1

INVENTORY MANAGEMENT Assignment

“WORLD CLASS MANUFACTURING”

SUBMITTED TO

SIR RAJA KHALID

SUBMITTED BY

FATIMA RAZZAQ

01-221162-104
 2

1.Introduction

In 2005, FIAT established the concept of world class manufacturing for the firms. Hajime

Yamashina, Professor Emeritus at Kyoto Universality in Japan, played a key role. From the

beginning the Fiat group of companies admired the operational efficiency and procedures. In

result, the term WCM was announced in FIAT automobile and power train departments, in

Maserati, in Lancia, in Alfa Romeo, and so on. The Fiat-owned companies CNH (manufacturer

of Case agricultural equipment and New Holland tractors) and the truck and engine manufacturer

Iveco also use WCM as their XPS. In fact, today, companies as varied as the Royal Mail, Ariston

(manufacturer of white goods), Unilever (consumer goods), Atlas Copco (industrial tools),

Barilla (pasta) and 12 different transportation companies reportedly use the WCM concept.

World Class Manufacturing

(Hayes & Wheelwright, 1984) introduced the term WCM and they presented a pack of

principles, best customs and tactics that will take any firm to achieve higher performance (Flynn,

Schroeder, & Flynn 1999) and those tactics were adopted by firms inside Japan and Germany.

Moreover, Schonberger (1986) in his book presented the most reliable and related work aligns

with WCM. According to him the new managerial customs should be based be positioned on

Japanese manufacturing systems JIT, Toyota production system and Total quality management.

(Mahadevan 1998) including all their tools. According Fiat group of Automobiles the term

WCM is explained as “organized and incorporated manufacturing system that includes all the

activities of the factory, the safety ambience, from maintenance to logistics and quality. The aim

of WCM is to constantly enhance the manufacturing performance, pursuing the advanced

removal of waste, to confirm the product quality and enhanced flexibility in reaction to customer

requests, by contribution and motivation of the people working in the establishment.

 3

Nowadays, company strives to become world class manufacturer to achieve the competitive edge

and attain organization goal. For some companies the term WCM means being the best in the

world of manufacturing or for some it means to achieve the level of performance that gives the

firm with capability to conquer and sustain into the future. A world class producer is the one who

can compete with the best anywhere in the world.

To successfully deliver a usual way of achieving competitive edge in the market based on world

class manufacturing principles a factory must include suitable production method. The

appropriate manufacturing methods usually seem like this:

● Shorter lead time

● On time delivery

● High Quality and unique features

● Perfection

● Customization

● Volume Variety

● Less cost

Through World Class Manufacturing (WCM) an organization can achieve an integrated system

that brings the excellence of the entire logistics cycle and production of an undertaking by:

Continuous improvement of all services -Involvement of all levels and functions; -The adoption

of the principles of Total Quality, Lean Production and the “Integrated Factory”. The seven key

factors for WCM success are:

● Decreased Lead time

● Agility

● Reduce operation cost

 4

● Meeting customer expectation

● Management of global business

● Oversee operations of outsource

● Maintaining the transparency in managing the organization.

● Improving the visibility of the performance of your business.

1) Implementation of WCM concept

To take practical advantage of this concept the firms need to comprehend and classify the crucial

elements. When implementing World Class Manufacturing concept, companies need to

understand the elements that impact the execution process and notify them efficiently to certify

advantages and escape malfunction. The crucial elements involve: management dedication,

quality sector, unceasing enhancement and customer satisfaction. This method is implemented

through the correct tools and techniques such as Total Productive Maintenance (TPM),

KANBAN System, Continuous flow, visual management, just in time, Lean manufacturing, Zero

quality control etc. To apply these approaches and techniques is difficult;however, it is

mandatory to befit world class. It is method to endlessly look for the enhancement for the

complete firm competitiveness.

The aim of WCM sector in the firm is to emphasize on increase alignment of the output, on the

examination of the details of waste and emphasis on crucial states to utilize the resources and

attain consequences in the littlest possible time. World Class Manufacturing requires many

suppliers who are World Class and may participate in the development of new products and can

always guarantee the same quality standards.

 5

a. WORLD CLASS MANUFACTURING PRACTICES

Across the world they are number of practices that help the organizations to achieve their goals

more effectively. The application of these approaches and traditions will help the organization to

increase their competence and effectiveness. The widespread used practices of WCM practices

are:

● Kaizen: Kaizen means ‘‘continuous improvement’'. It signifies slow and constant

improvement, enhanced value, amplification, and development (Karkoszka&Szewieczet,

2007).

● Lean Manufacturing: This approach is focused to transfer waste making processes in to

value adding processes (Mehta et al., 2012).it aims at the manufacturing of goods for the

end users at the least price as well as in reduced time.

 6

● Total Quality Management: TQM is a quality enhancement method that is more and

more applied by production and service firms to enhance the practices in requisites of

productivity, customer appeasement, and revenues (Singh&Ahuja, 2013).

● Just in Time (JIT): JIT approach was created by (Taiichi Ohno ,1982). JIT is approach

of continuous production enhancement that is focused on reducing all the waste in

production process so as to attain the uniqueness over the other rivals (Singh & Ahuja,

2012).

● 5S: To ensure the maximum productivity at the workplace, quality and output and safety

(Voelkel&Chapman, 2003; Kumar and Kumar, 2012; Singh & Ahuja, 2014). 5S signifies

to the five Japanese words namely “Seiri, Seiton, Seiso, Seiketsu, and Shitsuke”. The

acronym of these words in English language is Sort, Set, Shine, Standardize, and

Sustain.

● Total Productive Maintenance: TPM assist in aligning the production and other

business departments, and colleting flow of revenues (Ahuja &Khamba, 2007)

● Six-Sigma: Six-sigma more and more provides the variety and decreases waste in

activities with the assistance of statistical tools and methods (Coronando& Antony,

2002)
 7

2. WCM COMPONENTS: Description and features

In order to understand the WCM concept from operational point of view, the methodology was

developed in ten of the major phases of production, called technical pillars. These pillars are

linked with the Ten Managerial Pillars that are implied to all work places and people,

management that is known as the real catalyst of the revolution mainly in democratic structures.

Each component has individual categorization of the production employing precise ways to

achieve the goals. In particular, the “Technical Pillars” are as follow

● Safety

The reason of safety is to diminish radically the counts of collisions and to create desired

professional skills.

● Cost Deployment

To recognize logically and structurally the important objects of loss in the organization

production logistics business.

 8

● Focused Improvement 

Enhanced quality and productivity, and decreased costs by utilizing accurate and proper

approaches.

● Autonomous Activities

Increased efficiency of shift workers by workplace, firm layout in immense labor departments

and independent preservation in revenues intensive areas

● Professional Maintenance

This approach is focused to reduce maintenance cost and zero breakdowns. To enhance the

output of the machines utilizing the malfunction analysis methods.

● Quality

To make products with zero defects and zero waste and ensure quality. And to enhance the

skills of the workers.

● Customer Services and Logistics

To efficiently decrease the levels of stocks and to diminish the material handling, even with

direct deliveries from suppliers to the assembly line

● Early Equipment and Product Management

To make the new plants work as scheduled and assure the quick beginning and stability.

Moreover, to make systems easily maintained and inspected

● Personal Development

Develop a structure system of training, accurate skills and capabilities of each workplace. To

develop layout of workers, technologies, skillful people like major staff training.

● Environment

To meet the terms with the requirements and standards of environmental management.
 9

MANAGERIAL PILLARS:

1) Management Commitment

2) Clarity of Objectives

3) Route map to WCM

4) Allocation of Highly Qualified People to Model Areas

5) Commitment of the Organization

6) Competence of Organization towards Improvement

7) Time and Budget

8) Level of Detail

9) Level of Expansion

10) Motivation of Operators

Every component of WCM has seven steps that should be cover up and certified to apply this

methodology. Each pillar is interdependent to reach the next step if last step is incomplete you

cannot reach next step. These components deals with business department in daily work and need

an examination of the cost/benefit which is distinguishing element for the viability of that is about

to happen. The method of intensity and width of the WCM are extended innovation in the way

when teamwork to analyze each yard and only when the team provide the expected results, and

followed meticulously the steps provided by the pillar, which consists of identifying other sites.

3. IMPLEMENTATION IN SERVICE INDUSTRY

Service sector produce intangible goods precisely services instead of goods it includes various

information services, transportation services, technical services and consulting services etc.In my

opinion the World class manufacturing methodology aims to reduces the waste in production
 10

process to attain efficiency in turns. A services sectors has also some operation that require waste

minimization for that workforce need to be efficient and agile. To defend my opinion, I have

selected two cases from automobile industry which enlightened that the implication of world

class manufacturing pillars reduced the waste and brought efficiency in the system. Following are

the examples.

SUMMARY OF CASE STUDY FIAT GROUP

Fiat group Automobiles implied the World class manufacturing quality management to make

highest quality products by eliminating losses in all the factory fields an improvement of work

standards. A case study methodology was employed to gather information and performance

measurement system relationships. In this case study the WCM Pillars such as Cost Deployment

Pillar, Autonomous Activities/Workplace Organization Pillar and Logistics/Customers Service

Pillar were implied. The consequence of the study developed the principles on strategic

objectives, performance measurement systems and performance measurement system linkages

for improved organizational coordination.

The target of the case was to enhance the elasticity and productivity in an ETU (Elementary

Technology Unit) of Mechanical Subgroups in a part of the FGA’s assembling process in the

Casino Plant through the traditional Plan-Do-Check-Act approach using the WCM methodology.

The Plant implied step by step process to identify the waste and applied WCM methods to

reduce it. In the Do phase 41 types of non-value-added activities the various sub phase fact was

analyzed all 4 critical workstations and were identified of the production process job

stratification (VAA - Value Added Activities; NVAA – Non-Value-Added Activities; LBL -

Low Balancing Level; EAWS - European Assembly Work Sheet – Ergonomics)

 11

At that point it was implicit the new stream of the complete damper = damper + complete hub

sequencing according to the material matrix noticing the fatalities linked to material handling

The material matrix classifies the goods in three main groups:

● A (bulky, multi-variations, expensive)

● B (normal)

● C (small parts)

● Subgroups (a mixture of group A: bulky and multi variations or bulky and expensive

etc.).

For every category there was packed flow matrix that defines the correct flow associated: JIS,

JIT and indirect. After recognizing the accurate flow, in the JIS case, was created prototype of

the box to feed the line that would assure the accurate number of pieces to maximize the logistic

handling.

At the end of the Muda analysis (NVAA analysis) were implied all the solutions found to have a

lean process (the internal target is to achieve 25% of average NVAA losses) and was identified

the line through a new line balancing level to achieve 5% of the average line balancing losses.

Another important perspective was the logistics flows analysis keeping in mind the modern

warehouses. The simulation scenario was defined using trucks from the Cassino plant

warehouses that also feed other commodities to achieve high levels of saturation to minimize

handling losses.

At the end of the handling analysis (flow, stock level) thanks to this new “lean” organization of

material matrix was used the correct line feed from the Just.In Sequence warehouse. It

diminished the internal warehouse (stock level), the space used for sequencing (square meters),
 12

the indirect manpower used to feed the sequencing area and we obtained zero fts on the shop

floor because we used the (roll in - roll out) system.

Finally, they had 1 operator instead of 4 operators. Results verified the productivity and

ergonomic improvement and optimization logistics flows. In detail the main results and savings

can be summarized as follows:

● Productivity improvement +75% direct labor

● Ergonomics improvement +85% according to the rest factor

● Optimization of logistic flows according to the flow matrix.

EXAMPLE ITALIAN AUTOMOTIVE SUPPLIER

A globally diversified automotive supplier operating with in more than 150 countries under three

business categories:

● Building Efficiency: major supplier of equipment, controls and services for heating,

ventilating, air conditioning, refrigeration and security systems.

● Automotive Experience: a global leader in automotive seating, overhead systems, door

and instrument panels, and interior electronics.

● Power Solutions: the global leader in lead-acid starter batteries advanced lead-acid

batteries for Start-Stop vehicles and Lithium-ion batteries for hybrid and electric vehicles.

The supplier plant is located in central Italy and serves to major Italian vehicle firms. At this

plant only two types of door panels for two cars are manufactured. The prior manufacturing

system includes several instruments of Lean Production. There was Kanban, 5S, TPM, Visual

Management and other like the instrument of WCM but those instruments and tools were

organized in ten modules. They had implied Cost Deployment and the first loss is Non-Value

Added in Ultrasonic Welding and precisely in Sytrama 1 2 3. So, they had opened a Model Area
 13

of Workplace Organization on Sytrama 2 minimize the defects. The supplier implied the three

steps of WO and in the

Step 1 They had made 5S and applied the Tags to see all anomalies.

Step 2 They had reduced all waste means and had decreased cleaning time. The application of

Visual Management for material and equipment with all benefits of this instrument. Saved

second on this operation with implication MUDA to decrease waste. Trained the operators with

One Point Lesson and Standard Operative Procedure and then, standardized all these things.

Step 3 In third step, reduced the operation of assembly of one person for shift, in order to have

another saving.

Results: With implication of WCM model the automotive supplier guided to the activation of the

pillar of Cost Deployment and Workplace Organization for the reduction of losses resulting from

non-value added in the assembly process of the products supplied to the customer. The result of

this implementation doesn’t stop at only these two pillars, but it implied 56% losses reduction

very evident at first sight, future development of the firm.

 14

CONCLUSION

World Class manufacturing is the key the concept and one of the best practice in the

manufacturing world that every firm desires. The implementation of world-class manufacturing

(WCM) practices in an organization leads to the better competitive advantage over the other

organizations. The case studies also conclude that WCM reduced the losses and optimized the

logistics flows. Thus, greater efficiency and flexibility had been achieved by the firms due to

implication.

To respond the need of WMC in service industry these industrial policies need to be shaped to

respond to contingent factors which are specific to a sector, period and country. Fundamentally,

it is not a question of whether these selective policies work, but under what circumstances they

work.
 15

References

● Ahuja, I.P.S. and Khamba, J.S. (2008) Total productivemaintenance implementation in a

manufacturingorganization, International Journal of Productivity andQuality

Management, Vol. 3, No. 3, pp. 360-381

● Dwyer, J. (1999) More than a maintenance technique,Works Management, Vol. 52, No.

9, pp. 15- 26

● HAYES, R., H., WHEELWRIGHT, S., C (1985). Restoring our Competitive Edge:

Competing throughManufacturing. John Wiley& Sons, New York, NY, USA . ISBN 0-

526-38726-1.

● Karkoszka, T. and Szewieczet, D. (2007) Risk of theprocesses in the aspect of quality,

natural environmentand occupational safety, Journal of Achievements inmaterial and

manufacturing Engineering, Vol. 20, No. 1,pp. 539-542.

● Mehta, R.K., Mehta, D. and Mehta, N.K. (2012) AnExploratory Study on Implementation

of LeanManufacturing Practices (With Special Reference toAutomobile Sector Industry),

Journal of Managementand Economics, Vol. 19, No. 2, pp. 289-299

● Schonberger, R.J. (1986) World Class Manufacturing:The Lessons of Simplicity Appied,

The Free Press, NewYork, NY