Table of Contents:-
- What is World Class Manufacturing
- World Class Manufacturing Meaning
- Features of World Class Manufacturing
- Seven Keys to Become a World-Class Manufacturer
- Steps in World Class Manufacturing
- Importance of World Class Manufacturing
What is World Class Manufacturing
Richard J. Schonberger developed the concept of World Class Manufacturing. Schonberger, a professor studied the peculiar approach of some Japanese manufacturers. In 1986, Schonberger came up with the idea of “World Class Manufacturing” and wrote about it to extend and universalize the concepts. The basis of these concepts was the Toyota  Production System.
Manufacturing has evolved considerably since the advent of the Industrial Revolution. In the current global and competitive age, the organisation needs to have manufacturing practices which are lean, efficient, cost-effective and flexible.
World Class Manufacturing is a unique set of principles, concepts, techniques and policies that are used to effectively manage and operate a manufacturing company. It is driven by the results achieved by the Japanese manufacturing resurgence following World War II and adapts many of the ideas used by the Japanese in electronics, automotive and steel companies to gain a competitive edge. It primarily focuses on continuous improvement in customer service, quality, cost, lead time, and flexibility.
World Class Manufacturing Meaning
World-class manufacturing is a collection of concepts, which set standards for production and manufacturing for other organisations to follow. Japanese manufacturing is widely recognized as a pioneer in the concept of world-class manufacturing. World-class manufacturing practices were implemented in the electronic, automobile and steel industries. World-class manufacturing is a process-driven approach where various techniques and philosophies are used in one combination or another. It is the collective term for the most effective techniques and methodologies to achieve optimal results.
Until the 1970s, there was a widely accepted view of best practices in manufacturing. Firms which had grown on the back of post-war re-construction, sold into stable and relatively undemanding markets. Supply shortages meant that as long as firms could provide the volume at a reasonable price and quality, they would continue to thrive. Given these stable and favourable market conditions, the “model” which firms generally strived to achieve was based on the characteristics.
Some of the major characteristics are explained as follows:
1) Logistics: Logistics were organized around the principle of mass production. Cost reduction was to be achieved by increasing production volume. Machinery was thus designed to produce specialized products, and machine changeovers were to be minimized. This led firms to hold large inventories of incoming materials, work-in-progress and finished products, just in case anything might go wrong and interrupt the flow of production.
2) Quality: Quality procedures were designed to avoid getting in the way of production. So quality inspection was placed at the end of the production line, and faulty products were re-worked before delivery.
3) Organization: Work organization was designed to support this system. Highly skilled workers concentrated on management, design, quality, marketing and supervision, and unskilled workers followed the instructions they were given, often being paid on a piece-work basis to maximize production.
World-Class Manufacturing (WCM) is the culmination of centuries of production expertise and knowledge. Originating from the guild structure of the Middle Ages, this knowledge and proficiency progressed through manufacturing practices in the 18th century, scientific management and mass production, socio-technological advancements, and lean production methodologies in the 20th century. These developments eventually led to state-of-the-art manufacturing companies emerging at the outset of the 21st century, exemplifying the principles of World-Class Manufacturing.
World class manufacturing is a structured system uniting the most effective known methodologies in the sphere of manufacturing which include Total Quality Control (TQC), Â Total Productive Maintenance (TPM), Total Industrial Engineering (TIE), Just-in-Time (JIT), etc. geared towards raising the entire logistics and manufacturing cycle of plants to levels of excellence.
Features of World Class Manufacturing
The four main features of World class manufacturing are successively:
1) Improving in Team Format
The individuals directly executing added-value processes are considered the internal customers here. All others should provide support and justify their presence through their positive impact on the production process.
2) Standardise Working Methods
This feature is the permanent guarantee of the found solutions – the standardisation. A WCM cycle is only complete if we make sure that the solution we found cannot ebb away. In addition, the ‘process owners’ in such a way should take this step so that firms can verify that the step is guaranteed.
3) Make Losses Visible
WCM focuses on people who are involved in the operation. Together, they trace and make losses visible. Subsequently, WCM forms a team to identify and eliminate the cause of a specific loss because removing the root cause can permanently resolve the problem. Solutions not removing the cause only cure the symptoms of a problem and there are no real solutions.
4) Organising Process-Oriented
The third main feature of WCM is product organisation. Instead of dividing the work over as many specialised departments as possible, the so-called functional division, WCM organised in a process stream-oriented manner. Ideally, every product-market combination of your company knows its team, to which activities adding to the total value are assigned, as well as the support services directly and exclusively related to them.
Seven Keys to Become a World-Class Manufacturer
Each of these objectives is important in, and of it; however, taken together, they describe the focus of the activities and attitudes that define world class manufacturing.
1) Cut Operations Costs
Although recent developments in planning and Customer Relationship Management (CRM) have focused more on top-line benefits and growing revenue the bottom line is still greatly dependent on controlling costs. Companies with a lower operational cost structure enjoy an obvious advantage in profitability and can adjust pricing to meet competitive pressures, if necessary, to maintain or gain market share.
2) Exceed Customer Expectations
The ultimate goal of any business is pleasing the customers. The most successful companies do not just meet customer expectations, they exceed them and beat the competition by setting the bar at a level that makes it difficult, if not impossible, for others to surpass. Successful manufacturers manage the entire customer relationship from prospect to post-sales service and support- involving the entire organization in a customer focus. Regardless of whether they have direct contact with customers, contributors must keep the customers’ needs in mind as they plan and carry out day-to-day operations.
3) Manage the Global Enterprise
Globalization and Web commerce have changed traditional business behaviours and practices. If manufacturers do not expand into new geographic markets, their market share is likely to shrink as new competitors will enter their territory and target their historical customers.
Companies must adapt their products and services to those new potential customers. They must leverage the Internet to quickly establish a virtual presence. They must use collaborative technology to respond to customer’s requirements better and faster.
4) Streamline Outsourcing Processes
Outsourcing manufacturing operations is a common practice today because it offers flexibility – the ability to change products or processes rapidly – and can often save money by exploiting economies of scale or other favourable cost factors offered by the contractor.
Two approaches to outsourcing exist: an outside resource may perform a single process step or group of steps (such as heat treating or electroplating), or a third party might contract the entire manufacturing process. In either case, the manufacturer relieves demand on its plants and can concentrate on its core competencies – which might not include volume manufacturing its partner(s) provide the resources for producing products.
5) Improve Business Performance Visibility
In today’s fast-moving, ever-changing manufacturing environment, there is a need for faster responsiveness to changes in product innovation and supply chain dynamics. In this environment, ignorance is one of the greatest threats to a manufacturing company’s health and success.
Executives and senior managers must ensure they understand how the enterprise meets strategic objectives, while middle-level managers need visibility into their performance against tactical objectives. Responsible individuals should immediately notify when supply chain issues threaten the completion of objectives, enabling timely actions to ensure the continued fulfilment of customer delivery and quality requirements.
A well-implemented and effective business solution delivers overall visibility into the health of the company and its operations and provides detailed information for process management, performance measurement, problem identification and remediation. Such a system can help to improve revenue through competitive advantage, help to understand the business and therefore, manage it better, reduce operational costs, improve performance and improve results for all stakeholders -owners, executives, managers and employees.
6) Speed Time-to-Market
Developing and introducing new products and services is vital to most manufacturing companies. Good ideas are not enough; well-managed processes for bringing new products to market can lead to significant competitive advantages. Those activities, however, represent a significant risk that can lead either to missed opportunities or huge financial losses.
In addition to new product development, the same processes and resources are applied to product improvements, corrections and variations throughout the product life cycle. Based on market research, products are often subject to frequent engineering changes due to customer requests, technological advances, regulatory concerns or competitive pressures.
7) Reduce Lead Times
Shorter lead times are always a good thing. In many markets, the ability to deliver sooner will win business away from competitors with similar product features, quality and price. In other markets, quick delivery can justify a premium price and will certainly enhance customer satisfaction. In all cases, shorter lead times lower the risk of obsolescence. reduce the need for inventory buffers, and increase agility and flexibility.
Lead times are cumulative and bi-directional, i.e., order handling, planning, procurement, inspection, manufacturing, handling, picking, packing, and delivery all contribute to the lead time. The time it takes to get signals down the supply chain to initiate each activity contributes to the overall duration of completing the task.
World Class Manufacturing Process
Keong Leong and Peter Stonebreaker presented a five-level hierarchy of steps that lead to world-class operations, which is used to describe the characteristics of world-class manufacturers. The steps are presented in the figure given below.
1) Business and Operations Strategy
 All world-class manufacturers have an explicit, formal manufacturing mission. Within this mission lies the operating goal of becoming world-class. They utilize competitive information to establish organizational goals and objectives, which are then effectively communicated to all members of the enterprise. They regularly assess the appropriateness of these objectives for achieving and sustaining world-class status.
World class manufacturing requires an overall willingness to establish stronger relationships with all stakeholders, including suppliers and employees. It requires a steadfast dedication to self-assessment and continuous improvement. It also requires an aggressive approach to technology that can transform innovative strategies into tangible results. All of these must be reflected in the firm’s business and operational strategy if world class status is to be attained.
2) Organization Design, Technology, Performance Measurement and Human Resources
The following sections discuss how organization design, technology, performance measurement and human resources factor into an organization’s effort to become a top-tier manufacturer:
i) Organization Design
Top-tier manufacturers integrate all elements of the manufacturing system in such a way that effectively and timely satisfies the needs and wants of their customers. To ensure proper integration of all aspects within the system, commitment and the expenditure of efforts and resources are essential. The commitment of a world-class manufacturer extends to outside elements while encouraging and motivating its suppliers and vendors to become equal partners within the manufacturing system.
World class manufacturers work to eliminate organizational barriers to communication and to organise the firm in such a way that the core values needed to reach world class status take precedence. Most companies that have succeeded in implementing many of the world class tools such as Total Quality Management (TQM), Just-in-Time production (JIT), Total Productive Maintenance (TPM) and Manufacturing Resource Planning (MRP II) already had the core values well in place. Established companies with a solid global presence can quickly integrate new manufacturing concepts as they appear and gain recognition in the industry.
ii) Technology
A great deal of emphasis is placed on technology, equipment, and processes for attaining world-class status. World-class manufacturers consider technology as a strategic tool for achieving and maintaining their esteemed status in the global market. High priority is given to the development, discovery, and timely implementation of cutting-edge technology.
They also prioritize identifying and supporting individuals who possess the skills to effectively communicate and implement this technology. The most highly competitive firms have made significantly more progress than others in implementing TQM, re-engineering, simultaneous engineering, group technology, Computer Assisted Manufacturing (CAM), Material Resources Planning (MRP), and the use of Local Area Networks (LANs).
iii) Performance Measurement
World class manufacturers understand the importance of measurement in establishing objectives and performance expectations for their organization. They routinely adopt or develop the appropriate performance measurements needed to interpret and quantitatively describe the standards utilized to evaluate the efficiency of their manufacturing system and its interconnected parts.
The use of the proper measurements allows world class manufacturers to assess their performance against themselves (internal benchmarking), their competitors (competitive benchmarking), and 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, a goal that cannot be reached without proper measurement.
iv) Human Resources
World class manufacturers recognize that employee involvement and empowerment are essential for achieving continuous improvement across all aspects of the manufacturing system. The continuity of organizational development and growth relies on employees actively involving themselves. Top-tier companies invest more in their relationships with their employees by offering extensive training programs that surpass their competitors. An ‘Industry Week survey found that firms approaching world class status were three to five times more likely to report “highly effective” human resources programs than other firms. Many analysts suggest that combining lean manufacturing principles with employee participation can elevate firms to the status of world-class manufacturers.
3) Information Systems, Management Direction, and Operations Capabilities
i) Information Systems
 World-class manufacturers require top-tier data collection, processing, and dissemination, along with a feedback mechanism through information systems, to achieve their goals. Information systems are fully integrated into companies’ business processes, prioritizing continuous improvement and Total Operations Management (TOM) strategies. Capturing and analyzing customer feedback and designing, manufacturing, and delivering high-quality products and services depend on using superior information systems.
According to Richard Schonberger, in world-class companies, all functions share a common language and signalling system. World-class firms embrace computer-integrated manufacturing and computerized maintenance management. Additionally, the strategic use of information systems supports organizational commitment to continuous improvement.
ii) Management Direction
Management is responsible for directing the manufacturing organization’s journey to world class status and for creating an organizational 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 essential for the success of world class companies,
The manufacturing excellence required for world-class status is nurtured by superior management direction, which must permeate the manufacturing function, considering and managing it as an essential, inseparable part of the company. It aims for excellence in all parts of operations. Therefore, cannot tolerate mediocrity or average manufacturing performance.
To manage their manufacturing system effectively, management must strive to define and understand the interdependence of its various components clearly. This involves identifying new relationships, evaluating the potential outcomes of different decisions, and ensuring unambiguous communication within the organization and with customers and suppliers.
To effectively navigate the ever-evolving environment of continuous change, management must embrace experimentation and diligently evaluate outcomes. They must translate the knowledge gained through these efforts into a cohesive direction, framework, or model that improves operational decision making. By merging a learning culture into their core operating philosophy, management can adapt and succeed in facing ongoing challenges. The objective of achieving world-class status tests management’s ability to enhance its capacity for learning, adapting, and innovating swiftly in a fiercely competitive global market.
iii) Operations Capabilities
World class manufacturers are concerned with whether their operations systems can meet design specifications, rather than with evaluating the quality and quantity of products after the fact. To achieve world class status, it is essential to give the proper resources to the the manufacturing companies. With these resources, the company can effectively produce the right quantity, the right quality, at the right time (often just in time) and the right price. The proper technology must be on hand or readily achievable. In addition, the company must have the necessary managerial abilities to compete successfully on a global basis. For many companies, the necessary operational capability involves the ability to provide customers with a large degree of flexibility in either product or volume, changes in orders, exceptional response time to orders, or new product development.
Beyond the company itself, operations capability indicates a superior interactive relationship with all suppliers and vendors. World class companies have broadly implemented the Just in Time technique, are heavily involved with programs that contractually commit suppliers to annual cost cuts, and are making efforts to involve the supplier earlier in the new product development process.
4) Quality
World class manufacturers emphasize quality. Firms in this category are usually in an advanced state of TQM implementation, constantly striving to improve their operations. All quality costs (prevention costs, appraisal costs, and cost of defects internal and external) are evaluated and held to the lowest reasonable sum. Achieving “zero defects” is the ultimate objective for a world-class manufacturer. To achieve zero defects, the world-class firm must be well-versed in and have implemented Statistical Quality Control (SQC), sometimes referred to as Statistical Process Control (SPC) or quality at the source.
Hence, quality is maintained and boosted through quality control, quality planning, and quality improvement. In conjunction with this effort to improve processes and products, world class firms utilize an activity called benchmarking. This involves comparing the firm’s performance, either overall or in a functional area, with that of other world class organizations. According to some analysts, the use of TQM techniques is the most striking differentiator between world class and non-world-class companies. Quality has been identified as the primary competitive differentiator in the eyes of the customer.
5) Customer Service
World class manufacturers instil within their organization and constantly reinforce the idea that everyone must understand their customers and strive to meet the desires and needs of not only the customers but all other stakeholders. The goal of customer satisfaction includes various aspects such as order product quality, processing efficiency, responsiveness to changes, timely delivery, and post-sale service. The ultimate objective of continuous improvement is to enhance processes and the value of products and services to increase overall customer satisfaction and loyalty, ultimately ensuring long-term profitability.
6) World Class Manufacturing
Defining world-class manufacturing may be challenging for manufacturers, many claim they can easily recognize it when they encounter it. To truly understand the customer’s perspective, viewing things from their vantage point is essential. A survey conducted by Industry Week revealed that factories on the path to achieving world-class status are more likely to be affiliated with public companies, have corporate parents with revenues exceeding $1 billion, be part of the automotive industry value chain, and employ at least 250 individuals at their location. These companies have reported significant cost reductions over the past three years, along with increased revenues, higher capacity utilization, more excellent sales per employee, and Returns on Invested Capital (ROIC) that surpass those of other manufacturers.
According to Daniel F. Baldwin, “Truly world-class firms are always examining their business processes and continuously seeking solutions to improve in key areas, such as lead time reduction, streamlining processes, exceeding customer expectations, cost cutting, shortening time to market for new products and managing the global operation”.
World-class manufacturers possess the knowledge and technology to provide products and services of the highest quality.
Importance of World Class Manufacturing
As companies introduce world class manufacturing techniques, they require innovative methods of performance measurement to effectively manage their production facilities. These new methods are needed because:
1) Customers are requiring higher standards of quality, performance, and flexibility.Â
2) Traditional management accounting is not relevant to world class manufacturing.
3) New management methods employed by world class manufacturers require a variety of performance measures.Â
World class manufacturing concept is of a recent origin. The following attributes of the World class manufacturing are aimed at fulfilling customer demands:
1) Products with high quality.
2) Products in a wider variety.
3) Products delivered on time.
4) Products at competitive prices.
5) Flexibility in fulfilling products’ demands.
6) Products with several enhanced features.
7) Products delivered with shorter lead times.
All these performance measures are external to the manufacturing system but highly essential for the company’s success. These can be measured internally. Companies must set up their performance measures in these lines so that the product will have a high level of acceptance at the customer point.
The success of the company in the face of stiff competition is a direct consequence of its manufacturing function having a superior performance measurement system over its competitors. Under the world class manufacturing, the company’s products should have a specification closer to the customer’s needs than those made by any competitor, they should reach the customer error-free, get delivered in a lead time faster than any other competitor, and should always be delivered at the promised due dates.Â