TPM. ----------------------
Seven Pillars of TPM
----------------------
Once the foundation is laid through successful implementation of ‘5S’,
the structure of TPM will stand on the following pillars: ----------------------
Pillar No. 1 – Training ----------------------
In TPM, the operator besides his regular trade work has to handle other ----------------------
tasks related to upkeep, maintenance and improvement of his equipment. In
other words, every operator has to become multi-skilled. Aspects of multi- ----------------------
skilling and resulting flexible work force have been discussed in greater details
in a previous unit. Following points need special attention while planning for ----------------------
training of work force for TPM. ----------------------
i) Creating awareness about
----------------------
●● What is TPM?
----------------------
●● Why TPM?
●● What role the operator has to play? ----------------------
●● What are the benefits to the organisation and also to the individual? ----------------------
ii) Checking present status of skills and knowledge of work force.
----------------------
iii) Planning of training activity to cover following aspects:
----------------------
●● Common training to all to cover awareness points and various tools
that can be used like kaizen, benchmarking, quality circles, problem ----------------------
solving, fool-proofing, etc.
●● Job related training to improve job related skills and knowledge of ----------------------
the respective trade groups. ----------------------
●● Identifying shortcomings of individuals and impart specific training
to cover up the gaps. ----------------------
iv) Drawing up of a training calendar. ----------------------
v) Implementing the plan. ----------------------
vi) Evaluation of the training through a properly designed feed-back system
----------------------
and planning for improvements.
----------------------

----------------------

Waste Elimination 133

 Notes Pillar No. 2 – Planned Maintenance
It is an activity aimed at progressively reducing the problems on machines
----------------------
to reduce breakdowns and producing defect-free products. Planned maintenance
---------------------- is divided into four categories:
1. Breakdown Maintenance: Each breakdown is treated as an opportunity for
----------------------
improvement in machine condition. The root cause of the problem is traced
---------------------- and corrective actions are taken to ensure that similar problem will not arise
in future. A simple technique first introduced by Taichii Ohno in Toyota
---------------------- company which is known as ‘why-why’ technique can help in tracing the
root cause. A simple example given by him can illustrate the technique.
----------------------
Problem: Malfunction of digital controller
----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------
Fig. 6.3: The Why-Why Technique
----------------------
Solution: Clean the filter and include periodic cleaning in the preventive
---------------------- maintenance schedule.
---------------------- 2. Preventive Maintenance: As the name suggests, this activity is basically
aimed at preventing breakdowns from occurring by paying timely
---------------------- attention to the machines. Preventive maintenance normally covers
following points:
----------------------
a. Inspecting machines at fixed intervals to:
----------------------
●● Find out any abnormalities.
---------------------- ●● Ensure proper condition of parts which are critical for
functioning of the machine and quality of the product.
----------------------
●● Confirm suitability of various schedules like cleaning,
---------------------- lubricating, tightening, change of filters/oil, etc.
---------------------- ●● Check the condition of ware parts and decide the time for
their change.
----------------------
●● Confirm that machines are running at recommended speeds
---------------------- and feeds.

134 World Class Manufacturing

 b. Preparation of schedules for: Notes
●● Cleaning, lubrication, tightening.
----------------------
●● Change of ware parts.
----------------------
●● Adjustments leveling and alignments.
●● Overhauls. ----------------------
c. Implementing the planned schedule by distributing the work and ----------------------
allocating responsibilities.
----------------------
d. Generating data by keeping maintenance related records, analysing
the data for further corrective and preventive actions. ----------------------
3. Corrective Maintenance: This activity aims at taking actions on ----------------------
deficiencies and problems noticed during preventive maintenance and
to restore the machine back to its designed performance standards. ----------------------
Corrective maintenance can include following activities.
----------------------
●● Servicing and overhauling.
----------------------
●● Rebuilding or reconditioning.
●● Modifications and improvements. ----------------------

●● Correcting the basic design deficiencies of the machine. ----------------------

4. Maintenance Prevention: After the corrective maintenance, comes the ----------------------
step of ‘condition-based maintenance’. This activity is based on certain
health indicators of the machine. Like a human body, the machine can ----------------------
be made ‘intelligent’ to respond to unhealthy abnormalities. This can be
----------------------
made possible through the use of advanced technology. Warning systems
can be used to raise suitable alarm, the moment any abnormality arises. ----------------------
Machine can then be attended to clear the abnormality before further
damage occurs. Using operator’s five senses is another effective way for ----------------------
pre-empting the potential problems. ----------------------
Pillar No. 3 – Quality Maintenance
----------------------
This activity is aimed at identifying the parts of the machine, which are
critical for the product quality. A systematic plan is made to improve performance ----------------------
of these parts and eliminate the possibility of product non-conformance. To start ----------------------
with, the current quality concerns are identified and action is taken on these. The
next step is to identify potential quality concerns and take appropriate action. ----------------------
Quality of the product is ensured through:
----------------------
●● Improving process parameters.
●● Reducing process variation due to random causes related to machine, by ----------------------
improving machine condition. ----------------------
●● Fool-proofing the process by installing alarm systems, which can promptly
respond to quality deficiencies. ----------------------

----------------------

Waste Elimination 135

 Notes Pillar No. 4 – Continuous Improvements (Kobetsu Kaizen)
Continuous improvements in the working environment are achieved
---------------------- through a famous tool called “Kaizen”, which originated in Japan. The tool is
---------------------- based on the principle that ‘very large number of small improvements where
everyone in the organisation is involved, are more effective than few large
---------------------- improvements involving very few people’. Kaizen can be applied in all the
areas of organisation’s working. Systematically implemented, Kaizen can also
---------------------- be used for transition from breakdown maintenance to TPM. When Kaizen
has a focused approach, i.e., operated in a focused area such as equipment
----------------------
maintenance, it is termed as “Kobetsu Kaizen”.
---------------------- Pillar No. 5 – Autonomous Maintenance (Jishu Hozen)
---------------------- This is the most important pillar of TPM programme as it involves the
production operators in maintenance work, which is the core concept of TPM.
---------------------- The operators take on the responsibility for upkeep of their equipment to prevent
it from deteriorating. In Japan where this concept originated, it is known as
----------------------
“Jishu Hozen”. Following actions are recommended for implementation of
---------------------- Jishu Hozen:
i. Training of employees: Training has to be two pronged.
----------------------
a. Helping to change the attitude of the operators to accept the
---------------------- responsibility of their own equipment. It is necessary to explain
to the operators the concept and to convince them on the mutual
----------------------
benefits, both to the organisation and to the individuals.
---------------------- b. Expanding the skills and knowledge of the operators to cover the
aspects of machine upkeep, minor routine repairs and monitoring
---------------------- condition of the machine to assess potential troubles.
---------------------- ii. Initial clean-up of machines: This is the starting point of implementation
of Jishu Hozen and covers following actions:
----------------------
a. Removal of all dust/oil/grease/dirt stains from machine surfaces
---------------------- and also machine surroundings.
---------------------- b. Stoppage of coolant/water/oil leakages.
c. Removal/proper fixing of all loose wires, nuts, bolts, fasteners, etc.
----------------------
d. Disposal of all unwanted/obsolete/damaged material from
---------------------- workplace.
---------------------- e. Categorising all the identified problems of the machine into two
areas − those which can be solved by the operators and those where
---------------------- expert help of maintenance staff will be required.
---------------------- iii. Corrective actions: These are the actions, which are needed for ease of
maintenance and cover following points:
----------------------
a. Inaccessible areas to be made easy to access.
---------------------- b. Covers, safety cages, lids, panel doors, etc. to be made easy to open
and close.
----------------------

136 World Class Manufacturing

 c. As far as possible, maintenance to be made possible without taking Notes
away any part of the machine.
----------------------
iv. Fixing the schedules: Detailed schedules are to be made for basics
like cleaning, oiling, oil topping, oil changes, replacement of parts like ----------------------
drive belts, air/oil filters and tightening of fasteners. The schedule should
clearly specify the time, the action and the method. Counterchecks are to ----------------------
be installed to ensure that the schedules are strictly adhered to. ----------------------
v. Visual inspection: Operators are to be trained on aspects of pneumatics,
----------------------
electrical, hydraulics, lubrication, drive mechanisms, fasteners, machine
levels, etc. A schedule is to be made on daily/weekly/monthly checks on ----------------------
these aspects and records are to be maintained.
----------------------
vi. Autonomous inspection: Operator now makes his own schedule for
inspection. Based on his experience, he is authorised to delete some of the ----------------------
points from the authorised schedule and also add some points, which he
----------------------
feels are important. Depending on condition of the machine, the frequency
of inspection is decided by the operator. ----------------------
vii. Workplace organisation: Machine surroundings are organised properly. ----------------------
‘A place for everything and everything in its place’ is the motto. ‘5S’
principles are made use of. ----------------------
Workplace is made more congenial by making suitable lighting ----------------------
arrangement, providing proper ventilation and using principles of ergonomics
to reduce fatigue. Work instructions are displayed and adhered to strictly. ----------------------
Frequently required spares and ware parts are planned and kept handy. ----------------------
Pillar No. 6 – Office TPM
----------------------
In a very small organisation, productive operations and its support
functions like purchase, administration, HR, etc. are carried out by a small ----------------------
team and each person in the team is capable of handling multiple functions
----------------------
as per the needs of the organisation. As the organisations grow in size, it is
necessary to create these support functions as distinct identities and managed ----------------------
by the experts in the respective areas. Many a times, these support functions
lose their focus and become ‘control’ functions, adversely affecting the smooth ----------------------
flow of resources needed by the main productive operations and also adding ----------------------
unnecessary costs to the operations. Office TPM is aimed at bringing back this
focus by making the support functions realise their main role of assisting the ----------------------
productive function by incurring least costs. This is done by identifying and
----------------------
eliminating following likely losses in their operations.
●● Processing losses. ----------------------
●● Losses due to extra costs. ----------------------
●● Losses in wrong/delayed/under/over communications.
----------------------
●● Losses in setup changes.
----------------------
●● Losses due to inaccuracies.

Waste Elimination 137

 Notes ●● Losses due to breakdowns of equipment.
●● Losses due to time spent in retrieving information.
----------------------
●● Losses due to non-availability of correct information/status.
---------------------- ●● Losses incurred in emergency dispatches.
---------------------- ●● Losses due to customer complaints.
Steps to be taken for minimising/eliminating these losses
----------------------
●● Provide awareness to all support functions.
---------------------- ●● Help in identifying in each support function following factors: P – Lower
---------------------- ‘Productivity’, Q – Poor Quality, C – Extra ‘Costs’ D – ‘Delivery’ delays,
S – Lack of ‘Safety’ and M – Level of ‘Morale’ of employees.
---------------------- ●● Identify scope of improvement in each function.
---------------------- ●● Collect relevant data.
●● Help to solve the problems.
----------------------
●● Design and maintain the activity board based on the laid down plan.
---------------------- ●● Fan out to cover every function and individual.
---------------------- Pillar No. 7 – Health, safety and environment protection

---------------------- A safe, clean and refreshing workplace is a major motivating factor for
the employees. Points which need attention in this regard are:
---------------------- ●● A plant layout, which provides adequate space for movement and storage
of material and enough freedom of movement for the operators.
----------------------
●● Scientifically designed lighting and ventilation.
----------------------
●● Safe and efficient material handling systems.
---------------------- ●● Proper protection for moving parts of the machine.
---------------------- ●● Adequate space for maintenance of machines.
●● Ergonomically designed work methods to reduce fatigue of workers.
----------------------
●● Proper storage and handling of hazardous material.
---------------------- ●● Use of easily noticeable and readable signage to indicate directions,
storage spaces, hazardous areas, work areas, etc.
----------------------
●● Prompt disposal of unwanted material.
---------------------- ●● Adequate provision of fire fighting equipment.
---------------------- ●● Strict adherence to statutory requirements of safety and environment
protection.
----------------------
●● Training to all employees on matters pertaining to safety and environment
---------------------- protection.
●● Participation of every employee in keeping his work area spic and span.
----------------------
Building Equipment Ownership
---------------------- Core concept in TPM is to build a sense of ownership in every operator’s
---------------------- mind about the equipment he uses in his daily work. When the operator feels

138 World Class Manufacturing

that the equipment belongs to him, he will naturally shoulder the responsibility Notes
for its upkeep. It is not so easy to bring this sense of ownership in the mind of an
operator as all said and done, he has no ‘legal ownership’ of the equipment and ----------------------
he very well knows it. The only way left then is to somehow get his emotional
attachment for the equipment. This emotional attachment can come under ----------------------
following conditions: ----------------------
●● His continuous association with the equipment. If he has to work on
----------------------
different equipment for short periods on each of them, this condition will
not get fulfilled. ----------------------
●● He is allowed to make minor aesthetic modifications on the machine and
its surroundings to suit his taste and comforts. ----------------------

●● His involvement and suggestions are sought by his superiors for any ----------------------
major changes/modifications that are to be made on the equipment or in
working methods. ----------------------
●● His suggestions are given patient hearing and if accepted are implemented ----------------------
promptly.
----------------------
●● In case his suggestion is not accepted, the reasons for its rejection are
convincingly explained to him. ----------------------
●● He is made aware of the total work content and importance of his
----------------------
contribution to it.
●● He is explained the cost implications in improper upkeep of his equipment. ----------------------
●● He is made aware that the equipment he uses is the one, which earns him ----------------------
his ‘bread and butter’ and it is his moral responsibility to take proper care
of the equipment. ----------------------
●● Proper time and resources needed for upkeep of the equipment are made ----------------------
available.
----------------------
●● Emphasis of management is more on ‘how’ the work is done rather than
merely on ‘how much’ is done. ----------------------
●● Timely appreciation is given for the good work done.
----------------------
6.7 STATISTICAL PROCESS CONTROL ----------------------
Statistical Process Control (SPC) is a system for monitoring, controlling ----------------------
and improving a process through statistical analysis. It has many aspects, from
control charting to process capability studies and improvement. Nonetheless, ----------------------
the overall SPC system of a company may be broken down into four basic steps:
----------------------
1) measuring the process; 2) eliminating variances within the process to make it
consistent; 3) monitoring the process; and 4) improving the process. This four- ----------------------
step cycle may be employed over and over again for continuous improvement.
----------------------
Bulk of SPC concepts in use today were developed based on the premise
that the process parameter being controlled follows a normal distribution. Any ----------------------
SPC practitioner must be aware that the parameter must first be confirmed to be
normal before being subjected to analysis concepts based on normal behaviour. ----------------------

Waste Elimination 139

 Notes Thus, any discussion on SPC must be preceded by a discussion of what a normal
distribution is.
---------------------- The Normal Distribution
---------------------- The normal distribution (Beta Curve for Standard Normal Probability
Distribution) normal curve, or bell-shaped curve, is probably the most recognised
----------------------
and most widely-used statistical distribution. The reason for this is that many
---------------------- physical, biological, and social parameters obey the normal distribution. Such
parameters are then said to behave ‘normally’ or, more simply, are said to be
---------------------- ‘normal.’ The semiconductor industry has many processes that output data or
results that comprise a normal distribution. As such, it is important for every
---------------------- process engineer to have a firm grasp of what a normal distribution is.
---------------------- Besides the fact that the normal distribution is frequently encountered
in our day-to-day lives, the mathematics governing normal behaviour are
---------------------- fairly simple. In fact, only two parameters are needed to describe a normal
---------------------- distribution, namely, the mean or its centre, and the standard deviation (also
known as sigma) or its variability. Knowing both parameters is equivalent to
---------------------- knowing how the distribution looks like.
---------------------- The normal distribution is bell-shaped, i.e., it peaks at the centre and
tapers off outwardly while remaining symmetrical with respect to the centre. To
---------------------- illustrate this in more tangible terms, imagine taking down the height of every
student in a randomly selected Grade 5 class and plotting the measurements on
---------------------- a chart whose x-axis corresponds to the height of the student and whose y-axis
---------------------- corresponds to the number of students.
What is expected to emerge from this exercise is a normal curve, wherein
---------------------- a big slice of the student population will have a height that is somewhere in
---------------------- the middle of the distribution, say 57-59 inches tall. The number of students
belonging to other height groups will be less than the number of students in the
---------------------- 57”-59” category.

---------------------- In fact, the number of students decreases at a calculable rate as the height
group moves further away from the centre. Eventually you might find only
---------------------- one shortest student at, say, 48”, and one tallest student who probably stand at
66”. Lastly, plotting the number of the students falling under different height
---------------------- ranges of equal intervals will result in a bell-shaped curve. Such a plot is called
---------------------- a histogram.
What’s notable about normal distributions is that regardless of their
---------------------- standard deviation value, the % of data falling under a given number of standard
---------------------- deviations is constant. For example, say that the standard deviation of process
1 is 100, and the standard deviation of process 2 is 200. Process 1 and Process
---------------------- 2 will have different data distribution shapes (Process 1 being more stable),
but for both processes, 66% of the data under the normal curve will fall within
---------------------- +/- one (1) standard deviation from the mean of the distribution (i.e., between
{mean - 1 sigma} and {mean + 1 sigma}), and 37% of the data will be outside it.
----------------------
The Table below shows the percentages of data falling under different numbers
---------------------- of sigma.

140 World Class Manufacturing

Sigma Level DPMO Defect-free population% Notes
1 690,000 31
2 308,000 69.2 ----------------------
3 66,800 93.32
----------------------
4 6,210 99.379
5 320 99.977 ----------------------
6 3.4 99.9997
Skewed Distributions ----------------------

Perfectly normal curves are hard to come by with finite samples or data. ----------------------
Thus, some data distributions that are theoretically normal may not appear to
----------------------
be one once the data are plotted, i.e., the mean may not be at the centre of
the distribution or there may be slight non-symmetry. If a normal distribution ----------------------
appears to be ‘heavy’ or leaning towards the right side of the distribution, it is
said to be skewed to the left. A normal distribution that’s leaning to the left is ----------------------
said to be skewed to the right. ----------------------
Many response parameters encountered in the semiconductor industry
----------------------
behave normally, which is why statistical process control has found its
way extensively into this industry. The objective of SPC is to produce data ----------------------
distributions that are stable, predictable, and well within the specified limits for
the parameter being controlled. ----------------------

In relation to the preceding discussions, this is equivalent to achieving ----------------------

data distributions that are cantered between the specified limits, and as narrow
----------------------
as possible. Good centring between limits and negligible variation translates to
parameters that are always within specifications, which is the true essence of ----------------------
process control.
----------------------
Control Charting
----------------------
It is often said that you cannot control something that you do not measure.
Thus, every engineer setting up a new process must have a clear idea of how the ----------------------
performance of this new process is to be measured. Since every process needs to
satisfy customer requirements, process output parameters for measurement and ----------------------
monitoring are generally based on customer specifications. Industry-accepted ----------------------
specifications are also followed in selecting process parameters for monitoring.
----------------------
Control charting is a widely used tool for process monitoring in industry.
It employs control charts, which are simply plots of the process output data over ----------------------
time. Before a control chart may be used, the process engineer must first ensure
that the process to be monitored is normal and stable. ----------------------

A process may have several control charts − one for each of its major ----------------------
output parameters. A new control chart must have at least the following: the
----------------------
properly labelled x- and y-axis, lines showing the lower and upper specification
limits for the parameter being monitored, and a line showing the centre or target ----------------------
of these specifications. Once a control chart has been set up, the operator must
diligently plot the output data at predefined intervals. ----------------------

Waste Elimination 141

 Notes After 30 data points have been collected on the chart (may be less if
measurement intervals are long), the upper and lower control limits of the
---------------------- process may already be computed. Control limits define the boundaries of the
normal behaviour of the process. Their values depend only on the output data
---------------------- generated by the process in the immediate past. Control limits are therefore
---------------------- independent of specification limits. However, both sets of limits are used in the
practice of SPC, although in different ways.
----------------------
The lower control limit (LCL) and the upper control limit (UCL) of a
---------------------- process may be calculated from the mean and standard deviation (or sigma) of
the plotted data as follows:
----------------------
LCL = Mean - (3 x Sigma) UCL = Mean + (3 x Sigma)
---------------------- Thus, the span from the LCL of a process to its UCL is 6 sigma. The
probability of getting points outside this +/- 3 sigma range is already very low.
----------------------
Getting a measurement outside this range should therefore warn an engineer
---------------------- that something abnormal is happening, i.e., the process may be going out of
control. This is the reason why these boundaries are known as ‘control limits.’
----------------------
Once the control limits have been included on the control charts (also in
---------------------- the form of horizontal lines like the specification limits), the operator can start
using the chart visually to detect anomalous trends in the process that she would
---------------------- need to notify the engineer about.
----------------------

----------------------

----------------------

----------------------

----------------------

----------------------
Fig. 6.4: A Control Chart
----------------------
Figure 6.4 shows a control chart showing data that are slightly off-centred,
---------------------- but nonetheless in control and within specs.

---------------------- For instance, any measurement outside the control limits is an automatic
cause for alarm, because the probability of getting such a measurement is low.
---------------------- Four (4) or more consecutively increasing or decreasing points form a trend that
is not normal, and therefore deserve attention. Six (6) consecutive points on
---------------------- one side of the mean also deserve investigation. When such abnormalities are
---------------------- observed, the process owner must take an action to bring the process back to its
normal behaviour.
---------------------- Control limits must be recomputed regularly (say, every quarter), to
---------------------- ensure that the control limits being used by the operator are reflective of the
current process behaviour.
----------------------

142 World Class Manufacturing

6.8 POKA-YOKE Notes

It is a Japanese word, which means ‘Mistake proofing’. Initially it was ----------------------

known as Baka-Yoke, which meant ‘Fool-proofing’. A worker in Arakawa
----------------------
Company refused to use Baka- oke mechanisms in her work area because she
felt insulted by the word ‘Fool’. Hence, the term was changed from Baka (Fool) ----------------------
to Poka (Mistake).
----------------------
Shegio Shingo, an industrial engineer with Toyota Motor Company
first used this concept of ‘Mistake Proofing’ as a principle tool for his ‘Zero ----------------------
Quality Control’ (ZQC) approach. Poka-Yoke devices either prevent a defect
from occurring (shut out type) or where it is not possible to entirely prevent the ----------------------
occurrence, make the mistake obvious at a glance so that corrective action can
----------------------
be initiated immediately (attention type).
Shingo classified the inspection activity into three categories: ----------------------
1. Judgment inspection: Sorting out defectives from lot already produced. ----------------------
2. Information inspection: Data gained from inspection to control the ----------------------
process and prevent defects, e.g. control charts.
----------------------
3. Source inspection: Checking the operating conditions before the
operation starts. ----------------------
The third type is achieved through Poka-Yoke devices, which either
----------------------
ensures that proper conditions exist prior to actual production or prevent
production from occurring until the necessary conditions are satisfied. ----------------------
Poka-Yoke devices eliminate human as well as process oriented errors.
----------------------
Normally, operating personnel who know the operations best are encouraged
to design and install these devices at their own initiative. These devices can ----------------------
be simple, easy to operate and cheap. Toyota has an average of 12 Poka-Yoke
devices at every work station, each one costing less than $150. ----------------------
Following is the step-by-step approach for applying Poka-Yoke: ----------------------
i. Identify the operation/process to be tackled first, using Pareto technique. ----------------------
ii. Assess all the ways in which process can fail and analyse causes for each
of them using ‘5-why’ technique. Failure can be due to: ----------------------

a. Process error – Standard operating procedure not followed. ----------------------

b. Setup error – Wrong/defective tooling or wrong machine adjustments. ----------------------
c. Missing/improper parts.
----------------------
d. Operating errors.
e. Measurement errors. ----------------------
iii. Determine the right Poka-Yoke approach, i.e., whether to use ‘Shut-out’ ----------------------
type or ‘Attention’ type. Also see all the possibilities such as electrical,
mechanical, procedural, human, visual, etc. which can prevent incorrect ----------------------
execution of process step.
----------------------

Waste Elimination 143

 Notes iv.) Determine which of the following method is appropriate for Poka-Yoke
device:
---------------------- a. Contact – Use of shape, size, form or other physical attributes for
detection.
----------------------
b. Constant number – Error triggered off if a certain number of actions
---------------------- are not completed.
---------------------- c. Sequence – Error triggered if process steps are not performed as per
predetermined sequence.
---------------------- v. Design and install an appropriate Poka-Yoke device.
---------------------- vi. Carry out trials of the installed Poka-Yoke device.
vii. Train the operator.
----------------------
viii. Review performance.
---------------------- Poka-Yoke practice needs a strong support from TQM philosophy.
Organisations must have total customer focus and ensure proper investment
---------------------- in its people, who form the backbone for Poka-Yoke implementation. The way
---------------------- for satisfying external customer is always through the satisfaction of internal
customers.
----------------------

---------------------- Check your Progress 2

---------------------- Multiple Choice Multiple Response.

1. Some of the aspects which need attention related to the health, safety
---------------------- and environment protection are:
---------------------- i. Scientifically designed lighting and ventilation
ii. Proper protection for moving parts of the machine
----------------------
iii. Proper storage and handling of hazardous material
---------------------- iv. Proper storage of unwanted material
---------------------- 2. Some of the reasons for problems faced in maintenance management
are:
---------------------- i. Failures are predictable.
---------------------- ii. Problems and their solutions cannot be standardised.
iii. Equipment is normally of heterogeneous nature.
----------------------
iv. Maintaining an inventory of the spares is a complex job.
----------------------

---------------------- 6.9 TOTAL QUALITY CONTROL

----------------------
Total Quality Control (TQC) can be defined as:
---------------------- “An effective system for integrating the quality planning, quality
control and quality improvement efforts of all individuals and functions in
----------------------
the organisation so as to attain the full and continued satisfaction of buyers of
---------------------- company’s products”.

144 World Class Manufacturing

It can be seen that there are three main activities in TQC: Notes
J.M. Juran, the world-famous expert on quality, has combined these three
activities in what is known as “Juran Trilogy”. ----------------------

1. Quality Planning: Quality planning is an activity, which determines the ----------------------

needs of both internal and external customers and develops the processes
and their outputs to meet the entire set of these needs in a cost-effective ----------------------
way. ----------------------
Steps in quality planning
----------------------
Step no. 1: Identify, who the customers are.
----------------------
Step no. 2: Determine the needs of every customer.
Step no. 3: Translate the customer needs into a language which is clearly ----------------------
understood by those who have the responsibility of satisfying these.
----------------------
Step no. 4: Develop products which can optimally satisfy the needs of the
customer. ----------------------
Step no. 5: Develop processes that are able to build the required product ----------------------
characteristics and features into the product at lowest costs.
----------------------
Step no. 6: Transfer the process to operations.
2. Quality Control: Any process tends to deviate from the set norms during ----------------------
the operation due to various factors and interventions. Through established
----------------------
controls it is possible to notice these deviations before the output of the
process gets damaged. Suitable actions can then be taken to bring back ----------------------
the process to its set norms. This activity is known as ‘Quality Control’.
----------------------
Quality Control can be defined as “an activity for evaluating the actual
performance, comparing it with the set norms and taking action on the ----------------------
deviations”.
Three basic aspects of Quality Control are: ----------------------

i. Evaluating the actual performance. ----------------------

ii. Comparing the actual performance with the set standards. ----------------------
iii. Taking suitable action if the actual performance falls short of the
----------------------
requirements.
Thus, Quality Control is essentially an activity to hold the ‘status-quo’ ----------------------
of any process. A major managerial tool used for ‘Quality Control’ is
----------------------
‘Statistical Quality Control (SQC)’,
3. Quality Improvements: Whereas Quality Control is the activity for ----------------------
maintaining ‘status-quo’, Quality Improvements is the activity for changing
----------------------
the ‘status-quo’ for better performance. It is an effort to change the historical
level of performance of the process to a better level through systematic and ----------------------
well-directed activity. For example, if historical level of defectives from a
process averages 1500 ppm (parts per million), actions taken to bring this ----------------------
down to average of 500 will amount to ‘Quality Improvement’.
----------------------

Waste Elimination 145

 Notes Quality Improvement can take three basic forms:
i. Develop new products with better features to replace the old ones.
---------------------- ii. Adopt new technology.
---------------------- iii. Revise the existing processes to reduce the defectives.
A structured Quality Improvement programme consists of following
---------------------- elements:
---------------------- 1. Establishing a steering committee
2. Selection of improvement ‘Projects’
----------------------
3. Formation of the team to take up the Project
---------------------- 4. Working of the Team
Quality Planning, Quality Control and Quality Improvements together help
----------------------
in eliminating all the existing and future quality related problems and achieve a
---------------------- defect-free production.

---------------------- 6.10 REDUCING SETUP TIME

---------------------- Single Minute Exchange of Dies (SMED)
---------------------- In any manufacturing unit, when common facilities are used for processing
different products, it is obvious that the setup on such machines will have to be
---------------------- changed for the next product/operation as soon as the planned batch quantity
of the running product is finished. This setup change may involve changing
---------------------- the fixtures/tools/speeds/feeds, adjusting the machine movements, processing
---------------------- the first part, checking it, readjusting the machine based on the feedback, etc.
During this change over time, the machine cannot do any productive work.
---------------------- Percentage of this non-productive time to the total available time will depend
upon the batch size. This can be illustrated by the following example.
----------------------
Let us suppose that setup time on a machine for changing over from
---------------------- product ‘A’ to product ‘B’ is 400 minutes and the processing time per unit for
product ‘B’ is 1 minute, then the table below gives the percentage of productive
----------------------
time to the total time consumed for different batch sizes:
---------------------- Sr. No. Batch size Productive time Total time % of
---------------------- (mts.) (mts.) to total batch time productive
time
---------------------- 1. 100 100 400 + 100 = 500 20%
---------------------- 2. 1000 1000 400 + 1000 = 1400 71%
3. 10,000 10,000 400 + 10,000 = 10,400 96%
----------------------
Obviously, the utilisation of machine for productive work will increase as
---------------------- the batch quantity increases. This however creates a serious problem of increased
inventory and the costs associated with it. A solution for keeping the total costs
---------------------- (costs of carrying inventory + setup costs) down was to calculate the Economic
Batch Quantity (EBQ) by a formula which equated inventory carrying costs to
----------------------
the setup costs. This however was not an ideal solution as productive use of the
---------------------- machine was still low and evils of high inventory still persisted.

146 World Class Manufacturing

 Shigeo Shingo of Toyota had another idea. He questioned the basic Notes
premise of spending any time for setup change. He felt and ultimately proved
that setup time on any machine can be brought down to a matter of a few ----------------------
minutes through well-directed and concerted efforts. The technique developed
by him for rapid, efficient and accurate setup change came to be known as ----------------------
Single Minute Exchange of Dies (SMED), which stipulates a change over time ----------------------
of less than 10 minutes for any setup change. Here, the term Single Minute
refers to ‘Minutes in Single Digit’. ----------------------
Shingo recommended following step-by-step approach to achieve SMED ----------------------
targets:
----------------------
1. Constitute a team, which has representation from all the concerned
departments for setup reductions. ----------------------
2. Train the team members on the subsequent steps.
----------------------
3. Study the present method of setup change for following aspects:
----------------------
●● Waste: Operations which do not add any value to the setup change.
●● Internal setup: Operations which can be performed only by ----------------------
stopping the machine, e.g., removing tools/components/fixtures ----------------------
from the machine, cleaning the mounting surfaces, fixing new tools,
adjustments of the machine, etc. ----------------------
●● External setup: Operations that can be performed while the ----------------------
machine is running, e.g., getting drawings/instructions for the next
job, getting tools/fixtures/ components for the next setup, arranging ----------------------
for manpower, etc.
----------------------
4. Eliminate the first category, i.e., ‘waste’.
5. Convert maximum possible internal setup operations to external setup. ----------------------

6. Reduce time taken for internal setup operations. Some tips are: ----------------------
●● Well-organised sachet for all the tools required for the setup change. ----------------------
●● Quick release clamps/fasteners in place of nuts and bolts.
----------------------
●● Stoppers for positioning fixtures quickly.
●● Rolling bolsters in place of cranes. ----------------------
●● Overhead weight balancers for handling heavy objects. ----------------------
●● Accurately positioned pins/dowels/holes for eliminating adjustments.
----------------------
●● Quick changing/snap fitting for hydraulic/air pipe connections.
----------------------
●● Standardisation.
7. Improve external setup. Some tips are: ----------------------
●● Use visual controls. ----------------------
●● Use checklists to prevent omissions.
----------------------
●● Organise the workplace by practicing ‘5S’
8. Develop Standard Operating Procedure (SOP). ----------------------

Waste Elimination 147

 Notes 9. Monitor and evaluate performance of setup reduction programme.
10. Repeat the procedure for the next reduction process and continue till the
---------------------- SMRD targets are reached.
---------------------- Aids for setup reduction

---------------------- 1. Developing full understanding, communication and coordination between

members of the setup reduction team.
---------------------- 2. Careful planning before each setup change.
---------------------- 3. Development of parallel operations using ‘PERT’.
4. Video shooting the set up change operation so that it can be carefully
----------------------
studied through a series of playbacks to pinpoint areas of improvement.
---------------------- 5. Setup demonstrations for senior supervisors/officers from other areas to
invite their suggestions for improvements.
----------------------
6. Standardisation of parts, components, tools, fixtures, raw material to reduce
---------------------- variety.
---------------------- 7. Displaying setup improvement charts to keep everybody informed about
the progress.
---------------------- 8. Design modifications of parts to increase commonality of parts.
---------------------- SMED technique has got further evolved into One Touch Exchange of
Die (OTED), which stipulates that the setup change time should be less than
---------------------- 100 seconds.
----------------------
6.11 JUST-IN-TIME (JIT)
----------------------
JIT is a management philosophy aimed at eliminating manufacturing
---------------------- wastes by producing only the right amount and combination of parts at the right
place at the right time. This is based on the fact that wastes result from any
---------------------- activity that adds cost without adding value to the product, such as transferring
---------------------- of inventories from one place to another or even the mere act of storing them.
The goal of JIT, therefore, is to minimise the presence of non-value-
----------------------
adding operations and non-moving inventories in the production line. This will
---------------------- result in shorter throughput times, better on-time delivery performance, higher
equipment utilization, lesser space requirement, lower defects per million
---------------------- (dpm), lower costs, and greater profits.
---------------------- JIT finds its origin in Japan, where it has been in practice since the early
1970s. It was developed and perfected by Taiichi Ohno of Toyota, who is now
---------------------- referred to as the father of JIT. Taiichi Ohno developed this philosophy as a
means of meeting customer demands with minimum delays. Thus, in the olden
----------------------
days, JIT is used not to reduce manufacturing wastage, but primarily to produce
---------------------- goods so that customer orders are met exactly when they need the products.
JIT is also known as stockless production, since the key behind a successful
----------------------
implementation of JIT is the reduction of inventory levels at the various
---------------------- stations of the production line to the absolute minimum. This necessitates good

148 World Class Manufacturing

coordination between stations such that every station produces only the exact Notes
volume that the next station needs. On the other hand, a station pulls in only the
exact volume that it needs from the preceding station. ----------------------
The JIT system consists of defining the production flow and setting up the ----------------------
production floor such that the flow of materials as they get manufactured through
the line is smooth and unimpeded, thereby reducing material waiting time. ----------------------
This requires that the capacities of the various work stations that the materials
pass through are very evenly matched and balanced, such that bottlenecks in ----------------------
the production line are eliminated. This set-up ensures that the materials will ----------------------
undergo manufacturing without queuing or stoppage.
Another important aspect of JIT is the use of a ‘pull’ system to move ----------------------
inventories through the production line. Under such a system, the requirement ----------------------
of the next station is what modulates the production of a particular station. It is
therefore necessary under JIT to define a process by which the pulling of lots ----------------------
from one station to the next is facilitated.
----------------------
JIT is most applicable to operations or production flows that do not
change, i.e., those that are simply repeated over and over again. An example ----------------------
of this would be an automobile assembly line, wherein every car undergoes the
same production process as the one before it. ----------------------

JIT has likewise been practiced successfully by some semiconductor ----------------------

companies. Still, there are some semiconductor companies that don’t practice
JIT for the simple reason that their operations are too complex for JIT ----------------------
application. On the other hand, that’s precisely the challenge of JIT – creation ----------------------
of a production set-up that is simple enough to allow JIT.
Guidelines for Successful JIT Implementation ----------------------

1. Make the factory loadings uniform, linear and stable. Fluctuations in ----------------------
manufacturing loadings will result in bottlenecks.
----------------------
2. Reduce, if not eliminate, conversion and set-up times.
----------------------
3. Reduce lot sizes. This will smoothen out the flow of inventories from one
station to another, although this may necessitate more frequent deliveries ----------------------
or transfers.
----------------------
4. Reduce lead times by moving work stations closer together and streamlining
the production floor layout, applying cellular manufacturing concepts, ----------------------
using technology to automate processes and improve coordination.
----------------------
5. Reduce equipment downtimes through good preventive maintenance.
6. Cross-train personnel to achieve a very flexible work force. ----------------------

7. Require stringent supplier quality assurance since an operation under JIT ----------------------
cannot afford to incur errors due to defects.
----------------------
8. Use a control system to convey lots between workstations efficiently; the
use of a kanban system is an example of this. ----------------------

----------------------

Waste Elimination 149

 Notes 6.12 KANBAN SYSTEM
---------------------- Kanban systems are often associated with JIT implementation. In fact,
some people have the misimpression that JIT requires the use of a kanban system.
----------------------
Having a kanban system is not a strict requirement of JIT implementation, but
---------------------- their use as a tool for practicing JIT has become quite popular owing to its
simplicity.
----------------------
A kanban is a card attached to the carrier or container of a lot used to match
---------------------- what needs to be produced in a work station and what needs to be delivered to
---------------------- the next station. As mentioned, a JIT system is basically a ‘pull’ system, which
means that what needs to be produced in a particular station depends on what
---------------------- the next station needs. Ultimately, the production is therefore modulated by
end customer orders. Kanbans, which contain information about the lots and
----------------------
quantities involved, are therefore used to facilitate the execution of this ‘pull’
---------------------- system. With this ‘pull’ system, no parts that cannot be processed in succeeding
stations will be produced.
----------------------
Two-card Kanban system followed by Toyota
----------------------
Toyota uses a two-card system for Kanban.
----------------------
1. Withdrawal Card (‘WC’) which specifies:
----------------------
●● Quantity to be withdrawn by the user stage from the previous
---------------------- producer stage.
---------------------- ●● Stocking locations for producer and the user.
---------------------- 2. Production Order Card (‘POC’) which specifies:
---------------------- ●● Items and quantity of each unit of item to be produced.
---------------------- ●● Material required.

---------------------- ●● Location of the required material

---------------------- ●● Location of the finished material.

---------------------- A simple example of a fabrication shop supplying to final assembly is

given below to illustrate the two-card Kanban system.
----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

150 World Class Manufacturing

 Notes

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------
Fig. 6.5: Route Diagram for ‘WC’ and ‘POC’
----------------------
Legend: Dotted line - Loop for the Withdrawal Card
Full line - Loop for the Production Order Card ----------------------

Step 1: Empty containers of used units from the assembly with ‘wc’ attached ----------------------
are taken to the storage area. Withdrawal Cards are detached and retained for
future reference (Step 3). ----------------------

Step 2: Empty containers are exchanged for the full containers. The poc on each ----------------------
full container is detached and placed in the receiving post.
----------------------
Step 3: Contents of the full containers are checked against the wc and if okay,
the wc retained from step 1 is attached to the full container. The container is now ----------------------
moved to the inbound stocking location of assembly line. This step completes
----------------------
the loop for wc.
Step 4: Fabrication shop removes the poc from the receiving post. These are ----------------------
reviewed, sorted out and placed in the Production Order Post in the sequence of
----------------------
the production schedule.
Step 5: Production Order card is attached to the empty bin and taken to the ----------------------
fabrication shop in the sequence of the production schedule and parts are ----------------------
produced to fill up the container with requisite number.
Step 6: Poc and the container move as a pair through the production process in ----------------------
the fabrication shop. ----------------------
Step 7: Full bin with poc is moved to the storage area. This completes the loop
for poc. The same system works for the fabrication shop as user and its previous ----------------------
stage and the sequence continues through the entire production process. ----------------------

Waste Elimination 151

 Notes General operating rules for Kanban
1. Each container must have a card.
----------------------
2. Receiver of the goods will withdraw the material from the producer.
----------------------
3. Producer will not push the material to the next stage.
---------------------- 4. Containers of parts cannot be removed from the storage area without wc.
---------------------- 5. Container should always contain the requisite number of good parts.

---------------------- 6. Non-standard container or irregularly filled containers are not allowed.

7. Quantity withdrawn by the user should be strictly as mentioned on wc.
----------------------
8. Quantity produced by the Producer of the previous stage will be strictly
---------------------- as per poc.
---------------------- Taiichi Ohno, who first conceived Kanban, initiated it in Toyota machine
shop and assembly work on trial basis in the year 1952. It took almost 10 more
---------------------- years of persistent efforts for full adoption of the system in all the Toyota
plants. The next logical step for Ohno was to extend the system to Toyota’s
----------------------
suppliers. He first invited the suppliers for a tour of Toyota plants for observing
---------------------- the system closely at first hand. He also kept on involving Toyota engineers
with suppliers to educate and train them on continuous basis at every step of
---------------------- Kanban implementation. It took another 10 years of concerted work to perfect
the system with all the major suppliers of Toyota. Thus, delivery of units, which
----------------------
arrive ‘just in time’ for assembly operations, is the result of almost 20 years of
---------------------- persistent efforts of Toyota team and its cooperation with the suppliers.

----------------------
Activity 3
----------------------
1. How Toyota applies JIT in its manufacturing units?
----------------------

----------------------
6.13 THREE M’S - MUDA, MURI AND MURA
----------------------
Muda means waste, where waste is any activity that does not add value.
---------------------- Reducing or eliminating muda is, of course, one of the fundamental objectives
of any quality-oriented person.
----------------------
Taichi Ohno of Toyota identified what are called the seven wastes or seven
---------------------- mudas, which are already discussed at the beginning of this unit.

---------------------- A simplified view of muda is:

●● Wasting time.
----------------------
●● Wasting a consumable resource, such as materials.
---------------------- ●● Causing dissatisfaction (including incomplete satisfaction).
---------------------- Muri is all the unreasonable work that management imposes on workers
because of poor organisation, such as carrying heavy weights, moving things
----------------------

152 World Class Manufacturing

around, dangerous tasks, etc. It’s pushing a person or a machine beyond its Notes
natural limits. Unreasonable work is almost always a cause of variation.
----------------------
To link these three concepts is straight forward. Firstly, Muri focuses on
the preparation and planning of the process or what can be avoided proactively ----------------------
by design. Mura then focuses on implementation and the elimination of
fluctuation at the scheduling or operations level, such as quality and volume. ----------------------
The third, Muda, is discovered after the process is in place and is dealt with
----------------------
reactively. It is seen through variation in output. It is the role of management to
examine the Muda, or waste, in the processes and eliminate the deeper causes ----------------------
by considering the connections to Muri and Mura of the system. The Muda –
waste – and Mura – inconsistencies – must be fed back to the Muri, or planning, ----------------------
stage for the next project.
----------------------

Check your Progress 3 ----------------------

State True or False. ----------------------

1. Mura means waste, where waste is any activity that does not add ----------------------
value.
----------------------
2. Quality Control is essentially an activity to hold the ‘status-quo’ of
any process. ----------------------
3. Quality Improvement is the activity for changing the ‘status-quo’ for ----------------------
better performance.
----------------------
4. One of the important aspects of JIT is also the use of a ‘pull’ system
to move inventories through the production line. ----------------------
5. Kanban systems are never associated with JIT implementation. ----------------------

----------------------
Summary
----------------------
●● Any operation in manufacturing environment comprises value adding
and non-value adding activities. Non-value adding activities contribute ----------------------
to “Waste”. There are seven such wastes identified: overproduction, ----------------------
waiting time, transportation, process loss, inventories, waste of motion
and defective products. ----------------------
●● These seven wastes can be eliminated by a threefold approach: 1. Total ----------------------
Productive Maintenance (TPM), which eliminates machine downtime, 2.
Total Quality Control (TQC), which eliminates product defects, 3. Just- ----------------------
In- Time (JIT), which eliminates extra inventories.
----------------------
●● Before practicing TPM, it is necessary to practice traditional maintenance
practices which cover four phases of maintenance. TPM aims at ----------------------
involvement of production operatives in maintenance activities in order
to optimise the utilisation of available manpower and also use it as a ----------------------
motivating tool. ----------------------

Waste Elimination 153

 Notes ●● TQC has three elements: 1. Quality Planning 2. Quality Control 3.
Quality Improvements. Poka-Yoke is a technique, which ensures defect-
---------------------- free output from the machines. Statistical Process Control (SPC) is a tool
to monitor the production processes and take timely actions before non-
---------------------- conformities occur.
---------------------- ●● Just-In-Time is a tool for minimising inventory carrying costs which
requires reduction in setup times of the machines through application of
---------------------- SMED techniques.
---------------------- ●● Kanban is a predecessor of JIT practiced by Toyota. “3Ms” is another
version of seven wastes.
----------------------

---------------------- Keywords
---------------------- ●● Waste: Anything other than the minimum amount of equipment, materials,
parts, space and time which is absolutely necessary to add value to the
---------------------- product.
---------------------- ●● Cycle efficiency: Ratio of value-added time for an activity to the total
time for that activity.
----------------------
●● Over-production: Quantity produced more than the exact quantity
---------------------- required by the customer.
●● Waiting time: Idle time of any resource.
----------------------
●● Processing waste: Difference between total material input and useful
---------------------- (saleable) output.
---------------------- ●● Inventory: Unsold material in various forms in the company.
●● Total productive maintenance: A management system for optimising the
----------------------
productivity of manufacturing equipment through systematic equipment
---------------------- maintenance involving employees at all levels.
●● Just-in-time: A pull type of production system working on minimum
---------------------- inventory.
---------------------- ●● Total quality control: An effective system for integrating the quality
planning, quality control and quality improvement efforts of all individuals
---------------------- and functions in the organisation so as to attain the full and continued
---------------------- satisfaction of buyers of company’s products.
●● Condition monitoring: Continuously monitoring condition of the
---------------------- machine and taking corrective actions if any abnormal condition is
---------------------- noticed.
●● Preventive maintenance: Activity basically aimed at preventing
---------------------- breakdowns from occurring by paying timely attention to the machines.
---------------------- ●● Poka-Yoke: A method, which prevents machines from producing a
defective product.
----------------------
●● Statistical process control: A system for monitoring, controlling and
---------------------- improving a process through statistical analysis.

154 World Class Manufacturing

●● Overall equipment efficiency: Efficiency of equipment, which is a Notes
function of availability, performance and quality produced.
●● Kobetsu Kaizen: Kaizen with a focused approach, i.e., operated in ----------------------
a focused area such as equipment maintenance is termed as “Kobetsu ----------------------
Kaizen”.
●● Jishu Hozen: The operators taking the responsibility for upkeep of their ----------------------
equipment to prevent it from deteriorating. ----------------------
●● Single minute exchange of dies: The technique developed for rapid,
efficient and accurate setup change. ----------------------
●● Kanban: A card attached to the carrier or container of a lot used to ----------------------
match what needs to be produced in a work station and what needs to be
delivered to the next station. ----------------------

----------------------
Self-Assessment Questions
----------------------
1. What are the different paths and tools for elimination of waste?
----------------------
2. What is meant by forced deterioration phase and normal deterioration
phase of maintenance? ----------------------
3. Explain ‘five why’ technique of Taichii Ohno. ----------------------
4. What is corrective maintenance?
----------------------
5. Explain concepts of Kobetsu Kaizen and Jishu Hozen.
----------------------
6. What is meant by skewed distribution?
----------------------
Answers to Check your Progress
----------------------
Check your Progress 1
----------------------
Match the following.
----------------------
i. − c.
----------------------
ii. − d.
iii. − b. ----------------------
iv. − e. ----------------------
v. −a ----------------------
Check your Progress 2
----------------------
Multiple Choice Multiple Response.
----------------------
1. Some of the aspects which need attention related to the health, safety and
environment protection are: ----------------------
i. Scientifically designed lighting and ventilation
----------------------
ii. Proper protection for moving parts of the machine
----------------------
iii. Proper storage and handling of hazardous material

Waste Elimination 155

 Notes 2. Some of the reasons for problems faced in maintenance management are:
ii. Problems and their solutions cannot be standardised.
----------------------
iii. Equipment is normally of heterogeneous nature.
----------------------
iv. Maintaining an inventory of the spares is a complex job.
---------------------- Check your Progress 3
---------------------- State True or False.
---------------------- 1. False
2. True
----------------------
3. True
----------------------
4. True
---------------------- 5. False
----------------------
Suggested Reading
----------------------
1. 
Fabrizio, Thomas, Don Tapping. 5S for the Office: Organizing the
----------------------
Workplace to Eliminate Waste. Productivity Press Publication
---------------------- 2. Fredendall, Lawrence D. Basics of Supply Chain Management. CRC
---------------------- Press Publication.

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

156 World Class Manufacturing

Toyota Production System (TPS)
UNIT
Structure:

7.1 Introduction
7
7.2 Underlying Principles of TPS
7.3 The 14 Principles
7.4 Essential Features of TPS
7.5 Techniques used in TPS
7.5.1 Flexible Work Force – Toyota Way
7.5.2 Cellular Manufacturing
7.5.3 Jidoka (Autonomation)
7.5.4 Root Cause Analysis
Summary
Key Words
Self-Assessment Questions
Answers to Check your Progress
Suggested Reading

Toyota Production System (TPS) 157

 Notes
Objectives
----------------------
After going through this unit, you will be able to:
----------------------
• Identify the origin and development of Toyota Production System
---------------------- (TPS)
---------------------- • Examine the underlying principles of TPS
• Determine the long-term philosophy on which TPS is based
----------------------
• State the importance of process approach which is at the core of
---------------------- TPS.
---------------------- • Justify how value addition is achieved through development of
people
----------------------
• State the meaning of typical Japanese terms
----------------------
• Analyse how problem elimination is done through root cause
---------------------- analysis
• Assess the various techniques used in TPS
----------------------
• Examine how Toyota develops flexible work force
----------------------
• Evaluate the concept of Jidoka to get ‘right results the first time’
---------------------- World Class Manufacturing

----------------------
7.1 INTRODUCTION
----------------------
In 1990 James Womack first coined the phrase “Lean Manufacturing” in
---------------------- his book The Machine That Changed The World. The essential elements of Lean
---------------------- Manufacturing do not substantially differ from the techniques developed by
Ohno, Shingo and the people at Toyota. However, blind copying of Toyota Way
---------------------- has led to many failures. There is no standard recipe for manufacturing. Each
firm has its own unique set of products, processes, people, and history. While
---------------------- certain principles may be universally applicable, their implementation will
---------------------- differ from organisation to organisation. Manufacturing Strategy will always be
a difficult, uncertain, and individual process. Strategy (“The General’s Art”) is
---------------------- still, largely, an art. But, that should not prevent any organisation from bringing
the available science to bear on the problem.
----------------------
The Toyota Production System (TPS) is an integrated socio-technical
---------------------- system, developed by Toyota as its management philosophy and practices. The
TPS organises manufacturing and logistics for the automobile manufacturer,
---------------------- including interaction with suppliers and customers. The system is a major
---------------------- precursor of the more generic “Lean manufacturing.” Taiichi Ohno, Shigeo
Shingo and Eiji Toyoda developed the system between 1948 and 1975.
----------------------
Originally called “Just-In-Time Production”, it builds on the approach
---------------------- created by the founder of Toyota, Sakichi Toyoda, his son Kiichiro Toyoda, and

158 World Class Manufacturing

the engineer Taiichi Ohno. The founders of Toyota drew heavily on the work Notes
of W. Edwards Deming and the writings of Henry Ford. These men came to the
United States to observe the assembly line and mass production that had made ----------------------
Ford number one car manufacturer in the world. Rather than getting impressed,
they were appalled by high level of inventories, drastically uneven workloads ----------------------
on day-to-day basis and large amount of rework at the end of every process. ----------------------
While shopping in a supermarket named “Piggly Wiggly”, they observed
----------------------
the simple idea of an automatic drink re-supplier. When the customer wants a
drink, he takes one, and it is immediately replaced by another. This observation ----------------------
led to developing Kanban system of production, which forms the backbone of
TPS. ----------------------
The Toyota Production System has been compared to squeezing water ----------------------
from a dry towel. What this means is that it is a system for thorough waste
elimination. Waste elimination is already covered in greater details in the ----------------------
previous unit.
----------------------
People normally resign themselves to certain problems, thinking these
as inevitable and become hostage to routine thus abandoning the practice of ----------------------
problem-solving. This going back to basics, exposing the real significance of
----------------------
problems and then making fundamental improvements is the hallmark of Toyota
Production System. ----------------------
Toyota was able to greatly reduce lead time and costs and improve quality ----------------------
using the TPS. This enabled it to become one of the 10 largest companies in the
world. It is currently the most profitable and largest car company in the world. ----------------------
Low inventory levels is not the only philosophy of TPS but key features ----------------------
of the system is to work intelligently and eliminate waste so that inventory is
no longer needed. Many businesses, having observed Toyota’s factories, set out ----------------------
to attack high inventory levels directly without understanding what made these
reductions possible. The act of imitating without understanding the underlying ----------------------
concept or motivation may have led to the failure of those projects. ----------------------

7.2 UNDERLYING PRINCIPLES OF TPS ----------------------

1. Long-term philosophy: ----------------------

Base your management decisions on a long-term philosophy, even at the ----------------------

expense of short-term financial goals.
----------------------
2. The right process will produce the right results:
----------------------
●● Create continuous process flow to bring problems to the surface.
●● Use the “pull” system to avoid overproduction. ----------------------
●● Level out the workload (Heijunka) (Work like the tortoise, not the ----------------------
hare.)
●● Build a culture of stopping to fix problems, to get quality right from ----------------------
the first. ----------------------

Toyota Production System (TPS) 159

 Notes ●● Standardised tasks are the foundation for continuous improvement
and employee empowerment.
---------------------- ●● Use visual control so no problems are hidden.
---------------------- ●● Use only reliable, thoroughly tested technology that serves your
people and processes.
----------------------
3. Add value to the organisation by developing your people and partners:
---------------------- ●● Grow leaders who thoroughly understand the work, live the
---------------------- philosophy, and teach it to others.
●● Develop exceptional people and teams who follow your company’s
---------------------- philosophy.
---------------------- ●● Respect your extended network of partners and suppliers by
challenging them and helping them improve.
----------------------
4. Continuously solving root problems drives organisational learning:
---------------------- ●● Go and see for yourself to thoroughly understand the situation
---------------------- (Genchi Genbutsu).
●● Make decisions slowly by consensus, thoroughly considering all
---------------------- options (Nemawashi) implement decisions rapidly.
---------------------- ●● Become a learning organisation through relentless reflection (Hansei)
and continuous improvement (Kaizen).
----------------------
Commonly used terminology
---------------------- ●● Andon: Signboard
---------------------- ●● Genchi Genbutsu: Go and see for yourself
●● Hansei: Self-reflection
----------------------
●● Heijunka: Production smoothing
---------------------- ●● Jidoka-Autonomation: Automation with human intelligence
---------------------- ●● Manufacturing supermarket: Where all components are available to be
withdrawn by a process.
----------------------
●● Nemawashi: Laying the groundwork, literally. Going around the roots.
---------------------- ●● Poka-yoke: Fail-safing - to avoid (yokeru) inadvertent errors (poka)
----------------------
Activity 1
----------------------

---------------------- According to you, what is the long-term philosophy of TPS?

----------------------
7.3 THE 14 PRINCIPLES
----------------------
The Toyota Way has been called “a system designed to provide the tools
---------------------- for people to continually improve their work”. The 14 principles of The Toyota
Way are organised in four sections:
----------------------

160 World Class Manufacturing

1. Long-term Philosophy. Notes
2. The Right Process will produce the Right Results. ----------------------
3. Add Value to the Organisation by developing your People.
----------------------
4. Continuously solving Root Problems drives Organisational Learning.
----------------------
These principles are set out and briefly described below:
Section I — Long-term Philosophy (Principle 1) ----------------------

Base your management decisions on a long-term philosophy, even at the ----------------------

expense of short-term financial goals.
----------------------
People need purpose to find motivation and establish goals.
----------------------
Section II — The Right Process will produce the Right Results (Principle 2)
Create a continuous process flow to bring problems to the surface. ----------------------
Work processes are redesigned to eliminate waste (muda) through the ----------------------
process of continuous improvement — kaizen. The eight types of muda are:
----------------------
●● Overproduction
●● Waiting (time on hand) ----------------------
●● Unnecessary transport or conveyance ----------------------
●● Over-processing or incorrect processing
----------------------
●● Excess inventory
----------------------
●● More than the minimum motion required to do the activity.
●● Product defects ----------------------
●● Unused employee creativity ----------------------
Principle 3
----------------------
Use “pull” systems to avoid overproduction.
----------------------
It is a method where a process signals its predecessor that more material
is needed. The pull system produces only the required material after the ----------------------
subsequent operation signals a need for it. This process is necessary to reduce
overproduction. ----------------------
Principle 4 ----------------------
Level out the workload (Heijunka). (Work like the tortoise, not the hare).
----------------------
This helps achieve the goal of minimising waste (Muda), not overburdening
people or the equipment (muri), and not creating uneven production levels ----------------------
(Mura). ----------------------
Principle 5
----------------------
Build a culture of stopping to fix problems, to get quality right the first time.
----------------------
Quality takes precedence (Jidoka). Any employee in the Toyota Production
System has the authority to stop the process to signal a quality issue. ----------------------

Toyota Production System (TPS) 161

 Notes Principle 6
Standardised tasks and processes are the foundation for continuous
----------------------
improvement and employee empowerment.
---------------------- Although Toyota has a bureaucratic system, the way that it is implemented
allows for continuous improvement (Kaizen) from the people affected by that
----------------------
system. It empowers the employee to aid in the growth and improvement of the
---------------------- company.
Principle 7
----------------------
Use visual control, so no problems are hidden.
----------------------
Included in this principle is the 5S Program - steps that are used to make
---------------------- all work spaces efficient and productive, help people share work stations, reduce
time looking for needed tools and improve the work environment.
----------------------
Principle 8
----------------------
Use only reliable, thoroughly tested technology that serves your people
---------------------- and processes. Technology is pulled by manufacturing, not pushed to
manufacturing.
----------------------
Section III — Add Value to the Organisation by developing your People
---------------------- Principle 9
---------------------- Grow leaders who thoroughly understand the work, live the philosophy,
and teach it to others.
----------------------
Without constant attention, the principles will fade. The principles have
---------------------- to be ingrained. It must be the way one thinks. Employees must be educated and
trained; they have to maintain a learning organisation.
----------------------
Principle 10
----------------------
Develop exceptional people and teams who follow your company’s
---------------------- philosophy.
Teams should consist of four to five people and numerous management
----------------------
tiers. Success is based on the team, not the individual.
---------------------- Principle 11
---------------------- Respect your extended network of partners and suppliers by challenging
them and helping them improve.
----------------------
Toyota treats suppliers much like they treat their employees, challenging
---------------------- them to do better and helping them to achieve it. Toyota provides cross-
functional teams to help suppliers discover and fix problems so that they can
---------------------- become a stronger, better supplier.
---------------------- Section IV: Continuously solving Root Problems drives Organisational
Learning (Principle 12)
----------------------
Go and see for yourself to thoroughly understand the situation (Genchi
---------------------- Genbutsu).

162 World Class Manufacturing

 Toyota managers are expected to “go and see” operations. Without Notes
experiencing the situation first hand, managers will not have an understanding
of how it can be improved. Furthermore, managers use Tadashi Yamashima’s ----------------------
(President, Toyota Technical Centre (TTC)) 10 management principles as a
guideline: ----------------------
1. Always keep the final target in mind. ----------------------
2. Clearly assign tasks to yourself and others.
----------------------
3. Think and speak on verified, proven information and data.
4. Take full advantage of the wisdom and experiences of others to send, ----------------------
gather or discuss information. ----------------------
5. Share information with others in a timely fashion.
----------------------
6. Always report, inform and consult in a timely manner.
7. Analyse and understand shortcomings in your capabilities in a measurable ----------------------
way.
----------------------
8. Relentlessly strive to conduct kaizen activities.
9. Think “outside the box,” or beyond common sense and standard rules. ----------------------
10. Always be mindful of protecting your safety and health. ----------------------
Principle 13
----------------------
Make decisions slowly by consensus, thoroughly considering all options;
implement decisions rapidly (Nemawashi). ----------------------
The following are decision parameters:
----------------------
●● Find what is really going on (go-and-see) to test
●● Determine the underlying cause ----------------------
●● Consider a broad range of alternatives ----------------------
●● Build consensus on the resolution
----------------------
●● Use efficient communication tools
Principle 14 ----------------------
Become a learning organisation through relentless reflection (Hansei) and ----------------------
continuous improvement (kaizen).
----------------------
The process of becoming a learning organisation involves criticising every
aspect of what one does. The general problem-solving technique to determine ----------------------
the root cause of a problem includes:
----------------------
●● Initial problem perception
●● Clarify the problem ----------------------
●● Locate area/point of cause ----------------------
●● Investigate root cause (5 whys)
----------------------
●● Countermeasure
●● Evaluate ----------------------

●● Standardise ----------------------

Toyota Production System (TPS) 163

 Notes
Check your Progress 1
----------------------
Fill in the blanks.
----------------------
1. The _____ ____ produces only the required material after the
---------------------- subsequent operation signals a need for it.
---------------------- 2. The Toyota Production System is a system for thorough _______
_________.
----------------------
3. __________________means automation with human intelligence
---------------------- 4. The process of becoming a learning organisation involves __________
every aspect of what one does.
----------------------
5. Technology is _________ ___ manufacturing, not ________ ___
---------------------- manufacturing.
----------------------

---------------------- Activity 2
----------------------
With the help of the Internet, make a list of the organisations implementing
---------------------- TPS.
----------------------
7.4 ESSENTIAL FEATURES OF TPS
----------------------
“Underlying Principles” and “14 Principles” can be summed up in the
----------------------
following essential features of TPS.
---------------------- 1. Makes the factory operate for the organisation, just like a human body
operates for an individual.
----------------------
2. Increases the production efficiency by consistently and thoroughly
---------------------- eliminating the ‘Waste’.
---------------------- 3. Produces many types of products in small numbers.

---------------------- 4. Makes each product one at a time.

5. Makes efficiency improvements complimentary to ‘Cost Reductions’.
----------------------
6. Integrates efficiency of each operator into ‘Group Efficiency’, which in
---------------------- turn improves ‘Plant Efficiency’.
---------------------- 7. Improves productivity during low growth periods.

---------------------- 8. Encourages setting of standards at worker level.

9. Considers plant system as a whole and not department wise.
----------------------
10. Implements a system that employs fewer workers by providing
---------------------- environment, which is sensitive to human needs.
----------------------

164 World Class Manufacturing

11. Decides on replacement of machines from case-to-case basis by determining Notes
machine’s earning capacity and not its age or years in service.
----------------------
12. Emphasises “Team Work’ based on ‘Mutual Assistance Campaign’ and
effective ‘Baton Passing,’ i.e., compensating for weak links by extra efforts ----------------------
from strong team members.
----------------------
7.5 TECHNIQUES USED IN TPS ----------------------
Toyota developed a set of techniques that identify and eliminate waste in ----------------------
their context. Among them are:
----------------------
●● Cellular Manufacturing
●● TQM ----------------------
●● Kanban
----------------------
●● SMED
●● Flexible Work Force ----------------------
●● Jidoka ----------------------
●● Root Cause Analysis
----------------------
While TQM, Kanban and SMED are discussed elsewhere in greater
details, the others are discussed below: ----------------------
7.5.1 Flexible Work Force – Toyota Way ----------------------
The best example of the flexible work force can be that of Toyota Motor
Company, which is discussed in some details below. ----------------------

Toyota Beliefs: ----------------------

●● We do not just build cars, we build people. ----------------------
●● Making things is about making people.
----------------------
●● Developing exceptional people is Toyota’s number one priority.
●● You cannot separate People Development from Production System ----------------------
Development. ----------------------
●● Great people are supported by a System that mandates the need for such
People. ----------------------
●● Merely installing new technique without appropriate development of ----------------------
skills and abilities will produce limited results.
----------------------
●● Every Manager in Toyota must be a Teacher.
●● If a Student has not “Learnt”, the Teacher has not “Taught”. ----------------------
●● Only 10% is inherent talent, 90% is learnt through efforts and repeated ----------------------
practice. Toyota has 14 ‘Guiding Principles’ six of which are focused on
Human Resources. ----------------------
●● Basic management decisions should focus on long-term philosophy (refer ----------------------
to Toyota Beliefs stated above) even at the expense of short- term financial
goals. ----------------------

Toyota Production System (TPS) 165

 Notes ●● Standardised processes are the foundation for continuous improvements.
Processes are standardised and operated by competent people who are
---------------------- trained to do that.
---------------------- ●● Grow leaders who thoroughly understand work, who live the philosophy
and teach these to others.
---------------------- ●● Develop exceptional people and teams who follow Company’s philosophy.
---------------------- ●● Respect your suppliers by challenging and helping them to improve
continuously.
----------------------
●● Become a ‘Learning Organisation’ through relentless reflection and
---------------------- continuous improvement.
People selection at Toyota is based on person’s desire and capacity to
----------------------
learn. Toyota has recognised the realities of human behaviour and limitations
---------------------- and has created systems that minimise these limitations and take advantage of
human desire. Equal balance is struck between rewards and punishments in
---------------------- order to encourage desired behaviour.
---------------------- Once the process is standardised, Toyota relies heavily on “Job Instructions”
to ensure repeatability of the process and eliminate variation. A four-step method
---------------------- is followed for Job Instructions:
---------------------- i) Prepare the Student.

---------------------- ii) Present the Operation.

iii) Try out performance.
----------------------
iv) Follow up.
----------------------
First three steps are carried out in specially designed training environment
---------------------- for every operation and the person is put on the actual job only after getting the
desired performance in step three. This ensures that there is no loss of either
---------------------- quantity or quality even when a new man is assigned to regular operation.
---------------------- At Toyota, ‘Product Value Stream’ is supported by a ‘People Value
Stream’, which is briefly outlined below.
----------------------

----------------------

----------------------

----------------------

----------------------

----------------------
Fig. 7.1: Toyota Work Culture
---------------------- Inputs:
---------------------- 1. Organisational Philosophy

---------------------- 2. Organisational Value System

166 World Class Manufacturing

3. Production System Principles Notes
4. Key Competencies
----------------------
5. Eligible Human Resources
----------------------
People Value Stream Steps:
----------------------
1. Attract trainable people through recruitment, selection and orientation.
2. Develop abilities by training/coaching, on-the-job development and ----------------------
assigning adequate role. ----------------------
3. Engage developed people to follow standards, improve standards, solve
problems and work in teams to get continuous improvements. ----------------------

4. Enrol commitment of people by sharing success, creating opportunities ----------------------

for career development and working for the company.
----------------------
The above steps are continuously repeated through famous Deming Cycle
of Plan – DO – Check – Act (PDCA). ----------------------

Organisational Support Systems: ----------------------

1. Stable Employment and Manpower Management. ----------------------
2. Fair and Consistent HR Policies and Practices. ----------------------
3. Recognition and Corrective Actions.
----------------------
4. Hoshin Kanri (Policy Deployment).
----------------------
People Supporting Systems:
1. Teamwork ----------------------

2. Clean and Safe Workplace ----------------------

3. Two-way Communication ----------------------
4. Toyota Way Leadership ----------------------
Outputs:
----------------------
Culture of Quality People producing High Quality, Low Cost, On-Time
Products. ----------------------

7.5.2 Cellular Manufacturing ----------------------

Cellular Manufacturing and work cells are at the heart of Lean Manufacturing. ----------------------
Their benefits are many and varied. They increase productivity and quality. Cells
simplify material flow, management and even accounting systems. ----------------------
Cellular Manufacturing seems simple. But beneath this deceptive ----------------------
simplicity are sophisticated Socio-Technical Systems. Proper functioning
depends on subtle interactions of people and equipment. Each element must fit ----------------------
with the others in a smoothly functioning, self- regulating and self-improving ----------------------
operation.
----------------------

Toyota Production System (TPS) 167

 Notes What is a work cell?
A work cell is a work unit comprising more than one machine. Typically,
----------------------
it has 3-12 people and 5-15 machines in a compact arrangement. A number of
---------------------- such work cells can form a department.
An ideal cell manufactures a narrow range of highly similar products.
----------------------
Such an ideal cell is self-contained with all necessary equipment and resources.
---------------------- Cellular layouts organise departments around a product or a narrow
range of similar products. Materials wait in an initial queue when they enter the
----------------------
department.
---------------------- Once processing begins, materials move directly from process to process
---------------------- (or wait in mini-queues). The result is very fast throughput. Communication is
easy since all operators in the work cell work in tandem. This improves quality
---------------------- and coordination. Nearness and a common mission enhance teamwork.

---------------------- Simplicity is an underlying theme throughout cellular design. Material

flow, scheduling, supervision and many other elements in the manufacturing
---------------------- system are simplified in a work cell.

---------------------- Benefits of Cells

●● Inter-departmental movements are reduced.
----------------------
●● Distance through which material has to travel reduces drastically.
---------------------- ●● Route structure gets fixed.
---------------------- ●● Number of questions is reduced.
●● Throughput time is drastically reduced.
----------------------
●● Response time is reduced to a considerable extent.
---------------------- ●● Supervision becomes easier.
●● Teamwork improves.
----------------------
●● Feedback on quality is very fast.
---------------------- ●● Flexibility of work force improves.
---------------------- ●● Scheduling becomes simpler.
●● Cells usually require smaller, simpler and less expensive machines, which
---------------------- reduces the fixed costs.
---------------------- ●● Improves worker morale due to a sense of pride in workmanship, which
is inherent to work cell operations.
----------------------
Benefits to the Customer
---------------------- ●● The customer sees improved quality and this is an obvious benefit to both
customer and supplier.
----------------------
●● Customers see faster response to unusual requests for customised products
---------------------- or expedited delivery.
●● With cellular layouts, it is easier and less costly to manufacture in small,
----------------------
frequent lots. This usually matches customer needs more closely.
---------------------- ●● Deliveries become more reliable due to reduced throughput time.

168 World Class Manufacturing

7.5.3 Jidoka (Autonomation) Notes
Autonomation
----------------------
It may be described as “intelligent automation” or “automation with
a human touch.” This type of automation implements some supervisory ----------------------
functions rather than production functions. At Toyota, this usually means that
----------------------
if an abnormal situation arises, the machine stops and the worker will stop the
production line. Autonomation prevents the production of defective products, ----------------------
eliminates overproduction and focuses attention on understanding the problem
and ensuring that it never recurs. It is a quality control process that applies the ----------------------
following four principles:
----------------------
1. Detect the abnormality.
----------------------
2. Stop.
3. Fix or correct the immediate condition. ----------------------

4. Investigate the root cause and install a countermeasure. ----------------------

Purpose and implementation ----------------------
Autonomation is called by Shigeo Shingo – its originator – pre-
----------------------
automation. It separates workers from machines through mechanisms that detect
production abnormalities (many machines in Toyota have these). He says there ----------------------
are 23 stages between purely manual and fully automated work. To be fully
automated, machines must be able to detect and correct their own operating ----------------------
problems which are currently not cost-effective. However, 90 per cent of the
----------------------
benefits of full automation can be gained by autonomation.
The purpose of autonomation is that it makes possible the rapid or ----------------------
immediate address, identification and correction of mistakes that occur in a
----------------------
process. Autonomation relieves the worker of the need to continuously judge
whether the operation of the machine is normal; their efforts are now only ----------------------
engaged when there is a problem alerted by the machine. As well as making
the work more interesting, this is a necessary step if the worker is to be asked ----------------------
later to supervise several machines. For instance, rather than waiting until the
----------------------
end of a production line to inspect a finished product, autonomation may be
employed at early steps in the process to reduce the amount of work that is ----------------------
added to a defective product. A worker who is self-inspecting their own work,
or source-inspecting the work produced immediately before their work station ----------------------
is encouraged to stop the line when a defect is found. This detection is the
----------------------
first step in Jidoka. A machine performing the same defect detection process is
engaged in autonomation. ----------------------
Once the line is stopped, a supervisor or person designated to help correct ----------------------
problems gives immediate attention to the problem the worker or machine has
discovered. To complete Jidoka, not only is the defect corrected in the product ----------------------
where discovered, but the process is evaluated and changed to remove the
possibility of making the same mistake again. One solution to the problems can ----------------------
be to insert a “mistake-proofing” device somewhere in the production line. ----------------------

Toyota Production System (TPS) 169

 Notes Relationship with “just-in-time”
Taiichi Ohno and Sakichi Toyoda, originators of the TPS and practices
----------------------
in the manufacturing of textiles, machinery and automobiles considered JIT
---------------------- & Autonomation the pillars upon which TPS is built. Jeffrey Liker and David
Meier indicate that Jidoka or “the decision to stop and fix problems as they
---------------------- occur rather than pushing them down the line to be resolved later” is a large part
of the difference between the effectiveness of Toyota and other companies who
----------------------
have tried to adopt Lean Manufacturing. Autonomation, therefore, can be said
---------------------- to be a key element in successful Lean Manufacturing implementations.
For “just-in-time” (JIT) systems, it is absolutely vital to produce with
----------------------
zero defects, or else these defects can disrupt the production process or the
---------------------- orderly flow of work.
JIT and Lean Manufacturing are always searching for targets for
----------------------
continuous improvement in its quest for quality improvements, finding and
---------------------- eliminating the causes of problems so they do not continually crop up.

---------------------- Jidoka involves the automatic detection of errors or defects during

production. When a defect is detected, the halting of the production forces
---------------------- immediate attention to the problem. The halting causes slowed production but
it is believed that this helps to detect a problem earlier and avoids the spread of
---------------------- bad practices.
---------------------- 7.5.4 Root Cause Analysis

---------------------- It is a method aimed at identifying and solving the root causes of

problems or events. The practice of RCA is based on the belief that problems
---------------------- are best solved by attempting to correct or eliminate causes at the very root of
the problem and not treating only the symptoms which are at the surface. This
---------------------- way, possibility of recurrence of the problem is minimised but to eliminate the
---------------------- problem completely, RCA will have to be used as an iterative process with a
number of successive interventions. Thus, it is a powerful tool for continuous
---------------------- improvement.
---------------------- In initial stages, RCA is a reactive method of problem detection and
solving as it is done after the problem has occurred but through experience it
---------------------- can become a proactive tool wherein possibility of a problem occurring can be
forecasted and the necessary preventive action taken.
----------------------
RCA is broadly classified in following types:
----------------------
●● Safety-based RCA descends from the fields of accident analysis and
---------------------- occupational safety and health.
●● Production-based RCA originates from quality control for industrial
----------------------
manufacturing.
---------------------- ●● Process-based RCA typically follows production-based RCA, but with a
scope that has been expanded to include business processes.
----------------------
●● Failure-based RCA is rooted in the practice of failure analysis as employed
---------------------- in engineering and maintenance.

170 World Class Manufacturing

 Systems-based RCA has emerged as an amalgamation of the above types Notes
along with ideas taken from fields such as change management, risk management
and systems analysis. ----------------------
General principles of root cause analysis ----------------------
1. Aiming performance improvement measures at root causes is more
effective than merely treating the symptoms of a problem. ----------------------

2. To be effective, RCA must be performed systematically, with conclusions ----------------------

and causes backed up by documented evidence.
----------------------
3. There is usually more than one potential root cause for any given problem.
----------------------
4. To be effective, the analysis must establish all known causal relationships
between the root cause(s) and the defined problem. ----------------------
5. Root cause analysis transforms an old culture that reacts to problems
----------------------
to a new culture that solves problems before they escalate, creating a
variability reduction and risk avoidance mind set. ----------------------
General process for performing and documenting an RCA-based Corrective
Action ----------------------

1. Define the problem. ----------------------

2. Gather data/evidence. ----------------------
3. Ask why and identify the causal relationships associated with the defined
----------------------
problem.
4. Identify which causes if removed or changed will prevent recurrence. ----------------------
5. Identify effective solutions that prevent recurrence, are within your ----------------------
control, meet your goals and objectives and do not cause other problems.
----------------------
6. Implement the recommendations.
7. Observe the recommended solutions to ensure effectiveness. ----------------------
8. Variability reduction methodology for problem solving and problem ----------------------
avoidance.
----------------------
Root cause analysis techniques
●● Barrier analysis: A technique often used particularly in process ----------------------
industries. It is based on tracing energy flows, with a focus on barriers ----------------------
to those flows, to identify how and why the barriers did not prevent the
energy flows from causing harm. ----------------------
●● Bayesian inference: A statistical inference in which evidence or
----------------------
observations are used to update or to newly infer the probability that a
hypothesis may be true. The name “Bayesian” comes from the frequent ----------------------
use of Bayes theorem in the inference process. Bayes’ theorem was
derived from the work of the Reverend Thomas Bayes. ----------------------
●● Causal factor tree analysis: A technique based on displaying causal ----------------------
factors in a tree structure such that cause-effect dependencies are clearly
identified. ----------------------

Toyota Production System (TPS) 171

 Notes ●● Change analysis: An investigation technique often used for problems or
accidents. It is based on comparing a situation that does not exhibit the
---------------------- problem to one that does, in order to identify the changes or differences
that might explain why the problem occurred.
----------------------
●● Current Reality Tree – (Refer to Theory of Constraint)
----------------------
●● Failure mode and effects analysis also known as FMEA.
---------------------- ●● Fault-tree analysis
---------------------- ●● Whys
●● Ishikawa diagram, also known as the fishbone diagram or cause-and-
----------------------
effect diagram.
---------------------- ●● Kepner-Tregoe Problem Analysis: A root cause analysis process
---------------------- developed in 1958, which provides a fact-based approach to systematically
rule out possible causes and identify the true cause. It is a structured,
---------------------- systematic process which is used to maximise the critical thinking skills
of key stakeholders in a particular situation, problem (potential or real),
----------------------
decision or opportunity. The Rational Processes are broken down into
---------------------- following:
i. Situational appraisal: The process of ensuring that priority and order are
----------------------
established for multiple concerns associated with a specific issue.
---------------------- ii. Problem analysis: A systematic process for finding the cause of a positive
---------------------- or negative deviation.
iii. Decision analysis: A systematic process for making a balanced choice.
----------------------
iv. Potential problem or opportunity analysis: A systematic process for
---------------------- protecting an action or a plan.
---------------------- Basic elements of root cause

---------------------- ●● Materials
●● Defective raw material
----------------------
●● Wrong type for job
---------------------- ●● Lack of raw material
---------------------- ●● Machine/Equipment
---------------------- ●● Incorrect tool selection
●● Poor maintenance or design
----------------------
●● Poor equipment or tool placement
----------------------
●● Defective equipment or tool
---------------------- ●● Environment
---------------------- ●● Orderly workplace
---------------------- ●● Job design or layout of work

172 World Class Manufacturing

 ●● Surfaces poorly maintained Notes
●● Physical demands of the task
----------------------
●● Forces of nature
----------------------
●● Management
●● No or poor management involvement ----------------------

●● Inattention to task ----------------------

●● Task hazards not guarded properly ----------------------
●● Other (horseplay, inattention)
----------------------
●● Stress demands
----------------------
●● Lack of Process
●● Methods ----------------------

●● No or poor procedures ----------------------

●● Practices are not the same as written procedures ----------------------
●● Poor communication
----------------------
●● Management system
----------------------
●● Training or education lacking
●● Poor employee involvement ----------------------

●● Poor recognition of hazard ----------------------

●● Previously identified hazards were not eliminated ----------------------

----------------------
Check your Progress 2
----------------------
Multiple Choice Multiple Response.
1. Some of the benefits of work cell are: ----------------------
i. Inter-departmental movements are reduced. ----------------------
ii. Distance through which material has to travel increases
drastically. ----------------------
iii. Teamwork doesn’t improve ----------------------
iv. Route structure gets fixed.
----------------------
2. Some of the essential features of TPS are:
i. Makes different products at the same time ----------------------
ii. Produces many types of products in small numbers ----------------------
iii. Improves productivity during low growth periods
iv. Encourages setting of standards at worker level ----------------------

----------------------

----------------------

Toyota Production System (TPS) 173

 Notes Summary
---------------------- ●● The Toyota Production System (TPS) is an integrated socio-technical
---------------------- system, developed by Toyota as its management philosophy and practices.
Originally called “Just-In-Time Production”, it builds on the approach
---------------------- created by the founder of Toyota, Sakichi Toyoda, his son Kiichiro
Toyoda, and the engineer Taiichi Ohno. The Toyota production system
----------------------
has been compared to squeezing water from a dry towel. What this means
---------------------- is that it is a system for thorough waste elimination. Low inventory levels
is not the only philosophy of TPS but key features of the system is to work
---------------------- intelligently and eliminate waste so that inventory is no longer needed.
---------------------- ●● Toyota Way is organised in four sections comprising 14 principles.
●● Long-Term Philosophy.
----------------------
●● The Right Process Will Produce the Right Results.
----------------------
●● Add Value to the Organisation by Developing Your People.
---------------------- ●● Continuously Solving Root Problems Drives Organisational Learning.
---------------------- ●● TPS works with the help of following techniques: Cellular Manufacturing,
TQM, Kanban, SMED, Flexible Work force, Jidoka and Root Cause
---------------------- Analysis.
----------------------
Keywords
----------------------
●● Genchi Genbutsu: Go and see for yourself.
----------------------
●● Hansei: Self-reflection.
---------------------- ●● Heijunka: Production smoothing.
---------------------- ●● Jidoka-Autonomation: Automation with human intelligence.
●● Manufacturing supermarket: Where all components are available to be
----------------------
withdrawn by a process.
---------------------- ●● Nemawashi: Laying the groundwork, literally, going around the roots.
---------------------- ●● Work cell: A work unit comprising more than one machine. Typically, it
has 3-12 people and 5-15 machines in a compact arrangement.
----------------------
●● Bayesian inference: A statistical inference in which evidence or
---------------------- observations are used to update or to newly infer the probability that a
hypothesis may be true.
----------------------

---------------------- Self-Assessment Questions

---------------------- 1. Explain the meaning of the typical Japanese words used in TPS.

---------------------- 2. How is value addition achieved by Toyota by developing people?

3. Explain the technique of Root Cause Analysis.
----------------------

174 World Class Manufacturing

4. What are the principles of Root Cause Analysis? Notes
5. What are the techniques used for Root Cause Analysis?
----------------------
6. What are the basic elements of Root Cause Analysis?
----------------------
Answers to Check your Progress ----------------------
Check your Progress 1 ----------------------
Fill in the blanks.
----------------------
1. The pull system produces only the required material after the subsequent
operation signals a need for it. ----------------------
2. The Toyota Production System is a system for thorough waste elimination. ----------------------
3. Jidoka-Autonomation means automation with human intelligence ----------------------
4. The process of becoming a learning organisation involves criticising
every aspect of what one does. ----------------------

5. Technology is pulled by manufacturing, not pushed to manufacturing. ----------------------

Check your Progress 2 ----------------------
Multiple Choice Multiple Response. ----------------------
1. Some of the benefits of work cell are:
----------------------
i. Inter-departmental movements are reduced.
----------------------
ii. Distance through which material has to travel increases drastically.
iv. Route structure gets fixed. ----------------------
2. Some of the essential features of TPS are: ----------------------
i. Produces many types of products in small numbers ----------------------
ii. Improves productivity during low growth periods.
----------------------
iii. Encourages setting of standards at worker level
----------------------
Suggested Reading ----------------------
1. Ohno, Taiichi. Toyota Production System: Beyond Large-Scale Production. ----------------------
Productivity Press Publication.
----------------------
2. Shingo, Shigeo. A Study of the Toyota Production System. Productivity
Press Publication. ----------------------

----------------------

----------------------

----------------------

----------------------

Toyota Production System (TPS) 175

 Notes

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

176 World Class Manufacturing

Views of Experts
UNIT

8
Structure:

8.1 Introduction
8.2 Dr. Edward Deming
8.3 Philip Crosby
8.4 Shigeo Shingo
8.5 Kaoru Ishikawa
8.6 Michael Porter
8.7 C.K. Prahlad
8.8 Stephen Covey
8.9 Peter Senge
Summary
Key Words
Self-Assessment Questions
Answers to Check your Progress
Suggested Reading

Views of Experts 177

 Notes
Objectives
----------------------
After going through this unit, you will be able to:
----------------------
• Appraise the modern concepts in the field of management
----------------------
• State the views propagated by world famous management experts
----------------------

---------------------- 8.1 INTRODUCTION

---------------------- Efficiency, Effectiveness, Costs and Quality are the four most important
dimensions of a World Class Manufacturing Company. These four factors are
---------------------- not independent. As a matter of fact, each one of them has a close relationship
---------------------- with others. Contrary to the old belief that any improvement in Quality has
to come at extra costs, it is now an accepted fact that improvement in quality,
---------------------- which has to come through improvement of the processes, reduces the costs
and improves efficiency in the long term. This change in the concepts of how
---------------------- to reach the world class standards has been due to the theories and techniques
---------------------- propagated by modern experts of management like Dr. Deming, Ishikawa,
Crosby, Porter, etc. This unit briefly explores the teachings of some of these
---------------------- experts.

---------------------- 8.2 DR. EDWARDS DEMING

----------------------
William Edwards Deming (October 14, 1900–December 20, 1993) was
---------------------- an American statistician, professor, author, lecturer and consultant. Deming is
widely credited with improving production in the United States during the Cold
---------------------- War, although he is perhaps best known for his work in Japan. There, from
1950 onwards, he taught top management how to improve design (and thus
----------------------
service), product quality, testing and sales (the last through global markets)
---------------------- through various methods, including the application of statistical methods.

---------------------- Deming made a significant contribution to Japan’s later reputation for

innovative high-quality products and its economic power. He is regarded as
---------------------- having had more impact upon Japanese manufacturing and business than any
other individual not of Japanese heritage and is considered something of a hero
---------------------- in Japan.
---------------------- Deming’s Philosophy Synopsis

---------------------- The philosophy of W. Edwards Deming has been summarised as follows:

“Dr. W. Edwards Deming taught that by adopting appropriate principles
----------------------
of management, organisations can increase quality and simultaneously reduce
---------------------- costs (by reducing waste, rework, staff attrition and litigation while increasing
customer loyalty). The key is to practice continual improvement and think of
---------------------- manufacturing as a system, not as bits and pieces.”
----------------------

178 World Class Manufacturing

 In the 1970s, Dr. Deming’s philosophy was summarised by some of his Notes
Japanese proponents with the following ‘a’-versus-’b’ comparison:
----------------------
a. When people and organisations focus primarily on quality, defined by the
following ratio ----------------------
Result of work efforts ----------------------
Quality =
Total costs
----------------------
Quality tends to increase and costs fall over time.
b. However, when people and organisations focus primarily on costs, costs ----------------------
tend to rise and quality declines over time.
----------------------
The Deming System of Profound Knowledge
----------------------
It provides a map of theory by which to understand the organisations
that we work in. The first step is transformation of the individual. This ----------------------
transformation is discontinuous. It comes from understanding of the system of
profound knowledge. The individual, transformed, will perceive new meaning ----------------------
to his life, to events, to numbers, to interactions between people. ----------------------
Once the individual understands the system of profound knowledge, he
----------------------
will apply its principles in every kind of relationship with other people. He will
have a basis for judgement of his own decisions and for transformation of the ----------------------
organisations that he belongs to. The individual, once transformed, will:
----------------------
●● Set an example;
●● Be a good listener, but will not compromise; ----------------------
●● Continually teach other people; and ----------------------
●● Help people to pull away from their current practices and beliefs and
move into the new philosophy without a feeling of guilt about the past. ----------------------
Deming advocated that all managers need to have what he called a System ----------------------
of Profound Knowledge, consisting of four parts:
----------------------
1. Appreciation of a system: Understanding the overall processes involving
suppliers, producers, and customers (or recipients) of goods and services ----------------------
(explained below);
----------------------
2. Knowledge of variation: The range and causes of variation in quality,
and use of statistical sampling in measurements; ----------------------
3. Theory of knowledge: The concepts explaining knowledge and the limits ----------------------
of what can be known (see also: epistemology);
----------------------
4. Knowledge of psychology: Concepts of human nature.
Deming explained, “One need not be eminent in any part nor in all four ----------------------
parts in order to understand it and to apply it. The 14 points for management ----------------------
in industry, education, and government follow naturally as application of
this outside knowledge, for transformation from the present style of Western ----------------------
management to one of optimisation.”
----------------------

Views of Experts 179

 Notes The various segments of the system of profound knowledge proposed
here cannot be separated. They interact with each other. Thus, knowledge of
---------------------- psychology is incomplete without knowledge of variation.
---------------------- A manager of people needs to understand that all people are different.
This is not ranking people. He needs to understand that the performance of
---------------------- anyone is governed largely by the system that he works in, the responsibility of
management.
----------------------
The Appreciation of a system involves understanding how interactions
---------------------- (i.e., feedback) between the elements of a system can result in internal restrictions
that force the system to behave as a single organism that automatically seeks
----------------------
a steady state. It is this steady state that determines the output of the system
---------------------- rather than the individual elements. Thus, it is the structure of the organisation
rather than the employees, alone, which holds the key to improving the quality
---------------------- of output.
---------------------- The Knowledge of variation involves understanding that everything
measured consists of both “normal” variation due to the flexibility of the system
---------------------- and of “special causes” that create defects. Quality involves recognising the
difference to eliminate “special causes” while controlling normal variation.
----------------------
Deming taught that making changes in response to “normal” variation would
---------------------- only make the system perform worse. Understanding variation includes the
mathematical certainty that variation will normally occur within six standard
---------------------- deviations of the mean.
---------------------- The System of Profound Knowledge is the basis for application of
Deming’s famous 14 Points.
----------------------
Deming’s 14 Principles
---------------------- 1. Create constancy of purpose with a plan: Create constancy of purpose
---------------------- for continual improvement of products and service to society, allocating
resources to provide for long-range needs rather than only short-term
---------------------- profitability, with a plan to become competitive, to stay in business, and
to provide jobs.
----------------------
Purpose of any commercial organisation is to make profits for its owners.
---------------------- Profits are possible only when there are enough customers who are
prepared to pay for organisation’s products/services. In a competitive
----------------------
environment, customer satisfaction is possible only when there is
---------------------- continuous improvement in the product/services. Thus, essence of
constancy of purpose for the organisation is:
----------------------
●● To stay in business by being competitive.
---------------------- ●● Be competitive by continuously improving the products/services
and reducing costs.
----------------------
●● Strike the right balance for benefitting all the stake holders of the
---------------------- organisation.
----------------------

180 World Class Manufacturing

 Planning for creating this constancy of purpose is the responsibility of the Notes
top management, which has to:
----------------------
●● Establish policy
●● Establish core values ----------------------
●● Set the long-term strategic course ----------------------
Companies usually do have long-term vision, but have short-term systems,
that focus on short-term results. ----------------------

2. Adopt the new philosophy of quality: Adopt the new philosophy. We ----------------------
are in a new economic age, created in Japan. We can no longer live with
commonly accepted levels of delays, mistakes, defective materials and ----------------------
defective workmanship. Transformation of Western management style is ----------------------
necessary to halt the continued decline of business and industry.
----------------------
New philosophy of Quality involves:
●● Focus on customer and not competition ----------------------
●● Ensuring quality at source, i.e., through a better process which ----------------------
eliminates chances of defectives and reduces ‘waste’.
----------------------
●● Continuous improvement and upgrading of products/services.
●● Ensuring better uniformity of products and processes through ----------------------
Statistical approach.
----------------------
3. Cease dependence on mass inspection to achieve quality: Eliminate the
need for mass inspection as the way of life to achieve quality by building ----------------------
quality into the product in the first place. Require statistical evidence of
built-in quality in both manufacturing and purchasing functions. ----------------------

Necessity of inspection arises only when there is no confidence in the ----------------------

process which generates the product. Any amount of inspection does not
correct an already existing defect as inspection is only a post mortem ----------------------
activity. Thus, path to better quality lies through a fool-proof process ----------------------
rather than dependence on mass inspection. Quality is to be built into a
product and not inspected unto it. ----------------------
4. End the practice of choosing suppliers on price alone: End the practice ----------------------
of awarding business solely on the basis of price tag. Instead require
meaningful measures of quality along with price. Reduce the number of ----------------------
suppliers for the same item by eliminating those that do not qualify with
----------------------
statistical and other evidence of quality. The aim is to minimise total cost,
not merely initial cost, by minimising variation. This may be achieved ----------------------
by moving towards a single supplier for any one item, on a long term
relationship of loyalty and trust. Purchasing managers have a new job, ----------------------
and must learn it.
----------------------
Suppliers are the stakeholders of the organisation and traditional policy
of ‘divide and rule’ normally adopted is not conducive for building ----------------------
confidence in a supplier’s mind. This lack of confidence comes in the
----------------------

Views of Experts 181

 Notes way for getting quality and timely supplies at reasonable price. Having
too many suppliers reduces the share of business for the suppliers and
---------------------- they are forced to look for alternatives. It is necessary to have a long term
relationship with the suppliers by moving towards single source supplies
---------------------- and building trust and loyalty. Aim should be to reduce total costs rather
---------------------- than only the initial cost. Organisation should adopt “win-win” philosophy
with the suppliers. The security of the long-term relationship allows the
---------------------- supplier to innovate.
---------------------- 5. Identify problem and work continuously to improve the system:
Improve constantly and forever every process for planning, production
---------------------- and service. Search continually for problems in order to improve every
activity in the company, to improve quality and productivity, and thus to
----------------------
constantly decrease costs. Institute innovation and constant improvement
---------------------- of product, service and process. It is management’s job to work continually
on the system (design, incoming materials, maintenance, improvement of
---------------------- machines, supervision, training, retraining).
---------------------- Problem should be treated as an opportunity to improve the system.
Any problem arises basically because either the laid down system is not
---------------------- followed or because the system itself has a flaw. Problems are of two
types:
----------------------
The first type is the one which has already occurred and needs immediate
---------------------- attention through a corrective action. However, after the corrective action
and restoration to normalcy, it is necessary to conduct a root cause analysis
----------------------
and take preventive actions to ensure that the same problem will not recur
---------------------- again. This leads to improvement in the system.

---------------------- The second type of problems are the potential problems, i.e., those
problems which have not occurred but there is a distinct possibility of their
---------------------- occurrence unless some pre-emptive action is not taken. This requires a
continuous search for problems in order to improve every activity in the
---------------------- company, which leads to improved quality and productivity and reduction
---------------------- in costs. It is management’s job to work continuously on the system
(design, incoming materials, maintenance, improvements of machines,
---------------------- training, supervision, retraining).

---------------------- Points to remember are:

●● Corrective actions taken to sort out the existing problem, which is
---------------------- the result of external (assignable) cause is not improving a process.
---------------------- When all assignable causes are removed, the process is under
statistical equilibrium. For improving the process, it is necessary to
---------------------- reduce the variation in the process by addressing the random causes,
which are part and parcel of the process. Emphasis on conformance
---------------------- to standards can obstruct continuous improvement.
---------------------- ●● The Deming Cycle (PDCA Cycle) is key to continuous improvement.
----------------------

182 World Class Manufacturing

6. Adopt modern methods for training on the job: Institute modern Notes
methods of training on the job for all, including management, to make
better use of every employee. New skills are required to keep up with ----------------------
changes in materials, methods, product and service design, machinery,
techniques and service. ----------------------

Changes in materials, methods, product design, machinery, techniques ----------------------

and service conditions requires continuous up-gradation of skills of
----------------------
people who are required to handle these changes. Before the person is put
on the new job, he should be brought up to the required skills. This can be ----------------------
done by simulating the work conditions elsewhere. Some roadblocks to
training can be: ----------------------
●● It’s for my people, not for me. ----------------------
●● It’s for manufacturing, not for me.
----------------------
●● Our problems are different here.
●● We rely on our experience. ----------------------
●● Hope for instant pudding. ----------------------
●● People learn in different ways. ----------------------
7. Change focus from “Quantity” to “Quality”: Adopt and institute
leadership aimed at helping people do a better job. The responsibility ----------------------
of managers and supervisors must be changed from sheer numbers to ----------------------
quality. Improvement of quality will automatically improve productivity.
Management must ensure that immediate action is taken on reports of ----------------------
inherited defects, maintenance requirements, poor tools, fuzzy operational
definitions, and all conditions detrimental to quality. ----------------------
For ages, the performance parameter for the organisation has been linked ----------------------
to the quantity produced in a given period of time. Naturally the focus of
managers and supervisors is always on the numbers and emphasis is on ----------------------
‘How much’ and never on ‘How’. This many a times leads to subverting ----------------------
the system and taking short cuts to somehow meet the quantity targets.
This approach not only adversely affects the quality but can also increase ----------------------
the ‘Waste’ and subsequently the costs. As seen in the previous points,
quality results from a better process and a fool-proof process not only ----------------------
reduces the costs by eliminating waste but also eventually reduces the ----------------------
time and consequently can increase the quantity.
The responsibility of managers and supervisors must be changed ----------------------
from sheer numbers to quality. Improvement of quality through better ----------------------
processes will automatically improve productivity. Management must
ensure that immediate action is taken on reports of inherent defects, ----------------------
maintenance requirements, poor tools, vague operational definitions, and
other conditions detrimental to quality. ----------------------

Management has to demonstrate leadership by helping people, machines ----------------------

and gadgets to do a better job. Adopt and institute leadership aimed at
----------------------
helping people to do a better job.

Views of Experts 183

 Notes 8. “Drive out fear from the organisation so that everyone can work
effectively for the company”: Encourage effective two-way communication
---------------------- and other means to drive out fear throughout the organisation so that
everybody may work effectively and more productively for the company.
----------------------
Fear is a barrier to communication and improvement: wherever there is
---------------------- fear, we get the wrong information. Fear in work is opposite to joy in work.
The main source of fear is the behaviour pattern of the top management,
---------------------- which can result in mutual lack of trust at every level in the organisation.
Innovative and creative spirit of the employees can never be nurtured in
---------------------- an atmosphere of fear. Fear of change is also a big barrier, which must
---------------------- be overcome. Remember, people don’t resist change, they resist being
changed! The need is for everybody to be part of the change, and to own
---------------------- the change process. An atmosphere of fear results in management getting
a “filtered” view of the organisation.
----------------------
9. Break down barriers between departments: Break down barriers
---------------------- between departments and staff areas. People in different areas, such as
Leasing, Maintenance, Administration, must work in teams to tackle
---------------------- problems that may be encountered with products or service.
Deming says quite bluntly that if the boss of every staff area perceives
----------------------
(or indeed is told) that his objective is to maximise his department’s
---------------------- profits, then the company will fail. One of the most crucial differences
between old-style and new-style management is seen in the way that
---------------------- shop-floor employees, supervisors, departments, middle-managers and
senior managers regard their job: is it to optimise for their own area or to
---------------------- optimise for the organisation? It cannot be both. Obviously optimisation
---------------------- must be for the organisation. This is the reason why Deming so strongly
objects to Management by Objectives. It is necessary that objectives of
---------------------- every function/department should support and be subverted to the overall
objectives of the organisation.
---------------------- 10. Eliminate slogans, exhortations and targets for the workforce (ask
---------------------- for productivity only after providing the methods): Eliminate the use
of slogans, posters and exhortations for the work force, demanding Zero
---------------------- Defects and new levels of productivity, without providing methods. Such
exhortations only create adversarial relationships; the bulk of the causes
---------------------- of low quality and low productivity belong to the system, and thus lie
beyond the power of the work force.
----------------------
Slogans and targets like “Zero Defects”, “Zero Breakdown”, “Zero
---------------------- Inventory,” etc. are directed at the work force. Why there are no slogans
for management to show what tools/facilities are provided to achieve
---------------------- these? Such exhortations only create adversarial relationships as they
---------------------- give an impression that all this is the responsibility of the workers and
management has little part to play. Actually the bulk of the causes (more
---------------------- than 90%) of low quality and low productivity belong to the system, which
is the responsibility of the management. It is necessary first to convince
---------------------- the workers that the management has done all that is in their power to give
the best possible system for performing the task and then only ask them to
----------------------
show the results.
184 World Class Manufacturing
11. Eliminate numerical quotas for the work force and numerical goals Notes
for management: Eliminate work standards that prescribe quotas for the
work force and numerical goals for people in management. Substitute ----------------------
aids and helpful leadership in order to achieve continual improvement of
quality and productivity. ----------------------

Once a figure in any area is quoted by the management as an acceptable ----------------------

target, it gets converted in ‘quota’ and people try to stick to it. This can
----------------------
become a serious obstacle in further improvement in that area. If employees
get tuned in to work to quotas, their ability to innovate also gets seriously ----------------------
hampered. Though people have to work to achieve goals, intentions and
aims, it should not be in isolation. Goals and objectives need continuous ----------------------
up-gradation, which should be done at employees’ initiative. To do this,
----------------------
they need the necessary education, training, systems and methods.
Thus, it is necessary to eliminate work standards (quotas) on the factory ----------------------
floor and substitute leadership. Eliminate management by objective.
----------------------
Eliminate management by numbers, numerical goals. Substitute aids
and helpful leadership, statistical methods for continual improvement of ----------------------
quality and productivity.
----------------------
12. Remove barriers that rob people of pride in their work, and eliminate
the annual rating or merit system: Remove the barriers that rob hourly ----------------------
workers, and people in management, of their right to pride of workmanship.
This implies, among other things, abolition of the annual merit rating ----------------------
(appraisal of performance) and of Management by Objective. Again, the
----------------------
responsibility of managers, supervisors, foremen must be changed from
sheer numbers to quality. ----------------------
Two greatest barriers for the people to take pride in their job are: ----------------------
1. Breaking the work in small elements and converting them in
repetitive jobs in order to improve efficiency (Adam Smith ----------------------
technique): This turns people into robots, robbing them of their ----------------------
innovative capabilities. Not knowing the complete job makes people
lose interest in how their work helps the organisation to reach its ----------------------
objectives. It is like a sculptor taking pride in his creation if he has
done a full sculpture but if the same is done in parts by different ----------------------
artisans at different places and then assembled at some other place; ----------------------
none of the contributors have any pride in the final product. People
get accustomed to do what they are told to do and not go beyond it. ----------------------
This also leads to resist any change and improvement in any area
becomes difficult resulting in stagnation. ----------------------

2. Performance appraisals and annual merit rating systems: In ----------------------

this system people get rewarded for individual performance and not
for the team performance, which leads to unhealthy competition ----------------------
resulting in strife. System normally rewards people for conforming ----------------------
to standards and not for improvements or their contribution to help
others to achieve their goals. ----------------------

Views of Experts 185

 Notes If these barriers are removed and people are encouraged to take pride in
what they are doing, they can perform much better and contribute positively
---------------------- to the team performance.
---------------------- 13. Institute a vigorous programme of education and self-improvement
for everyone: Institute a vigorous programme of education, and
---------------------- encourage self-improvement for everyone. What an organisation needs is
---------------------- not just good people; it needs people that are improving with education.
Advances in competitive position will have their roots in knowledge.
----------------------
Point no. 6 explains training for skills, which is finite; it ends when a person’s
---------------------- ability has reached a stable state. In comparison, education is never-ending.
Training tells you ‘How to do the things’ whereas education explains ‘Why
---------------------- the things are to be done’. One who concentrates on training is the ‘practical
---------------------- man’, also defined as one who repeats the mistakes of his predecessors. Not
that such people are not needed, but the organisation needs more people
---------------------- who improve with education. Advances in competitive position will have
their roots in knowledge. Education is priceless, beyond calculation. The
----------------------
future, not the past, is important, and education is vital for improving the
---------------------- future.

---------------------- A company should take action to aid and encourage the education of its
employees at all levels. The company’s own courses should no longer
---------------------- be restricted to training, but be broadened to include good educational
content.
----------------------
Finally, recruitment should not be based just on past records. Look for
---------------------- people who can culturally gel with the organisation and who are willing
---------------------- to improve continuously.
14. Create support of top management for all above points: Clearly define
----------------------
top management’s permanent commitment to ever-improving quality and
---------------------- productivity, and their obligation to implement all of these principles.
Indeed, it is not enough that top management commit themselves for
---------------------- life to quality and productivity. They must know what it is that they
---------------------- are committed to, that is, what they must do. Create a structure in top
management that will push every day on the preceding 13 Points, and take
---------------------- action in order to accomplish the transformation. Support is not enough:
action is required!
----------------------
Top management’s permanent commitment to ever-improving quality and
---------------------- productivity, and their obligations to implement all of these principles should
be clearly defined. Everyone in the organisation has to work to accomplish the
----------------------
transformation. They must know what it is that they are committed to. It is the
---------------------- top management’s responsibility to create a structure in top management that
will push every day on the preceding 13 Points, and take action in order to
---------------------- accomplish the transformation. Support is not enough: action is required.
----------------------

186 World Class Manufacturing

Seven Deadly Diseases Notes
The “Seven Deadly Diseases” include:
----------------------
1. Lack of constancy of purpose.
----------------------
2. Emphasis on short-term profits.
3. Evaluation by performance, merit rating, or annual review of performance. ----------------------
4. Mobility of management. ----------------------
5. Running a company on visible figures alone. ----------------------
6. Excessive medical costs.
----------------------
7. Excessive costs of warranty, fuelled by lawyers who work for contingency
fees. ----------------------
“A Lesser Category of Obstacles” includes: ----------------------
1. Neglecting long-range planning. ----------------------
2. Relying on technology to solve problems.
----------------------
3. Seeking examples to follow rather than developing solutions.
----------------------
4. Excuses, such as “Our problems are different”.
5. Obsolescence in school that management skill can be taught in classes. ----------------------
6. Reliance on quality control department rather than management, supervisors, ----------------------
managers of purchasing and production workers.
----------------------
7. Placing blames on workforces who are only responsible for 15% of
mistake where the system desired by management is responsible for 85% ----------------------
of the unintended consequences
----------------------
8. Relying on quality inspection rather than improve product quality.
----------------------
Deming’s advocacy of the Plan-Do-Check-Act cycle, his 14 Points, and
Seven Deadly Diseases have had tremendous influence not only in manufacturing ----------------------
but have been applied in other arenas, such as in the relatively new field of sales
process engineering. ----------------------
Quotations and Concepts of Deming ----------------------
In his later years, Dr. Deming taught many concepts, which he emphasised
----------------------
by key sayings or quotations that he repeated. A number of these quotes have been
recorded. Some of the concepts might seem to be oxymoron or contradictory to ----------------------
each other; however, the student is given each concept to ponder its meaning in
the whole system, over time. ----------------------
●● “There is no substitute for knowledge.” ----------------------
This statement emphasises the need to know more, about everything in ----------------------
the system. It is considered as a contrast to the old statement, “There is no
substitute for hard work” by Thomas Alva Edison (1847–1931). Instead, a ----------------------
small amount of knowledge could save many hours of hard work.
----------------------

Views of Experts 187

 Notes ●● “The most important things cannot be measured.”
The long-term issues that are most important cannot be measured in
----------------------
advance. However, they might be among the factors that an organisation is
---------------------- measuring, just not understood as most important at that time.
●● “The most important things are unknown or unknowable.”
----------------------
The factors that have the greatest impact, long term, can be quite surprising.
---------------------- Analogous to an earthquake that disrupts service. Other “earth-shattering”
---------------------- events that most affect an organisation will be unknown or unknowable, in
advance. Other examples of important things would be: a drastic change in
---------------------- technology, or new investment capital.
---------------------- ●● “Experience by itself teaches nothing.”
This statement emphasises the need to interpret and apply information
----------------------
against a theory or framework of concepts that is the basis for knowledge about
---------------------- a system. It is considered as a contrast to the old statement, “Experience is the
best teacher” (Dr. Deming disagreed with that). To Dr. Deming, knowledge
---------------------- is best taught by a master who explains the overall system through which
---------------------- experience is judged; experience, without understanding the underlying system,
is just raw data that can be misinterpreted against a flawed theory of reality.
---------------------- Deming’s view of experience is related to Shewhart’s concept, “Data has no
meaning apart from its context”.
----------------------
●● “By what method? Only the method counts.”
----------------------
When information is obtained, or data is measured, the method, or
---------------------- process used to gather information, greatly affects the results. For example,
the “Hawthorne effect” showed that people just asking frequently for opinions
---------------------- seemed to affect the resulting outcome, since some people felt better just being
---------------------- asked for their opinion. Dr. Deming warned that basing judgements on customer
complaints alone ignored the general population of other opinions, which
---------------------- should be judged together, such as in a statistical sample of the whole, not
just isolated complaints: survey the entire group about their likes and dislikes.
----------------------
The extreme complaints might not represent the attitudes of the whole group.
---------------------- Similarly, measuring or counting data depends on the instrument or method
used. Changing the method changes the results. Aim and method are essential.
---------------------- An aim without a method is useless. A method without an aim is dangerous. It
---------------------- leads to action without direction and without constancy of purpose. Deming
used an illustration of washing a table to teach a lesson about the relationship
---------------------- between purpose and method. If you tell someone to wash a table, but not
the reason for washing it, they cannot do the job properly (will the table be
----------------------
used for chopping food or potting plants?). That does not mean just giving the
---------------------- explanation without an operational definition. The information about why the
table needs to be washed, and what is to be done with it, makes it possible to do
---------------------- the job intelligently.
----------------------

188 World Class Manufacturing

●● “You can expect what you inspect.” Notes
Dr. Deming emphasised the importance of measuring and testing to
predict typical results. If a phase consists of inputs + process + outputs, all 3 are ----------------------
inspected to some extent. Problems with inputs are a major source of trouble, ----------------------
but the process using those inputs can also have problems. By inspecting the
inputs and the process more, the outputs can be better predicted, and inspected ----------------------
less. Rather than using mass inspection of every output product, the output can
be statistically sampled in a cause-effect relationship through the process. ----------------------

●● “Special Causes and Common Causes.” ----------------------

Dr. Deming considered anomalies in quality to be variations outside the ----------------------
control limits of a process. Such variations could be attributed to one-time
events called “special causes” or to repeated events called “common causes” ----------------------
that hinder quality.
----------------------
●● Acceptable Defects
Rather than wasting efforts on zero-defect goals, Dr. Deming stressed the ----------------------
importance of establishing a level of variation, or anomalies, acceptable to the ----------------------
recipient (or customer) in the next phase of a process. Often, some defects are
quite acceptable, and efforts to remove all defects would be an excessive waste ----------------------
of time and money.
----------------------
●● The Deming Cycle (or Shewhart Cycle)
As a repetitive process to determine the next action, the Deming Cycle ----------------------
describes a simple method to test information before making a major decision. ----------------------
The 4 steps in the Deming Cycle are: Plan-Do-Check-Act (PDCA), also known
as Plan-Do-Study- Act or PDSA. Dr. Deming called the cycle the Shewhart ----------------------
Cycle, after Walter A. Shewhart. The cycle can be used in various ways, such as
running an experiment: PLAN (design) the experiment; DO the experiment by ----------------------
performing the steps; CHECK the results by testing information; and ACT on ----------------------
the decisions based on those results.
----------------------
●● Semi-Automated, not Fully Automated
Dr. Deming lamented the problem of automation gone awry (“robots ----------------------
painting robots”): instead, he advocated human-assisted semi-automation,
----------------------
which allows people to change the semi-automated or computer-assisted
processes, based on new knowledge. Compare to Japanese term ‘jidoka’ (which ----------------------
can be loosely translated as “automation with a human touch”).
----------------------
●● “The problem is at the top; management is the problem.”
Dr. Deming emphasised that the top-level management had to change ----------------------
to produce significant differences, in a long-term, continuous manner. As
----------------------
a consultant, Deming would offer advice to top-level managers, if asked
repeatedly, in a continuous manner. ----------------------
●● “What is a system?”
----------------------
A system is a network of interdependent components that work together
to try to accomplish the aim of the system. A system must have an aim. Without ----------------------

Views of Experts 189

 Notes an aim, there is no system. The aim of the system must be clear to everyone
in the system. The aim must include plans for the future. The aim is a value
---------------------- judgment. (We are of course talking here about a man-made system.)
---------------------- • “A system must be managed. It will not manage itself. Left to themselves
in the Western world, components become selfish, competitive. We cannot
---------------------- afford the destructive effect of competition.”
---------------------- • “To successfully respond to the myriad of changes that shake the world,
transformation into a new style of management is required. The route to
---------------------- take is what I call profound knowledge—knowledge for leadership of
transformation.”
----------------------
• “The worker is not the problem. The problem is at the top management!”
----------------------
It is management’s job to direct the efforts of all components towards
---------------------- the aim of the system. The first step is clarification: everyone in the
organisation must understand the aim of the system, and how to direct
---------------------- his efforts towards it. Everyone must understand the damage and loss
---------------------- to the whole organisation from a team that seeks to become a selfish,
independent, profit centre.
---------------------- • “What is the variation trying to tell us about a process, about the people
---------------------- in the process?”
Dr. Shewhart created the basis for the control chart and the concept of a state
---------------------- of statistical control by carefully designed experiments. While Dr. Shewhart
---------------------- drew from pure mathematical statistical theories, he understood that data
from physical processes never produce a “normal distribution curve” (a
---------------------- Gaussian distribution, also commonly referred to as a “bell curve”). He
discovered that observed variation in manufacturing data did not always
---------------------- behave in the same way as data in nature (Brownian motion of particles).
---------------------- Dr. Shewhart concluded that while every process displays variation, some
processes display controlled variation that is natural to the process, while
---------------------- others display uncontrolled variation that is not present in the process causal
system at all times. Dr. Deming renamed these distinctions “common cause”
---------------------- for chance causes and “special cause” for assignable causes. He did this so
---------------------- the focus would be placed on those responsible for doing something about
the variation, rather than the source of the variation. It is top management’s
---------------------- responsibility to address “common cause” variation, and therefore it is
management’s responsibility to make improvements to the whole system.
---------------------- Because “special cause” variation is assignable, workers, supervisors or
---------------------- middle managers that have direct knowledge of the assignable cause best
address this type of specific intervention.
----------------------
• “Knowledge is theory. We should be thankful if action of management
---------------------- is based on theory. Knowledge has temporal spread. Information is
not knowledge. The world is drowning in information but is slow in
---------------------- acquisition of knowledge. There is no substitute for knowledge.”
---------------------- This statement emphasises the need for theory of knowledge.

190 World Class Manufacturing

 Notes
Activity 1
----------------------
State and explain any three quotes of Deming which you feel are most ----------------------
appropriate to the Indian Scenario.
----------------------
8.3 PHILIP CROSBY ----------------------

In 1979 after a career at ITT, Crosby started the management consulting ----------------------
company, Philip Crosby Associates, Inc. This consulting group provided
----------------------
educational courses in quality management both at their headquarters in Winter
Park, Florida, and at eight foreign locations. Also in this year, Crosby published ----------------------
his first business book, Quality Is Free. This book became popular at that time
because of the crisis in North American quality. During the late 1970s and into ----------------------
the 1980s, North American manufacturers were losing market share to Japanese ----------------------
products largely due to the superiority of quality of the Japanese products.
----------------------
Crosby’s response to the quality crisis was the principle of “doing it right
the first time” (DIRFT). He would also include four major principles: ----------------------
1. The definition of quality is conformance to requirements ----------------------
2. The system of quality is prevention
----------------------
3. The performance standard is zero defects
----------------------
4. The measurement of quality is the price of non-conformance
Crosby’s prescription for quality improvement was a 14-step programme. ----------------------
His belief was that a company that established a quality programme will see ----------------------
savings returns that more than pays off the cost of the quality programme
(“quality is free”). ----------------------
“Zero Defects” and “Right First Time” ----------------------
Philip Crosby is an American who promoted the phrases “zero defects” ----------------------
and “right first time”. “Zero defects” doesn’t mean mistakes never happen, rather
that there is no allowable number of errors built into a product or process and ----------------------
that you get it right first time.
----------------------
Philip Crosby believes management should take prime responsibility for
quality, and workers only follow their managers’ example. He defined the Four ----------------------
Absolutes of Quality Management. ----------------------
The Four Absolutes of Quality Management
----------------------
1. Quality is conformance to requirements.
----------------------
2. Quality prevention is preferable to quality inspection.
3. Zero defects is the quality performance standard. ----------------------

4. Quality is measured in monetary terms – the price of non-conformance. ----------------------

Views of Experts 191

 Notes Crosby’s 14 Steps to Quality Improvement
1. Management is committed to quality – and this is clear to all.
----------------------
2. Create quality improvement teams – with (senior) representatives from
---------------------- all departments.
---------------------- 3. Measure processes to determine current and potential quality issues.

---------------------- 4. Calculate the cost of (poor) quality.

5. Raise quality awareness of all employees.
----------------------
6. Take action to correct quality issues.
----------------------
7. Monitor progress of quality improvement – establish a zero-defects
---------------------- committee.
8. Train supervisors in quality improvement.
----------------------
9. Hold “zero-defects” days.
----------------------
10. Encourage employees to create their own quality improvement goals.
---------------------- 11. Encourage employee communication with management about obstacles
---------------------- to quality.
12. Recognise participants’ effort.
----------------------
13. Create quality councils.
----------------------
14. Do it all over again – quality improvement does not end.
---------------------- Philip Crosby has broadened his approach to include wider improvement
---------------------- ideals.
He defined the:
----------------------
Five characteristics of an “Eternally Successful Organisation”
----------------------
1. People routinely do things right first time.
---------------------- 2. Change is anticipated and used to advantage.
---------------------- 3. Growth is consistent and profitable.

---------------------- 4. New products and services appear when needed.

5. Everyone is happy to work there.
----------------------
Quotes by Crosby
----------------------
●● Eliminating what is not wanted or needed is profitable in itself.
---------------------- ●● Successful people breed success.
---------------------- ●● Change should be a friend. It should happen by plan, not by accident.
●● In a true zero-defects approach, there are no unimportant items.
----------------------
●● Slowness to change usually means fear of the new.
---------------------- ●● Very few of the great leaders ever get through their careers without failing,
---------------------- sometimes dramatically.

192 World Class Manufacturing

●● If anything is certain, it is that change is certain. The world we are planning Notes
for today will not exist in this form tomorrow.
●● The audience only pays attention as long as you know where you are ----------------------
going. ----------------------
●● No one can remember more than three points.
----------------------
●● We can spend our whole lives underachieving.
●● Improving quality requires a culture change, not just a new diet. ----------------------
●● Not having a common understanding of quality puts more pain into an ----------------------
organisation than anything else I have ever known.
----------------------
●● If we deliver on time, but the product has defects, we have not delivered
on time. ----------------------
●● In a true zero-defects approach, there are no unimportant items.
----------------------

Activity 2 ----------------------

----------------------
Illustrate the four absolutes of Quality as per Crosby with real life examples
from the industry. ----------------------

----------------------
8.4 SHIGEO SHINGO
----------------------
The Shingo system is developed in parallel and in many ways in conflict
with the statistically based approach to quality control. This system or philosophy ----------------------
of production is named after the co-developer of the Toyota just-in-time system, ----------------------
Shigeo Shingo. Two aspects of the Shingo system in particular have received
great attention. One is how to accomplish drastic cuts in equipment setup times ----------------------
by single-minute exchange of die (SMED) procedures. The other, the focus of
this article, is the use of source inspection and the poka-yoke system to achieve ----------------------
zero defects. ----------------------
Shingo has argued that SQC methods do not prevent defects. Although
----------------------
they provide information to tell us probabilistically when a defect will occur,
they are after the fact. The way to prevent defects from coming out at the ----------------------
end of a process is to introduce controls within the process. Central Shingo’s
approach is the difference between errors and defects. Defects arise because ----------------------
people make errors. Even though errors are inevitable, defects can be prevented
----------------------
if feedback leading to corrective action takes place immediately after the errors
are made. Such feedback and action require inspection, which should be done ----------------------
on a 100 per cent of the items produced. This inspection can be one of the three
types: successive check, self-check, and source inspection. Successive check ----------------------
inspection is performed by the next person in the process or by an objective
----------------------
evaluator such as a group leader. Information on defects is immediate feedback
for the worker who produced the product, who then makes the repair. Self- ----------------------
check is done by the individual worker and is appropriate by itself on all but
items that require sensory judgment (such as existence or severity of scratches, ----------------------

Views of Experts 193

 Notes or correct matching of shades of paint). These require successive checks.
Source inspection is also performed by the individual worker, except instead
---------------------- of checking for defects, the worker checks for the errors that will cause defects.
This prevents the defects from ever occurring and hence requires rework. All
---------------------- three types of inspection rely on controls consisting of fail-safe procedures or
---------------------- devices (called poka-yoke). Poka-yoke includes such things as checklists or
special tooling that (1) prevents the worker from making an error that leads to a
---------------------- defect before starting a process or (2) gives rapid feedback of abnormalities in
the process to the worker in time to correct them.
----------------------
There is a wide variety of poka-yokes, ranging from kitting parts from a
---------------------- bin (to ensure that the right number of parts is used in assembly) to sophisticated
detection and electronic signal devices. There is a good deal more to say about
----------------------
the work of Shingo. Blasting industry’s preoccupation with control charts,
---------------------- Shingo states they are nothing but a mirror reflecting current conditions. When
a chemical plant QC manager proudly stated that it had 200 charts in a plant of
---------------------- 150 people, Shingo asked him if they had a control chart for control charts. In
addition to his insights into the quality area, his work on SMED is a must read
----------------------
for manufacturing executives.
----------------------
8.5 KAORU ISHIKAWA
----------------------
Kaoru Ishikawa wanted to change the way people think about work. He
---------------------- urged managers to resist becoming content with merely improving a product’s
---------------------- quality, insisting that quality improvement can always go one step further.
His notion of company-wide quality control called for continued customer
---------------------- service. This meant that a customer would continue receiving service even after
receiving the product. This service would extend across the company itself in
---------------------- all levels of management, and even beyond the company to the everyday lives
---------------------- of those involved. According to Ishikawa, quality improvement is a continuous
process, and it can always be taken one step further.
----------------------
With his cause-and-effect diagram (also called the “Ishikawa” or “fishbone”
---------------------- diagram) this management leader made significant and specific advancements
in quality improvement. With the use of this new diagram, the user can see all
---------------------- possible causes of a result, and hopefully find the root of process imperfections.
By pinpointing root problems, this diagram provides quality improvement from
----------------------
the “bottom up.” Dr. W. Edwards Deming − one of Isikawa’s colleagues − adopted
---------------------- this diagram and used it to teach Total Quality Control in Japan as early as World
War II. Both Ishikawa and Deming use this diagram as one of the first tools in the
---------------------- quality management process.
---------------------- Ishikawa also showed the importance of the seven quality tools: control
chart, run chart, histogram, scatter diagram, Pareto chart, and flowchart.
---------------------- Additionally, Ishikawa explored the concept of quality circles − a Japanese
philosophy which he drew from obscurity into worldwide acceptance. Ishikawa
----------------------
believed in the importance of support and leadership from top level management.
---------------------- He continually urged top level executives to take quality control courses, knowing

194 World Class Manufacturing

that without the support of the management, these programs would ultimately Notes
fail. He stressed that it would take firm commitment from the entire hierarchy of
employees to reach the company’s potential for success. Another area of quality ----------------------
improvement that Ishikawa emphasized is quality throughout a product’s life
cycle - not just during production. Although he believed strongly in creating ----------------------
standards, he felt that standards were like continuous quality improvement ----------------------
programmes - they too should be constantly evaluated and changed. Standards
are not the ultimate source of decision making; customer satisfaction is. He ----------------------
wanted managers to consistently meet consumer needs; from these needs, all
other decisions should stem. Besides his own developments, Ishikawa drew and ----------------------
expounded on principles from other quality gurus, including those of one man ----------------------
in particular: W. Edwards Deming, creator of the Plan-Do-Check-Act model.
Ishikawa expanded Deming’s four steps into the following six: ----------------------
●● Determine goals and targets. ----------------------
●● Determine methods of reaching goals.
----------------------
●● Engage in education and training.
●● Implement work. ----------------------
●● Check the effects of implementation. ----------------------
●● Take appropriate action.
----------------------

Check your Progress 1 ----------------------

----------------------
Fill in the blanks.
1. _____________ is known as the Father of Quality Management. ----------------------
2. _____________ Principle was introduced by Phil Crosby. ----------------------
3. Shigeo Shingo is well known for ________________ principles in ----------------------
quality management.
----------------------
4. ___________ is a well-known corporate trainer in strategy management.
----------------------

----------------------
Activity 3
----------------------
Draw an Ishikawa Diagram of a certain problem from the automobile
industry. ----------------------

----------------------
8.6 MICHAEL PORTER ----------------------
Michael E. Porter is a leading authority on competitive strategy, the ----------------------
competitiveness and economic development of nations, states, and regions,
and the application of competitive principles to social problems such as health ----------------------
care, the environment, and corporate responsibility. Some of his more popular
----------------------
theories are given below.

Views of Experts 195

 Notes Competitive Advantage
It is a position of a company in a competitive landscape that allows the
----------------------
company to earn return on investments higher than the cost of investments.
---------------------- Competitive advantage should be relevant, unique and sustainable.
Competitive advantage theory suggests that states and businesses should
----------------------
pursue policies that create high-quality goods to sell at high prices in the market.
---------------------- Porter emphasises productivity growth as the focus of national strategies.
Competitive advantage rests on the notion that cheap labour is ubiquitous and
---------------------- natural resources are not necessary for a good economy. Competitive advantage
stresses maximizing scale economies in goods and services that garner premium
----------------------
prices.
---------------------- Competitive advantage occurs when an organisation acquires or develops
---------------------- an attribute or combination of attributes that allows it to outperform its
competitors. These attributes can include access to natural resources, such as
---------------------- high grade ores or inexpensive power, or access to highly trained and skilled
personnel human resources. New technologies such as robotics and information
---------------------- technology are either to be included as a part of the product, or to assist making
---------------------- it. The term competitive advantage is the ability gained through attributes and
resources to perform at a higher level than others in the same industry or market.
---------------------- Superior performance being the ultimate desired goal of a firm, competitive
---------------------- advantage becomes the foundation highlighting the significant importance to
develop same.
---------------------- Porter’s Five Forces
---------------------- It is a framework for the industry analysis and business strategy
development developed by Michael E. Porter of Harvard Business School
----------------------
in 1979. It draws upon Industrial Organisation (IO) economics to derive five
---------------------- forces that determine the competitive intensity and therefore attractiveness of a
market. Attractiveness in this context refers to the overall industry profitability.
---------------------- An “unattractive” industry is one in which the combination of these five forces
acts to drive down overall profitability. A very unattractive industry would be
----------------------
one approaching “pure competition”, in which available profits for all firms are
---------------------- driven down to zero.
Three of Porter’s five forces refer to competition from external sources.
----------------------
The remainder are internal threats. It is useful to use Porter’s five forces in
---------------------- conjunction with SWOT analysis (Strengths, Weaknesses, Opportunities and
Threats).
----------------------
Porter referred to these forces as the micro environment, to contrast it
---------------------- with the more general term macro environment. They consist of those forces
close to a company that affect its ability to serve its customers and make a
---------------------- profit. A change in any of the forces normally, requires a business unit to re-
assess the marketplace given the overall change in industry information. The
----------------------
overall industry attractiveness does not imply that every firm in the industry will
---------------------- return the same profitability. Firms are able to apply their core competencies,

196 World Class Manufacturing

business model or network to achieve a profit above the industry average. A Notes
clear example of this is the airline industry. As an industry, profitability is low
and yet individual companies, by applying unique business models, have been ----------------------
able to make a return in excess of the industry average.
----------------------
Porter’s five forces include:
----------------------
Three forces from ‘horizontal’ competition:
●● Threat of substitute products. ----------------------
●● Threat of established rivals. ----------------------
●● Threat of new entrants.
----------------------
Two forces from ‘vertical’ competition:
----------------------
●● Bargaining power of suppliers.
●● Bargaining power of customers. ----------------------
This five forces analysis is just one part of the complete Porter strategic ----------------------
models. The other elements are the value chain and the generic strategies.
----------------------
Business Cluster
Business cluster is a geographic concentration of interconnected ----------------------
businesses, suppliers, and associated institutions in a particular field. Clusters
----------------------
are considered to increase the productivity with which companies can compete,
nationally and globally. In urban study, the term agglomeration is used. It is also ----------------------
a very important aspect of business strategies.
----------------------
This term industry cluster, also known as a business cluster, competitive
cluster, or Porterian cluster, was introduced and the term cluster was popularised ----------------------
by Michael Porter in The Competitive Advantage of Nations (1990). Cluster
development has since become a focus for many government programmes. ----------------------
Following development of the concept of inter-organisational networks in ----------------------
Germany and practical development of clusters in the United Kingdom; many
perceive there to be four methods by which a cluster can be identified: ----------------------
●● Geographical cluster - as stated above ----------------------
●● Sectoral clusters (a cluster of businesses operating together from within
the same commercial sector, e.g., marine (South East England; Cowes ----------------------
and now Solent) and photonics (Aston Science Park, Birmingham)) ----------------------
●● Horizontal cluster (interconnections between businesses at a sharing of
resources level, e.g., knowledge management) ----------------------
●● Vertical cluster (i.e., a supply chain cluster) ----------------------
It is also expected − particularly in the German model of organisational
----------------------
networks − that interconnected businesses must interact and have firm actions
within at least two separate levels of the organisations concerned. ----------------------
Michael Porter claims that clusters have the potential to affect competition
----------------------
in three ways:
●● By increasing the productivity of the companies in the cluster ----------------------

Views of Experts 197

 Notes ●● By driving innovation in the field
●● By stimulating new businesses in the field
----------------------
Types of clusters
---------------------- Generally three types of business clusters, based on different kinds of
---------------------- knowledge, are recognised:
●● Techno clusters: These clusters are high technology-oriented, well
----------------------
adapted to the knowledge economy, and typically have as a core renowned
---------------------- universities and research centres like Silicon Valley.
●● Historic knowhow-based clusters: These are based on more traditional
---------------------- activities that maintain their advantage in know-how over the years, and
---------------------- for some of them, over the centuries. They are often industry specific. For
example: London as financial centre.
---------------------- ●● Factor endowment clusters: They are created because of a comparative
---------------------- advantage they might have linked to a geographical position. For
example, wine production clusters because of sunny regions surrounded
---------------------- by mountains, where good grapes can grow. This is like certain areas in
France, Spain, Chile or California.
----------------------
A business cluster is a geographical location where enough resources and
---------------------- competences amass and reach a critical threshold, giving it a key position in
a given economic branch of activity, with a decisive sustainable competitive
---------------------- advantage over other places, or even a world supremacy in that field.
---------------------- The Silicon Valley Case
---------------------- In the mid to late 1990s, several successful computer technology related
companies emerged in Silicon Valley in California. This led anyone who wished
---------------------- to create a start-up company to do so in Silicon Valley. The surge in the number
of Silicon Valley start-ups led to a number of venture capital firms relocating to
----------------------
or expanding their Valley offices. This in turn encouraged more entrepreneurs
---------------------- to locate their start-ups there.
In other words, venture capitalists (sellers of finance) and dot-com start-
----------------------
ups (buyers of finance) “clustered” in and around a geographical area.
---------------------- The cluster effect in the capital market also led to a cluster effect in the
labour market. As an increasing number of companies started up in Silicon
----------------------
Valley, programmers, engineers, etc. realised that they would find greater job
---------------------- opportunities by moving to Silicon Valley. This concentration of technically
skilled people in the valley meant that start-ups around the country knew that
---------------------- their chances of finding job candidates with the proper skill-sets were higher in
the valley, hence giving them added incentive to move there. This in turn led to
----------------------
more high-tech workers moving there.
---------------------- Value Chain
---------------------- Value chain is a chain of activities for a firm operating in a specific industry.
The business unit is the appropriate level for construction of a value chain, not
---------------------- the divisional level or corporate level. Products pass through all activities of

198 World Class Manufacturing

the chain in order, and at each activity the product gains some value. The chain Notes
of activities gives the products more added value than the sum of added values
of all activities. It is important not to mix the concept of the value chain with ----------------------
the costs occurring throughout the activities. A diamond cutter can be used as
an example of the difference. The cutting activity may have a low cost, but the ----------------------
activity adds much of the value to the end product, since a rough diamond is ----------------------
significantly less valuable than a cut diamond. Typically, the described value
chain and the documentation of processes, assessment and auditing of adherence ----------------------
to the process routines are at the core of the quality certification of the business,
e.g., ISO 9001. ----------------------

Activities ----------------------
The value chain categorises the generic value-adding activities of an ----------------------
organisation. The “primary activities” include: inbound logistics, operations
(production), outbound logistics, marketing and sales (demand), and services ----------------------
(maintenance). The “support activities” include: administrative infrastructure
----------------------
management, human resource management, technology (R&D), and
procurement. The costs and value drivers are identified for each value activity. ----------------------
Significance of value chain
----------------------
The value chain framework quickly made its way to the forefront of
management thought as a powerful analysis tool for strategic planning. The ----------------------
simpler concept of value streams, a cross-functional process which was ----------------------
developed over the next decade, had some success in the early 1990s.
The value-chain concept has been extended beyond individual firms. ----------------------
It can apply to whole supply chains and distribution networks. The delivery ----------------------
of a mix of products and services to the end customer will mobilise different
economic factors, each managing its own value chain. The industry wide ----------------------
synchronized interactions of those local value chains create an extended value
chain, sometimes global in extent. Porter terms this larger interconnected ----------------------
system of value chains the “value system.” A value system includes the value ----------------------
chains of a firm’s supplier (and their suppliers all the way back), the firm itself,
the firm distribution channels, and the firm’s buyers (and presumably extended ----------------------
to the buyers of their products, and so on).
----------------------
Capturing the value generated along the chain is the new approach taken
by many management strategists. For example, a manufacturer might require its ----------------------
parts’ suppliers to be located nearby its assembly plant to minimise the cost of
transportation. By exploiting the upstream and downstream information flowing ----------------------
along the value chain, the firms may try to bypass the intermediaries creating ----------------------
new business models, or in other ways create improvements in its value system.
----------------------
Value chain analysis has also been successfully used in large petrochemical
plant maintenance organisations to show how work selection, work planning, ----------------------
work scheduling and finally work execution can (when considered as elements
of chains) help drive lean approaches to maintenance. The Maintenance Value ----------------------
Chain approach is particularly successful when used as a tool for helping
----------------------

Views of Experts 199

 Notes Change Management as it is seen as more user friendly than other business
process tools.
----------------------
Value chain analysis has also been employed in the development sector as
---------------------- a means of identifying poverty reduction strategies by upgrading along the value
chain. Although commonly associated with export-oriented trade, development
---------------------- practitioners have begun to highlight the importance of developing national and
intra-regional chains in addition to international ones.
----------------------
Four Corners Model
----------------------
It is a predictive tool designed by Michael Porter that helps in determining
---------------------- a competitor’s course of action. Unlike other predictive models which
predominantly rely on a firm’s current strategy and capabilities to determine
---------------------- future strategy, Porter’s model additionally calls for an understanding of what
motivates the competitor. This added dimension of understanding a competitor’s
----------------------
internal culture, value system, mind set and assumptions help in determining a
---------------------- much more accurate and realistic reading of a competitor’s possible reactions in
a given situation.
----------------------
The Four Corners
---------------------- Motivation – Drivers: This helps in determining competitor action by
---------------------- understanding their goals (both strategic and tactical) and their current position
vis-à-vis their goals. A wide gap between the two could mean the competitor
---------------------- is highly likely to react to any external threat that comes in its way, whereas a
narrower gap is likely to produce a defensive strategy. Question to be answered
---------------------- here is: What is it that drives the competitor? These drivers can be at various
---------------------- levels and dimensions and can provide insights into future goals.
Motivation – Management Assumptions: The perceptions and
---------------------- assumptions the competitor has about itself and its industry would shape strategy.
---------------------- This corner includes determining the competitor’s perception of its strengths
and weaknesses, organisation culture and their beliefs about competitor’s goals.
---------------------- If the competitor thinks highly of its competition and has a fair sense of industry
forces, it is likely to be ready with plans to counter any threats to its position.
---------------------- On the other hand, a competitor who has a misplaced understanding of industry
---------------------- forces is not very likely to respond to a potential attack. Question to be answered
here is: What are competitor’s assumption about the industry, competition and
---------------------- its own capabilities?
---------------------- Actions – Strategy: A competitor’s strategy determines how it competes
in the market. However, it should be noted that there could be a difference
---------------------- between the company’s intended strategy (as stated in the annual report,
interviews) and its realised strategy (as can be evinced from its acquisitions,
----------------------
new product development, etc.). It is therefore important here to determine the
---------------------- competitor’s realised strategy and how they are actually performing. If current
strategy is yielding satisfactory results, it is safe to assume that the competitor
---------------------- is likely to continue to operate in the same way. Questions to be answered
here are: What is the competitor actually doing and how successful are they in
----------------------
implementing their current strategy?

200 World Class Manufacturing

 Actions – Capabilities: This looks at a competitor’s inherent ability Notes
to initiate or respond to external forces. Though it might have the motivation
and the drive to initiate a strategic action, its effectiveness is dependent on its ----------------------
capabilities. Its strengths will also determine how the competitor is likely to
----------------------
respond to an external threat. An organisation with an extensive distribution
network is likely to initiate an attack through its channel, whereas a company ----------------------
with strong financials is likely to counter attack through price drops. The
questions to be answered here are: What are the strengths and weaknesses of ----------------------
the competitor? Which areas is the competitor strong in? ----------------------
The main strength of Porter’s four corners is that, it attempts to understand
----------------------
the psychological aspects of competitive action. It allows for and takes into
consideration factors such as motivation which are often overlooked but often ----------------------
the key drivers of competitive behaviour.
----------------------
Firms are more often than not aware of their rivals and do have a generally
good understanding of their strategies and capabilities. However, motivational ----------------------
factors are often overlooked. Sufficiently motivated competitors can often
----------------------
prove to be more competitive than bigger but less motivated rivals. What sets
this model apart from others is its insistence on accounting for the “implicit” ----------------------
factors such as culture, history, executive, consultants, and board’s backgrounds,
goals, values and commitments and inclusion of management deep beliefs and ----------------------
assumptions about what works or does not work in the market. ----------------------
Porter’s four corners model provides a framework that ties competitor’s
----------------------
capabilities to their assumptions of the competitive environment and their
underlying motivations. By looking at both a firm’s capabilities (what the firm ----------------------
can do) and underlying implicit factors (their motivations to follow a course
of action) can help predict competitor actions with a relatively higher level of ----------------------
confidence. The underlying assumption here is that decision makers in firms are ----------------------
essentially human and hence subject to the influences of affective and automatic
processes described by neuroscientists. Hence, by considering these factors ----------------------
along with a firm’s capabilities, this model is a better predictor of competitive
----------------------
behaviour.
----------------------
Check your Progress 2
----------------------
Fill in the blanks. ----------------------
1. _____________diagram is also known as Cause-and-Effect Diagram.
----------------------
2. ______________Analysis is also known as 80:20 rule.
----------------------
3. Four Most Important Dimensions of World Class Manufacturing are
efficiency, ___________, costs and ___________. ----------------------
4. Deming’s ______Principles and _______Cycle are popular in World ----------------------
Class Manufacturing.
----------------------

Views of Experts 201

 Notes
Activity 4
----------------------
Write a case on Michel Porter’s Five Forces and how they affect the market.
----------------------

----------------------
8.7 C. K. PRAHALAD
----------------------
Core competency
---------------------- Core competency is a specific factor that a business sees as being central
---------------------- to the way it, or its employees, work. It fulfils three key criteria:
1. It provides consumer benefits.
----------------------
2. It is not easy for competitors to imitate.
---------------------- 3. It can be leveraged widely to many products and markets.
---------------------- A core competency can take various forms, including technical/subject
matter know-how, a reliable process and/or close relationships with customers
---------------------- and suppliers. It may also include product development or culture, such as
---------------------- employee dedication.
Core competencies are particular strengths relative to other organisations
---------------------- in the industry which provide the fundamental basis for the provision of added
---------------------- value. Core competencies are the collective learning in organisations, and involve
how to coordinate diverse production skills and integrate multiple streams of
---------------------- technologies. It is communication, an involvement and a deep commitment to
working across organisational boundaries. Few companies are likely to build
---------------------- world leadership in more than five or six fundamental competencies.
---------------------- Co-creation

---------------------- Co-creation is a form of market or business strategy that emphasises the

generation and ongoing realisation of mutual firm-customer value. It views
---------------------- markets as forums for firms and active customers to share, combine and renew
each other’s resources and capabilities to create value through new forms of
---------------------- interaction, service and learning mechanisms. It differs from the traditional
active firm - passive consumer market construct of the past.
----------------------
Co-created value arises in the form of personalised, unique experiences
---------------------- for the customer (value-in-use) and ongoing revenue, learning and enhanced
market performance drivers for the firm (loyalty, relationships, customer word
----------------------
of mouth). Value is co-created with customers if and when a customer is able to
---------------------- personalize his/her experience using a firm’s product-service proposition – in
the lifetime of its use – to a level that is best suited to get his/her job(s) or tasks
---------------------- done and which allows the firm to derive greater value from its product-service
investment in the form of new knowledge, higher revenues/profitability and/or
----------------------
superior brand value/loyalty.
---------------------- Scholars C.K. Prahalad and Venkat Ramaswamy introduced the concept in
---------------------- their 2000 Harvard Business Review article, “Co-Opting Customer Competence”.

202 World Class Manufacturing

They developed their arguments further in their book published by Harvard Notes
Business School Press, The Future of Competition where they offered examples
including Napster and Netflix showing that customers would no longer be ----------------------
satisfied with making yes or no decisions on what a company offers. Value will
be increasingly co-created by the firm and the customer, they argued, rather than ----------------------
being created entirely inside the firm. Co-creation in their view not only describes ----------------------
a trend of jointly creating products, it also describes a movement away from
customers buying products and services as transactions, to those purchases being ----------------------
made as part of an experience. The authors held that consumers seek freedom of
choice to interact with the firm through a range of experiences. Customers want ----------------------
to define choices in a manner that reflects their view of value, and they want to ----------------------
interact and transact in their preferred language and style.
----------------------
The Third Stage of Co-Creation
Ramaswamy and Francis Gouillart now advise companies on a third ----------------------
stage of co-creation that seeks to improve how companies operate throughout
----------------------
their organisations, and in all their systems and processes. This “full theory of
interactions” goes beyond the existing forms of co-creation of the customer ----------------------
experience and co-creation of products and services.
----------------------
Transforming traditional corporate practices such as training, performance
management and communications into co-creative interactions; sparks ----------------------
innovation, cuts costs, increases employee engagement, and generates value.
Examples of companies at various stages of transformation through co-creation ----------------------
include Nike, Nokia, IBM and Credit Agricole.
----------------------

Activity 5 ----------------------

----------------------
Organisations rely on core competency to remain competitive. Take up a
case from the industry. ----------------------

----------------------
8.8 STEPHEN COVEY ----------------------
The Seven Habits of Highly Effective People ----------------------
First published in 1989, is a self-help book written by Stephen R. Covey.
----------------------
Covey presents an approach to being effective in attaining goals by aligning
oneself to what he calls “true north” principles of a character ethic that he ----------------------
presents as universal and timeless.
----------------------
The 7 Habits:
The First Three Habits surround moving from dependence to independence ----------------------
(self-mastery)
----------------------
●● Habit 1: Be Proactive
----------------------
●● Habit 2: Begin with the End in Mind
●● Habit 3: Put First Things First ----------------------

Views of Experts 203

 Notes The Next Three are to do with Interdependence:

---------------------- ●● Habit 4: Think Win/Win

●● Habit 5: Seek First to Understand, then to be Understood
----------------------
●● Habit 6: Synergise
---------------------- The Last habit relates to self-rejuvenation:
---------------------- ●● Habit 7: Sharpening the Saw

---------------------- Abundance mentality

Covey coined the term abundance mentality or abundance mindset,
---------------------- a business concept in which a person believes there are enough resources and
---------------------- success to share with others, when looking at optimistic people. It is commonly
contrasted with the scarcity mindset, which is founded on the idea that, given
---------------------- a finite amount of resources, a person must hoard their belongings and protect
them from others. Individuals with an abundance mentality are supposed to be
---------------------- able to celebrate the success of others rather than be threatened by it.
---------------------- A number of books appearing in business press since then have discussed
the idea. The abundance mentality is believed to arrive from having a high
---------------------- self-worth and security, and leads to the sharing of profits, recognition and
---------------------- responsibility. Organisations may also apply an abundance mentality while
doing business.
----------------------
The Upward Spiral
---------------------- Covey explains the “Upward Spiral” model in the ‘sharpening the
saw’ section. Through our conscience, along with meaningful and consistent
----------------------
progress, the spiral will result in growth, change, and constant improvement.
---------------------- The Upward Spiral model consists of three parts: learn, commit, do. According
to Covey, one must be increasingly educating the conscience in order to grow
---------------------- and develop on the upward spiral. The idea of renewal by education will propel
one along the path of personal freedom, security, wisdom, and power.
----------------------

---------------------- 8.9 PETER SENGE

---------------------- The Fifth Discipline: The Art and Practice of the Learning Organisation
---------------------- It is a book by Peter Senge (a senior lecturer at MIT) focusing on
group problem solving using the systems thinking method in order to convert
---------------------- companies into learning organisations. The five disciplines represent approaches
(theories and methods) for developing three core learning capabilities: fostering
----------------------
aspiration, developing reflective conversation, and understanding complexity.
---------------------- The Five Disciplines
---------------------- The five disciplines of the learning organisation discussed in the book are:

---------------------- 1. “Personal mastery is a discipline of continually clarifying and deepening

our personal vision, of focusing our energies, of developing patience, and
---------------------- of seeing reality objectively.”

204 World Class Manufacturing

2. “Mental models are deeply ingrained assumptions, generalizations, or Notes
even pictures of images that influence how we understand the world and
how we take action.” ----------------------

3. “Building shared vision is a practice of unearthing shared pictures of ----------------------

the future that foster genuine commitment and enrolment rather than
compliance.” ----------------------

4. “Team learning starts with dialogue, the capacity of members of a team to ----------------------
suspend assumptions and enter into genuine thinking together.”
----------------------
5. Systems thinking - The Fifth Discipline that integrates the other 4.
----------------------
“Systems thinking also needs the disciplines of building shared vision,
mental models, team learning, and personal mastery to realize its potential. ----------------------
Building shared vision fosters a commitment to the long term. Mental models
focus on the openness needed to unearth shortcomings in our present ways of ----------------------
seeing the world. Team learning develops the skills of groups of people to look for
----------------------
the larger picture beyond individual perspectives. And personal mastery fosters
the personal motivation to continually learn how our actions affect our world.” ----------------------
The Learning Disabilities ----------------------
●● I am in my position.
----------------------
People fail to recognise their purpose as a part of the enterprise. Instead,
they see themselves as an inconsequential part of a system over which ----------------------
they have little influence, leading them to limit themselves to the jobs
they must perform at their own positions. This makes it hard to pinpoint ----------------------
the reason an enterprise is failing, with so many hidden ‘loose screws’ ----------------------
around.
●● The enemy out there. ----------------------
●● The Illusion of Taking Charge ----------------------
●● The Fixation of Events ----------------------
The tendency to see things as results of short-term events undermines our
ability to see things on a grander scale. Cave men needed to react to events ----------------------
quickly for survival. However, the biggest threats we face nowadays are ----------------------
rarely sudden events, but slow, gradual processes, such as environmental
changes. ----------------------
●● The Parable of the Boiling frog* ----------------------
●● The Delusion of Learning from Experience
----------------------
●● The Myth of the Management Team
*[The boiling frog story is a widespread anecdote describing a frog ----------------------
slowly being boiled alive. The premise is that if a frog is placed in boiling water,
----------------------
it will jump out, but if it is placed in cold water that is slowly heated, it will
not perceive the danger and will be cooked to death. The story is often used as ----------------------
a metaphor for the inability of people to react to significant changes that occur
gradually.] ----------------------

Views of Experts 205

 Notes The 11 Laws of the Fifth Discipline
1. Today’s problems come from yesterday’s “solutions”.
----------------------
2. The harder you push, the harder the system pushes back.
----------------------
3. Behaviour will grow better before it grows worse.
---------------------- 4. The easy way out usually leads back in.
---------------------- 5. The cure can be worse than the disease.
---------------------- 6. Faster is slower.
7. Cause and effect are not closely related in time and space.
----------------------
8. Small changes can produce big results...but the areas of highest leverage
---------------------- are often the least obvious.
---------------------- 9. You can have your cake and eat it too - but not all at once.

---------------------- 10. Dividing an elephant in half does not produce two small elephants.
11. There is no blame.
----------------------

---------------------- Summary
---------------------- ●● The change in the concepts of how to reach the world class standards has
been due to the theories and techniques propagated by modern experts of
---------------------- management.
---------------------- ●● Dr. W. Edwards Deming taught that by adopting appropriate principles
of management, organisations can increase quality and simultaneously
---------------------- reduce costs. His theory of profound knowledge and 14 principles formed
---------------------- the foundation for TQM. Appreciation of system and understanding
variation were two key concepts, which formed the basis for his theories.
---------------------- ●● Philip Crosby was another quality expert, who introduced the concepts of
‘Four absolute truths of Quality’ and ‘14 step zero defect’
----------------------
●● Shigeo Shingo introduced concepts of SMED (Rapid setups of machines)
---------------------- while Ishikawa, another Japanese management expert introduced Quality
Circles and Ishikawa diagram.
----------------------
●● Michael Porter, a strategy expert, came up with concepts like competitive
---------------------- advantage, five forces, which determine competitive intensity, business
clusters, value chain and four corner model, a predictive tool to predict
---------------------- competitor’s actions.
---------------------- ●● C.K. Prahlad advocated concepts of core competency and co-creation
while very recently, 7 habits of a successful manager by Stephen Covey
---------------------- is a widely talked about theory.
----------------------
Keywords
----------------------
●● Profound knowledge: Knowledge, which is universally true irrespective
---------------------- of time and place.

206 World Class Manufacturing

●● Special causes: Causes of variation in the process, which are external to Notes
the process.
●● Deming cycle: Plan-Do-Check-Act close loop recommended by Deming ----------------------
for continuous improvement. ----------------------
●● System: Activities organised in a logical manner to achieve objectives.
----------------------
●● Successive check: Inspection done by the next person in the chain.
●● Self-check: Inspection done by the person doing the operation. ----------------------
●● Source inspection: Inspection performed by the individual worker, ----------------------
except instead of checking for defects, the worker checks for the errors
that will cause defects. ----------------------
●● Fish bone diagram: Cause-and-effect diagram also known as Ishikawa
----------------------
diagram.
●● Business cluster: Geographic concentration of interconnected businesses, ----------------------
suppliers, and associated institutions in a particular field.
----------------------
●● Value chain: Chain of activities for a firm operating in a specific industry.
●● Core competency: Specific factor that a business sees as being central to ----------------------
the way it, or its employees, works. ----------------------
●● Co-creation: Form of market or business strategy that emphasises the
generation and ongoing realisation of mutual firm-customer value. ----------------------

----------------------
Self-Assessment Questions
----------------------
1. What is ‘System of Profound Knowledge’?
----------------------
2. Why should organisations have constancy of purpose?
3. What are the characteristics of a successful organisation as per Crosby? ----------------------

4. Explain the concept of ‘Business Cluster’ and its significance to market. ----------------------
5. Elaborate on any 5 laws of fifth discipline. ----------------------

Answers to Check your Progress ----------------------

----------------------
Check your Progress 1
Fill in the blanks. ----------------------
1. Dr. W. Edwards Deming is known as the Father of Quality Management. ----------------------
2. SQC & SPC Principle was introduced by Phil Crosby. ----------------------
3. Shigeo Shingo is well known for Six Sigma & Process Variation principles
in quality management. ----------------------

4. Dr. C. K. Pralhad is a well-known corporate trainer in strategy management. ----------------------

----------------------

----------------------

Views of Experts 207

 Notes Check your Progress 2

---------------------- Fill in the blanks.

1. Ishikawa diagram is also known as Cause-and-Effect Diagram.
----------------------
2. Pareto Analysis is also known as 80:20 rule.
----------------------
3. Four Most Important Dimensions of World Class Manufacturing are
---------------------- efficiency, effectiveness, costs and quality.

---------------------- 4. Deming’s 14 Principles and PDCA Cycle are popular in World Class
Manufacturing.
----------------------

---------------------- Suggested Reading

---------------------- 1. Lee, William B. and Michael Katzorke. Leading Effective Supply Chain
Transformations: A Guide to Sustainable World-class Capability and
---------------------- Results. J. Ross Publishing.
---------------------- 2. Tomkins, James A., Dale A. Harmelink. The Supply Chain Handbook.
Tompkins Press.
----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

208 World Class Manufacturing

Lean Six Sigma
UNIT

9
Structure:

9.1 Introduction
9.2 Lean Manufacturing
9.3 Concept of Six Sigma
9.4 Execution Infrastructure for Lean Six Sigma Application
9.5 Tools for Lean Six Sigma
Summary
Key Words
Self-Assessment Questions
Answers to Check your Progress
Suggested Reading

Lean Six Sigma 209

 Notes
Objectives
----------------------
After going through this unit, you will be able to:
----------------------
• Identify the relationship between lean and six sigma
----------------------
• Compare lean applications with Toyota production system
---------------------- • Identify time traps, which drastically bring down cycle efficiency
---------------------- • State the characteristics of lean manufacturing system.
---------------------- • Discuss the essentials of six sigma

---------------------- • Describe the infrastructure needed for application of lean six sigma
• Analyse major DMAIC (define, measure, analyse, improvement,
---------------------- control) tools needed for implementation of lean six sigma
---------------------- methodology

----------------------
9.1 INTRODUCTION
----------------------
Lean Manufacturing and Six Sigma are two of the most talked about and
----------------------
practiced methods by many World Class Manufacturing companies. Origin
---------------------- and history of both these tools is different. Lean principles originate from the
Japanese manufacturing industry. The term was first coined by John Krafcik
---------------------- in an article, “Triumph of the Lean Production System”, whereas Six Sigma
is a system of practices originally developed by Bill Smith of Motorola to
----------------------
systematically improve processes by eliminating defects.
---------------------- Two of the customer’s primary requirements are quality and timely
---------------------- delivery. Both these requirements are susceptible to the variability in each
process within the supply chain. This variability is of two types:
---------------------- 1. Variability in the quality of the output.
---------------------- 2. Variability in the time taken for the activity.
---------------------- Six Sigma is used for bringing process under statistical control so that the
variability in the output quality can be kept within the desired limits. This method
---------------------- cannot on its own control the time factor, which will need the methodology of
‘Lean’. As both are related to variability of the process, better results can be
----------------------
achieved if both the approaches, i.e. Six Sigma and Lean are practiced together.
---------------------- As a matter of fact, the tools and the infrastructure for practicing these two
different methods are common to a large extent. Hence, both these methods are
---------------------- discussed in this unit together.
----------------------

----------------------

----------------------

210 World Class Manufacturing

9.2 LEAN MANUFACTURING Notes

Lean v/s TPS ----------------------

For many, Lean is the set of “tools” that assist in the identification and ----------------------
elimination of waste (muda). As waste is eliminated, quality improves while
production time and costs are reduced. Some examples of such “tools” are Value ----------------------
Stream Mapping, Five S, Kanban (pull systems), poka-yoke (error-proofing), ----------------------
etc.
There is a second approach to Lean Manufacturing, which is promoted ----------------------
by Toyota and is widely known as Toyota Production System (TPS), which is ----------------------
already discussed in greater details in one of the previous units. The system
focuses upon improving the “flow” or smoothness of work, thereby steadily ----------------------
eliminating mura (“unevenness”) through the system. Goal of TPS is to virtually
eliminate wait time throughout the supply chain. Every operation is made so ----------------------
flexible that actual usage by the customer creates a demand to produce only the ----------------------
amount consumed by the customer – whether internal or external.
----------------------
The difference between these two approaches is not the goal but the way
of achieving it. The implementation of smooth flow exposes quality problems ----------------------
which already existed and eliminating these, results in waste reduction.
----------------------
Both ‘Lean’ and ‘Toyota Production System’ can be seen as a loosely
connected set of potentially competing principles whose goal is cost reduction ----------------------
by the elimination of waste. These principles include: pull processing, perfect
first-time quality, waste minimisation, continuous improvement, flexibility, ----------------------
building and maintaining a long term relationship with suppliers, autonomation,
----------------------
load levelling, production flow and visual control.
Toyota’s view is that ‘Lean’ does not refer to any tools, but it is the reduction ----------------------
of three types of waste: muda (“non-value-adding work”), muri (“overburden”), ----------------------
and mura (“unevenness”). Lean exposes the problems systematically which are
then solved through various tools applicable to that situation. Toyota Production ----------------------
System (TPS) and the original seven muda are explained in more details in one
of the previous units. ----------------------
Lean means fast processes. Slow processes are responsible for increasing ----------------------
the throughput time and adding to costs.
----------------------
Lean manufacturing conceptually differs from the traditional manufacturing.
Lean manufacturing focuses on eliminating the waiting time from the system. ----------------------
In most manufacturing systems, this waiting time can go as high as 95%. Lean
manufacturing works in three steps: ----------------------

1. Identify the time delay at critical workstations (Referred to as ‘Time ----------------------

Traps’).
----------------------
2. Analyse the causes for these Time Traps.
----------------------
3. Apply lean manufacturing techniques/tools to remove the causes for these
Time Traps. ----------------------

Lean Six Sigma 211

 Notes The result will be a system where there are minimum time delays.
Following example can illustrate the concept:
----------------------
Example
----------------------
For an assembly made up of four parts (1. 2, 3 & 4), each part has to
---------------------- undergo operation numbers A, B, C and D in that sequence. Setup time and
processing time/unit on each workstation, for all four parts are given below:
----------------------
A B C D
---------------------- Setup (Hrs) 4 Nil Nil Nil
---------------------- Unit (Secs) 25 30 25 40
Assembly takes 2.5 minutes. On workstation A, a batch of 1000 is taken
----------------------
before changing the setting to the next part.
---------------------- Taking closer look at the above details, following facts emerge.
---------------------- 1. Value added time for each assembled unit = Processing time for each part
for one assembly unit +Assembly time
----------------------
25 + 30 + 25 + 40
---------------------- =4x + 2.5 = 9.07 + 2.5 = 11.57 minutes
60
---------------------- 2. Workstation turnover time for workstation A = Time taken to process a
batch of 1000 of all the four parts = 4 x (setup time + processing time for
---------------------- 1000 batch)
---------------------- 25 x 1000
which is = 4 x (4 + – ) = 43.78
hours 60 x 60
----------------------
1 1
---------------------- 3. Process Lead time = x Max. workstation time = x 43.78 = 21.9 hours
2 2
----------------------
Value added time 11.57 1
4. Cycle Efficiency = = x x 100 = 0.88%
---------------------- Process Lead time 60 21.9
Note that this is less than 1
----------------------
5. Pile up of inventory (Average 500 of every part) is seen at the assembly
---------------------- point, which is not due to constraint at assembly point but due to necessity
of taking a batch of 1000 numbers of every part in order to compensate
----------------------
for high – 4 hours – of setting time
---------------------- Conclusions:
---------------------- 1. Cause of delay in the process and consequent low cycle efficiency is the
bottleneck operation.
----------------------
2. Bottleneck operation may not be in some cases the one where the inventory
---------------------- piles up but the one, which accounts for the maximum time in the process,
i.e., the one, which has the maximum workstation turnover time.
----------------------
3. Appropriate lean tool is to be used to the bottleneck operation to get
---------------------- improvement.

212 World Class Manufacturing

 In the example cited above, bottleneck is at operation number 1 and the Notes
necessary lean tool is SMED (Single Minute Exchange of Dies). If setup time
is reduced to 1 hour, batch size can be reduced to 250 and average inventory to ----------------------
125 (Improvement of 400%).
----------------------
Improved workstation turnover time will be:
----------------------
25 x 250
4 x (1 + ) = 10.94
60 x 6 ----------------------
1 ----------------------
Process Lead time will come down to x 10.94 = 5.47
2
----------------------
11.571 1
And improved cycle efficiency will be x x 100 = 3.53% ----------------------
60 5.47
Measure of Lean is the ‘Cycle Efficiency’. ----------------------
Characteristics of “Lean Manufacturing”
----------------------
●● Single-piece production
----------------------
●● Repetitive order characteristics
●● Just-In-Time materials/pull scheduling ----------------------

●● Short cycle times ----------------------

●● Quick changeover ----------------------
●● Continuous flow work cells
----------------------
●● Collocated machines, equipment, tools and people
----------------------
●● Compressed space
●● Multi-skilled employees ----------------------

●● Flexible work force ----------------------

●● Empowered employees ----------------------
●● High first-pass yields with major reductions in defects
----------------------

Activity 1 ----------------------

----------------------
Compare ‘Lean Manufacturing’ with ‘Toyota Production System’.
----------------------

9.3 CONCEPT OF SIX SIGMA ----------------------

Six Sigma is a system of practices originally developed by Bill Smith of ----------------------

Motorola to systematically improve processes by eliminating defects. Defects ----------------------
are defined as units that the customer would not like to have. Since it was
originally developed, Six Sigma has become one of the more important tools ----------------------
for Total Quality Management (TQM) initiatives.
----------------------

Lean Six Sigma 213

 Notes Six Sigma is a powerful tool that can help an organisation to design,
operate and control every process in such a manner that no process yields more
---------------------- than 3.4 defects for every million opportunities.
---------------------- Six Sigma concept reduces defects in two different ways:
1) By reducing the variability by re-designing the process, and
----------------------
2) By permitting higher variations in specifications.
----------------------
Six Sigma methodology addresses two basic areas of operations: Through
---------------------- DMAIC (Define, Measure, Analyse, Improve, Control) tools, existing business
processes are improved whereas DMADV (Define, Measure, Analyse, Design,
---------------------- Verify) tools aim at creating new product/process designs which are inherently
---------------------- defect free and give better performance.
The core of the Six Sigma methodology is a data-driven, systematic
---------------------- approach to problem solving, with a focus on customer requirements. Statistical
---------------------- tools and analysis are often useful in the process. However, it is a mistake to
view the core of the Six Sigma methodology as statistics; an acceptable Six
---------------------- Sigma project can be started with only rudimentary statistical tools.
---------------------- Origin and meaning of the term “six sigma process”

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------
Graph of the normal distribution which underlies the statistical
---------------------- assumptions of the Six Sigma model. The Greek letter ó marks the distance on
---------------------- the horizontal axis between the mean, μ, and the curve’s inflection point. The
greater this distance is, the greater is the spread of values encountered. For the
---------------------- curve shown in red above, μ = 0 and ó = 1. The other curves illustrate different
values of μ and ó.
----------------------
The following outlines the statistical background of the term Six Sigma:
---------------------- Sigma (the lower- case Greek letter ó) is used to represent the standard deviation
(a measure of variation) of a statistical population. The term “six sigma process,”
---------------------- comes from the notion that if one has six standard deviations between the mean
---------------------- of a process and the nearest specification limit, there will be practically no items
that fail to meet the specifications. This is based on the calculation method
---------------------- employed in a process capability study, which is already discussed in one of the
previous units.
----------------------

214 World Class Manufacturing

 In a capability study, the number of standard deviations between the Notes
process mean and the nearest specification limit is given in sigma units. As
process standard deviation goes up, or the mean of the process moves away ----------------------
from the centre of the tolerance, fewer standard deviations will fit between the
mean and the nearest specification limit, decreasing the sigma number. ----------------------

Role of the 1.5 Sigma Shift ----------------------

Experience has shown that in the long term, processes usually do not ----------------------
perform as well as they do in the short. As a result, the number of sigmas that
will fit between the process mean and the nearest specification limit is likely to ----------------------
drop over time, compared to an initial short-term study. To account for this real-
----------------------
life increase in process variation over time, an empirically-based 1.5 sigma shift
is introduced into the calculation. According to this idea, a process that fits six ----------------------
sigmas between the process mean and the nearest specification limit in a short-
term study will in the long term only fit 4.5 sigmas – either because the process ----------------------
mean will move over time, or because the long-term standard deviation of the
----------------------
process will be greater than that observed in the short term, or both.
Hence, the widely accepted definition of a six sigma process is one that ----------------------
produces 3.4 defective parts per million opportunities (DPMO). This is based
----------------------
on the fact that a process that is normally distributed will have 3.4 parts per
million beyond a point that is 4.5 standard deviations above or below the mean ----------------------
(one-sided capability study). So the 3.4 DPMO of a “Six Sigma” process in fact
corresponds to 4.5 sigmas, namely 6 sigmas minus the 1.5 sigma shift introduced ----------------------
to account for long-term variation. This is designed to prevent underestimation
----------------------
of the defect levels likely to be encountered in real-life operation.
Sigma Level Calculations ----------------------

Sigma level calculations are based on number of Defects per Million ----------------------
Opportunities (DPMO). The DPMO calculation requires flowing details:
----------------------
●● Number of units produced in the batch for every predetermined period.
●● Number of defect opportunities, i.e., number of checks during the processing. ----------------------
●● Number of defective units. ----------------------
Then, DPMO = Number of defective units × 1,000,000 ----------------------
Number of units produced × Number of defect opportunities
Six Sigma Table ----------------------

Sigma Level DPMO Defect-free population% ----------------------

1 690,000 31 ----------------------
2 308,000 69.2 ----------------------
3 66,800 93.32
----------------------
4 6,210 99.379
----------------------
5 320 99.977
6 3.4 99.9997 ----------------------

Lean Six Sigma 215

 Notes Essentials of Six Sigma are:
●● Customer centricity
----------------------
●● Top management engagement
---------------------- ●● Resource commitment
---------------------- ●● Execution infrastructure

---------------------- ●● Financial results

---------------------- Activity 2
----------------------
1. Visit the website of American Society for Quality and read about ‘Six
---------------------- Sigma’
---------------------- 2. Draw the graph showing significance of 1.5 sigma shift.

----------------------
9.4 EXECUTION INFRASTRUCTURE FOR LEAN SIX
----------------------
SIGMA APPLICATIONS
----------------------
CEO
---------------------- Company Champion Business Unit Head
---------------------- Business Unit Champion Process Owner Process Owner Process Owner
---------------------- Master Black Belt
Black Belt Black Belt Black Belt Green Belt Green Belt Green Belt
----------------------
Project Team Members
----------------------

---------------------- CEO

----------------------
Company Champion
----------------------

---------------------- Business Unit Champion

---------------------- Master Black Belt

----------------------

---------------------- Black Belt Black Belt Black Belt

----------------------

----------------------

---------------------- Fig. 9.1: Six Sigma Process Implementation Organisation Chart

---------------------- Note: Positions shown in bold and italics work full time on Six Sigma.

216 World Class Manufacturing

1. All other positions participate in Six Sigma in addition to their normal Notes
responsibilities.
----------------------
2. Dotted line connections show cross-functional relationships.
Responsibilities and Training Needs of Six Sigma Positions ----------------------
Company Champion ----------------------
He is the overall head of Six Sigma initiative in the organisation and ----------------------
reports directly to the CEO.
Responsibilities: ----------------------

●● Develop corporate Six Sigma strategy. ----------------------

●● Lead design team. ----------------------
●● Monitor execution of Six Sigma through comparison of actual results
with the set goals and initiate corrective actions to close the gaps. ----------------------
●● Communicate Six Sigma within the organisation. ----------------------
●● Ensure value creation through project selection and effective barrier ----------------------
removal.
●● Liaison between Six Sigma activities and regular operations. ----------------------
●● Coordinate training for Six Sigma. ----------------------
Training needs:
----------------------
●● Managing of Six Sigma infrastructure without hampering regular work.
----------------------
●● Financial, NPV analysis and value theory.
●● Project selection methodology. ----------------------
●● General overall exposure to Six Sigma tools. ----------------------
●● Interpersonal and communication skills.
----------------------
Business Unit Champion
Looks after Six Sigma activities in the Business Unit/Division. He serves ----------------------
as the bond between Six Sigma projects and Business Unit strategies. ----------------------
Responsibilities:
----------------------
●● Develop Six Sigma schedules and deployment plans for the unit.
----------------------
●● Coordinate with the Business Unit Head for Six Sigma activity.
●● Ensure effective communication between Business Unit Head and Black ----------------------
Belt improvement teams.
----------------------
●● Provide integration between full time and part time teams working on Six
Sigma (Refer the organisation structure shown in the previous figure). ----------------------
●● Monitor Six Sigma results, compare them with the set goals, analyse the ----------------------
gap and report to the Company Champion.
----------------------

----------------------

Lean Six Sigma 217

 Notes Training needs:
Intensive training in Six Sigma tools used in value stream analysis and
----------------------
project selection.
---------------------- Master Black Belts
---------------------- These are internal expert consultants to Black Belts and to Project teams
they head. During initial phases when internal experts in Six Sigma applications
---------------------- are not available, external consultants may be hired.
---------------------- Responsibilities:

---------------------- ●● Manage improvement teams by providing leadership.

●● Train, mentor and coach Black Belts.
----------------------
●● Be an expert resource at least in one speciality area needed for
---------------------- improvement.
●● Arrange experience sharing of successes and best practices between
----------------------
different teams through meetings or symposia.
---------------------- Training Needs:
---------------------- Extensive training in all areas of Six Sigma, with experience of completing
at least 5−6 improvement projects with substantial annualized benefits.
----------------------
Black Belts
---------------------- They lead the Project teams to deliver value and are the backbones of Six
---------------------- Sigma.
Responsibilities:
----------------------
●● Implement improvement projects through a team and in collaboration
---------------------- with process owners.
---------------------- ●● Report team progress to Master Black Belts/Business Unit Champions.
●● Train Green Belts in DMAIC tools.
----------------------
●● Lead the team, identify best practices and report to Master Black Belts.
---------------------- Training:
---------------------- ●● Leadership and communication skills.
---------------------- ●● Six Sigma improvement processes and tools.
●● Problem solving tools.
----------------------
●● Understanding of financial analysis.
---------------------- ●● Working knowledge of routine software and computer applications.
---------------------- Green Belts

---------------------- Are the employees who take up Six Sigma implementation along with
their other job responsibilities? They operate under the guidance of Black Belts
---------------------- and support them in achieving the overall results.

----------------------

218 World Class Manufacturing

White Belts Notes
Junior most fresh entrants to Six Sigma structure initiated with an
----------------------
objective for future expansion of Six Sigma network. They assist Green Belts
or carry out specific responsibilities for Black Belts. ----------------------
Specific meaning of certain terms for six sigma
----------------------
●● Control: The state of stability, normal variation and predictability. Process
of regulating and guiding operations and processes using quantitative ----------------------
data.
----------------------
●● CTQ: Critical to Quality (Critical “Y”): Element of a process or
practice which has a direct impact on its perceived quality. ----------------------
●● Customer Needs, Expectations: Needs, as defined by customers, which ----------------------
meet their basic requirements and standards.
----------------------
●● Defects - Sources of customer irritation: Defects are costly to both
customers and to manufacturers or service providers. Eliminating defects ----------------------
provides cost benefits.
●● Variance: A change in a process or business practice that may alter its ----------------------
expected outcome. ----------------------
Software used for Six Sigma
----------------------
There are generally two classes of software used to support Six Sigma:
analysis tools, which are used to perform statistical or process analysis, and ----------------------
programme management tools, used to manage and track a corporation’s
entire Six Sigma programme. Analysis tools include statistical software such ----------------------
as Minitab, JMP, SigmaXL, RapAnalyst or Statgraphics as well as process ----------------------
analysis tools such as iGrafx. Some alternatives include Microsoft Visio,
Telelogic System Architect, IBM Web-Sphere Business Modeler, and Proforma ----------------------
Corp. ProVision. For programme management, tracking and reporting, the most
popular tools are Instantis, Power Steering, I Nexus and Six Net. Other Six ----------------------
Sigma for IT Management tools include Proxima Technology Centauri, HP ----------------------
Mercury, BMC Remedy.
----------------------
Check your Progress 1 ----------------------

Fill in the blanks. ----------------------

1. _____________and _______________ are the two most practiced ----------------------
methods by many world class manufacturing organisations.
----------------------
2. Two of the customer’s primary requirements are ____________
and____________ delivery. ----------------------
3. Some of the most common lean tools are VSM, _______, Kanban and
----------------------
_________.
4. Three types of wastes are ________, muri and ________. ----------------------

----------------------

Lean Six Sigma 219

 Notes
Activity 3
----------------------
1. Cite examples from Industry who have set up a separate infrastructure
----------------------
for execution of Lean Six Sigma.
---------------------- 2. Search on the Web to find out how many automotive and manufacturing
---------------------- companies in India have achieved Six Sigma Quality Standards.

----------------------
9.5 TOOLS FOR LEAN SIX SIGMA
----------------------
Tools used for practicing Lean and Six Sigma are categorised as DMAIC
---------------------- (Define, Measure, Analyse, Improvement & Control) tools. The list of some
widely used tools is given below. (* marked tools are already discussed
----------------------
elsewhere in this book and the remaining are discussed in this unit).
---------------------- Define Tools:
---------------------- 1. Project Definition Form

---------------------- 2. SIPOC Diagram

Measure Tools:
----------------------
A. Process Characteristic Tools
----------------------
1. Process Mapping
---------------------- 2. Value Stream Mapping
---------------------- B. Focus Tools
1. Pareto Charts
----------------------
2. Cause & Effect Matrix
----------------------
3. FMEA*
---------------------- C. Idea Generating & Selection Tools
---------------------- 1. Brainstorming
2. Nominal Group Technique
----------------------
3. Multi-voting
----------------------
4. Ishikawa Diagram
---------------------- D. Data Collection Tools
---------------------- 1. Tally Sheets
2. Gauge R&R
----------------------
E. Understanding and Eliminating Variation
----------------------
1. Run Charts*
---------------------- 2. Control Charts*
---------------------- 3. Process Capability*

220 World Class Manufacturing

Analyse Tools: Notes
1. Scatter Plots
----------------------
2. ANOVA
----------------------
3. Regression Analysis
----------------------
4. Time Trap Analysis
----------------------
5. Root Cause Analysis*
----------------------
Improve Tools:
----------------------
1. Poka-Yoke*
2. Kaizen ----------------------

3. SMED* ----------------------

4. TPM* ----------------------
5. DOE ----------------------
Control Tools: ----------------------
SPC* ----------------------
Define Tools
----------------------
1. Project Definition Form
----------------------
This is a form designed to give information on the key parameters of
the project to the Top Management. It should be a live document which ----------------------
keeps on evolving as the project progresses through its various phases. ----------------------
The form can be linked to the project tracking software. The form will
normally contain following information: ----------------------
●● Problem for which, the project is initiated, i.e., ‘Problem Definition’. ----------------------
●● Scope of the project. ----------------------
●● Background history. ----------------------
●● Key areas of measurement.
----------------------
●● Benefits that can accrue with successful culmination of the project.
----------------------
●● Requirement of resources and costs involved.
----------------------
●● Underlying assumptions.
----------------------
●● Risks involved.
----------------------
●● Likely duration of the project.
----------------------

----------------------

Lean Six Sigma 221

 Notes A typical sample of a Project Definition Form is given below.
Project Definition Form [or PID]
----------------------

---------------------- Project Client: Company or Department Name Sponsor:

----------------------
Project Title:
----------------------
Link with company strategy – actual wording.
----------------------

---------------------- Project Background:

---------------------- Project Benefits:

----------------------
Project Objectives:
----------------------
Project Deliverables:
----------------------

---------------------- Project Boundaries: Project Exclusions:

----------------------
Success Criteria:
----------------------
Constraints:
----------------------

---------------------- Key Assumptions:

---------------------- Project Risks:

----------------------
Project Issues:
----------------------

---------------------- Project Manager:

---------------------- Project Sponsor:
Project Board/ Steering Project Team Members:
---------------------- Group Members:
---------------------- Resource Costs: Other Costs:

---------------------- Total costs & anticipated Profit / ROI(attach breakdown of overall budget)
---------------------- Project Start Date: Completion Date:
Signature of Project Date:
---------------------- Manager:
Approval from Project Date:
----------------------
Sponsor:
----------------------

222 World Class Manufacturing

2. SIPOC Diagram Notes
SIPOC diagram is also known as a high level process map. The reason
----------------------
to map the current process is to be able to quickly define, document,
analyse, prioritise and recommend solutions and follow-up plans to move ----------------------
the company toward its financial and customer-focused goals.
----------------------
Before beginning a process improvement project, all the relevant elements
must be identified. SIPOC Diagram is used to help define these. A SIPOC ----------------------
diagram helps to identify the process outputs and the customers of those
outputs so that the voice of the customer can be captured. ----------------------
The SIPOC diagram includes a high-level map of the process that “maps ----------------------
out” its basic steps. Through the process, the suppliers (S) provide input (I)
to the process. The process (P), which is under improvement, adds value, ----------------------
resulting in output (O) that meets or exceeds the customer (C) expectations.
----------------------
These can be better defined as:
----------------------
●● Suppliers: Significant internal/external suppliers to the process.
●● Inputs: Significant inputs to the process. This would include things ----------------------
such as materials, forms, information, staff, etc. ----------------------
●● Process: One block representing the entire process.
----------------------
●● Outputs: Significant outputs to internal/external customers. This
would be anything the business unit distributes. Frequency/timing is ----------------------
listed along with the output. Examples of outputs would be reports,
ratings, products, documents, etc. ----------------------
●● Customers: Significant internal/external customers to the process. ----------------------
This would include anyone who receives outputs. It is important to
note that the customer must get the output directly from the business ----------------------
unit and does not necessarily have to be a user of the output. If
----------------------
the output is received from a third party, they are not customers.
Examples of customers could be managers, CEOs, boards of ----------------------
directors or other departments.
----------------------
When creating a SIPOC diagram, the project team does not necessarily
need to begin from scratch. In fact, the team should probably start in the ----------------------
process (P) phase and ask questions about the process itself. The team
should label the process with the summaries of the most critical in three ----------------------
to six steps. After analysing the process, they should document what (O)
----------------------
is delivered to whom (C). The team can brainstorm and prioritise the most
critical one to those customers. They then can identify, prioritise and align ----------------------
the outputs most significant to those customers. The next step would be
to verify these initial assumptions with voice of the customer tools from ----------------------
the DMAIC process and/or designate as critical to quality, speed or cost.
----------------------
Lastly, the team can identify what input or information (I) is needed to
perform that process and who provides that input (S). This brainstorming ----------------------
and prioritisation of significant inputs finishes the activities around
building a SIPOC. ----------------------

Lean Six Sigma 223

 Notes In summary, there are three main reasons for building a SIPOC diagram.
These are:
----------------------
1. A SIPOC diagram quickly and easily captures the current or “as is” state
---------------------- of the organisation and processes in question.
2. The SIPOC exercise brings associates together in a non-threatening way
----------------------
that builds.
---------------------- 3. The SIPOC exercise allows the team to review all the processes in a way
that they can easily see which next steps can be identified.
----------------------
Steps to Complete the SIPOC Diagram
----------------------
The steps for building a SIPOC diagram are:
---------------------- 1. Create an area that will allow the team to post additions to the SIPOC
---------------------- diagram. This could be a transparency (to be projected by an overhead)
made of the provided template, flip charts with headings (S-I-P-O-C)
---------------------- written on each, or headings written on post-it notes posted to a wall.
---------------------- 2. Begin with the Process. Map it in four to five high level steps.
3. Identify the outputs of this process.
----------------------
4. Identify the customers that will receive the outputs of this process.
----------------------
5. Identify the inputs required for the process to function properly.
---------------------- 6. Identify the suppliers of the inputs that are required by the process.
---------------------- 7. Optional: Identify the preliminary requirements of the customers. This
will be verified during a later step of the Six Sigma measurement phase.
----------------------
8. Discuss with Project Sponsor, Champion, and other involved stakeholders
---------------------- for verification.
---------------------- Example: SIPOC Diagram of an office boy making a cup of tea for the boss.

---------------------- Suppliers Inputs Process Output Customer

Office boy Gas stove Start gas Tea Boss
---------------------- Grocer Water, Pot Boil water Tea bags
Gas Agency Kettle Pour in kettle
---------------------- Cutlery shop Tea bags Immerse tea bags
Milk-man Milk pot
----------------------
Sugar pot Prepare tray
---------------------- Cup, saucers, spoons Serve tea
Measure Tools
----------------------
A. Process Characteristic Tools
----------------------
1. Process Mapping (Flow Charting)
---------------------- A flowchart is a graphical representation of a process. It represents the
---------------------- entire process from start to finish, showing inputs, pathways and circuits, action
or decision points, and ultimately, completion. It can serve as an instruction
----------------------

224 World Class Manufacturing

manual or a tool for facilitating detailed analysis and optimisation of workflow Notes
and service delivery.
----------------------
Work-flow (process) mapping is one of the fastest ways to lower errors,
increase productivity, and affect customer service. It generally follows these ----------------------
steps:
----------------------
a. Existing work flow:
1. Choose a process, which is time-consuming, error-prone, or critical ----------------------
to success; starting where there is a strong potential for improvement
----------------------
which will provide better chances of success.
2. Assemble a team, which will include people from the lowest and ----------------------
highest levels directly involved in the operation. The team must be ----------------------
given the responsibility and sufficient authority to take decisions to
modify the existing workflow to a new and better one. ----------------------
3. Map out the way work is currently done with designated symbols. ----------------------
i. Ovals show input to start the process or output at the end of
the process. ----------------------

ii. Boxes or rectangles show task or activity performed in the ----------------------

process.
----------------------
iii. Arrows show process direction flow.
----------------------
iv. Diamonds show points in the process where yes/no questions
are asked or a decision is required. ----------------------
v. Usually there is only one arrow out of an activity box. If there ----------------------
is more than one arrow, you may need a decision diamond.
vi. If there are feedback arrows, make sure feedback loop is ----------------------
closed; i.e. it should take you back to the input box. ----------------------
b. Improvement:
----------------------
1. Identify problem areas. Where there are many areas to choose from,
try to follow the 80/20 rule; work on the 20% of the areas that cause ----------------------
80% of the problems.
----------------------
2. Brainstorm solutions. Identify all possible action steps for each
problem area, without evaluating them. ----------------------
3. Evaluate action steps. Set up a set of “final” action steps by group ----------------------
consensus.
----------------------
c. Implementation:
1. Assign responsibilities. Ask people to volunteer to take responsibility ----------------------
for each action step judged to be worthwhile by the group, and to ----------------------
set deadlines.
----------------------
2. Create a master plan for assigning responsibilities for actions and
the deadlines. ----------------------

Lean Six Sigma 225

 Notes Distribute the plan and make sure everyone agrees with it and that
it accurately reflects the decisions made during the sessions.
----------------------
3. Monitor the progress and regularly brainstorm to have ongoing
---------------------- improvements.
2. Value Stream Mapping
----------------------
Value stream comprises all those activities that convert customer needs
---------------------- into customer satisfiers in the form of Product/Service/Information.
---------------------- Value stream mapping is a paper and pencil sketch that depicts all the
process steps, which are required to turn customer needs into products/services
---------------------- that satisfy these needs and helps you to see and understand the flow of material
---------------------- and information as a product or service makes its way through the value stream.
Value stream mapping is typically used in Lean; it differs from the process
---------------------- mapping of Six Sigma in four ways:

---------------------- 1. It gathers and displays a far broader range of information than a typical
process map.
---------------------- 2. It tends to be at a higher level (5−10 boxes) than many process maps.
---------------------- 3. It tends to be used at a broader level, i.e., from receiving of raw material
to delivery of finished goods.
----------------------
4. It tends to be used to identify where to focus future projects, subprojects,
---------------------- and/or kaizen events.
---------------------- Value Stream Map clarifies:

---------------------- ●● Multiple process levels.

●● Non-value activities that contribute to ‘Waste’.
----------------------
●● The decision points, which otherwise are not directly visible.
---------------------- Activities on a Value Stream Map are classified in three categories:
---------------------- ●● Activities that add value for the customer.
●● Activities that add value for the business.
----------------------
●● Non-value adding activities.
----------------------
A value stream map takes into account not only the activity of the product,
---------------------- but the management and information systems that support the basic process.
This is especially helpful when working to reduce cycle time on bottleneck
---------------------- operations, because you gain insight into the decision making flow in addition
to the process flow. It is actually a Lean tool.
----------------------
The basic idea is to first map your process, then above it map the
---------------------- information flow that enables the process to occur.
---------------------- Implementation Steps

---------------------- ●● Identify the target product, product family, or service.

●● Draw a current state value stream map, which shows the current steps,
---------------------- delays, and information flows required to deliver the target product or

226 World Class Manufacturing

 service. This may be a production flow (raw materials to consumer) Notes
or a design flow (concept to launch). There are ‘standard’ symbols for
representing supply chain entities. ----------------------
●● Assess the current state value stream map in terms of creating flow by ----------------------
eliminating waste.
●● Draw a future state value stream map. ----------------------
●● Implement the future. ----------------------
Hines and Rich defined seven value stream mapping tools, they are:
----------------------
●● Process Activity Mapping.
----------------------
●● Supply Chain Responsiveness Matrix.
●● Product Variety Funnel. ----------------------
●● Quality Filter Mapping. ----------------------
●● Forrester Effect Mapping.
----------------------
●● Decision Point Analysis.
●● Overall Structure Maps. ----------------------

B. Focus Tools ----------------------

1. Pareto Analysis ----------------------
It is a graphical picture of the most frequent causes of the problem and is
----------------------
based on the principle that 20% of the causes account for 80% of the problem.
This is also known as 80/20 or Pareto rule. Pareto diagram is a special type of ----------------------
Histogram, where the bars are arranged in descending order of their heights,
showing individual contribution of each factor as well as the cumulative ----------------------
contribution. The diagram helps in identifying the ‘vital few’ (20%) causes
----------------------
from the ‘trivial many’ so that management concentration can be focused on
these to get better and faster results with lesser efforts. This is also sometimes ----------------------
referred to as ‘Management by exception’.
----------------------
2. Cause-and-Effect Matrix
This is an effective tool for capturing “Voice of Customer” and relating ----------------------
it to the process input variables. Process input variables are ranked in terms of ----------------------
their importance in satisfying customer requirements so that more attention can
be paid to the variables, which have greater influence on customer satisfaction. ----------------------
The Matrix is created in following steps: ----------------------
1. Process outputs in terms of customer requirements are listed in the top
horizontal row and each of these is given a rating vis-à-vis its importance ----------------------
on a scale of 1–10. ----------------------
2. Process input variables are listed in the vertical column on the left side of
----------------------
the matrix.
Use of Process Map is made to list down the Process inputs. ----------------------

----------------------

Lean Six Sigma 227

 Notes 3. Relationship of each input to the customer requirement is now given
marks as below:
----------------------
No relation - 0
---------------------- Weak relation - 1
Fair relation - 3
---------------------- Strong relation - 9
---------------------- 4. Process output importance is now calculated by multiplying relationship
factor times with the customer importance rating for each input variable
---------------------- and summing these values on the right side of the column.
---------------------- 5. Input factors having higher numbers will need more attention while
processing.
----------------------
Example: Cause-and-Effect Matrix for a Tea Shop is constructed below.
----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

---------------------- Obviously, the most important process input variables are: add tea, add
milk and add sugar in order to get the better satisfaction and will need close
---------------------- attention in preparing tea.
---------------------- C. Idea Generating and Selection Tools
---------------------- 1. Brainstorming
Brainstorming is a group creativity technique designed to generate a
----------------------
large number of ideas for the solution of a problem. In 1953, the method
---------------------- was popularised by Alex Faickney Osborn in a book called Applied
Imagination. Osborn proposed that groups could double their creative
---------------------- output with brainstorming.
----------------------

228 World Class Manufacturing

 There are four basic rules in brainstorming. These are intended to reduce Notes
social inhibitions among group members, stimulate idea generation, and
increase overall creativity of the group. ----------------------
a. Focus on quantity: This rule is a means of enhancing divergent production, ----------------------
aiming to facilitate problem solving through the maxim quantity breeds
quality. The assumption is that the greater the number of ideas generated, ----------------------
the greater the chance of producing a radical and effective solution.
----------------------
b. Withhold criticism: In brainstorming, criticism of ideas generated
should be put ‘on hold’. Instead, participants should focus on extending ----------------------
or adding to ideas, reserving criticism for a later ‘critical stage’ of the
----------------------
process. By suspending judgment, participants will feel free to generate
unusual ideas. ----------------------
c. Welcome unusual ideas: To get a good and long list of ideas, unusual
----------------------
ideas are welcomed. They can be generated by looking from new
perspectives and suspending assumptions. These new ways of thinking ----------------------
may provide better solutions.
----------------------
d. Combine and improve ideas: Good ideas may be combined to form a
single better good idea, as suggested by the slogan “1+1=3”. It is believed ----------------------
to stimulate the building of ideas by a process of association.
----------------------
Set the problem
Before a brainstorming session, it is critical to define the problem. The ----------------------
problem must be clear, not too big, and captured in a specific question such ----------------------
as “What service for mobile phones is not available now, but needed?” If the
problem is too big, the facilitator should break it into smaller components, each ----------------------
with its own question.
----------------------
Background
----------------------
The background memo is the invitation and informational letter for the
participants, containing the session name, problem, time, date and place. The ----------------------
problem is described in the form of a question, and some example ideas are
given. The memo is sent to the participants well in advance, so that they can ----------------------
think about the problem beforehand.
----------------------
Select Participants
----------------------
The facilitator composes the brainstorming panel, consisting of the
participants and an idea collector. A group of 10 or fewer members is generally ----------------------
more productive. Many variations are possible but the following composition is
suggested. ----------------------

●● Several core members of the project who have proved themselves. ----------------------
●● Several guests from outside the project, with affinity to the problem. ----------------------
●● One idea collector who records the suggested ideas.
----------------------
List of Leading Questions:
During the brainstorming session, the creativity may decrease. At this ----------------------

Lean Six Sigma 229

 Notes moment, the facilitator should stimulate creativity by suggesting a lead question
to answer, such as Can we combine these ideas? or How about looking from
---------------------- another perspective? It is best to prepare a list of such leads before the session
begins.
----------------------
Conducting the Session:
----------------------
The facilitator leads the brainstorming session and ensures that ground
---------------------- rules are followed. The steps in a typical session are:
a. A warm-up session, to expose novice participants to the criticism-free
----------------------
environment.
---------------------- A simple problem is brainstormed, for example, What should be the CEO’s
---------------------- retirement present? or What can be improved in Microsoft Windows?
b. The facilitator presents the problem and gives a further explanation if
---------------------- needed.
---------------------- c. The facilitator asks the brainstorming group for their ideas.
---------------------- d. If no ideas are forthcoming, the facilitator suggests a lead to encourage
creativity.
----------------------
e. All participants present their ideas, and the idea collector records them.
---------------------- f. To ensure clarity, participants may elaborate on their ideas.
---------------------- g. When time is up, the facilitator organises the ideas based on the topic,
goal and encourages discussion.
----------------------
h. Ideas are categorised.
----------------------
i. The whole list is reviewed to ensure that everyone understands the ideas.
---------------------- j. Duplicate ideas and obviously infeasible solutions are removed.
---------------------- k. The facilitator thanks all participants and gives each a token of appreciation.

---------------------- Process of conducting a brainstorming session:

●● Participants who have ideas but were unable to present them are
---------------------- encouraged to write down the ideas and present them later.
---------------------- ●● The idea collector should number the ideas, so that the chairperson can
use the number to encourage an idea generation goal, for example: We
---------------------- have 44 ideas now, let’s get it to 50!
---------------------- ●● The idea collector should repeat the idea in the words he or she has
written verbatim, to confirm that it expresses the meaning intended by the
---------------------- originator.
---------------------- ●● When many participants are having ideas, the one with the most associated
idea should have priority. This is to encourage elaboration on previous
---------------------- ideas.
---------------------- ●● During a brainstorming session, managers and other superiors may be
discouraged from attending, since it may inhibit and reduce the effect of
---------------------- the four basic rules, especially the generation of unusual ideas.

230 World Class Manufacturing

Evaluation: Notes
Brainstorming is not just about generating ideas for others to evaluate
----------------------
and select. Usually the group itself will, in its final stage, evaluate the ideas and
select one as the solution to the problem proposed to the group. ----------------------
●● The solution should not require resources or skills the members of the
----------------------
group do not have or cannot acquire.
●● If acquiring additional resources or skills is necessary, that needs to be the ----------------------
first part of the solution.
----------------------
●● There must be a way to measure progress and success.
●● The steps to carry out the solution must be clear to all, and amenable to ----------------------
being assigned to the members so that each will have an important role. ----------------------
●● There must be a common decision making process to enable a coordinated
effort to proceed, and to reassign tasks as the project unfolds. ----------------------
●● There should be evaluations at milestones to decide whether the group is ----------------------
on track toward a final solution.
----------------------
●● There should be incentives to participation so that participants maintain
their efforts. ----------------------
2. Nominal Group Technique
----------------------
Every problem has multiple solutions and these can be suggested by
different people working on the project. There has to be a way to select the ----------------------
best possible solution without hurting the sentiments of the rest. Nominal ----------------------
Group Technique tries to achieve this. It is an idea selection tool used in
conjunction with brainstorming. The technique uncouples every idea ----------------------
from personalities of the team members. It is used especially when the
issues involved are controversial and some of the team members are more ----------------------
aggressive by nature. During the NGT, ideas are explained, team members ----------------------
can ask questions and seek clarifications but there are no free discussions
about pros and cons. Every member is given limited number of votes to ----------------------
cast and ideas which receive the maximum number of votes are selected for
final discussion. Advantage of the technique is that the ideas get selected on ----------------------
their merit and not on the person who has suggested them. ----------------------
3. Multi-voting
----------------------
This is the next step to NGT and is used when possible choices are reduced
to a manageable number (5−10). Each team member now gets one third ----------------------
of votes of the total choices available and the results after voting are put
on the Pareto Chart. ----------------------

4. Ishikawa Diagram ----------------------

This method of finding all possible causes for an end effect, which ----------------------
in most cases is a problem, was introduced by Ishikawa. The method
identifies various possible ‘causes’ for a problem ‘(Effect)’ so that each ----------------------
possibility can be examined thoroughly in order to pinpoint the actual
----------------------

Lean Six Sigma 231

 Notes causes and take appropriate actions to eliminate these. Hence it is also
called as “Cause-and- Effect” diagram. Due to its peculiar configuration,
---------------------- which resembles a fish bone, some people refer to it as a “Fish Bone”
diagram. The diagram is essentially a culmination of a ‘Brainstorming’
---------------------- session group constituted to identify all possible causes for the problem.
---------------------- Example: Cause and Effect diagram for the problem of ‘High Fuel Consumption’
of a car is constructed below.
----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------
Fig. 9.2: Cause and Effect Diagram
---------------------- D. Data Collection Tools
---------------------- 1. Tally Sheets
---------------------- These are forms designed to record the generated data in an organised
way to facilitate its subsequent analysis. These tally sheets are of three
---------------------- main types:
---------------------- i. Inspection tally sheet: Used for grouping various types of defects from
production lots of products at regular intervals of time.
----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

232 World Class Manufacturing

Example Notes
ii. Recording tally sheet: Designed to record a large number of observations
----------------------
in an organised way to facilitate the subsequent analysis.
Example: Frequency table for recording of observations for 50 mm ----------------------
diameter measurement for 150 pieces of cylindrical rod.
----------------------
Department —————————— Operator ——————————
Date: Specifications: 49.95 to 50.05 ----------------------
Measurements Frequency of occurrence Total ----------------------
49.95 5 10 15 20 25 30 35 40
----------------------
/ 1 7 //// 19 25 //// //// 40
49.96 /// 3 ----------------------
49.97 //// // ----------------------
49.98 //// //// ////
49.99 //// //// //// //// //// ----------------------
50.00 //// //// //// //// //// ////
50.01 //// //// //// //// //// / 26 ----------------------
50.02 //// //// //// /// 18
----------------------
50.03 //// / 6
50.04 //// 4 ----------------------
50.05 / 1
iii. Check Sheet: Listing down of all the elements/items necessary for ----------------------
carrying out the planned activity successfully and achieve the desired ----------------------
results. Wherever necessary, the elements/items are listed down in their
logical sequence/chronological order. ----------------------
Examples: a) Comprehensive list of items to be carried on a trekking trip. ----------------------
b) Route sheet, which gives the sequence of operations and path
----------------------
to be followed by a part to be manufactured.
2. Gage Repeatability and Reproducibility ----------------------
Most decisions as regards fitness for use of a product are based on the ----------------------
measurements carried out on the product. These results are subject to
variation due to two basic factors: firstly ability of the same person to ----------------------
repeat the results and secondly possibility of different persons repeating ----------------------
the results. Both these factors are technically termed as:
Gage Repeatability: Extent to which a person taking measurement on
i.  ----------------------
the same product, using the same instrument will get different results. ----------------------
Gage Reproducibility: Extent to which different persons taking
ii. 
----------------------
measurement on the same product using the same instrument will get
different results. ----------------------
If measurement variation is less than 10% of the specification spread, the
----------------------
Gage R&R is considered as good. Between 10% to 30%, it needs improvement
and above 30% it is unsuitable for use. ----------------------

Lean Six Sigma 233

 Notes Analyse Tools
1. Scatter Plots
----------------------
It is a special type of graph in which, two characteristics whose relationship
---------------------- is to be studied, are taken on X and Y axis. Each observation is recorded as
a dot on the graph, which gives a pattern of scattered dots. This pattern can
----------------------
indicate whether there is any relationship between these two characteristics.
---------------------- An imaginary straight/ curved line can be drawn through these scattered
dots to highlight the relationship. Line graph shown previously is actually
---------------------- culmination of scatter dots of Temp v/s time observations.
---------------------- 2. Analysis of Variation (ANOVA)

---------------------- Output of any process is subject to variation due to many factors. To

analyse this variation fully and then reduce it, it is necessary to study all
---------------------- permutations and combinations of these factors. This cumbersome job is
made easy by using a simple statistical package like Minitab for getting
---------------------- Analysis of Variation (ANOVA) evaluation by inputting the relevant data.
---------------------- 3. Regression Analysis

---------------------- ANOVA helps in identifying the input variables, which are more
responsible for variation in the output. Regression analysis helps in
---------------------- the quest of finding a solution by providing a mathematical model that
quantifies the relationship between an input variable and the output. This
---------------------- facilitates prediction of the process performance resulting from changes
---------------------- made in specific input variables. For example, in Polymer manufacturing,
ANOVA can identify Temperature and Line Speed as two input variables
---------------------- having a significant effect on tensile strength of Polymer but regression
analysis will provide a mathematical equation, which will relate these
---------------------- input variables to the tensile strength.
---------------------- 4. Time Trap Analysis
---------------------- We have already seen that in most processes, materials spend hardly 5%
of total time in value added activities and almost 80% of the delay is
---------------------- caused by very few activities. These delay causing activities are the “Time
Traps”. Once these ‘Time traps’ are identified, improvement projects can
----------------------
be taken up to reduce/eliminate the time spent in these activities. This can
---------------------- give a significant reduction in the through-put time and costs.
A simple case of ‘time trap’ involving four activities was illustrated in the
----------------------
earlier unit. However, when the operations are many and complex, such
---------------------- manual methods or use of spread sheets for identifying ‘Time traps’ will
be very cumbersome and prone to errors. This problem is now addressed
---------------------- in most of the ERP systems, which supplement old infinite capacity MRP
systems with Advanced Planning (AP) programs that use real capacity.
----------------------
The systems store necessary data for calculating minimum batch sizes. In
---------------------- addition, Supply Chain Accelerator (SCA) software is available to support
Advance Planning (AP) programmes. SCA in addition to calculating
---------------------- minimum batch sizes also helps in identifying the hidden ‘Time traps’.

234 World Class Manufacturing

Improve Tools Notes
1. Kaizen
----------------------
The term Kaizen (Pronounced ki-zen) is a Japanese word where “kai”
means “change” or “the action to correct” and “zen” means “good”. ----------------------
Together the word refers to a philosophy or practices focusing on ongoing,
----------------------
continuous improvements in any activity whether manufacturing, business
or even life in general. In contrast to the usual emphasis on revolutionary, ----------------------
innovative change on an occasional basis, Kaizen looks for uninterrupted,
ongoing incremental change. ----------------------
When used in the business sense and applied to the workplace, Kaizen ----------------------
typically refers to activities that continually improve all functions of a
business, from manufacturing to management and from the CEO to a line ----------------------
worker. Kaizen covers total spectrum of business.
----------------------
Originally a Buddhist term, Kaizen comes from the words, “Renew the
heart and make it good.” Therefore, adaptation of the Kaizen concept ----------------------
also requires changes in “the heart of the business”, corporate culture and ----------------------
structure.
By improving standardised activities and processes, Kaizen aims to ----------------------
eliminate waste. Kaizen was first implemented in several Japanese ----------------------
businesses during the country’s recovery after World War II and has since
spread to businesses throughout the world. According to Masaki Imai ----------------------
who was the first to introduce the concept in the industry, “Kaizen means
improvement. Moreover it means continuing improvement in personal ----------------------
life, home life, social life, and working life.” ----------------------
Kaizen is basically an umbrella concept that can utilise any of the known
tools like Kanban, JIT, Five S, Jidoka, TQC, SPC, Quality Circles, TPM, ----------------------
SMED, Andons, etc. either separately or in combination to get the desired ----------------------
ongoing improvement.
----------------------
Principles of Kaizen implementation are:
●● Human resources are the most important company asset. ----------------------
●● Processes must evolve by gradual improvement rather than radical ----------------------
changes.
----------------------
●● Improvement must be based on statistical/quantitative evaluation
of process performance. ----------------------
Kaizen can be implemented in an organisation by improving every
aspect of a business process in a step-by-step approach, while gradually ----------------------
developing employee skills through training education and increased ----------------------
involvement. Responsibilities of various levels in the organisation for
successful implementation of Kaizen are given below: ----------------------
1. Top Management ----------------------
●● Determination to introduce Kaizen as Corporate Strategy.
----------------------

Lean Six Sigma 235

 Notes ●● Providing support, direction and resources.
●● Establishing policy for Kaizen and cross-functional goals.
----------------------
●● Ensuring attainment of the set goals through policy deployment and
---------------------- cross-functional management.
●● Building systems, procedures and structures conducive to Kaizen.
----------------------
2. Middle Management
---------------------- ●● Implementing Kaizen goals through policy deployment and cross-
---------------------- functional management.
●● Using Kaizen in functional areas.
----------------------
●● Establishing, maintaining and upgrading standards.
---------------------- ●● Increasing awareness for Kaizen through training and education.
---------------------- ●● Helping employees to develop skills and tools for problem solving.
3. Supervisors
----------------------
●● Using Kaizen in functional roles.
---------------------- ●● Formulating plans for Kaizen and providing guidance to the
workers.
----------------------
●● Improving communication with workers and sustaining high
---------------------- morale.
---------------------- ●● Supporting Quality Circle activity and suggestion schemes.
●● Ensuring discipline on the shop floor.
----------------------
4. Workers
---------------------- ●● Engaging in Kaizen through suggestion system and Quality Circle
activity.
----------------------
●● Practicing ‘Five S’ on shop floor.
---------------------- ●● Engaging in continuous self-development to become better problem
---------------------- solvers.
●● Enhancing skill and versatility.
----------------------
Kaizen system is simple, but its implications are far reaching. These can
---------------------- be in the area of
PQCDSM – Productivity, Quality, Cost, Delivery, Safety and Morale of
----------------------
Employees.
---------------------- Different Versions of Kaizen
---------------------- 1. Kaizen Teian
It is just making suggestions for improving a work. The suggestions are
----------------------
reviewed by management and those that are accepted are executed.
---------------------- 2. Gemba or Point Kaizen
---------------------- Gemba meaning, “where the real work is being done”, e.g., on the shop
floor or at the point where a service is being delivered. Gemba Kaizen
---------------------- involves following activities:

236 World Class Manufacturing

●● Map the work process. Notes
●● Do measurements to detect waste.
----------------------
●● Involve the team in uncovering the reasons for waste and generating ideas
for eliminating those reasons. ----------------------
●● Make changes necessary for improving the work process. ----------------------
●● Measure the benefits of the improvements.
----------------------
●● Standardise the new process and train all concerned.
----------------------
Five Golden Rules of Gemba Kaizen:
i. Go to the spot at the workplace (Gemba), where problem arises. ----------------------
ii. Check Gembutsu (Tangible objects at Gemba such as work pieces, tools, ----------------------
jigs, fixtures, machines, etc.).
----------------------
iii. Take temporary measures at the spot to restart the operations so as to
minimise loss due to stoppages. ----------------------
iv. Find and eliminate root cause. ----------------------
v. Standardise to prevent recurrence. ----------------------
Three Ground Rules:
----------------------
i. Housekeeping: Foundation for Gemba Kaizen is implementation and
practice of ‘Five S’. It is observed that 50% of defectives are reduced ----------------------
through perfect housekeeping. ----------------------
ii. Muda Elimination: Muda means any wasteful activity or any obstruction
----------------------
to smooth flow of an activity.
Activity = Work + Muda Expenditure = Cost + Waste ----------------------
That is, for each activity there is expenditure and every work there is a ----------------------
cost associated. Any expenditure on the Muda is a waste!
----------------------
(Elimination of ‘Waste’ is discussed in greater details in one of the
previous units). ----------------------
iii. Standardise: Find the best way for doing a job. This will reduce defectives ----------------------
by further 50%.
----------------------
3. Flow Kaizen or Kaikaku Kaizen
----------------------
It is an extended value stream at the business level. It focuses on the
top-level view of the extended value stream and identifies improvements at ----------------------
that level. For example, IT process. It identifies waste in the sequencing of
value stream components or even in the presence of unnecessary components. ----------------------
It will identify waste in how outputs move from the production system through ----------------------
distribution channels to customers. In essence, it evaluates the structure and
flow of value from suppliers through production to customers. ----------------------

----------------------

Lean Six Sigma 237

 Notes 4. Blitz Kaizen
It is an approach to having a special event type Kaizen in the workplace.
----------------------
It involves broadly and specifically having the employees do the Kaizen. It
---------------------- typically emphasises using cross-functional teams so that all the trades involved
in a work process are represented. It uses a fixed time cycle (usually 5-days) to
---------------------- do the Kaizen.
---------------------- 5. Kobetsu Kaizen

---------------------- Uses a special event approach that focuses on improvements associated

with machines and is linked to the application of Total Productive Maintenance
---------------------- (TPM). It begins with an up-front planning activity that focuses its application
where it will have the greatest effect within a business. It defines a project
---------------------- that works through a problem-solving process. It analyses machine operations
---------------------- information, uncovers waste, uses a form of root cause analysis (perhaps the 5
Whys approach) to discover the causes of waste, applies tools to remove waste
---------------------- (e.g., Quick Change), and measures results.

---------------------- 6. Paper Kaizen

It is a process improvement activity wherein:
----------------------
●● A work process (either operating or under conceptual stage) is described
---------------------- on paper.
---------------------- ●● Description is reviewed to detect waste.
●● Process is revised to eliminate the waste.
----------------------
●● Measurement activity is added to gauge the current process status on
---------------------- predetermined characteristics (e.g., cycle time, throughput, elements of
waste like wait time), compare it to the desired state, and revise the work
---------------------- process to achieve the desired state.
---------------------- ●● Improved work process is described on paper.

---------------------- Another approach is to add a walk-through element where the process

improvers walk-through the process and get information and ideas from the
---------------------- workers. This front-end activity occurs during the first day of the event and
involves:
----------------------
●● Mapping the work process.
---------------------- ●● Doing a walk-through to verify the process description.
---------------------- ●● Detecting waste and get worker ideas.
●● Analysing the waste observed to identify opportunities for improvement
----------------------
and verifying that the mission and goals for the event make sense.
---------------------- Major Kaizen Concepts
---------------------- 1. Kaizen v/s Management: Responsibilities of Top Management, Middle
Management and Supervisors for Kaizen are already explained earlier.
----------------------
●● Maintenance: Activities directed towards maintaining current
---------------------- technological, managerial and operating standards and upholding

238 World Class Manufacturing

 such standards through training and discipline. Assigned tasks are Notes
performed to follow the Standard Operating Procedures (SOPs).
●● Improvements: Activities directed at uplifting current standards. ----------------------
●● Kaizen focuses on human efforts: Emphasis is on perfecting the ----------------------
process (correct way of doing the things) so that the desired results
are guaranteed. ----------------------
2. Process v/s Results ----------------------
Kaizen focuses on human efforts. Emphasis is on perfecting the process ----------------------
(correct way of doing the things) so that the desired results are guaranteed.
3. Following PDCA/SDCA cycle: ----------------------

P – Plan: Refers to establishing a target for improvement. D – Do: Refers ----------------------

to implementing the plan.
----------------------
C – Check: Refers to determining whether the implementation remains on
track. ----------------------
A – Act: Refers to performing and standardising to prevent recurrence of ----------------------
problem or set goals for new improvements.
----------------------
In SDCA cycle, S refers to Standardisation. Clearly, PDCA cycle is
applicable to improvement function of management and SDCA cycle is ----------------------
applicable to maintenance function.
----------------------
4. Putting Quality First
For maximising customer satisfaction, the company management has to ----------------------
focus on three areas: Quality, Cost and Delivery. Kaizen concept puts number ----------------------
one priority on Quality and as Quality results from perfecting the process, other
two parameters get automatically addressed. ----------------------
5. Speaking with data ----------------------
Kaizen is basically a problem-solving process and problems cannot be
----------------------
solved on gut feelings. Problem-solving needs data generation of the current
situation and its analysis. Eventual satisfaction of the external customer depends ----------------------
on performing every step in the process chain in such a way that the next step
gets exactly what it wants. Satisfying internal customer’s requirements is ----------------------
equally important.
----------------------
Kaizen Event
----------------------
It is the method of getting employees’ involvement and may adopt the
following sequence: ----------------------
1. Decide upon a section of the business in which Kaizen will be implemented. ----------------------
2. Decide upon a team leader for the team who has received all the correct
----------------------
training.
3. Form the team and explain the theory behind Kaizen. ----------------------
4. Let the team discuss problems in the workplace. ----------------------

Lean Six Sigma 239

 Notes 5. Get the team to discuss as many issues as they would wish to tackle,
remember it does not have to be a single issue against which they should
---------------------- focus, several small issues are always worthwhile looking at.
---------------------- 6. Let the team decide which issue(s) is going to be tackled. It is the team
that knows best about its environment.
----------------------
7. Let the team decide what the main causes of concern regarding the issue(s)
---------------------- are.
8. Let the team decide how the issue(s) will be measured - how has the
----------------------
current issue been decided? And how the team will monitor the present
---------------------- situation?

---------------------- 9. Information about the issue is gathered.

10. The team should now be in a position to come up with a target situation,
---------------------- let the team look at the merits of different solutions, let the team decide
---------------------- upon target completion, implementation dates.
11. Let the team decide upon how to bring about the change to the workplace,
---------------------- is it going to be visually communicated? Verbally communicated? (Work-
---------------------- practice changes), etc.
12. Finally, let the team decide upon how they will monitor the changes they
----------------------
bring, to see how successful they have been.
---------------------- Benefits of Kaizen
---------------------- ●● Problems are identified at source, and resolved.
●● Small improvements, which are realized, can add up to major benefits for
----------------------
the business.
---------------------- ●● Improvements, which lead to changes in the business quality, cost and
delivery of products, mean a greater level of customer satisfaction, and
----------------------
business growth.
---------------------- ●● By involving employees in looking at their environment to bring about
change, results in improved morale as people begin to find work easier
----------------------
and more enjoyable.
----------------------
Check your Progress 2
----------------------

---------------------- Fill in the blanks.

1. SMED stands for ____________________.
----------------------
2. Measure of Lean is ______________ and _____________.
----------------------
3. Two Methods for approaching Six Sigma Operations are
---------------------- ____________ and _______________.

---------------------- 4. Six Sigma means ___________DPMO.

----------------------

240 World Class Manufacturing

 Summary Notes

●● Two of the customer’s primary requirements are quality and timely ----------------------
delivery. Both these requirements are susceptible to the variability in each
----------------------
process within the supply chain. This variability is of two types:
●● Variability in the quality of the output. ----------------------
●● Variability in the time taken for the activity. ----------------------
●● Six Sigma is used for bringing process under statistical control so that the
----------------------
variability in the output quality can be kept within the desired limits. This
method cannot on its own control the time factor, which will need the ----------------------
methodology of ‘Lean’.
●● Lean means fast processes. Slow processes are responsible for increasing ----------------------
the throughput time and adding to costs. ----------------------
●● Six Sigma is a powerful tool that can help an organisation to design,
operate and control every process in such a manner that no process yields ----------------------
more than 3.4 defects for every million opportunities. Six Sigma concept ----------------------
reduces defects in two different ways: 1) By reducing the variability
by re-designing the process, and 2) By permitting higher variations ----------------------
in specifications. Tools used for practicing Lean and Six Sigma are
categorised as DMAIC (Define, Measure, Analyse, Improvement & ----------------------
Control) tools. ----------------------

Keywords ----------------------

●● Lean: Without extra. ----------------------

●● Six Sigma: System of practices to systematically improve processes by ----------------------

eliminating defects.
----------------------
●● Variability: A natural phenomenon where no two things are exactly alike.
●● Time traps: Time delay at critical workstations. ----------------------
●● Process lead time: Average time for processing all the components from ----------------------
the workstation identified as time trap.
----------------------
●● Work station turnover time: Total time taken for processing full batches
of all the components from the work station identified as a time trap. ----------------------
●● Company champion: Overall head of Six Sigma initiative in the
----------------------
organisation.
●● Business unit champion: Person looking after Six Sigma activities in the ----------------------
Business Unit/Division.
----------------------
●● Master black belt: Internal expert consultants to Black Belts and to
project teams. ----------------------
●● Black belt: Person leading the project teams to deliver value and is the ----------------------
back-bone of Six Sigma.
----------------------

Lean Six Sigma 241

 Notes ●● Green belts: Employees who take up Six Sigma implementation along
with their other job responsibilities.
---------------------- ●● White belts: Junior-most fresh entrants to Six Sigma structure initiated
---------------------- with an objective for future expansion of Six Sigma network.
●● Project definition form: Form designed to give information on the key
---------------------- parameters of the project to the top management.
---------------------- ●● Process mapping: A flowchart which is a graphical representation of a
process.
----------------------
●● Value stream mapping: A paper and pencil sketch that depicts all the
---------------------- process steps, which are required to turn customer needs into products/
services that satisfy these needs and helps to see and understand the flow
---------------------- of material and information as a product or service makes its way through
the value stream.
----------------------
●● Pareto chart: A graphical picture of the most frequent causes of the
---------------------- problem and is based on the principle that 20% of the causes account for
80% of the problem.
----------------------
●● Cause and effect matrix: Tool for capturing “Voice of Customer” and
---------------------- relating it to the process input variables.
---------------------- ●● Brainstorming: A group creativity technique designed to generate a
large number of ideas for the solution of a problem.
---------------------- ●● Nominal group technique: An idea selection tool used in conjunction
---------------------- with brainstorming.
●● Ishikawa diagram: The method of finding all possible causes for an end-
---------------------- effect.
---------------------- ●● Tally sheets: Forms designed to record the generated data in an organised
way to facilitate its subsequent analysis.
----------------------
●● Scatter plots: A special type of graph in which two characteristics whose
---------------------- relationship is to be studied, are taken on X and Y axis.

----------------------
Self-Assessment Questions
----------------------
1. What are the characteristics of ‘Lean Manufacturing?
----------------------
2. What is the relationship between Sigma level and DPMO?
---------------------- 3. What are the essentials of ‘Six Sigma’?
---------------------- 4. Explain the role of each level in the recommended infrastructure for Lean
Six Sigma execution.
----------------------
5. What kind of training is needed for each level?
---------------------- 6. Explain how SIPOC Diagram/Chart is constructed.
---------------------- 7. How and why Project Mapping is done?
----------------------

242 World Class Manufacturing

8. Why is brainstorming done? What is the scientific approach to brainstorming? Notes
9. How does Gage R & R improve the inspection accuracy?
----------------------
10. Under which circumstances is Regression Analysis done?
----------------------
11. Explain the terms ‘Scatter Plots’ and ‘ANOVA’.
12. What are the major concepts involved in Kaizen? ----------------------

13. What is a Kaizen event and what are the benefits of Kaizen? ----------------------

----------------------
Answers to Check your Progress
----------------------
Check your Progress 1
Fill in the blanks. ----------------------

1. Lean Manufacturing and Six Sigma are the two most practiced methods ----------------------
by many world class manufacturing organisations.
----------------------
2. Two of the customer’s primary requirements are quality and timely
delivery. ----------------------
3. Some of the most common lean tools are VSM, Five-S, Kanban and Poka- ----------------------
Yoke.
----------------------
4. Three types of wastes are muda, muri and mura.
Check your Progress 2 ----------------------

Fill in the blanks. ----------------------

1. SMED stands for Single Minute Exchange of Die. ----------------------
2. Measure of Lean is Cycle and Efficiency.
----------------------
3. Two Methods for approaching Six Sigma Operations are DMAIC and
DMADV. ----------------------
4. Six Sigma means 3.4 DPMO. ----------------------

----------------------
Suggested Reading
----------------------
1. Breyfogle, Forrest W. and James M. Cupello. Managing Six Sigma: A
Practical Guide to Understanding, Assessing, and Implementing the ----------------------
Strategy That Yields Bottom-Line Success. John Wiley Publication.
----------------------
2. Furterer, Sandra L. Lean Six Sigma in Service: Applications and Case
Studies. CRC Press. ----------------------
3. Tennant, Geoff. Six Sigma: SPC and TQM in Manufacturing and Services. ----------------------
Gower Publishing.
----------------------

----------------------

----------------------

Lean Six Sigma 243

 Notes

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

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244 World Class Manufacturing

Modern Techniques
UNIT

10
Structure:

10.1 Introduction
10.2 Theory of Constraints (TOC)
10.3 Synchronous Manufacturing
10.4 Business Process Reengineering (BPR)
10.5 Benchmarking
10.6 Knowledge Management
10.7 Game Theory
10.8 Flexible Machining System
Summary
Key Words
Self-Assessment Questions
Answers to Check your Progress
Suggested Reading

Modern Techniques 245

 Notes
Objectives
----------------------
After going through this unit, you will be able to:
----------------------
• Analyse the Theory of Constraints (TOC)
----------------------
• Recognise the shortcomings of traditional fragmented organisation
---------------------- and the solutions offered by reengineering
• Discuss how benchmarking is used to improve performance of
----------------------
every function of the organisation
---------------------- • Explain the meaning of knowledge management and how learning
---------------------- organisations are created
• Use game theory to solve problems
----------------------
• Describe the concept of flexible manufacturing
----------------------

---------------------- 10.1 INTRODUCTION

----------------------
Dr. Eliuahu Goldratt first introduced the concept of Theory of Constraints
---------------------- (TOC), a management philosophy, in his 1984 book titled The Goal. The theory
is based on the concept that any manageable system is limited in achieving
---------------------- more of its goal by a very small number of constraints, and that there is always
at least one constraint.
----------------------

---------------------- 10.2 THEORY OF CONSTRAINTS (TOC)

---------------------- The TOC process seeks to identify the constraint and restructure the rest
of the organisation around it, through the use of the Five Focusing Steps.
----------------------
Key Assumption in TOC
----------------------
The underlying assumption of Theory of Constraints is that organisations
---------------------- can be measured and controlled by variations on three measures:

---------------------- 1. Throughput: Money (or goal units) generated through sales.

2. Operating expense: Money that goes into the system to ensure its
---------------------- operation on an ongoing basis.
---------------------- 3. Inventory: Money that system invests in order to sell its goods and
services.
----------------------
The five focusing steps in TOC
----------------------
1. Identify the constraint.
---------------------- 2. Decide how to exploit the constraint.
---------------------- 3. Subordinate all other processes to above decision.

---------------------- 4. Strengthen the constraint.

246 World Class Manufacturing

5. If, as a result of these steps, the constraint has shifted, return to Step 1. Notes
Don’t let inertia become the constraint.
----------------------
The five focusing steps aim to ensure that the ongoing improvement
efforts are centred around the organisation’s constraints. ----------------------
Constraints
----------------------
A constraint is anything that prevents the system from achieving more of
its goal. Core principle within TOC is that there is at least one and at most a few ----------------------
constraints in any given system. Basically, constraints can be of two types:
----------------------
●● Internal constraint: An internal constraint is in evidence when the
market demands more from the system than it can deliver. If this is the ----------------------
case, then the focus of the organisation should be on discovering that ----------------------
constraint and following the five focusing steps to open it up and remove
it. ----------------------
Internal constraint can be: ----------------------
●● Equipment: The way equipment is currently used limits the ability
of the system to produce more salable goods/services. ----------------------
●● People: Lack of skilled people limits the system. ----------------------
●● Policy: A written or unwritten policy prevents the system from
----------------------
making more.
●● External constraint: An external constraint exists when the system ----------------------
can produce more than the market will bear. If this is the case, then the
----------------------
organisation should focus on mechanisms to create more demand for its
products or services. ----------------------
Plant Types
----------------------
Based on the type of material flow, the basic types of the plants and the
area in which the constraint normally occurs is given below: ----------------------
●● I-Plant: Material flows in a sequence, such as in an assembly line. The ----------------------
primary work is done in a straight sequence of events (one to one). The
constraint is the slowest operation. ----------------------
●● A-Plant: The general flow of material is many to one, such as in a plant ----------------------
where many sub-assemblies converge for a final assembly. The primary
problem in A-plants is in synchronising the converging lines so that each ----------------------
supplies the final assembly point at the right time.
----------------------
●● V-Plant: The general flow of material is one to many, such as a plant
that takes one raw material and can make many final products. Classic ----------------------
examples are meat rendering plants or a steel manufacturer. The primary
----------------------
problem in V-plants is “robbing” where one operation (A) immediately
after a diverging point “steals” materials meant for the other operation ----------------------
(B). Once the material has been processed by A, it cannot come back and
be run through B without significant rework. ----------------------

----------------------

Modern Techniques 247

 Notes ●● T-Plant: The general flow is that of an I-Plant (or has multiple lines), which
then splits into many assemblies (many to many). Most manufactured parts
---------------------- are used in multiple assemblies and nearly all assemblies use multiple
parts. Customised devices, such as computers, are good examples.
---------------------- T-plants suffer from both synchronisation problems of A-plants (parts
---------------------- aren’t all available for an assembly) and the robbing problems of V-plants
(one assembly steals parts that could have been used in another).
---------------------- Drum Buffer Rope Concept
---------------------- Drum-Buffer-Rope is a manufacturing execution methodology, named
for its three components. The ‘Drum’ is the physical constraint of the plant; the
---------------------- work centre or machine or operation that limits the ability of the entire system
---------------------- to produce more. The rest of the plant follows the beat of the drum. They make
sure the drum has work and that anything the drum has processed does not get
---------------------- wasted.
---------------------- The ‘Buffer’ protects the drum, so that it always has work flowing to
it. Buffers in DBR have time as their unit of measure, rather than quantity of
---------------------- material. This makes the priority system operate strictly based on the time an
order is expected to be at the drum. Traditional DBR usually calls for buffers
----------------------
at several points in the system; the constraint, synchronization points and at
---------------------- shipping. S-DBR has a buffer at shipping and manages the flow of work across
the drum through a load planning mechanism.
----------------------
The ‘Rope’ is the work release mechanism for the plant. Only a “buffer
---------------------- time” before an order is due gets released into the plant. Pulling work into the
system earlier than a buffer time guarantees high work in process and slows
---------------------- down the entire system.
---------------------- The drum, buffer and rope provide the basis for building a production
schedule that is highly immune to disruption, avoids creating excess inventory,
---------------------- and uses small batches to minimise overall lead time.
---------------------- But even with “Drum-Buffer-Rope,” occasionally disruptions occur that
require special attention. “Buffer Management” is used to mitigate and often
---------------------- prevent those disruptions.
---------------------- Implementations of “Drum-Buffer-Rope” typically results in “lean,” low-
inventory production operations capable of consistently 95% (or better) on-
---------------------- time delivery, lead-time reduction of 35-50%, and inventory reduction of 50%,
---------------------- as well as significantly reduced need for expediting and rescheduling.

---------------------- 10.3 SYNCHRONOUS MANUFACTURING

---------------------- Synchronous Manufacturing is the most popular but broader application
---------------------- of the Theory of Constraints that takes into consideration all elements of the
business and not just the ‘Production’ working in synchronisation to achieve the
---------------------- strategic goals of the business.

----------------------

248 World Class Manufacturing

 Still, the heart of a Synchronous Manufacturing implementation is a shop Notes
schedule that meets the delivery schedules with right products by overcoming
all the constraints and at the same time achieving short lead times, fast flow ----------------------
and low inventories. Companies have moved from JIT/Kanban to Theory of
Constraints and made massive additional improvements. It is just a matter of ----------------------
doing a small number of things right. ----------------------
The symptoms of poor synchronisation are:
----------------------
●● Inventories are too high at all the stages.
----------------------
●● Lead times are too long.
●● Poor customer service, in terms of on-time delivery or service from stock. ----------------------
●● Poor productivity. ----------------------
●● Too much overtime.
----------------------
●● Too much expediting.
●● Priorities constantly shifting. ----------------------
●● Frequent materials and parts shortages. ----------------------
●● Unable to quickly and easily respond to urgent customer requirements.
----------------------
In repetitive manufacturing environment, synchronous manufacturing
applies to low-volume/ high-mix type of order characteristics. It also applies ----------------------
to environments where a large degree of customisation or “customerisation” is
required, or a make-to-order environment. ----------------------
Lean manufacturing applies best when the order characteristics are high- ----------------------
volume/low-mix. In these cases, components are identical, or differences lie in
scale or size. WIP inventory is low in variety and can be controlled with ease. ----------------------
In contrast, in a low-volume/high-mix environment, the componentry tends to
----------------------
vary greatly, and the WIP inventory mix is characterised with a much greater
variety, and is more difficult to control. ----------------------
Synchronous manufacturing employs the synchronisation between ----------------------
customer orders and work stations. In other words, the first order worked on in
the first work station is the first work order worked on in the second station, and ----------------------
so on. This requires a good systems scheduling algorithm often using a first-in/
first-out method to scheduling customer orders. Synchronous manufacturing ----------------------
can be applied within an Agile Manufacturing Strategy. ----------------------
Synchronous scheduling is often mixed in the same manufacturing
environment with Kanban signals, but at a later stage in the manufacturing ----------------------
process. For instance, a process that begins by taking raw steel and producing ----------------------
blanks can be scheduled using Kanban pull devices.
When customer orders are scheduled for production, the blanks are pulled ----------------------
for the first operation, where changes to the blanks may be varied from piece ----------------------
to piece. A device known as a production synchroniser often separates the
blanking operation (Kanban scheduled) from the flexible downstream operation ----------------------
(synchronous scheduled). Flexible Kanbans or “Flexbans” can be used to
control WIP locations and prevent spilling into the aisles. ----------------------

Modern Techniques 249

 Notes The benefits generally are higher flexibility, lower costs, higher quality,
lower inventory, and shorter lead times. The characteristics of synchronous
---------------------- processes are:
---------------------- ●● Make to order
●● Synchronised production
----------------------
●● Just-in-Time materials/pull scheduling in early stages
----------------------
●● Synchronised scheduling in later stages
---------------------- ●● Short cycle times
---------------------- ●● Highly flexible and responsive processes
---------------------- ●● Highly flexible machines and equipment
●● Quick changeover
----------------------
●● Continuous flow work cells
----------------------
●● Collocated machines, equipment, tools and people
---------------------- ●● Compressed space
---------------------- ●● Multi-skilled employees
---------------------- ●● Empowered employees
●● High first-pass yields with major reductions in defects
----------------------
Performance Measurement Methods in Synchronous Manufacturing
----------------------
1. Global operational performance measurements:
---------------------- ●● Net profit—measurement in dollars
---------------------- ●● Return on investment—generally a per cent of the investment
---------------------- ●● Cash flow—the amount of cash available for day-to-day operations.
From an accounting standpoint, deductions such as for depreciation
---------------------- are added back in since depreciation is not really money spent
---------------------- 2. Operational measurements:
●● Throughput—the actual rate of sales generated by the system.
----------------------
●● Inventory—all the money invested in things that are intended to be
---------------------- sold. This includes raw materials, equipment, etc., but at the cost
price, less any depreciation (which is operating expense).
----------------------
●● Operating expense—money spent to convert inventory into
---------------------- throughput. This includes direct and indirect labour, materials,
depreciation, administrative costs, etc.
----------------------
Traditional accounting methods work with such things as standard costs,
---------------------- allocation of burdens (which may consist of indirect labour, administrative
costs, insurance, taxes, depreciation, etc.), and gross profits, net profits, cost
----------------------
centres, profit centres, all of which may be based on standards and allocations.
---------------------- These may not have any basis in reality.

250 World Class Manufacturing

Some Important Terms used in Synchronous Manufacturing Notes
●● Process batch: Process batch size is the total number of units that are
----------------------
scheduled to be processed within the same setup. Larger process batches
involve fewer setups and, therefore, have more output. The reverse is true ----------------------
for smaller process batches.
●● Transfer batch: Refers to the movement of part of the process batch, ----------------------
rather than waiting for the entire job to be completed. A process batch of ----------------------
1000, for example, can be transferred in 10 batches of 100 each. Process
batch and transfer batch sizes can be controlled from a bottleneck or ----------------------
capacity constrained resource.
----------------------
●● Forward loading: Tasks are scheduled from some point into the future.
When resources are limited, tasks are assigned until capacity is reached ----------------------
and then carried forward to the next period.
----------------------
●● Backward loading: Backward loading is the MRP type scheduling,
where the finished product or required part is needed. From that future ----------------------
point, a schedule is created back to the present, allowing for processing
and lead time requirements at each step of the way. ----------------------
Quality Control in Synchronous Manufacturing ----------------------
QC in synchronous manufacturing is specifically decided based on ----------------------
importance. First, a bottleneck or CCR is identified as the constraint of the
system. This critical resource will then be guaranteed that it will not waste time ----------------------
working on bad parts since inspection will be done on its incoming side. Flow
after this bottleneck should not be interrupted or scrapped. Therefore, all parts ----------------------
that join into this product after the bottleneck will have passed inspection. ----------------------
Also, all processing after the bottleneck will be of high quality so that
scrap will not be created. In summary, inspect before the bottleneck, and inspect ----------------------
all parts entering the flow after the bottleneck; also perform high quality work ----------------------
at all stations after the bottleneck.
----------------------
Inventory in Synchronous Manufacturing
Synchronous manufacturing treats inventory as a loan given to the ----------------------
manufacturing unit. Inventories are measured by raw materials cost. Buffer
----------------------
inventories are utilised to assure throughput. Overall, synchronous manufacturing
discourages inventory if it serves no purpose. Inventory is measured in terms of ----------------------
dollar days with the goal of minimising dollar days.
----------------------
Scheduling in Synchronous Manufacturing
In synchronous manufacturing, the production flows are controlled by the ----------------------
drum. The drum regulates the flow of materials throughout the entire system. ----------------------
DBR method is already explained in this unit.
Synchronous manufacturing paces the entire production process by ----------------------
the bottlenecks. Therefore, if additional (less) capacity is needed, capacity is ----------------------
added (restricted) at the bottlenecks. In this way, the flow is controlled at each
bottleneck or CCR to bring the capacities in line. ----------------------

Modern Techniques 251

 Notes In synchronous manufacturing, balancing all capacities is viewed as a bad
decision. If capacity is truly balanced, completion deadlines may not be met
---------------------- due to variability in processing times. A better strategy is to balance the flow of
product through the system.
----------------------
Concept of Moving Bottleneck
----------------------
Generally, a moving bottleneck is caused by batch sizes that are too
---------------------- large. What happens is that a large batch scheduled on a machine or resource,
which on the average has excess capacity, prevents other products from being
---------------------- completed that also need the same resource. This interrupts the flow and starves
downstream resources. From their perspective looking upstream, they see that
----------------------
particular resource as the bottleneck. However, days or weeks later, because of
---------------------- the product mix, this apparent bottleneck will disappear. Another large batch
size somewhere else in the system will appear which does the same thing, i.e.,
---------------------- starves downstream operations.
---------------------- Table 10.1: Comparison of JIT, MRP, and Synchronised Manufacturing
Systems
----------------------
Aspect JIT MRP Synchronised
---------------------- Manufacturing
Type of Production Continuous flow, Batch type with Same as MRP
---------------------- System. make to stock high variety
---------------------- WIP Very low Very high Low
Production cycle Very short Very long Short
---------------------- time
Schedule flexibilityLess flexible. MRP frozen for 30 Can be changed
---------------------- Schedules frozen days, but variable daily as needed
for minimum of in work centres
----------------------
30 days
---------------------- Regard for capacity High. Tries to Terrible. May start Is founded
limits balance capacity off alright, but on capacity
---------------------- quickly becomes limitations
inaccurate
----------------------
Labour skills Multi-skilled to Specialised in own Same as MRP
---------------------- help out other work area
areas
----------------------
Advantages of Synchronous Manufacturing
---------------------- ●● Quick and substantial improvements without specific improvement
projects.
----------------------
●● The method is tolerant of poor data, inaccurate data and missing data.
----------------------
●● Same vocabulary and measurements are used by departments and people
---------------------- across the organisation.
●● Fast-flow material movement results in reducing finished goods and WIP
----------------------
inventories by as much as 75%.
----------------------

252 World Class Manufacturing

●● Can reduce cycle times and promised lead times. Notes
●● Improves due-date performance or service levels.
----------------------
●● Synchronous manufacturing schedules provide stability, minimise
expediting, require minimum maintenance and allow overtime only to ----------------------
respond to genuine problems or to opportunities to make more money.
----------------------
●● Focused and continuous improvement in Processes and Quality.
●● Can cater to urgent customer requirements without disturbing existing ----------------------
orders.
----------------------
●● Any investments made in ERP or Lean can have better ROI when coupled
with synchronous manufacturing. ----------------------

----------------------
Activity 1
----------------------
1. Identify organisations with poor symptoms. ----------------------
2. Make a list of companies having positive correlation between “Lean”
----------------------
and “Synchronised Manufacturing”.
----------------------
10.4 BUSINESS PROCESS RE-ENGINEERING (BPR) ----------------------
Reinvent the Company ----------------------
Three forces governing today’s market are: ----------------------
1. Customers take charge: Customers decide what they want, when they
----------------------
want, how much they want and what are they willing to pay for it. Mass
market is broken down in small pieces, sometimes as small as a single ----------------------
customer.
----------------------
2. Competition intensifies: Niche markets are in focus. Similar products
sell in different markets on entirely different competitive basis. Trade ----------------------
barriers are falling resulting in global competition. Start-up companies
create their own rules about how to run the business. New technologies ----------------------
change the nature of competition in unexpected ways.
----------------------
3. Change becomes constant: Change has become pervasive and persistent
and its pace is accelerating. Companies must move fast to survive. ----------------------
Changes which affect the company are mostly external and beyond direct
----------------------
control of the company
The contemporary performance problems companies face are mostly ----------------------
due to the fragmentation of processes, which occur due to building functional ----------------------
silos and vertical structures on narrow pieces of processes. These are headed by
functional experts who are oblivious of overall requirements of the organisation. ----------------------
The expectation from these functional heads is that they will act as glue to
join the fragmented parts to work in unison for the benefit of the organisation. ----------------------
Instead, these experts become preoccupied with isolating and cementing their ----------------------

Modern Techniques 253

 Notes own silos for individual gains. Quite often, efficiency of individual parts/
functions of the company, come at the expense of efficiency of its whole.
----------------------
Business Process Reengineering seeks to change all this. It aims at
---------------------- reunifying the broken-down tasks (Adam Smith Principle) into a coherent
business process. Business Reengineering (BR) is starting all over. Old wisdom
---------------------- is to be discarded for something to suit current demands of market and harnessing
power of today’s technologies and capitalizing on individualism, self-reliance,
----------------------
willingness to accept risk and propensity for change. Starting point is by asking
---------------------- yourself: “Why do we do what we do at all?”
Many tasks are performed to satisfy the internal needs of the company
----------------------
and have nothing to do with customer satisfaction. These need to be reduced
---------------------- to barest minimum or preferably eliminated. An excellent company has to be
lean, nimble, flexible, responsive, competitive, efficient, customer focused and
---------------------- profitable.
---------------------- Definition of Reengineering

---------------------- The fundamental rethinking and radical redesign of business processes

to achieve dramatic improvements in critical contemporary measures of
---------------------- performance such as cost, quality, service and speed.

---------------------- Fundamental: Business Reengineering (BR) begins with no assumptions

and no givens. It takes nothing for granted. It ignores ‘What is’ and concentrates
---------------------- on ‘What should be’. Thus the start has to be with two basic questions
---------------------- 1. “Why we do what we do”?
2. “Why we do the way we do”?
----------------------
The first question leads to actions for eliminating what is not necessary
---------------------- while the second one leads to actions necessary to change the methods for better
performance.
----------------------
Radical: Going to the roots of everything to find what is right and what is
---------------------- wrong.
---------------------- Dramatic: Improvements demand blowing up the old and replacing with
something entirely new.
----------------------
Processes: Collection of activities that take one or more inputs and converts
---------------------- these into outputs which are required by the customer.
---------------------- Embarking on Reengineering
The biggest challenge in starting reengineering exercise is overcoming
----------------------
the resistance of people to change. The suggestions are:
---------------------- 1. Case for action: People are to be told “Why” company wants to reengineer.
The case must be put forth in concise, precise and compelling manner.
----------------------
It has to be a dramatically persuasive argument supported by evidence.
---------------------- The case must be strongly put without exaggeration. It should be totally
persuasive but at the same time brief and blunt. It should be like a wedge
---------------------- driven to unstuck people from their existing entrenched positions.

254 World Class Manufacturing

2. Vision Statement: It is a statement telling “What the company needs Notes
to become”. It gives the employees a palpable goal to achieve, forces
management to think clearly about the purpose of the change programme ----------------------
and extent to which the change is needed. It describes how the company
is going to operate and outlines the kind of results it must achieve. It is ----------------------
both a qualitative and quantitative statement. It acts as a reminder and ----------------------
yardstick for measuring the performance. It acts like a magnet to attract
people who are ‘unstuck’ from their entrenched positions by the ‘Case ----------------------
for Action’. Vision statement need not be long but must be powerful with
three essentials: ----------------------

1. Focus on action ----------------------

2. Measurable objectives ----------------------
3. Change basis for competitiveness
----------------------
Organisational Structure for Reengineering
----------------------
The recommended positions to be created from amongst the existing
senior members of staff/management are: ----------------------
1. Leader: A senior executive who authorises and motivates the overall ----------------------
reengineering efforts. He should be a person with enough clout to turn the
whole organisation upside down. He has to assume a self-appointed and ----------------------
self-motivated role. Through his convictions, the organisation explores
the unknown, creates a new vision and sets new standards. He should ----------------------
have authority over resources. He should demonstrate leadership through ----------------------
signals, symbols and systems. He should be strong, aggressive, committed
and knowledgeable. ----------------------
2. Steering Committee: A policy making body of senior managers who ----------------------
develop organisation’s overall reengineering strategy and monitors its
progress. ----------------------
3. Reengineering Czar: An individual who is responsible for developing ----------------------
reengineering techniques and tools within the company and for achieving
synergy across the company. He serves as leader’s chief of staff for ----------------------
reengineering efforts. He has two functions to perform: a. enabling and
----------------------
supporting each individual process owner and reengineering team, b.
coordinating all reengineering activities. ----------------------
4. Process owner: A manager with responsibility for a specific process.
----------------------
He is generally a line manager and should be comfortable with change,
tolerant to ambiguity and calm in adversities. He has to assemble the team ----------------------
for reengineering efforts and lead it by motivating, inspiring, monitoring
and liaisoning. ----------------------
5. Team: A group of people dedicated to the reengineering of a particular ----------------------
process. The team diagnoses the existing process and oversees its redesign
and implementation. The team generates ideas and turns these into reality. ----------------------
It should be a small team (5−10) comprising outsiders as well as insiders. ----------------------

Modern Techniques 255

 Notes Insiders should have credibility with co-workers. Outsiders can bring a
fresh perspective and higher level of objectivity. Team should continue to
---------------------- work with the redesigned process till it gets firmly established.
---------------------- Characteristics of a Reengineered Process

---------------------- 1. Several jobs are combined into one due to integrated process, reducing
handoffs resulting in fewer errors, delays and rework.
----------------------
2. Empowered workers find innovative and creative ways to reduce time
---------------------- and costs continually, require less supervision and have better control
over process.
----------------------
3. Workers take decisions, drastically reducing time wasted in taking decisions
---------------------- through hierarchical steps.
---------------------- 4. Steps in the process are performed in a natural order
5. Process can have multiple versions, each one suited to a different market.
----------------------
6. Work is performed where it makes most sense – in traditional organisation
---------------------- the work is organised around specialists
---------------------- 7. Checks and controls are reduced to barest minimum.
---------------------- 8. Reconciliations are minimised by cutting back the number of external
contact points, which process may have.
----------------------
9. A case manager who generally is an empowered customer service
---------------------- representative provides a single point contact.
---------------------- 10. Hybrid centralised/decentralised operations are prevalent facilitated by
advanced information technology.
----------------------
How work changes in a reengineered process
----------------------
1. Work unit changes from “Functional Department” to “Process Team”.
---------------------- 2. Job of individuals change from “Specialised Tasks” to “Multidimensional
---------------------- work”.
3. People’s role changes from “Controlled” to “Empowered”.
----------------------
4. Job preparation changes from “Training” to “Education”.
----------------------
5. Criteria for rewards/advancement changes from “Performance” to “Ability”.
---------------------- 6. Focus of performance measurement and compensation changes from
---------------------- “Activity” to “Results”.
7. Values change from “Protective” to “Productive”.
----------------------
8. Organisational structure changes from “Hierarchical” to “Flat”.
----------------------
9. Executives change from “Score Keepers” to “Leaders”.
----------------------

----------------------

256 World Class Manufacturing

Process Redesign Notes
Redesigning a process requires imagination, intuitive thinking and a touch
----------------------
of craziness. The team redesigning the process has to abandon what is familiar
and seek outrageous process, suspend belief in rules and procedures. The first ----------------------
principle to be followed is, as few people as possible should be involved in
performing the redesigned process. The team has to boldly apply the principles ----------------------
of reengineering, search out and destroy assumptions and look for creative
----------------------
applications of technology.
Tips for redesign ----------------------
●● You don’t have to be an expert to redesign a process. ----------------------
●● Being an outsider helps.
----------------------
●● You have to discard preconceived notions.
----------------------
●● It is important to see the things through customer’s eyes.
●● Redesign is best done by a team. ----------------------
●● You don’t need to know much about the current process. ----------------------
●● It is not hard to have great ideas.
----------------------
●● Redesign can be fun.
●● It can be less fun when you have to move from having ideas to making ----------------------
them happen.
----------------------

Activity 2 ----------------------

----------------------
Study one or two organisations implementing Business Process Reengineering
(BPR) and write the basic concepts. ----------------------

----------------------
10.5 BENCHMARKING ----------------------
Benchmarking is the process of comparing an organisation’s operations ----------------------
and internal processes against those of other organisations within or outside
its industry. The other organisations against which the comparisons are made, ----------------------
known as ‘benchmark partners’, are usually those that are perceived to be the
best performers in their class. The purpose of benchmarking is to identify and ----------------------
adopt best known practices that can lead to superior performance. It was a ----------------------
buzzword in the 80s and 90s, but continues to be strongly practiced in various
industries today. ----------------------
Benchmarking is a systematic process. It must have a framework and use a ----------------------
standard set of attributes that are measurable to compare multiple organisations
objectively. Benchmarking must be performed on a specific area or activity ----------------------
only, such as operational best practices, information technology, staffing,
----------------------
compensation packages, distribution systems, budgeting, and the like. Limiting
the scope of the benchmarking activity allows the formulation of a more focused ----------------------

Modern Techniques 257

 Notes agenda that provides more useful information from better-targeted benchmark
partners.
----------------------
In general, benchmarking partners are classified into four categories:
---------------------- 1. Internal, which pertains to departments, factories, etc. of the same company.
---------------------- 2. Competitive, which pertains to direct competitors.

---------------------- 3. Functional, which pertains to best-in-class organisations who are in the

same field or activities.
---------------------- 4. Generic, which pertains to leading organisations from various fields and
---------------------- industries.
Benchmarking with internal partners is usually the best starting point
---------------------- for a benchmarking programme. However, many companies or organisations
---------------------- are not big enough for internal benchmarking, and have to resort to external
benchmark partners to get the information they need. Identifying suitable
---------------------- external benchmarking partners depends on the purpose of the benchmarking
activity as well as the nature of the benchmarking organisation.
----------------------
For example, it would be good to be able to benchmark against a leading
---------------------- competitor, but this benchmarking arrangement is usually quite difficult to set
up because most leading competitors will not divulge their ‘trade secrets’ to
----------------------
enable a competitor to catch up, resulting in benchmark results that are empty of
---------------------- useful information. In such cases, functional or generic benchmarking partners
involving world-class non-competitor companies are viable options, since these
---------------------- are often willing enough to share information with an organisation.
---------------------- Benchmarking consists of five basic steps:

---------------------- 1. Decide on what process or area to benchmark, considering which would

give the most leverage or improvement potential.
---------------------- 2. Understand the internal processes or operations involved in the area
---------------------- being benchmarked and collect data on their key performance metrics;
a good understanding of how an internal system works would facilitate
---------------------- understanding of those of the benchmark partners.

---------------------- 3. Identify organisations who are best in class in the area to be benchmarked
and arrange mutually beneficial benchmarking activities with them.
----------------------
4. Conduct the benchmarking activities arranged with the partners.
---------------------- 5. Analyse the benchmark data and adopt practices that will produce the
greatest benefits to the organisation.
----------------------
There are many ways by which benchmarking may be conducted with
---------------------- the benchmarking partner, but one of the most popular ones is by exchanging
information through a questionnaire, possibly on a visit to the partner. This may
----------------------
consist of the following steps:
---------------------- 1. Develop a questionnaire that covers all the information that needs to be
---------------------- obtained.

258 World Class Manufacturing

2. Answer the questionnaire internally to test it and so that the same Notes
information may be provided reciprocally if the partner asks for it.
----------------------
3. Provide a reason for every question so that its necessity may be rationalised
to the partner if necessary. ----------------------
4. Discuss the questionnaire to clarify its objectives, areas of interest, and ----------------------
areas of confidentiality and sensitivity with the partner.
----------------------
5. Arrange a visit with the partner.
If the visit to the benchmarking partner materialises, the following ----------------------
guidelines would be useful: ----------------------
1. Prepare for the visit thoroughly.
----------------------
2. Define the purpose and objectives well.
----------------------
3. Commit the questionnaire to memory and leave the hard copy behind.
4. Be open and honest during the visit. ----------------------

5. Avoid being seen by the partner taking down notes, but take down notes ----------------------
nonetheless.
----------------------
6. Reciprocate information requests.
----------------------
7. Thank the partner again and again.
----------------------
Benchmarking is just a tool to learn from others, and not a tool to win in
business. It will not give information on what products and services customers ----------------------
want, or how to generate more revenues and profits. There are other management
techniques to accomplish these objectives. These must complement the regular ----------------------
use of benchmarking to ensure continuous improvement in everything that a ----------------------
company does. Lastly, benchmarking per se is not useful unless knowledge
gained from it is put in action to benefit the company. ----------------------

----------------------
Check your Progress 1
----------------------
Match the following.
----------------------
i. Benchmarking a. Improved shortfalls
ii. Game Theory b. Learning organisation ----------------------

iii. Knowledge Management c. Problem solving ----------------------

iv. Re-engineering d. Performance ----------------------

----------------------
Activity 3 ----------------------

Write some examples of benchmarking. ----------------------

----------------------

Modern Techniques 259

 Notes 10.6 KNOWLEDGE MANAGEMENT
---------------------- Knowledge Management or simply “KM” is a business concept that
deals with how a company should and could make the best use of its existing
----------------------
knowledge. It involves the systematic and structured process of organising
---------------------- corporate information for easy retrieval, distribution, and reuse across the entire
company. By this definition alone, computerisation should be part of every
---------------------- serious KM programme, which is why KM-related software has been on the
rise in recent years.
----------------------
Experts believe that the vast wealth of knowledge that an organisation
---------------------- accumulates over years – business ideas, management concepts, internal systems
---------------------- and processes, engineering expertise, customer and prospect information,
industry trends, and the like − are often very underutilised. In fact, millions
---------------------- of pieces of vital knowledge within the company are just localised to a certain
group within the organisation, or even just a certain individual. This information
---------------------- only stays with the people who keep them, and will be lost as soon as these
---------------------- people leave the company.
With excellent knowledge management, every piece of corporate
---------------------- information becomes readily available to anybody within the company who
---------------------- could use them for the company’s benefit. Empowering people to seamlessly
share past or present knowledge, or even their skills, with each other and
---------------------- harness them to meet company goals is the essence of knowledge management.
The importance of knowledge management is embodied in the now-famous
---------------------- statement of former Hewlett-Packard CEO Lew Platt: “If HP knew what it
---------------------- knows, we’d be three times as profitable.”
In the last century, manual labour or production management is the
---------------------- key to success. In the 21st century, it would be knowledge management. In
---------------------- fact, knowledge management directly impacts the major drivers of company
success: customer value, operational excellence, and product innovation.
---------------------- Pursuing these efficiently and effectively requires excellent management of
knowledge to ensure progressive productivity among knowledge workers and
---------------------- proper harnessing of the organisation’s collective knowledge to its advantage.
---------------------- Knowledge Management has three major components:
---------------------- 1. People, who keep the knowledge and apply them.
2. Processes, with which people create, capture, store, organise and distribute
----------------------
knowledge.
---------------------- 3. Information, which are the pieces of facts and data that people convert
---------------------- into and apply as knowledge.
It is therefore imperative that these three components are considered
---------------------- when setting up a KM programme.
---------------------- For instance, having great leadership and developing good organisational
structure and corporate culture within the company will encourage people to
---------------------- participate in KM initiatives. Processes, on the other hand, must be created

260 World Class Manufacturing

based on and driven by a knowledge management framework that would allow Notes
centralised creation, capture, organisation, retrieval, and reuse of information to
generate value for the company. Lastly, information must not only be accessible ----------------------
- people must also be able to associate them with their work and apply them as
knowledge to improve their output. ----------------------

In setting up a KM programme, it is important to distinguish between ----------------------

‘information’ and ‘knowledge’. Information is just a piece of fact or data stored
----------------------
somewhere. Knowledge, on the other hand, is associating these various pieces
of information with each other to create a new meaning to their existence, ----------------------
which when conveyed and applied creates value for the organisation. The key
to effective knowledge management is not really in the storage and retrieval ----------------------
of individual pieces of information, but in being able to create meaningful and
----------------------
valuable associations among them. This is why knowledge management is not
just knowing what you know, but also profiting from it. ----------------------
Many experts believe that a complete off-the-shelf knowledge management
----------------------
software solution for everyone will not happen in the near future. This is because
every company differs in the way it creates and applies knowledge. Companies ----------------------
can use the same data storage solution, but there is no KM software just yet that
can cater to every corporate goal, corporate culture, and corporate knowledge ----------------------
infrastructure to help management come up with something that would increase
----------------------
profits or market share. To this point, genuine stock-approach KM doesn’t yet
exist, so companies have to set up their own internal KM solutions for now. ----------------------
What abound in the market at present are not complete turnkey
----------------------
knowledge management solutions, but simply knowledge management tools.
These are nonetheless powerful collaboration tools and modules of knowledge ----------------------
management-enabling software that can work across platforms to facilitate the
transfer of knowledge, create a better and more efficient working environment, ----------------------
and ultimately help the company succeed. These include components for
----------------------
Document Management (DM), Digital Asset Management (DAM), Content
Management (CM), Web Content Management (WCM), Records Management ----------------------
(RM), Business Process Management (BPM), Customer Relationship
Management (CRM), etc. ----------------------
Still, the quest for better and better knowledge management solutions ----------------------
goes on. New technologies involving electronic meetings, chat-enabled
collaborations, and portal infrastructures that mediate people interactions ----------------------
and amass knowledge from them are just a few examples of what have been ----------------------
developed, and are still being developed, for this purpose. Innovations in the
field of knowledge management will certainly continue, especially since in this ----------------------
day and age, knowledge is power.
----------------------
The term ‘Learning Organisation’ refers to an organisation that
constantly monitors its environment for changes, and learns from and adapts ----------------------
to these changes. The term was coined by Harvard’s Chris Argyris, but it was
Peter Senge, a highly acclaimed business strategist with a PhD in Management, ----------------------
who popularised the term in his book, The Fifth Discipline. Senge defines a ----------------------

Modern Techniques 261

 Notes ‘learning organisation’ as a dynamical system that is in a state of continuous
adaptation and improvement. Learning organisations build feedback loops
---------------------- designed to maximise the effectiveness of their learning processes.
---------------------- Organisational learning is becoming more and more important in the
modern business world where things change rapidly and information gets
---------------------- transmitted almost instantaneously. In such a constantly changing environment,
only the truly flexible and adaptive companies will excel, i.e., learning from the
----------------------
past is vital to success in the future.
---------------------- According to Senge, a company should be a place where “people
continually expand their capacity to create the results they truly desire, where
----------------------
new and expansive patterns of thinking are nurtured, where collective aspiration
---------------------- is set free, and where people are continually learning to see the whole together.”
Peter Senge identified five basic disciplines or components of a learning
----------------------
organisation:
---------------------- 1. Systems thinking
---------------------- 2. Personal mastery
---------------------- 3. Mental models
4. Shared vision
----------------------
5. Team learning
----------------------
People need structures and systems that are conducive to learning,
---------------------- reflection, and engagement. The five components of the learning organisation
were conceptualised to help people become active participants in understanding
---------------------- their reality at present and shaping it for the future.
---------------------- Systems thinking, which is said to be the conceptual cornerstone of
Senge’s approach, is the discipline that recognises the interconnection between
---------------------- parts that make up a whole. It acknowledges that organisations are complex
---------------------- systems composed of many inter-related components, and that it is very
important to understand how the key components dynamically interact with
---------------------- each other to give life to the system that they comprise. Managers within the
organisation must learn to think at the ‘systems’ level, giving more importance
---------------------- to the long-term impact of system dynamics instead of the short-term problems
---------------------- encountered in each part of the system.
Personal mastery refers to the discipline of an individual being able to
---------------------- continuously clarify and deepen his personal vision, focus his energies, develop
---------------------- patience, and openly and honestly see reality as it exists. Personal learning does
not ensure organisational learning, but the latter cannot exist without the former.
---------------------- Individuals must therefore strive to learn and live life from a creative rather
than reactive perspective. Having a very clear personal vision of how things
---------------------- should be and a very objective recognition of what the reality is would help the
---------------------- individual determine the gap between his vision and the reality, motivating him
to learn in active pursuit of continuous improvement.
----------------------

262 World Class Manufacturing

 Mental Models are, according to Senge, “deeply ingrained assumptions, Notes
generalisations, or even pictures and images that influence how we understand
the world and how we take action.” Mental models represent an individual’s ----------------------
ability to compare new ideas with internal images of how the world works.
These mental images, if in contrast with new ideas, can prevent the latter from ----------------------
being turned into reality. It is, therefore, important for an organisation to foster ----------------------
openness among its people while providing them with the right direction in
order to prevent mental models from limiting the organisation’s ability to put ----------------------
new ideas into practice.
----------------------
Shared vision refers to the ability of a group to form and hold a common
picture of a desired future that its members seek to create. According to ----------------------
Senge, a shared vision is “a vision that many people are truly committed to,
----------------------
because it reflects their own personal vision. Shared vision is vital for learning
organisations because it provides the focus and energy for learning.” When ----------------------
there is a genuine commonly held vision within the organisation, people strive
to learn and excel, not because they are told to, but because they want to. ----------------------
Team learning, according to Senge, is “the process of aligning and ----------------------
developing the capacities of a team to create the results its members truly
desire.” Achieving personal mastery and having a shared vision are important to ----------------------
a learning organisation, but not enough. People need to be able to learn together,
----------------------
so they can act together. Team learning starts with a ‘dialogue’, or the process
of ‘thinking together’, wherein its members suspend personal assumptions and ----------------------
enter into a state of genuine group awareness and collective thinking.
----------------------
Activity 4 ----------------------

Provide some examples related to Knowledge Management. ----------------------

----------------------
10.7 GAME THEORY ----------------------
Game theory is a concept that deals with the formulation of the correct ----------------------
strategy that will enable an individual or entity, when confronted by a complex
challenge, to succeed in addressing that challenge. It was developed based on ----------------------
the premise that for whatever circumstance, or for whatever ‘game’, there exists
----------------------
a strategy that will allow one to ‘win.’ Any business is a game played against
competitors, or even against customers. Master the rules of the business you’re ----------------------
in and you’ll win the game, so says Game Theory.
----------------------
Game Theory is not a new concept, having been invented by John von
Neumann and Oskar Morgenstern in 1944. At that time, the mathematical ----------------------
framework behind the concept had not yet been fully established, limiting the
concept’s application to special circumstances only. Over the past 60 years, ----------------------
however, the framework has gradually been strengthened and solidified, with
----------------------
refinements ongoing until today. Game Theory is now an important tool in
any strategist’s toolbox, especially when dealing with a situation that involves ----------------------

Modern Techniques 263

 Notes several entities whose decisions are influenced by what decisions they expect
from other entities.
----------------------
Game Theory involves the study of how the final outcome of a competitive
---------------------- situation is dictated by interactions among the people involved (also referred to
as ‘players’ or ‘agents’) based on the goals and preferences of these players, and
---------------------- on the strategy that each player employs. A strategy is simply a predetermined
---------------------- ‘programme of play’ that guides a player as to what actions to take in response
to past and expected actions from other players.
---------------------- Game Theory has several important elements, some of which are:
---------------------- i. The agent, which refers to a person or entity who have their own goals
and preferences.
----------------------
ii. The utility, which is an abstract concept that indicates the amount of
---------------------- satisfaction that an agent derives from an object or an event.
---------------------- iii. The game, which pertains to a situation participated in by several agents
(now referred to as ‘players’, since they’re in a game), each of whom is
----------------------
trying to maximise his utility of the game by anticipating the actions of
---------------------- the other players and responding to them correctly.
iv. The information, which is what a player knows about what has already
----------------------
happened in the game, and which can be used to come up with a good
---------------------- strategy.

---------------------- v. The representation, which characterises the order of play employed in the
game.
----------------------
vi. The equilibrium, which is an outcome of or a solution to the game.
---------------------- In 1950, Albert Tucker of Princeton University invented the Prisoner’s
---------------------- Dilemma, an imaginary scenario that is undoubtedly one of the most famous
representations of Game Theory. Here, two prisoners were accused of the same
---------------------- crime and eventually given three possible outcomes:

---------------------- 1. If one confesses and the other does not, the confessor will be released and
the other will be imprisoned for a long period of time.
----------------------
2. If neither confesses, both will be imprisoned for a short period of time.
---------------------- 3. If both confess, both will be imprisoned for an intermediate period of time.
---------------------- In the end, both prisoners conclude that the best decision is to confess,
and are both sent to intermediate imprisonment.
----------------------
A new concept related to Game Theory is the Nash Equilibrium, which
---------------------- was developed by John Nash for his PhD thesis. In a game, players would tend
to change strategies from time to time to improve their respective positions.
----------------------
The Nash Equilibrium is the point at which no player can improve his or her
---------------------- position in the game by changing strategy. In the Prisoner’s Dilemma, the Nash
Equilibrium is the point at which both prisoners confess, since whoever changes
---------------------- this strategy will be sent to a long prison term, instead of an intermediate one.

264 World Class Manufacturing

 Game Theory is said to be too rational to be used in the reality of an Notes
irrational, modern business world. As such, companies that usually embrace it
are those which are in a business sector where there are but a few players, and ----------------------
for which the rules are very tightly regulated, such as the oil industry. In such a
‘playing field’ where rules are to be followed and behaviour can be rationalised, ----------------------
the best competitive moves can be formulated using Game Theory. ----------------------

Check your Progress 2 ----------------------

----------------------
Multiple Choice Multiple Response.
1. What are the five basic disciplines of learning organisations as per ----------------------
Peter Senge?
----------------------
i. Systems Thinking
ii. Personal Mastery ----------------------
iii. Mental Models ----------------------
iv. Shared Vision
----------------------
v. Team Learning
vi. Company Strategy ----------------------
vii. Vision Mission Statement & Quality Objectives
----------------------

----------------------
10.8 FLEXIBLE MACHINING SYSTEM
----------------------
Flexible machining system can mean different things to each company
doing it. Some users need to process complex parts in small to mid-size ----------------------
batches efficiently and without disrupting the workflow. Others want to process
----------------------
precision-machine in larger batches of parts, and then set up for other lots fast.
How they build flexibility into their machining process is as diverse as how they ----------------------
define flexibility, as is shown by the following three machining strategies.
----------------------
The first is a stand-alone high speed CNC machining centre with
next-generation body parts. It reportedly can beat flexible transfer lines in ----------------------
performance. The second, a manufacturing cell, uses linked modular machine
tools to make a family of parts. The third is a hybrid CNC machining system ----------------------
that is just now being introduced to the US. Its builders believe its modular ----------------------
design offers the capacity of a row of machining centres in much less space.
Each manufacturing strategy has its strengths and weaknesses, depending ----------------------
on the mix of parts to be processed and required batch sizes. What do the ----------------------
following three machining strategies have in common? All build on the
elementary capabilities of the machining centre. Although configured quite ----------------------
differently, they share a common goal to maximise spindle uptime.
----------------------
An XHC 240 machining centre from Ex-Cell-O GmbH (Eislingen,
Germany) in use at Ford Motor Company’s Cologne, Germany transmission ----------------------
plant is a good illustration of the first strategy. The machine has reduced floor-
----------------------
to-floor production time for precision- machining clutch housings by 60.

Modern Techniques 265

 Notes Ford engineers report that the machining centre provides the same output as
a flexible transfer line at about two-thirds of the total investment. It also has
---------------------- substantially shorter changeover times, which gives Ford a decided advantage
when it comes to model changes. The bottom line is faster response to changing
---------------------- market demands.
---------------------- Ex-Cell-O engineers credit the machine’s next-generation components for
its performance. The machine design includes a motorised high-speed spindle
----------------------
with sensors that monitor temperature and regulate pneumatic lubrication of
---------------------- the spindle bearings; an electrical direct drive with linear motors for the X, Y,
and Z axes; a fast computer numerical control; high regulating dynamics; direct
---------------------- magazine-to-spindle tool change; and a servo driven pallet changer.
---------------------- The machine is the first machining centre to use linear motors on all main
axis drives. This feature, combined with a precision high-speed spindle and
---------------------- direct-to-spindle tool changer, can allow the high-speed machine to produce
parts 50% faster than conventional machining centres. Compared to the other
----------------------
high-speed machines Ford considered for this job, the Ex-Cell-O machine cut
---------------------- total cycle time by about 30%.
The linear motors link the machine base and its driven components
----------------------
with a magnetic field rather than to a balls crew slide, as in machines using
---------------------- electro-motors. The result is rapid- traverse speeds of 60 m/min, compared
to conventional speeds of 15 m/min. At 1g acceleration, the system reaches
---------------------- peak speed after only about 50 mm. High rapid-traverse speeds, together with
high acceleration and deceleration rates, can reduce tool positioning times
----------------------
dramatically. This factor alone accounts for about 70% of the total reduction in
---------------------- machining cycle time.”

---------------------- One reason linear motors allow high traverse speeds is the lack of friction in
the drive. Another benefit of the machine is the lack of mechanical transmission
---------------------- elements, so Ford engineers don’t have to deal with the usual play, elasticity, and
wear of mechanical links, and any guide-tolerance or transmission-ratio faults.
---------------------- Mounting linear motors directly on the moving part of the slide also helps the
---------------------- machine achieve the positioning accuracy required in the Ford application.
For high metal-removal rates, the Ex-Cell-O machining centre uses a
---------------------- 24,000-rpm motorised spindle originally developed for a high-speed milling
---------------------- machine designed to process compressor parts. It accepts tool holders with a
hollow-taper shaft, rather than a standard- taper shank. The shaft clamps the tool
---------------------- axially to the spindle’s precision flange face with high axial force, providing a
precise, stable connection, even at high metal removal rates.
----------------------
Tool exchange is directly into the machine spindle, eliminating the need
---------------------- for grippers. A 40-position disk type magazine makes short axial movements
to remove a tool from the spindle shaft and replace it with another. Chip-to-
---------------------- chip time drops to 4.5 sec compared to the 10 sec common on conventional
---------------------- machining centres. Pallet changing also is fast. When the Z axis is in its rear
position, a servo driven transfer device replaces both pallets in one movement,
---------------------- reducing total pallet change time to about 6 sec.

266 World Class Manufacturing

 The machine’s unique features let Ford cut the number of standard and Notes
special cutting tools by half compared to conventional machines. The 40-position
disk-type tool magazine serves in effect as a tool holding fixture system. It ----------------------
ensures a firm and highly precise connection between the work spindle and tool,
which is a must for machining bearing diameters. Standard tools use through- ----------------------
the-tool flood coolant and include straight-loop solid-carbide drills, coated solid- ----------------------
carbide thread formers, and polycrystalline diamond helical-flute milling cutters.
The turret also includes special combination solid-carbide drilling and threading ----------------------
tools with internal coolant supply for drilling, chamfering, spot facing, and thread
milling. They drill at 24,000 rpm and form threads at 4000 rpm. A floating tool ----------------------
holder is unnecessary because of the precisely working spindle. Another special ----------------------
combination tool mills various cuts at 15, 30, and 45(deg) angles.
----------------------
The combination of intelligent servo drives and modular numerical
control also allows Ford engineers to program geometrical and mathematical ----------------------
interpolation in 2 msec, which allows high-precision circular milling. In addition,
the machine provides position compensation for contouring and acceleration ----------------------
errors, and offers high positional resolution. These control features helped
----------------------
Ford standardise on fewer tools. One tool doing circular milling, for instance,
can produce hole diameters from 47 to 73 mm. The system holds tolerance ----------------------
specs of 0.008 mm for roundness, 0.008 mm for parallelism, and 0.006 mm for
straightness. The circular milling process also meets a flatness specification on ----------------------
the joint faces of less than 0.05 mm, as well as a parallelism tolerance of less
----------------------
than 0.02 mm from the joint faces to the bearing shoulder.
A brushing operation after machining removes burrs. Following a ----------------------
6-second pallet change and a second part clamping, the machine then drills
----------------------
radial features like the clutch activation bore. Next, operators gage finished
parts for statistical process control, measuring diameters with electronic plug ----------------------
gages. Zeiss measuring machines supply positions and distances, while a
separate precision form tester measures bearing diameter shape tolerances. ----------------------
Resulting C sub pk was greater than 1.67 for 40 out of 41 features recently ----------------------
tested. All 63 position tolerances were within a 75 circle. These data are well
within Ford’s quality guidelines. ----------------------
From Chaos to Cell Control ----------------------
The second flexible machining strategy involving linked machining centres ----------------------
is illustrated by machine tool builder Cincinnati Milacron (Cincinnati), which
has two cells processing machine tool parts at Plant Two. The manufacturing ----------------------
engineers and cell technicians involved in bringing the cells online faced the
same concerns as any company rethinking the way it makes parts, namely how ----------------------
to put the cells in place, reroute parts into those cells, develop the required ----------------------
tooling packages and programming, and manage cell resources.
One cell includes four Cincinnati Milacron T-30 machining centres, each ----------------------
with a 170- pocket tool chain, linked by a single-level RGV system with 27 ----------------------
parking stations and three loading stations. The plant also has a three-machine
Maxim 630 flexible cell with a dual-level RGV system, 36 park stations, and ----------------------

Modern Techniques 267

 Notes three loading stations. Each cell uses a Milacron cell controller to manage work
load and resources entering and leaving the cell. A pre-set gage interfaces to
---------------------- both cell controllers to provide online access to all pre-set tools entering cells.
---------------------- The two cells process parts for standard horizontal machining centres,
the Avenger turning lines, and aerospace and specialty equipment. The work is
---------------------- basically the second generation of work previously conducted at two separate
locations.
----------------------
Two years ago, when the company moved the standard machine tool
---------------------- business back to Cincinnati, it was decided to expand the two-machine T-30
cell returning from the Fountain Inn plant by adding two additional T-30s
----------------------
already at various locations in Cincinnati, as well as install the Maxim cell.
---------------------- Manufacturing engineering then routed all parts to the cells that could be
machined as completely as possible with their equipment. Rerouting the parts
---------------------- was relatively easy compared to the fixturing changes and reprogramming
necessary.
----------------------
The large quantity of low lot-size parts routed to the cells produced a
---------------------- large amount of tools that had to be built and pre-set each day. It became clear
that, if the cell operators were to manage this, the tooling and programming
----------------------
methods had to be examined for these parts.
---------------------- One problem was that the Fountain Inn plant had used a different
---------------------- numbering system for tool assemblies. There also were procedural problems.
Engineers had attempted to set up resident tool packages for each machine, but
---------------------- jobs coming to the machines usually required a large enough number of non-
resident tools that they were removing a lot of resident tools. The reason was
---------------------- that four or five different programmers worked on jobs routed to the cells and
---------------------- didn’t have tool selection guidelines. There are many ways to cut a pocket, for
instance. It would have been helpful for someone to say ‘when cutting this size
---------------------- pocket use this size tool.’

---------------------- The goal was to standardise tooling for the new cells, so every job routed
to the cells was re-examined. From that, a matrix was produced of the tools
---------------------- required for every set of each part and the tools used most frequently were
identified. Other tooling was then consolidated. Tooling inventory for each cell
---------------------- was reduced by some 40%.
---------------------- Cell personnel and programmers now work with a standard tool package
book that lists tools to be used whenever possible. When a new part enters the
---------------------- cell, the cell supervisor reviews all associated programmes to make sure that
---------------------- they conform with the book. Engineers haven’t eliminated all special tools from
the cell, but the cell controller helps route them efficiently.
----------------------
The job of merging additional machines into the first cell went smoothly
---------------------- and took about 1 1/2 - 2 months. This process would have taken only 3 −4
weeks if the company’s field representatives, which implement cells for external
---------------------- customers, had completed installation, but the cell maintenance team worked
on the project for the learning experience.
----------------------

268 World Class Manufacturing

 What have they learned? Companies moving to flexible cellular Notes
manufacturing need to rethink their tooling and programming strategy.
Consolidating their tooling inventory may not be easy, but not doing it could ----------------------
add unnecessary tool inventory costs to the cell’s bottom line. A key element of
flexible cellular manufacturing will be knowing what tools are required, their ----------------------
location, and when they need replacing. ----------------------
When Dedication Means Inflexible
----------------------
The third flexible machining strategy, to use a hybrid machine tool, can
have its niche in applications short on floor space that require high-volume ----------------------
processing, but don’t want to move to a dedicated transfer-type machine. The
----------------------
Ketterer Flexible CNC Centre from Tooling & Production Systems (Sussex, WI)
doesn’t look like either a typical machining centre or a rotary transfer machine, ----------------------
so it is no surprise that its machining capabilities fall somewhere between the
two in both flexibility and lot sizes that can be processed. ----------------------
There are two ends of the spectrum in machining. The machining centre ----------------------
is often the choice for low-volume processing because of its flexibility, but only
one or two spindles running at a time can limit output. At the other end of the ----------------------
spectrum are the dedicated, relatively inflexible machines for very high-volume
----------------------
work. The Ketterer machine’s niche is the in- between applications beyond the
volume capacity of a machining centre and those for which manufacturers don’t ----------------------
want to buy dedicated machines. It is a multi-station CNC machining centre.
----------------------
The machine allows multi-side machining of forgings, castings, or blanks
in low, medium, and high volumes in minimal setups. It can accommodate up ----------------------
to seven turret-style three-axis machining stations, each with the capacity of
a small horizontal machining centre. All stations sit around a common base ----------------------
holding the index table and fixtured parts. Each turret station is limited to six ----------------------
HSK 63 shank tools because the machine has to balance high output with
flexibility. ----------------------
The machine design is modular, so users can begin with the basic three- ----------------------
station module and then add on capacity as their needs change. This simply
involves positioning another wing unit to the machine base and updating the ----------------------
control, an Indramat MT, which is designed to control multiple axes at once.
Another key feature of the machine is the direct-drive 13-kW spindle motor, ----------------------
which has a 21-kW peak output and uses water cooling. The machine’s standard ----------------------
spindle also offers 10,000 rpm, with 18,000 rpm optional.
More productivity gains come from the work holding configuration that ----------------------
allows five-sided machining of parts simply by indexing the rotary table in ----------------------
1(deg) increments or more. Users can machine four parts, as well as two sides of
each part, simultaneously, cycling both the part and the turret through a number ----------------------
of indexes. The Ketterer machine can’t always replace a multi-machine cell
because of its part-size limitation. Where cells can often accommodate fairly ----------------------
large parts, the Ketterer can only handle those fitting on its 275-mm table. The ----------------------
Ketterer’s forte is machining medium to high-volume parts that fit within this
envelope flexibly and within a constrained shop floor area. ----------------------

Modern Techniques 269

 Notes One advantage over a cell is that users eliminate several part clampings or
pallet transfer and can reduce related part error. As in cells, operators can load
---------------------- parts at one station while other stations are machining. Fixtures can include
hydraulically actuated, quick-change, jaw or toggle-type clamping options.
----------------------
In all applications profiled, spindle uptime will depend on how well
---------------------- the manufacturing engineers plan tooling exchange and work flow, flooding
of the work with coolant, even chip disposal. The steps required for efficient
----------------------
manufacturing haven’t changed, only the tools available to do it have changed.
----------------------

----------------------
Activity 5

---------------------- What are the different ways of building flexibility in manufacturing? Explain
each type with a short example.
----------------------

----------------------
Summary
----------------------
●● Dr. Eliuahu Goldratt first introduced the concept of Theory of Constraints
---------------------- (TOC), a management philosophy, in his 1984 book titled The Goal. The
theory is based on the concept that any manageable system is limited in
---------------------- achieving more of its goal by a very small number of constraints, and
---------------------- that there is always at least one constraint. The TOC process seeks to
identify the constraint and restructure the rest of the organisation around
---------------------- it, through the use of the Five Focusing Steps.

---------------------- ●● Synchronous Manufacturing is the most popular but broader application

of the Theory of Constraints that takes into consideration all elements of
---------------------- the business and not just the ‘Production’ working in synchronisation to
achieve the strategic goals of the business.
----------------------
●● The contemporary performance problems companies face are mostly due
---------------------- to the fragmentation of processes, which occur due to building functional
silos and vertical structures on narrow pieces of processes. These are
---------------------- headed by functional experts who are oblivious of overall requirements
---------------------- of the organisation. The expectation from these functional heads is that
they will act as glue to join the fragmented parts to work in unison for the
---------------------- benefit of the organisation. Instead, these experts become preoccupied
with isolating and cementing their own silos for individual gains. Quite
---------------------- often, efficiency of individual parts/functions of the company, come at the
---------------------- expense of efficiency of its whole. Business Process Reengineering seeks
to change all this. It aims at reunifying the broken down tasks (Adam
---------------------- Smith Principle) into a coherent business process.
---------------------- ●● Benchmarking is the process of comparing an organisation’s operations
and internal processes against those of other organisations within
---------------------- or outside its industry. The other organisations against which the
comparisons are made, known as ‘benchmark partners’, are usually those
----------------------

270 World Class Manufacturing

 that are perceived to be the best performers in their class. The purpose of Notes
benchmarking is to identify and adopt best known practices that can lead
to superior performance. ----------------------
●● Knowledge Management or simply “KM” is a business concept that deals ----------------------
with how a company should and could make the best use of its existing
knowledge. It involves the systematic and structured process of organising ----------------------
corporate information for easy retrieval, distribution, and reuse across the
----------------------
entire company. By this definition alone, computerisation should be part
of every serious KM programme, which is why KM-related software has ----------------------
been on the rise in recent years.
●● Organisational learning is becoming more and more important in the ----------------------
modern business world where things change rapidly and information ----------------------
gets transmitted almost instantaneously. In such a constantly changing
environment, only the truly flexible and adaptive companies will excel, ----------------------
i.e., learning from the past is vital to success in the future.
----------------------
●● Game theory is a concept that deals with the formulation of the correct
strategy that will enable an individual or entity, when confronted by a ----------------------
complex challenge, to succeed in addressing that challenge.
----------------------
●● Flexible Machining is different for different situations. How flexibility is
built into the machining process is as diverse as how flexibility is defined. ----------------------

----------------------
Keywords
----------------------
●● Theory of constraints: Concept that any manageable system is limited
in achieving more of its goal by a very small number of constraints, and ----------------------
that there is always at least one constraint.
----------------------
●● Throughput: Money (or goal units) generated through sales.
●● Operating expense: Money that goes into the system to ensure its ----------------------
operation on an ongoing basis. ----------------------
●● Inventory: Money the system invests in order to sell its goods and
services. ----------------------
●● Constraint: Anything that prevents the system from achieving more of ----------------------
its goal.
----------------------
●● Process batch: The total number of units that are scheduled to be
processed within the same setup. ----------------------
●● Transfer batch: The movement of part of the process batch, rather than
----------------------
waiting for the entire job to be completed.
●● Forward loading: Tasks are scheduled from some point into the future. ----------------------
●● Backward loading: The MRP type scheduling, where the finished ----------------------
product or required part is needed.
●● Bottleneck: Work centre which limits the throughput. ----------------------

----------------------

Modern Techniques 271

 Notes ●● Benchmarking: Process of comparing an organisation’s operations and
internal processes against those of other organisations within or outside
---------------------- its industry.
---------------------- ●● Knowledge management: Business concept that deals with how a
company should and could make the best use of its existing knowledge.
---------------------- ●● Learning organisation: Organisation that constantly monitors its
---------------------- environment for changes, and learns from and adapts to these changes
●● Mental models: Deeply ingrained assumptions, generalisations, or even
---------------------- pictures and images that influence how we understand the world and how
---------------------- we take action.
●● Shared vision: Ability of a group to form and hold a common picture of
---------------------- a desired future that its members seek to create.
---------------------- ●● Systems thinking: Discipline that recognises the interconnection between
parts that make up a whole.
----------------------
●● Team learning: The process of aligning and developing the capacities of
---------------------- a team to create the results its members truly desire.

----------------------
Self-Assessment Questions
----------------------
1. What are the focusing steps for TOC?
---------------------- 2. What are different types of constraints? Explain their relationship with
---------------------- different plant types.
3. Explain Drum-Buffer-Rope Philosophy.
----------------------
4. What are the characteristics of Synchronised Manufacturing?
----------------------
5. What are the advantages of Synchronous Manufacturing?
---------------------- 6. What are the characteristics of a reengineered process?
---------------------- 7. What is a Learning Organisation?

---------------------- 8. Explain Peter Senge’s concept of a ‘Learning Organisation’.

9. What are the differentiating points between Game Theory and ‘Nash
---------------------- Equilibrium’?
----------------------
Answers to Check your Progress
----------------------
Check your Progress 1
----------------------
Match the following.
----------------------
i. – d.
---------------------- ii. – c.
---------------------- iii. – b.

---------------------- iv. – a.

272 World Class Manufacturing

Check your Progress 2 Notes
Multiple Choice Multiple Response.
----------------------
1. What are the five basic disciplines of learning organisations as per Peter
Senge? ----------------------

i. Systems Thinking ----------------------

ii. Personal Mastery ----------------------
iii. Mental Models
----------------------
iv. Shared Vision
----------------------
v. Team Learning
----------------------
Suggested Reading ----------------------
1. Dettmer, H. William. Goldratt’s Theory of Constraints: A Systems ----------------------
Approach to Continuous Improvement. ASQ Quality Press.
----------------------
2. Johansson, Henry J. and Patrick McHugh. Business Process Reengineering:
Breakpoint Strategies for Market Dominance. Wiley Publication. ----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

Modern Techniques 273

 Notes

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

----------------------

274 World Class Manufacturing

World Class Indian Companies
UNIT

11
Structure:

11.1 Introduction
11.2 TVS Group
11.3 Infosys Technology
11.4 Tata Iron & Steel Company (TISCO)
Summary
Key Words
Self-Assessment Questions
Answers to Check your Progress
Suggested Reading

World Class Indian Companies 275

 Notes
Objectives
----------------------
After going through this unit, you will be able to:
----------------------
• Describe the functioning of some world class Indian organisations
----------------------
• State the vision and mission of these organisations
---------------------- • Recognise the core values on which these organisations function
---------------------- • Identify why these organisations have retained their leadership in the
market
---------------------- • Discuss how these organisations keep their employees motivated
---------------------- • Analyse the practices of these organisations to get customer
satisfaction
----------------------
• Correlate their working with the theories discussed in previous units
----------------------

---------------------- 11.1 INTRODUCTION

---------------------- In this unit, we will take a look at some Indian companies, which can
---------------------- easily carry the label of a World Class Company. Two of these companies are in
the manufacturing sector but we will also take a look at a universally acclaimed
---------------------- software company, Infosys Technologies, which in a short time span has risen
from small set up in a three room flat in Pune to a global major.
----------------------
TVS group companies are pioneers in getting world renowned quality
---------------------- awards and successfully practicing modern techniques like TQM, TPM, etc.
whereas TISCO, one of the oldest Indian companies is a pioneer and a path
----------------------
setter in Human Relations Management.
---------------------- These examples can be used by you to correlate the World Class
Manufacturing concepts we have discussed in the earlier units.
----------------------

---------------------- 11.2 TVS GROUP

---------------------- The TVS Group traces its origins to a rural transport service, founded
in 1911 in Tamil Nadu, India. Today, this renowned business conglomerate
----------------------
remains faithful to its core ideals of trust, values, service and ethics.
---------------------- The TVS Group is India’s leading supplier of automotive components
and one of the country’s most respected business groups.
----------------------
With a combined turnover of more than US$ 4 billion, the TVS Group
---------------------- employs a total workforce of close to 25,000. Charting a steady growth path
---------------------- of expansion and diversification, it currently comprises around 30 companies.
These operate in diverse fields that range from two-wheeler and automotive
---------------------- component manufacturing to automotive dealerships, finance and electronics.
Uniting these multiple businesses is a common ethos of quality, customer
---------------------- service and social responsibility.

276 World Class Manufacturing

The guiding principles of the group are: Notes
1. Customer Service: Regardless of the field they work in, TVS companies
----------------------
are known for their unwavering commitment to quality.
Most group companies have adopted Total Quality Management as a way ----------------------
of life. Robust processes and stringent controls underlie every activity,
----------------------
delivering tangible benefits to all stakeholders from customer to employee.
While each company in the group has achieved significant milestones on ----------------------
its quality path, five companies have won the coveted Deming Award
instituted by the Union of Japanese Scientists and Engineers. ----------------------
2. Uncompromising Ethics: The TVS Group’s reputation for honest and ----------------------
reliable business conduct is one of its greatest assets. Built by many
people over many years, the group has a strong legacy of accountability, ----------------------
integrity and transparency. Its commitment to competitive excellence is
----------------------
combined with total, uncompromising integrity.
Responsibility towards society and the environment has always been a ----------------------
strong force at the TVS Group. This is manifested in the form of diverse ----------------------
community partnerships. From schools and hospitals to initiatives for
drinking water and electrification, companies contribute actively to the ----------------------
development of the society in which their people live and work.
----------------------
3. People Focus: The people that make up the TVS Group work in an
environment of shared ideas, efforts and responsibilities. The group’s ----------------------
history, marked by long-standing relationships, is testimony to the fact
that people have found careers with it and not just jobs. Recognised ----------------------
for its excellent human resource practices, the group addresses each ----------------------
individual’s need to grow professionally and personally. Strong emphasis
on employee welfare and systems for continuous training has allowed ----------------------
different businesses to attract, retain and develop outstanding talent.
----------------------
A brief write up on some of the major group companies is given below.
----------------------
Brakes India Limited
Brakes India was founded in 1962 as a joint venture between TV Sundaram ----------------------
Iyengar & Sons and Lucas Industries, UK. The company manufactures braking
----------------------
equipment for automotive and non-automotive applications. Besides exporting
products to 35 countries worldwide, Brakes India caters to over 60% of the ----------------------
domestic OEM market. Some of its manufacturing sites have been assessed
at ISO 14001, ISO 9002, TS 16949 and QS 9000. The foundry division has ----------------------
received the prestigious Deming prize and award for TPM excellence.
----------------------
Delphi-TVS Diesel Systems Limited
----------------------
Delphi-TVS is a joint venture between Delphi Corporation, USA and
TV Sundaram Iyengar & Sons, India. The company manufactures Diesel Fuel ----------------------
Injection Equipment for Cars, Sports Utility and Multi Utility Vehicles, Light
Commercial Vehicles, Tractors, Single and Two Cylinder engines. Delphi-TVS ----------------------
believes that its success is based on the solid foundation of customer satisfaction, ----------------------

World Class Indian Companies 277

 Notes continuous innovation and total employee involvement. The company has a
track record of sustained growth since it was set up. Delphi-TVS have obtained
---------------------- ISO/TS 16949 and ISO 14000 certifications. The company has now won the
JIPM TPM Excellence Award (first category). To meet increasingly stringent
---------------------- emission norms, Delphi-TVS has upgraded its technology and introduced new
---------------------- products. Mechanical Rotary Technology has been upgraded to Electronic
Rotary Technology and Delphi-TVS and has now introduced the state-of-the-
---------------------- art Common Rail Technology with full authority electronic controls.
---------------------- Harita TVS Technologies Limited
Formed in 2001, Harita TVS provides Engineering Design Services to
----------------------
customers across US, Europe and India. With core competencies in Automotive,
---------------------- Industrial Machinery and Energy and Networking, it has become a preferred
partner to many OEM and Tier-1 customers. The company offers end-to-end
---------------------- solutions for next generation products with its Mechanical Design Services
(MDS) & Electronic Design Services (EDS). With a service portfolio covering
----------------------
the entire spectrum of a typical NPI (New Product Development) process,
---------------------- backed by strong engineering background of the TVS Group, Harita TVS has
helped its customers reach their strategic business goals by reducing time-to-
---------------------- market and cutting costs. It provides project-based solutions or full-product
solutions based on customer requirements. It has developed domain competency
----------------------
in plastic, sheet-metal and casting technologies and has been able to apply its
---------------------- product design knowledge to provide value added services to customers across
different verticals.
----------------------
Harita TVS is ISO 9001:2000 certified and has implemented ISO 27001.
---------------------- An excellent Customer Engagement Model & Delivery System driven by Six-
Sigma processes has helped Harita TVS maintain an impeccable track record
---------------------- of excellent and on-time delivery. A highly competent and creative talent,
managed by PCMM, helps keep pace with the growing needs of customers
----------------------
across different geographies in varied markets.
---------------------- Apart from the state-of-the-art Engineering Centre at Bangalore (India),
---------------------- Harita TVS also has presence in Michigan (USA), Frankfurt (Germany),
Chennai (India).
---------------------- Lucas-TVS Limited
---------------------- Lucas-TVS was established in 1961 as a joint venture between Lucas,
UK and TV Sundaram Iyengar & Sons, to manufacture automotive electrical
---------------------- systems. Today, the company is a leader in the auto electrical field – three out
---------------------- of four vehicles in India are fitted with Lucas-TVS products. The company
addresses segments across the auto industry, like passenger cars, jeeps, utility
---------------------- vehicles, light commercial vehicles, medium and heavy commercial vehicles,
off-highway vehicles, industrial engines, earth movers, tractors and two/three
---------------------- wheelers. It also provides solutions for stationary and marine applications.
---------------------- Lucas- TVS is a TS 16949 and ISO 14001 certified company and has bagged
the Deming Application Prize (2004) from the Japanese Union of Scientists and
---------------------- Engineers (JUSE).

278 World Class Manufacturing

Sundaram Brake Linings Limited Notes
Established in 1974, Sundaram Brake Linings (SBL) is a pioneer in
----------------------
the manufacture of asbestos-free friction material in India. Distinguished by
its focus on cutting-edge technology, the company has a strong presence in ----------------------
the Indian OEM and aftermarket and exports to over 60 countries. SBL is a
ISO/TS 16949 and ISO 14001 certified company. It is the first friction material ----------------------
manufacturer in the world to win the coveted Deming Application Prize for
----------------------
Total Quality Management. SBL is successfully positioned to meet the growing
need for friction materials for the automotive industry. ----------------------
Sundaram-Clayton Limited
----------------------
Sundaram-Clayton Limited (SCL) is a pioneering manufacturer of air
brake systems. The market leader in this space, the company exports quality ----------------------
spare parts to over 15 countries. The SCL-Brakes division is the first Indian
----------------------
company to manufacture the next generation Anti-Lock Braking System (ABS)
and Anti-Spin Regulation (ASR), both of which have been developed with in- ----------------------
house design technology. It is also the first company in India and the fourth
company outside Japan, to win the prestigious Deming Award. The company’s ----------------------
Die-casting division has evolved from being a captive supplier to a full-service
----------------------
supplier of aluminium components to Indian and multinational companies.
Both divisions – Brakes and Die-casting – have QS 9000 and ISO 14001 ----------------------
certifications.
----------------------
Sundaram Fasteners Limited
Incorporated in 1966, Sundaram Fasteners Limited (SFL) is the largest ----------------------
manufacturer and exporter of high tensile fasteners in India. SFL’s product ----------------------
range includes high tensile fasteners, powder metal parts, cold extruded parts,
iron powder, radiator caps, gear shifters and automotive pumps/assemblies. ----------------------
Principal supplier of radiator caps to General Motors, USA, SFL has won the
prestigious “Supplier of the Year” award from GM for five consecutive years. ----------------------
The automotive pumps and assemblies division is the principal supplier of ----------------------
rocker- level assemblies to Cummins, USA for ISX and ISM platforms. With
facilities in Chennai, Madurai, Pondicherry, Hosur, Hyderabad and China, ----------------------
SFL was the first Indian company to get ISO 9000 certification. Today, all its
divisions are ISO/TS 16949 and ISO 14001 certified. ----------------------

Rubber Division ----------------------

TVS Rubber, the rubber division of SIL, manufactures moulded rubber ----------------------
products for vehicle manufacturers, system manufacturers and other industries,
including defence, electrical, electronic, mining, thermal and white goods. ----------------------
TVS Rubber also serves the OEM and aftermarket in USA, Europe and other
----------------------
countries, on a JIT basis. It has a technical tie up with Bridgestone, Japan for
the manufacture of Anti Vibration Mountings. It has achieved ISO/TS 16949: ----------------------
2002 certification and received the TPM Excellence Award from JIPM, Japan
in 2004. ----------------------

----------------------

World Class Indian Companies 279

 Notes TVS Automotive Europe Limited
TVS Automotive Europe Limited is a joint venture between TV Sundaram
----------------------
Iyengar & Sons Limited and John Bruce UK Limited. The company is a single
---------------------- source for high quality automobile/engineering products for its OE/Tier 1 and
2 customers in UK and Europe. Products are sourced from QS/ISO certified
---------------------- suppliers located in India, China, Taiwan and Thailand. TVS Automotive
Europe caters to the complete Business Process Outsourcing (BPO) needs of
----------------------
its customers by providing services like supplier identification, supplier audit,
---------------------- quality documentation and tailor-made logistics solutions. A true end-to-end
solutions provider, it has a marketing office in UK and ISO 9001:2000 certified
---------------------- sourcing and back offices in India. Apart from offering components across
categories, the company also provides value added services, logistics support
----------------------
and warehouse facilities to its customers.
---------------------- TVS Motor Company Limited
---------------------- TVS Motor Company Limited is one of the largest two-wheeler
manufacturers in India and amongst the top 10 in the world. From being the
---------------------- first to introduce a two-seater moped in India (TVS 50 in 1980), to being the
first two-wheeler company in the world to receive the coveted Deming Prize for
----------------------
Total Quality Management, TVS Motor has consistently set benchmarks for the
---------------------- industry.

---------------------- The company’s leadership edge is continually consolidated through

pioneering R&D and innovative engineering practices. The company is ISO
---------------------- 9000, QS 9000 and TS 16949 certified and has also received the TPM Excellence
Award. TVS Motor serves its 10 million strong and growing customer base
---------------------- through a vast network of over 500 dealers and 2500 customer touch points. It
---------------------- has sold over a million two wheelers. The company has, for the last four years,
continuously bagged the Export Excellence Award.
---------------------- TVS Srichakra Limited
---------------------- TVS Srichakra Limited is the largest auto ancillary group in India. The
company is a leading manufacturer of automotive tyres and India’s premier
---------------------- two-wheeler tyre manufacturer (7 million tyres annually). It serves its loyal
---------------------- customer base through a 2050 strong dealer base and 20 warehouses in India.
The company also exports to USA, Europe, Africa, South America and South
---------------------- East Asia. ISO 9001 and ISO 14001 certified, TVS Srichakra has a robust
R&D, testing and manufacturing infrastructure. Its portfolio includes industrial
---------------------- pneumatic tyres, farm and implement tyres, skid steer tyres, multipurpose tyres
---------------------- and vintage tyres. The company has won the TPM Excellence Award and has
adopted Six-Sigma and Lean Manufacturing techniques.
----------------------
Wheels India Limited
---------------------- Wheels India Limited was established in the early 60s as a joint venture
between TVS and Dunlop UK. It is a leading manufacturer of automotive
----------------------
wheels and supplies to all major vehicle manufacturers in the country. The
----------------------

280 World Class Manufacturing

company has collaboration with Titan, the world leader in off-highway vehicle Notes
wheels. It produces wheels for all vehicle categories including passenger cars,
utility vehicles, trucks, buses, agricultural tractors and construction equipment. ----------------------
More than 15 per cent of its production is exported to North America, Europe,
Asia Pacific and South Africa. Cutting-edge product development and process ----------------------
design allows the company to address high-volume markets, niche segments ----------------------
and customer-specific requirements. The company has manufacturing facilities
at Padi, Pune and Rampur with a combined annual capacity of seven million ----------------------
wheels with a workforce of 1585 people.
----------------------

Activity 1 ----------------------

----------------------
Write the guiding principles of the TVS group and mention briefly as to how
it contributes to the ‘WCM’ tag. ----------------------

----------------------
11.3 INFOSYS TECHNOLOGIES
----------------------
Infosys Technologies Ltd. was established in 1981 by seven people with
----------------------
US$ 250. Today, the company is a global leader in the “next generation” of IT
and consulting with revenues of over US$ 15billion (FY 13). ----------------------
Infosys defines, designs and delivers technology-enabled business solutions ----------------------
that help Global 2000 companies win in a Flat World. Infosys also provides a
complete range of services by leveraging domain and business expertise and ----------------------
strategic alliances with leading technology providers.
----------------------
The company’s offerings span business and technology consulting,
application services, systems integration, product engineering, custom software ----------------------
development, maintenance, re-engineering, independent testing and validation
services, IT infrastructure services and business process outsourcing. ----------------------

Infosys pioneered the Global Delivery Model (GDM), which emerged ----------------------
as a disruptive force in the industry leading to the rise of offshore outsourcing.
The GDM is based on the principle of taking work to the location where the ----------------------
best talent is available, where it makes the best economic sense, with the least ----------------------
amount of acceptable risk.
----------------------
Infosys has a global footprint with 63 offices and development centres
in India, China, Australia, the Czech Republic, Poland, the UK, Canada and ----------------------
Japan. Infosys and its subsidiaries have 1,50,000 employees as on June 30,
2013. ----------------------
Infosys takes pride in building strategic long-term client relationships. ----------------------
Over 97% of the revenues come from existing customers (FY 13).
----------------------
Vision
To be a globally respected corporation that provides best-of-breed business ----------------------
solutions, leveraging technology, delivered by best-in-class people. ----------------------

World Class Indian Companies 281

 Notes Mission
To achieve our objectives in an environment of fairness, honesty, and
----------------------
courtesy towards our clients, employees, vendors and society at large.
---------------------- Values
---------------------- We believe that the softest pillow is a clear conscience. The values that
drive us underscore our commitment to:
----------------------
●● Customer Delight: To surpass customer expectations consistently.
---------------------- ●● Leadership by Example: To set standards in our business and transactions
and be an exemplar for the industry and ourselves.
----------------------
●● Integrity and Transparency: To be ethical, sincere and open in all our
---------------------- transactions.
---------------------- ●● Fairness: To be objective and transaction-oriented, and thereby earn trust
and respect.
----------------------
●● Pursuit of Excellence: To strive relentlessly, constantly improve
---------------------- ourselves, our teams, our services and products to become the best.
A Magnet for the Best Global Talent
----------------------
Fortune magazine identified Infosys among the top companies that
---------------------- “inspire, nurture and empower a new generation of global leaders.”
---------------------- Quality Focus

---------------------- “In God we trust, everyone else must come with data”, is an often
heard phrase at Infosys. The company constantly benchmarks its services and
---------------------- processes against globally recognised quality standards. Certifications include
SEI-CMMI Level 5, CMM Level 5, PCMM Level 5, TL 9000 and ISO 9001-
---------------------- 2000. In February 2007, Infosys BPO was certified for e-SCM level 4.0, the
---------------------- e-Sourcing Capability Model for Service Providers developed by a consortium
led by Carnegie Mellon University’s Information Technology Services
---------------------- Qualification Centre.

---------------------- Innovation, Speed and Excellence in Execution

The company was one of the first companies to develop and deploy a
---------------------- global delivery model and attain SEI-CMMI Level 5 certification on offshore
---------------------- and onsite operations. Company manages growth by investing in infrastructure
and by rapidly recruiting, training and deploying new professionals. It has 63
---------------------- global development centres, the majority of which are located in India. It also
has development centres in Australia, Canada, China, Japan, Mauritius, and at
---------------------- multiple locations in the United States and Europe.
---------------------- Industry Leadership
---------------------- Company’s history is marked by a series of firsts. It was the first Indian
company to list on a US stock exchange and the first Indian company to do a
---------------------- POWL in Japan. In December 2006, it became the first Indian company to be
added to the NASDAQ-100 index and became the only Indian company to be
----------------------

282 World Class Manufacturing

part of any of the major global indices. The company was listed on The Global Notes
Dow. Infosys was also ranked No. 14 among the most respected companies
in the world by Reputation Institute’s Global Pulse 2008. It was also listed on ----------------------
Forbes’ Asian Fabulous 50 for the fourth consecutive year. Infosys is also a five-
----------------------
time Global MAKE Winner and one of only two Indian companies amongst
global leaders to have won the award in 2008. ----------------------
Awards received by the company in recent years: ----------------------
For people practices
----------------------
2010
----------------------
●● Infosys ranked among ‘Best Companies for Leaders’
●● Infosys, the most sought-after company in India: Business Today Survey ----------------------
●● Infosys wins American Society for Training & Development (ASTD) ----------------------
award for excellence in inclusivity
----------------------
2009
----------------------
●● Infosys BPO Bags Excellence Award for Diversity Hiring Initiatives
●● Infosys in ‘India’s Best Companies to Work For’: Survey by Great Place ----------------------
to Work® Institute
----------------------
●● Infosys listed among best companies for leaders by Hay Group and Chief
Executive Magazine ----------------------
Technology Excellence Awards ----------------------
2010 ----------------------
●● Infosys BPO was recognised for outsourced services delivery at the
----------------------
Shared Services & Outsourcing Network (SSON) 2010 North American
and Australasian Shared Services Excellence Awards. ----------------------
2009
----------------------
●● Independent Research Firm names Infosys as a Leader among Oracle
Service Providers ----------------------

●● Infosys Honoured with Oracle Titan Partner Award at Oracle® Open ----------------------
World 2009
----------------------
●● Infosys’ Siebel Business Process Testing Solution Named “Partner
Solution Offering of the Year” at HP Software Universe 2009 ----------------------
●● Independent Research Firm Names Infosys as a Leader in SAP ----------------------
Implementation
----------------------
●● Infosys BPO Receives e-SCM-SP Capability Level 5 Certificate from
Carnegie Mellon University’s ITSqc ----------------------
●● Infosys cited as a Leader in North American SOA Systems Integration
----------------------
Services Market by Independent Research Firm
----------------------

World Class Indian Companies 283

 Notes 2008
●● Infosys cited as a Leader in Oracle Implementation Services by Independent
---------------------- Research Firm
---------------------- ●● Infosys Australia achieves enhanced CMMI Level 5 quality standard
---------------------- ●● Infosys wins HDS Diamond Award for ‘Best Virtualisation Strategy’ and
Platinum Award for ‘Best Green Strategy for a Data Centre’
---------------------- ●● Infosys wins two Banker Technology Awards for its exceptional work in
wholesale and capital markets
----------------------
●● Infosys Cited as a Leader in SAP Implementation Services by Independent
---------------------- Research Firm
---------------------- Company performance and management awards
2010
----------------------
●● Infosys ranked second in The International Association of Outsourcing
---------------------- Professionals ‘Global Outsourcing 100’
---------------------- 2009
●● Infosys among Asia’s Most Admired Knowledge Enterprises
----------------------
●● Infosys named as a Top Supplier for Sears Holdings Corporation
---------------------- ●● Infosys BPO receives “positive” rating in leading analyst firm’s
---------------------- Comprehensive Finance and Accounting Business Process Outsourcing
MarketScope Report
---------------------- ●● Infosys listed on Forbes’ Asian Fabulous 50 for the fourth consecutive
---------------------- year
●● Infosys in Fortune’s 100 fastest-growing companies
----------------------
●● Infosys, the most admired Indian company: Wall Street Journal survey
---------------------- ●● Infosys, the Best Outsourcing Partner: Waters Rankings 2009
---------------------- ●● Infosys was ranked among the top 50 most respected companies in the
world by Reputation Institute’s Global Reputation Pulse 2009
---------------------- ●● Infosys listed among best companies for leaders by Hay Group and Chief
---------------------- Executive Magazine
●● Infosys is the sole Indian IT services company to be featured in the Top
---------------------- 25 of Business Week’s InfoTech 100
----------------------
Check your Progress 1
----------------------

---------------------- Match the following.

i. Ethics a. Quality better than others
---------------------- ii. Trusteeship b. Trustworthiness
---------------------- iii. Credibility c. Holder of property
iv. Excellence d. Moral and equity
----------------------

284 World Class Manufacturing

 Notes
Activity 2
----------------------
1. List the organisations Infosys Technologies cater to.
----------------------
2. Write the value system of Infosys as to how it contributes to the ‘Vision’
and ‘Mission’ of the Company. ----------------------

----------------------
11.4 TATA IRON & STEEL COMPANY (TISCO) ----------------------
At the turn of the 20th century, the Tatas wanted to build a steel plant ----------------------
in India. Jamshedji Tata went to Pittsburgh and asked geologist Charles Page
Perin to help him find the site to build his dream—India’s first steel plant. The ----------------------
search for a site rich in the resources needed for the plant, namely iron, coal,
----------------------
limestone and water began in April 1904 in today’s Madhya Pradesh.
The prospectors, C.M. Weld, Dorabji Tata and Shapurji Saklatvala, took ----------------------
nearly three years in a painstaking search across vast stretches of inhospitable
----------------------
terrain to find a suitable location. One day, almost by accident they came across
a village called Sakchi, on the densely forested stretches of the Chhota Nagpur ----------------------
plateau, near the confluence of the Subarnarekha and Kharkai rivers. It seemed
to be the ideal choice and the place was selected. ----------------------
Early development work was undertaken by Durrell & Co, a civil ----------------------
engineering firm run by Lawrence Samuel Durrell, the father of naturalist Gerald
Durrell (who was born here) and novelist Lawrence Durrell. Commissioned by ----------------------
the Tata family in 1920, Durrell was responsible for building a tinplate mill, a ----------------------
brick-making plant, an office building, a hospital and over 400 workers’ houses.
Jamshedji’s plan for the city was clear. He envisioned far more than a ----------------------
mere row of workers hutments. He insisted upon building all the comforts and ----------------------
conveniences a city could provide. As a result, many areas in the city are well
planned and there are great public leisure places such as the Jubilee Park. ----------------------
While building the city, Jamshedji Tata had said, “Be sure to lay wide ----------------------
streets planted with shady trees, every other of a quick growing variety. Be
sure that there is plenty of space for lawns and gardens; reserve large areas for ----------------------
football, hockey and parks; earmark areas for Hindu temples, Mohammedan
mosques and Christian churches.” ----------------------

What the city looks like today is a testament to his visionary plans. ----------------------
Jamshedpur is the only city in India without a municipality. The responsibility
----------------------
for its conservation and maintenance is entirely assumed by Tata Steel, very
likely a unique situation in the world. ----------------------
Legend has it that in the late 1980s when the state government proposed
----------------------
a law to end the Tatas’ administration of Jamshedpur and bring the city under a
municipality, the local populace rose in protest and defeated the government’s ----------------------
proposal. In 2005, a similar proposal was once again put up by lobbying
politicians. The target audience was the working class. A large majority of ----------------------

World Class Indian Companies 285

 Notes this sided with the government and set up protest meetings outside the East
Singhbhum Deputy Commissioner’s office. However, the objective was never
---------------------- achieved and Jamshedpur remains without a municipality till date and the
quality services continue.
----------------------
Vision
----------------------
“We aspire to be the global steel industry benchmark for Value Creation
---------------------- and Corporate Citizenship”
We make the difference through:
----------------------
Our people, by fostering team work, nurturing talent, enhancing leadership
---------------------- capability and acting with pace, pride and passion.
---------------------- Our offer, by becoming the supplier of choice, delivering premium
products and services, and creating value for our customers.
----------------------
Our innovative approach, by developing leading edge solutions in
---------------------- technology, processes and products.
---------------------- Our conduct, by providing a safe working place, respecting the environment,
caring for our communities and demonstrating high ethical standards.
----------------------
Mission
---------------------- Consistent with the vision and values of the founder Jamshedji Tata, Tata
---------------------- Steel strives to strengthen India’s industrial base through the effective utilisation
of staff and materials. The means envisaged to achieve this are high technology
---------------------- and productivity, consistent with modern management practices.

---------------------- Tata Steel recognises that while honesty and integrity are the essential
ingredients of a strong and stable enterprise, profitability provides the main
---------------------- spark for economic activity.

---------------------- Overall, the company seeks to scale the heights of excellence in all
that it does in an atmosphere free from fear, and thereby reaffirms its faith in
---------------------- democratic values.
---------------------- Policies
The Tata Steel Group has always believed that mutual benefit of countries,
----------------------
corporations and communities is the most effective route to growth. Tata Steel
---------------------- has not limited its operations and businesses within India but has built an
imposing presence around the globe as well.
----------------------
With the acquisition of Corus in 2007 leading to commencement of Tata
---------------------- Steel’s European operations, the Company today, is among the top 10 steel
producers in the world with an existing annual crude steel production capacity
---------------------- of around 30 million tonnes per annum and employee strength of above 80,000
across five continents. The company has always had significant impact on the
----------------------
economic development in India and now seeks to strengthen its position of
---------------------- pre-eminence in international domain by continuing to lead by example of
responsibility and trust.
----------------------

286 World Class Manufacturing

 Tata Steel’s overseas ventures and investments in global companies have Notes
helped the company create a manufacturing and marketing network in Europe,
South East Asia and the Pacific-rim countries. The Group’s South East Asian ----------------------
operations comprise Tata Steel Thailand, in which it has 67.1% equity and Nat
Steel Holdings, which is one of the largest steel producers in the Asia Pacific ----------------------
with presence across seven countries. ----------------------
Human Resource Policy
----------------------
●● Tata Steel is an equal opportunity employer.
----------------------
●● Tata Steel recognises that its people are the primary source of its
competitiveness. ----------------------
●● It will pursue management practices designed to enrich the quality of life
----------------------
of its employees, develop their potential and maximise their productivity.
●● It will aim at ensuring transparency, fairness and equality in all its dealings ----------------------
with its employees.
----------------------
●● Tata Steel shall strive continuously to foster a climate of openness, mutual
trust and teamwork. ----------------------
●● In the process Tata Steel shall strive to be the employer of choice by ----------------------
attracting the best available talent and ensuring a cosmopolitan workforce.
Quality Policy ----------------------
●● Consistent with the group purpose, Tata Steel constantly strives to improve ----------------------
the quality of life of the communities it serves through excellence in all
facets of its activities. ----------------------
●● We are committed to create value for all our customers and key ----------------------
stakeholders by continually standardising, improving and innovating our
offerings, systems and processes involving all our employees. ----------------------
●● This policy shall form the basis of establishing and reviewing the ----------------------
Business Objectives and Strategies and shall be communicated across the
organisation. The policy will be reviewed to align with business direction ----------------------
and to comply with all the requirements of TQM Principles. ----------------------
Corporate Social Responsibility & Accountability Policy
----------------------
●● Tata Steel believes that the primary purpose of a business is to improve
the quality of life of people. ----------------------
●● Tata Steel shall volunteer its resources, to the extent it can reasonably
----------------------
afford, to sustain and improve healthy and prosperous environment and
to improve the quality of life of the employees and the communities it ----------------------
serves.
----------------------
●● Tata Steel shall conduct its business ever mindful of its social accountability,
respecting applicable laws and with regard for human dignity. ----------------------
●● Tata Steel shall positively impact and influence its partners in fostering a
----------------------
sense of social commitment for their stakeholders.
----------------------

World Class Indian Companies 287

 Notes The Tata Steel Group is proudly represented by people who act with
integrity and passion. The strong focus on Value Creation and Corporate
---------------------- Citizenship has helped the group build an enviable corporate reputation founded
in honest and transparent approaches.
----------------------
The values and principles, which have governed Tata Steel’s business for
---------------------- a century, have been deployed through the implementation of the Tata Code
---------------------- of Conduct (TCOC), which was first formally articulated in 1998. This Code
was intended to serve as a guide to each employee on the values, ethics and
---------------------- business principles expected of him or her in personal and professional conduct.
The Management of Business Ethics is effectively instituted today in Tata Steel
----------------------
through its four pillars concept.
---------------------- ●● Leadership
---------------------- ●● System and Processes

---------------------- ●● Training and awareness

●● Measurement
----------------------
A number of initiatives are continuously taken to reinforce the Code of
---------------------- Conduct among employees and other stakeholders. The systems and processes
are revisited and modified constantly to ensure that they are not subjected to
----------------------
unethical practices.
---------------------- The Tata Code of Conduct - Highlights
---------------------- The TCOC is a testament to Tata Steel’s determination to help its
employees in every way to understand their duties and commitments towards
---------------------- shared values and principles. The comprehensive document serves as the ethical
---------------------- road map for Tata employees and Group companies.
National interest being given foremost importance, The Code also
----------------------
embodies such values as clarity of communication, transparency, respect for
---------------------- others and an ethical approach in conducting business, all of which contribute
towards building team spirit and enhance integrity in the Company’s involvement
---------------------- with all stakeholders.
---------------------- The TCOC has added significance in the Group’s aspiration to be the global
industry benchmark for value creation and corporate citizenship. It highlights
----------------------
the importance of group efforts in improving the quality of life of the people
---------------------- in the communities in which it operates. This includes the understanding that
in the process of production and sale of its products and services, the company
---------------------- will strive for economic, social and environmental sustainability.
---------------------- In the context of Tata Steel’s increasing global presence, the Tata Code
of Conduct has been reviewed to accommodate required and appropriate
----------------------
modifications. This has ensured that diverse cultural and business related issues
---------------------- are addressed universally across the Group. The Tata Code of Conduct was
launched in Tata Steel (Thailand), NatSteel in July 2007 and in Corus in January
---------------------- 2009.

288 World Class Manufacturing

 A number of proactive initiatives are continuously taken by Tata Steel Notes
to induct and involve the employees in management of business ethics. This
ensures that values are translated into practice more readily and with the ----------------------
full import of responsibilities involved. July is celebrated as ‘Ethics Month’
every year, with numerous programmes and activities. The effectiveness of all ----------------------
initiatives is measured by various internal and external surveys and the result of ----------------------
these studies is proactively incorporated in the existing system.
----------------------
Tata Steel has for many years planned its operations and development in
adherence to clear statements of vision and value-oriented guiding principles. ----------------------
The five core values of the company guide and drive business decisions, building
on the Group’s beliefs and convictions from the earliest days. It is a legacy that ----------------------
has earned the company the complete trust of millions of stakeholders across
----------------------
the world and a reputation that has only improved over the years.
Core Values ----------------------
Trusteeship ----------------------
“The wealth generated by Jamshedji Tata and his son….The whole of that ----------------------
wealth is held in trust for the people and exclusively for their benefit. The cycle
is thus complete. What came from the people has gone back to the people many ----------------------
times over.”
----------------------
Integrity
“Every employee of a Tata Company shall deal on behalf of the company ----------------------
with professionalism, honesty, integrity as well as high moral and ethical ----------------------
standards.”
----------------------
Respect for Individual
“Employees of a Tata Company shall be treated with dignity. Employees ----------------------
policy and practices shall be administered in a manner that would ensure that in
----------------------
all matters equal opportunity is provided to those eligible and the decisions are
merit based.” ----------------------
Credibility ----------------------
“A Tata Company shall be committed in all its actions to benefit the
economic development of the countries in which it operates and shall not ----------------------
engage in any activity that would adversely affect such objective.” ----------------------
Excellence
----------------------
“A Tata Company shall be committed to supply goods and services of the
highest quality standards. The company seeks to scale the heights of excellence ----------------------
in all that it does.”
----------------------
Tata Steel feels that self-reliance in technology is a pre-requisite for
growth, especially in the context of globalisation and expanding operations. ----------------------
The Group’s Advanced Research and Development Centres are competent
----------------------
enough to meet emerging challenges and ensure that the Company always stays
ahead of all competition. ----------------------

World Class Indian Companies 289

 Notes Over the years, Tata Steel has placed a continuous emphasis on improving
processes, with a view to consistently enhancing efficiencies, improving quality
---------------------- and thereby achieving better performance benchmarks in all areas of operations.
The Research Department established by Tata Steel way back in 1935, was
----------------------
the first of its kind in India, and stands as a testimony to the foresight of the
---------------------- early pioneers and the vision of the founder of the Company. With globalisation
and an increasing scale of operations, the Company feels that self-reliance in
---------------------- technology has become a virtual pre-requisite to innovation and growth. To stay
---------------------- ahead of competitors, the group maintains its own research centres; its strength
in research and development helping it consistently to meet the challenges of
---------------------- growth and changes over the years.
----------------------
Check your Progress 2
----------------------
Fill in the blanks.
----------------------
1. ________ and ________ are a company’s statements displayed for
---------------------- the trust and faith of its stakeholders
---------------------- 2. Core competency of a company means ___________ and
___________.
----------------------
3. ____________ is also called Protocol to be adhered to in an organisation.
----------------------

----------------------
Activity 3
----------------------
Which factors in your opinion give Tata Group its unique standing amongst
----------------------
the Indian industries?
----------------------

---------------------- Summary
---------------------- ●● The TVS Group is India’s leading supplier of automotive components
and one of the country’s most respected business groups. The guiding
----------------------
principles of the group are: all-pervasive quality, customer service,
---------------------- uncompromising ethics and people focus.

---------------------- ●● Infosys takes pride in building strategic long-term client relationships.

Over 97% of the revenues come from existing customers. Core values of
---------------------- the company are: Customer Delight, Leadership by Example, Integrity
and Transparency, Fairness and Pursuit of Excellence.
----------------------
●● The Tata Steel Group has always believed that mutual benefit of countries,
---------------------- corporations and communities is the most effective route to growth. Tata
Steel feels that self-reliance in technology is a pre-requisite for growth,
----------------------
especially in the context of globalisation and expanding operations. Over
---------------------- the years, Tata Steel has placed a continuous emphasis on improving

290 World Class Manufacturing

 processes, with a view to consistently enhancing efficiencies, improving Notes
quality and thereby achieving better performance benchmarks in all areas
of operations. ----------------------

----------------------
Keywords
----------------------
●● Ethics: Moral principles and practices, involvement of subtle questions
of rightness, fairness or equity. ----------------------
●● Trusteeship: Holder of property in good faith. ----------------------
●● Integrity: Adherence to a code of values, uprightness of character or ----------------------
actions.
●● Credibility: Trustworthiness. ----------------------
●● Excellence: Quality of being better than all others. ----------------------

----------------------
Self-Assessment Questions
----------------------
1. Choose any two companies from the group and explain the methods these
companies have adopted to attain leadership in the market. What are the ----------------------
core competencies of the company? Which of the awards received by the
----------------------
company, in your opinion, reflect company’s market standing? Why?
2. Establish the correlation between TISCO’s Vision, Mission and policies. ----------------------

3. Explain “Tata Code of Conduct”. ----------------------

4. What are the core values of TISCO? ----------------------

Answers to Check your Progress ----------------------

----------------------
Check your Progress 1
Match the following. ----------------------

i. – d. ----------------------
ii. – c. ----------------------
iii. – b. ----------------------
iv. – a.
----------------------
Check your Progress 2
----------------------
Fill in the blanks.
1. Vision and Mission are a company’s statements displayed for the trust and ----------------------
faith of its stakeholders ----------------------
2. Core competency of a company means strengths and products.
----------------------
3. Code of Conduct is also called Protocol to be adhered to in an organisation.
----------------------

World Class Indian Companies 291

 Notes
Suggested Reading
----------------------
1. The Industries Directory of MCCIA.
---------------------- 2. Ghoshal, Sumantra and Gita Piramal. World Class in India: A Casebook
of Companies in Transformation. Penguin Books India.
----------------------

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292 World Class Manufacturing