WORLD CLASS

MANUFACTURING
 Definition
The purpose of any manufacturing enterprise is to
consistently make a profit, pure and simple.
Being a world class in manufacturing means that the
company can compete successfully and make a
profit in an environment of international
competition, not only now, but also in the future.
 CHARACTERISTICS OF WORLD
CLASS MANUFACTURING
I. Management/Employee Involvement
 
Emphasized teamwork
High worker productivity
Effective communication throughout the
organization
Empowered employees
Autonomous groups
Practices Lean Manufacturing Principles
Operates under Total Quality
Management/Total Quality Control
principles
Strong and effective leadership
CHARACTERISTICS OF WORLD
CLASS MANUFACTURING
New culture in the organization
Emphasis on innovation
Environmentally sensitive
Life-cycle approach to product development
Emphasis on effective strategic planning
Technology awareness
Effective organizational structure
Reengineering on a continuous basis
Holistic objectives
Customer focus
Emphasis on research and education
Strong marketing organization
 CHARACTERISTICS OF WORLD
CLASS MANUFACTURING
II. Focus on Quality
Total Quality Management
Reliable products
Statistical QC is used at all key processes
Partnership with vendors
Environmentally sensitive
Maintains high standards
Product design is driven by customer needs
ISO certification
Benchmarking
 CHARACTERISTICS OF WORLD
CLASS MANUFACTURING
III. Efficient Production Operations
Focus on improving productivity
Flexible manufacturing
Practices many modern day manufacturing
methods such as JIT, MRP, KANBAN, TPM, GT,
CIM, Bottleneck Management, etc.
Concurrent engineering is used in the product
realization process
Focus on waste reduction
Continuous effort on work simplification
Uses preventive maintenance as a tool of
productivity improvement
Applies value analysis in product development
CHARACTERISTICS OF WORLD
CLASS MANUFACTURING
IV. Customer Focus
  Customer driven product development
process
Practices environmentally safe
manufacturing
Just-in-time manufacturing for
customer’s just-in-time needs
Exceeds customer’s quality needs
Delivers maximum value for the
customer
INTERNATIONAL COMPARISONS

1. Comparison of Manufacturing Output, 1975-

1991
2. Selected Countries' Exports of Manufactured
Goods, 1969-1992
3. Export/Import Ratio for Selected Sectors, 1984-
1990
4. Trade Balance for Electronic Equipment, 1985,
1992
5. Trends in Output per Hour in Manufacturing,
1950-1991
 INTERNATIONAL COMPARISONS

6. Output per Worker for Selected Countries, 1950-

1987
7. High Volume Auto Assembly Plant Productivity,
1989
8. Production of Machine Tools Without Parts and
Accessories, 1985-1990
9. Gross Domestic Expenditure on R&D as a
Percentage of GDP, 1981-1991
10. Technology Balance of Payments
 INTERNATIONAL COMPARISONS
Table 1. Comparative Manufacturing Output, 1975-1991
(1975=100) Source: OECD reports

Country 1978 1980 1985 1990 1991

Australia 103 111 110 125 119
Canada 113 114 129 135 128
France 114 118 115 130 128
Germany 113 119 123 142 146
Italy 116 129 126 143 140
Japan 123 143 165 191 193
UK 103 95 99 112 111
USA 126 126 143 163 160
 INTERNATIONAL COMPARISONS
Table 2. Selected Countries' Exports of Manufactured Goods
(percentage share) Source: Central Statistical Office
Canada France Germany Italy Japan UK USA
Year
1969 N/A 8.2 19.1 7.3 11.2 11.2 19.2
1975 4.3 10.2 20.3 7.4 13.6 9.1 17.7
1980 4 10 19.9 7.9 14.9 9.7 17
1985 6.2 8.5 18.6 7.8 19.7 7.8 16.8
1988 5.1 9 19.5 8.2 18.3 8.4 15.3
1989 4.9 8.8 20.4 8.4 17.5 8.2 16.1
1990 4.5 9.7 20.5 8.6 15.8 8.6 15.8
1991 4.4 9.6 19.6 8.4 16.9 8.5 17
1992 4.4 9.7 19.4 8.6 17.4 8.2 17
69-80 -7 22 4 8 33 -13 -11
80-92 10 -3 -3 9 17 -15 N/A
69-92 2 18 2 18 55 -27 -14
 INTERNATIONAL COMPARISONS

Table 3. Export/Import Ratio for Selected Sectors (1984 and

1990) and Total Manufacturing (1972,1984, and 1990).
Source: OECD
Electrica Office Total

Aerospace l/Electro Computers Drugs Manufacturing

Country 1984 1990 1984 1990 1984 1990 1984 1990 1972 1984
Australi 0.11 0.07 0.07 0.12 0.04 0.09 0.34 0.25 N/A 0.54
a
Canada 0.65 1.25 0.47 0.46 0.4 0.46 0.34 0.25 N/A 1.01
France 2.21 1.43 1.12 0.91 0.69 0.59 1.93 1.39 1.1 1.11
German 1.05 0.87 1.45 1.25 0.87 0.66 1.74 1.61 1.53 1.42
y
Italy 1.09 1.15 1.19 0.86 0.74 0.82 0.97 0.55 1.31 1.24
Japan 0.1 0.15 10.55 5.62 5.61 0.96 0.27 0.32 2.82 2.78
UK 1.43 1.14 0.73 0.83 0.73 0.84 2.14 1.94 1.09 0.81
USA 2.98 3.26 0.52 0.69 1.83 0.95 1.7 1.56 0.84 0.63
 INTERNATIONAL COMPARISONS
Table 4. Trade Balance in 1985 and 1992 for Electronics
Equipment and Components for Selected Countries ($ billions)
Balance = exports – imports
Country 1985 1992

Australia (2.6) (4.3)

Canada (6.7) (6.4)
France 1.3 2.9
Germany 37.1 60.6
Italy 0.7 4.0
Japan 1.1 7.1
UK 2.0 9.0
USA (14.5) (19.5)
 INTERNATIONAL COMPARISONS
Table 5. Trends in Output per Hour in Manufacturing for Selected
Countries,(1982 = 100). Source: US Department of Labor

Countries 1950 1960 1970 1980 1985 1987 1989 1990 1991

Canada 36 52 77 100 120 119 119 120 122

France 20 31 59 91 109 113 128 129 129

Germany 18 39 67 98 113 112 119 123 125

Italy 17 29 55 96 122 127 135 141 145

Japan 8 19 52 92 112 120 135 144 147
UK 40 49 71 90 118 130 144 146 150
USA 49 60 79 94 108 117 123 126 128
 INTERNATIONAL COMPARISONS
Table 6. Output per Worker for Selected Countries 1950-1987 ($
thousands) Source: The Wall Street Journal (5/1/1989) Figures
are in 1987 dollars.

Countries 1950 1970 1987 Index 1987

1970=100

Germany 8 21.4 31.6 148

Japan 3.5 15.8 27.6 175

South N/A 5.6 13.3 238
Korea
USA 23.3 34.8 39.2 114
 INTERNATIONAL COMPARISONS
Table 7. High Volume Auto Assembly Plant Productivity, 1989. Sample includes Chrysler, Ford,
GM, Fiat, PSA, Renault, and Volkswagen Source: International Motor Vehicle Program
* includes Brazil, Korea, Mexico, Taiwan
 

Country Hours per vehicle

Weighted Sample
Best Average Worst Size
Japanese owned plants in Japan 13.2 16.8 25.9 8

Japanese owned plants in North 18.8 20.9 25.5 5

America

US owned plants in North America 18.6 24.9 30.7 14

US and Japanese owned plants in 22.8 35.3 57.6 9

Europe

Europe an owned plants in Europe 22.8 35.5 56.7 13

Plants in newly industrialized 25.7 41 78.7 11

countries*
 INTERNATIONAL COMPARISONS
Table 8. Plant Performance Comparison 1987. Source: International Motor
Vehicle Program. Nummi = joint venture between GM and Toyota

Factors GM Toyota Numm

i
Framing Takaoka Freem
ham ont

Assembly 31 16 19
hours per
auto
Assembly 135 45 45
defects per
100 autos
Assembly 8.1 4.8 7
space per
auto
Average 2 weeks 2 hours 2 days
inventory of
parts
 INTERNATIONAL COMPARISONS
Table 9. Production of Machine Tools without Parts and Accessories
for Selected Countries (Swiss Franks- millions). Source CECIMO
Countries 1985 1988 1990 1990
(1985 = 100)
Belgium 229 303 395 172

Denmark 102 92 118 116

France 1,225 1157 1,621 132
Germany 7,755 9,614 12,110 156
Italy 2,729 4,086 5,137 188
Japan 13,038 12,706 15,206 117
Korea 429 924 1,186 270
Netherlands 92 97 194 211

Spain 617 1,027 1,410 229

Taiwan 676 1,125 1,307 193

United States 6465 3,861 4,688 73

United 1780 2,035 2,077 117

Kingdom
 INTERNATIONAL COMPARISONS
Table 10. Gross Domestic Expenditure on R&D as a
Percentage of Gross Domestic Product (GPD).
Source: OECD. * The numbers belong to 1986 and 1988, respectively.

Country 1981 1985 1989 1990 1991

Australia N/A 1.27* 1.23* N/A N/A

Canada 1.23 1.44 1.35 1.38 1.43
France 2.01 2.25 2.34 2.4 N/A
Germany 2.45 2.72 2.88 2.81 N/A
Italy 1.01 1.13 1.24 1.35 1.35
Japan 2.32 2.77 2.98 3.07 N/A
UK 2.42 2.31 2.27 N/A N/A
USA 2.45 2.93 2.82 2.79 2.75
 INTERNATIONAL COMPARISONS
Table 11. Technology Balance of Payments (Figures
greater than 1 show receipts greater than
payments).
Source: OECD
Country 1984 1985 1986 1987 1988 1989 1990

Australia 0.22 N/A 0.37 N/A N/A N/A N/A

Canada 0.85 0.73 0.75 0.98 1.04 0.93 N/A

France 0.9 0.84 0.83 0.78 0.8 0.83 N/A
Germany 0.77 0.71 0.82 0.83 0.83 0.78 0.81
Italy 0.29 0.26 0.31 0.38 0.54 0.5 0.58
Japan 0.99 0.8 0.86 0.76 0.79 1 0.91
UK 1.05 1.13 0.95 0.92 0.92 0.96 N/A
USA 5.52 6.73 6.83 6.65 5.29 5.26 5.78
 Trade Balance
Goods on a Census Basis
VALUE IN MILLIONS OF DOLLARS
1960 THRU 1998
 Why Has This Happened ?
• Failure to Recognize the Size of the Competition
• Failure to Appreciate the Impact of Increasing the
Manufacturing Capacity
• Willingness to invest in research and
development
• Top management's lack of manufacturing
experience
• The production manager's obsession with short-
term performance issues
• Failure to recognize the customer as the ultimate
decision maker
• Failure of top-down management
• Ineffective operations management
 Why Has This Happened ?
• Inability to keep up with technology
• Top-heavy organizations
• Poor processes
• Labor relations and high wages
• Low productivity
• Increased mobility of capital
• Lack of continuous improvement
• Lack of strategic planning
• Overburdening legal issues