Implementing Management Strategy: World Class Manufacturing - Term Paper Example

?World Manufacturing College Executive Summary World Manufacturing (WCM) is used in reference to industries that have employed best practices in order to gain competitive advantage. Competition is what drives companies to exploit their potentials entirely, world class manufacturers can therefore be distinguished from average manufacturers depending on their implementation of WCM strategies. In order to achieve WCM status, industries have implemented such measures as quality on production, cost reduction, value addition, human resources, organizational strategies and technology among others. WCM has been used synonymously with big industries; however, other enterprises other than manufacturing industries are adapting WCM measures in order to attain WCM status. The big industries with WCM status have thus become pace-setters for the smaller enterprises. Introduction WCM 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 tradeoffs among the four competitive priorities: cost, quality, delivery/service, and flexibility. Managers began to realize that they no longer had to make these tradeoffs but could instead compete on several competencies (E-notes World Class Manufacturer Journal, 2013). What is World Class Manufacturing? WCM refers to a standard of excellence, the kind of manufacturing considered the best in the world. World class manufacturing is a collection of concepts, which set standard for production and manufacturing for another organization to follow. Japanese manufacturing is credited with pioneer in concept of world-class manufacturing. World class manufacturing was introduced in the automobile, electronic and steel industry (Management Study Guide Journals-World Class Manufacturing, 2013). In another description, WCM is often used to describe a company that has achieved a perceived, but largely undefined, level of performance. In today’s highly competitive, global marketplace, being truly excellent is not only a desirable trait but increasingly a requirement to survive and prosper, even for a small to mid-sized manufacturer. WCM is an on-going journey towards total operational excellence. In defining WCM, the following four building blocks encompass attributes that are practical and workable interpretations of WCM: Compete with competitors on the basis of time Having very high levels of product and process quality Involving all stakeholders in the conduct of business Practicing continuous improvements in all aspects of business In order to adopt these WCM building blocks, the manufacturer needs have understanding, awareness, acceptance an implementation (Shearer, 2004). World Class Manufacturers are those that demonstrate industry best practice. To achieve this, companies should attempt to be the best in the field at each of the competitive priorities (quality, price, delivery speed, delivery reliability, flexibility and innovation). Organizations should therefore aim to maximize performance in these areas in order to maximize competitiveness. However, as resources are unlikely to allow improvement in all areas, organizations should concentrate on maintaining performance in qualifying factors and improving competitive edge factors (SM Thacker and Associates). The fundamental principle governing WCM is that cost added is equivalent to waste whereas value added is equivalent to loss. Typical manufacturers relies a 70 per cent to 30 per cent cost added to value added ratio as illustrated below: Source: World Class Manufacturing Performance Journal. Management Education and Consulting. Buker, Inc. The value added is equivalent to 30% whereas 70% is equivalent to cost added. This draws losses for the manufacturing firm and draws them further away from WCM status. For world class manufacturing firms, the opposite is true. The cost added is equivalent to 30% whereas 70% is equivalent to the value added. This leads them to realize WCM status. Source: World Class Manufacturing Performance Journal. Management Education and Consulting. Buker, Inc. WCM Performance Measures The traditional WCM performance measures are being replaced with new performance measures. This is because traditional management accounting is no longer relevant to a company moving towards WCM environment. Customers are also requiring higher standards of quality, performance and flexibility. The management techniques used in production plants is changing significantly (Maskell, 1991). WCM measures currently being taken up by companies are focused on quality, business and operations strategy, customer service, technology, organization design, human resource and business and operations strategy among others as summed up in the figure below: WCM Measures World Class Manufacturing Customer Service Quality Information Systems and Operation Capabilities Human Resources and Technologies Business Operations Strategy Quality Manufacturers are reducing total costs in quality and this is measured on a monthly basis. The quality costs include prevention costs, appraisal costs and costs of defects. ‘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 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. The use of total quality management (TQM) techniques, according to some analysts, is the most striking differentiator between world-class and non-world-class firms. Quality has also been found to be the most important competitive differentiator in the eyes of the customer (Encyclopedia of Business, 2nd Edition. World-Class Manufacturer). Business and Operations Strategy Most world class manufacturers have a formal manufacturing mission; they have an operating goal to become world class. This strategy involves using competitive information to establish organizational goals which they communicate to all members. This is constantly measured to ensure their suitability for attaining WCM status. WCM emphasizes the need for intrinsic relationships with workers as well as suppliers. This should be among the priority issues in the industry’s strategies (Operations Consulting and Lean Management for World Class Efficiency). Customer Service World class manufacturers put into consideration the satisfaction of the customers as well as the stakeholders. Customer satisfaction is ensured through quick sales, service and delivery. They take into serious consideration customer feedback therefore enabling them to tailor their products and services to suit customer needs (Stickler, ). Technology WCM considers technology a strategic tool for a company to attain world-class status. They strive to identify and to implement new and relevant technology. Such companies have implemented technology like material resource planning (MRP), use of local area networks (LAN) and computer-assisted manufacturing (CAM) (E-notes World Class Manufacturer Journal, 2013). Human Resource World class manufacturers empower their employees in order to achieve WCM status. They build good employer-employee relationship; they also provide training to upgrade employee skills and knowledge relevant to the industry’s growth. Effective human resource is the key differentiator amongst competitors (Encyclopedia of Business, 2nd Edition. World-Class Manufacturer). Extending WCM to other Enterprises Other enterprises, be it Small and Medium Enterprises (SMEs), are adapting WCM strategies in their operations. SMEs contribute a significant role to the economy of a country. In most cases, SMEs produce their own products, but at the same time they produce items for large scale industries. These create certain interdependencies among SMEs and between them and large scale industries to improve the competitiveness of SMEs (International Journal of Manufacturing Technology and Management, 2000 Vol.2, No.1/2/3/4/5/6/7, pp.777-789). Enterprises that have adapted WCM measures and best practices have remained at the top. They have realized WCM by improving staff training. This enables the staff to produce quality work and at the same time boosted customers’ perception of the enterprise. Continued learning and collaboration with consultants enables enterprises to access expertise in different fields. Another approach is listening to employees and providing solutions to their problems. Employees’ suggestions are vital as they help to improve the bottom line performance and at the same time foster good relations necessary for a productive working environment. Enterprises are also focusing on quality first. Quality comes along with total elimination of waste and at all costs and maintaining the enterprise’s reputation. Another approach to WCM status being taken up by enterprises is client satisfaction, performance, excellence in design and performance (Onsite Insights Journal, 2008). Enterprises walking towards WCM status are making use of fast turnaround time. Fast does not imply fast technology or human resources, but doing fewer activities than ordinary firms in order to produce the same products. Enterprises are also adapting WCM strategies such as making use of minimal resources to produce high quality products and services as compared to their competitors. High productivity with minimal resources leads to minimal use of space, suppliers, workforce and inventories among others. Flexibility is also a key ingredient to WCM status for enterprises. Enterprises with flexible and adaptive manufacturing systems have marketing advantages as well as cost advantages. An enterprise’s flexibility is defined by short time of set up, that is, changing form one model to another (Szwejczewski and Jones, 2012). Environment consciousness is also a tool requisite for WCM status in enterprises. This means that the enterprises work in a clean environment ensured by its minimal waste production and also proper waste disposal. It also makes use of biodegradable and recyclable resources (Domingo, 2003). Conclusion Many world class manufacturers belong to public companies and have corporate parents with very high revenues. They participate in automotive value chain and employ 250 or more people at the location. Such firms report large cost reductions, increased revenues, higher capacity utilization, higher sales per employee, and returns on invested capital (ROIC) that exceeds that of their competitors. Such world class firms are continuously examining their business processes and seeking solutions to improve lead time reduction, cost cutting, exceeding customer expectations, streamlining processes, shortening time to market for new products, and managing the global operation (encyclopedia of business, 2nd edition). WCM is the pace-setter for many industries including the SMEs striving to achieve this status. WCM is a continuous process; its measures are subject to constant review and appropriate adjustment by manufacturing industries in response to industry trends over time. Bibliography Domingo, R. (2003). Business Management Journal. What is a World Class Factory. E-notes World Class Manufacturer Journal, 2013. Gunasekaran A. International Journal of Manufacturing Technology and Management, 2000 Vol.2, No.1/2/3/4/5/6/7, pp.777-789. World class manufacturing in small and medium enterprises. International Journal of Manufacturing Technology and Management, 2000 Vol.2, No.1/2/3/4/5/6/7, pp.777-789 LeanMap Journals. Operations consulting and Lean Management for World Class Efficiency Management Study Guide Journals-World Class Manufacturing, 2013Independent Best Practice Training and Consultancy Journal. SM Thacker and Associates. MASKELL, B. H. (1991). Performance measurements for world class manufacturing: a model for American companies. Portland, Or, Productivity Press. Onsite Insight Journals, 2008. Best Practice and World Class Manufacturing – a worthwhile goal for UK’s SME manufacturers Reference for Business. Encyclopedia of Business, 2nd Edition. SCHONBERGER, R. (1982). Japanese manufacturing techniques: nine hidden lessons in simplicity. New York, Free Press. SCHONBERGER, R. (1986). World class manufacturing: the lessons of simplicity applied. New York, Free Press. Shearer, J. (2004). The Manufacturing Optimization Group Journal. World Class Manufacturing. Stickler Michael J. (2011). Journal on Achieving World Class Levels of Performance through Lean Manufacturing SZWEJCZEWSKI, M., & JONES, M. (2012). Learning From World Class Manufacturers. Basingstoke, Palgrave Macmillan. World Class Manufacturing Performance Journal. Management Education and Consulting. Buker, Inc. Read More