BOOK 1

144

East and West The Hunt for Competitiveness

Practical, Proven Ways to Increased Profitability

Japanese Manufacturing Systems explained and demonstrated

Richard Keegan

Enterprise Ireland

East and West The Hunt for Competitiveness

Practical, Proven Ways to Increased Profitability

Index

Chapter 1 Time and Innovation in Japan.

Chapter 2 Ten keywords to Understand Manufacturing in Japan.

1. Focusing on production engineering (strategy).

2. Continuous Improvement (culture).

3. Zero as Optimum concept (culture).

4. Knowledge Management (culture).

5. Visual Management (culture).

6. Detail Oriented (culture).

7. Focusing on Quality (tactics).

8. Standardisation (tactics).

9. Reduction of Lead Times.

10. Equipment Independence.

Chapter 3 - Strengths and Weakness of the West and Japan.

Chapter 4 What is WCM in Japan?

Chapter 5 The Drawback of WCM in Japan.

Chapter 6 - Seven Steps toward WCM.

Step 1: Safety.

Step 2: Reliability.

Step 3: Yields.

Step 4: Quality.

Step 5: Rationalisation in logistics and manning.

Step 6: Synchronisation between sales and production.

Step 7: Fully automated plant.

Chapter 7 Major activities to support WCM.

Appendixes

Appendix I : World Class Toolkit.

Appendix II : Audit Criteria for WCM

Appendix III : 5 S Self Assessment

Tables Page

1. Invention Vs Development

2. 5S Implementation

3. Transition to TQM.

4. Strength Comparisons West and Japan

5. Western and Japanese Management

6. Traditional Vs Total Quality Approach to Business

7. Process Capability Index

8. Six Sigma Vs Total Quality Management

9. JIT Vs Mass Production Characteristics

10. Operational Standard (OS) Levels

Figures

1. Japanese Market Changes

2. Pyramid of Capability

3. Productivity Improvement by Industrialisation,

4. Information Technology and Creativity.

5. A New balance in products sold.

6. Changes in Human Resource allocation 70s to today.

7. Product Life Cycle Changes.

8. Environment Change Management Response.

9. General trend of organisation change Increasing sophistication.

10. Operating Principles and Standards.

11. Spiral of Production Engineering.

12. Balance of Staff Skills Traditional Vs WCM.

13. The power of Graphics in Communication.

14. Continuous Improvement.

15. Innovation without Kaizen.

16. Performance with Kaizen.

17. Performance without and with Kaizen.

18. Statistical Process Control Chart Philosophical Differences.

19. Kaizen Increasingly sophisticated methods.

20. Logical Process Improvement.

21. Improvement Daily Work balance.

22. Zero as Optimum.

23. Knowledge Management.

24. The Visual Workplace.

25. Visual Management Triangle.

26. Machine Loss Pyramid.

27. Business Fulfilment Cycle.

28. Manufacturing Lead Times.

29. East and West

30. World Class Manufacturing Management

31. House of World Class Performance

32. Normal Distribution

33. Relationship between characteristic distribution and tolerances

34. Product and Process Capability Working Together

35. Process Capability86

34. Judgement on Process based on Cp Value

35. Product and Process Capability Working Together

36. The Roles of Design Engineers and Operators

37. TPM aims

38. TQM Vs TPM A Comparison

39. Cash to Profit JIT Vs Mass Production

40. Delivery per Manufacturer

41. Pace Monitor Examples

42. Cost Deployment

43. Overall Equipment Effectiveness Explained

44. Seven Steps toward WCM

45. Air flow indicator

46. Dial and level making visualisation

47. Footprint visualisation

48. Automating Processes Detail

49. Guaranteeing quality and workerless operation

50. Temple of World Class Manufacturing

51. Autonomous Maintenance Project Action Board

Acknowledgements

This book is based on twenty five years experience working with and in companies who have continually striven for superior performance.

It is based on the basic principles of Japanese manufacturing as taught by Professor Hajime Yamashina, formerly of Kyoto University. Additional insights, tools and techniques are also presented to clarify and expand on the core materials.

Both Professor Yamashina and I have worked for many years with the EU Japan Centre for Industrial Co-Operation, an organisation co-founded by the European Commission and the Ministry for External Trade and Industry of Japan, to promote understanding and co-operation between Japan and Europe. The Professor and I have worked together on the World Class Mission where European managers visit Japan to study current manufacturing methods.

The concepts presented in this book are my, a Europeans, interpretation of the tools and techniques used and taught by the Japanese.

I would like to also thank the innumerable company personnel both in Ireland and overseas who have helped me to help them to understand how to use best practice techniques to improve their operational performance. Improving operational performance can never be the only goal of a business. Without innovation in both process and product they will surely die, but, without being the best you can be in how you make your products you are also risking the future. The tools and techniques presented in this book will help you secure the present and provide a basis for a successful future.

Chapter 1

Time and Innovation in Japan

Time is an extremely important resource. It is very easy to lose time and difficult to make the most of it. As we seek to understand how the leading Japanese organisations are using World Class practices to remain competitive and to build strong futures we will look at the recent history of Japan and its markets.

fig. 1. Japanese Market Changes.

The Japanese market, and consequently, its manufacturing output, is presented in fig. 1. Manufacturing in Japan prior to the first World Oil Crisis, area (0) was characterised by the widespread adoption of Quality Control techniques. These were based on the widely understood Quality tools. At this time manufacturers were under pressure to get product out the door. Markets, in general, could not get enough product to meet demand.

With the Oil Crises the market dynamic changed. Productive capacity outstripped market demand and many companies felt serious pressure. In Japan the approach known as Total Quality Control (TQC) came to prominence. The TQC approach is best known for the use of Quality Circles but there are a number of additional elements to TQC. When the market contracted fig 1 area 1 many companies moved to diversify their production in an effort to stabilise their operations and sustain their business.

The TQC approach was chosen as a vehicle to facilitate change while delivering on the requirements of a reducing and decreasingly more quality minded marketplace. The TQC approach facilitated the restructuring and re-direction of corporate culture. This refocus led in a number of cases away from a strict, by the rules systems of management to a more open, involved, work environment where people could, often for the first time, become involved in improving their own business worlds. The object of TQC was to improve the Quality of products delivered to clients and consumers. This was achieved through the systemisation of management. Processes and procedures were defined and standardised as a first step in reducing variability of delivered product. Employees and management were trained in the use of basic Quality Control techniques how to measure bad quality and how to react to address it. This learning and the subsequent deployment of TQC was most visible in the use of Quality Circles groups of people charged with the maintenance of quality of output of their produce. Quality was defined in terms of the number of defects detected. The urban myth exists to this day of the Western buyer demanding of his Japanese supplier a defect level of 2%. The Japanese supplier, so the story goes, could not understand why the Western buyer wanted 2% defects but after much discussion agreed to meet the Quality demands of his customer. The Japanese supplier duly delivered the order with 98 good products and a separate package containing the two deliberately defective ones ordered by the customer.

In the late 80s and early 90s, area (2) on fig 1, the market and the producers cycled around under and over supply. The producers worked diligently to develop and launch new products, often looking for niche markets. Major energy was spent on being more responsive than the competition with the objective of being able to bring new products to the market before the competition.

In the period 91 to 96, area (3), many leading Japanese businesses worked incessantly to bring profit making products to the market. This marked a shift in emphasis for the Japanese. During this period the market remained relatively flat. This lack of market growth meant that Japanese businesses moved away from a focus on Market Share and towards a focus on Profitability. The market at this time was characterised by an over supply capability business had the resources and installed assets to produce significantly more product than the marked required.

After 1996 the Japanese manufactures moved into what has been characterised as the Total Quality Management period. Now manufacturers focus shifted away from checking for defects to a more positive and active approach to avoiding faults and defects at source, (4) on fig 1. By 1996 manufacturers had mastered the art of production. Quality levels were achievable at single figure parts per million defects levels. Machinery was able to be worked consistently and efficiently and logistics and supply chain solutions had been developed to the extreme. At this time the means of differentiation in the market place changed. Companies were no longer focusing on how to make products but were, and are, more seriously focused on what to make.

In the early days of the new millennium companies are working very hard to align their means of production closely with a rapidly changing market. Products and product niches are emerging today that simply did not exist three, five, seven and ten years ago. The most successful companies today are those that can flexibly marshal their resources, both internal and along the supply chain, to meet the variable demands of the market place. These demands are variable in terms of product, technology and quantity. There will be winners and losers in this fast moving market place. Some companies will succeed in this alignment process, they will be able to match their creative and productive resources to meet and exceed market needs and requirements. Other companies will find it impossible to co-ordinate their own resources and those of their supply chain to rapidly changing market demands these companies will be losers in the global market place.

Changes have also taken place in the measures that management have used to drive performance during these five periods. The emphasis has shifted away from basic measures of productivity to more measures of corporate creativity and innovation. It is very important to understand that the earlier productivity based measures have not been abandoned in favour of more modern measures they have been built upon. The leading Japanese firms have effectively created a pyramid of capability that today peaks at the innovation point, fig 2.

fig. 2. Pyramid of Capability

The types of measures used at a given time period related to market periods 0 to 5. As companies, their managers, staff and suppliers gained experience and expertise at a given level they were able to progress to the next, more demanding level. They built internal abilities which in turn have led to sustainable businesses, in a fast moving market environment.

The market today is being addressed by combination of industrialisation, information technology and creativity. In the 1890s Lord Kelvin suggested the closure of the Patents Office in London because everything man would need had already been invented. Manufacturers today are at risk of making the same mistaken assumption, when we say that we know how to make things! But, from a practical point of view we currently possess a lot of knowledge on the act of manufacture. Significant progress in meeting market and consumer needs will come from the integration of the means of production and logistics, enabled by information technology and creativity, fig 3.

Pure manufacturing will continue to evolve and develop using advancements in processes, new materials and operations research. Logistics, both within and between companies and between companies and consumers will be enhanced with the use of eCommerce and information technologies. These enablers will assist companies to respond more quickly to market usage levels and help reduce stock levels along the supply chain through improved visibility.

Possibly the biggest gains in productivity into the future will come from the effective use of creativity. The application of creativity and innovation to product, process, system and business development issues has the potential to provide sustainable differentiation into the future.

fig 3. Productivity Improvement by Industrialisation, Information Technology and Creativity.

Looking at the present and into the near term future it is likely that the need for rapidly responding, highly capable businesses will continue. Product life cycles continue to shorten and the range of products continues to expand. However, the recent introduction of Simple telephones may be an indication of a change in market direction. The way a market is evolving can be represented by fig 4.

fig 4. A New Balance in Products Sold.

The rapid rate of introduction and short product life cycles means that New Products will become increasingly more important for businesses. As companies chase growth to assure their survival they will need to focus more and more of their creative energy into this area.

Growth is the new Battlefield!

The winning companies in the next ten years will be those that:-

Secure Growth.

Innovate their product offerings.

Respond rapidly to changing market and consumer demands.

Improve their productive capacity.

Develop efficient ICT enablers to deliver cost effective logistics solutions.

This evolution in the market and the means of production and market service will lead to an acceleration in the trend of employment change seen since the 1970s, fig 5. More and more resources will be allocated to the Research, Creativity and Business Development areas of an operation and away from the pure manufacturing area.

fig 5. Changes in Human Resource Allocation 1970s to today.

The global market today varies rapidly due to changes in personal consumption, disruptive technologies, new technological breakthroughs, development of emerging markets and countries and international conflict. The old certainties are no more. Companies are as likely today to be competing with a company located on the far side of the world as they are to be competing with a company in the next town. This changed and changing reality means that successful businesses need to be responsive. They need to develop their own response to the globalisation issue and to implement a strategy to address the challenge.

The adage:

Think Globally and Act Locally is both very apt and challenging. If we stand back and look at the world it is possible to see that there are specific global locations best suited to particular elements of the fulfilment cycle:

Thinking in a global sense, there are:

Places where competent researchers can be hired USA, EU.

Places where cheap raw materials can be purchased Africa, China.

Places where we can get good and enough workers China.

Places where we can obtain software engineers India, Ireland.

Places where we can trade freely USA, EU.

This view of the global environment can lead to companies organising themselves to optimise the possibilities available to them. These possibilities, though also come with some drawbacks and these, too, need to be addressed. The drawbacks can be described as Mass, Distance and Time, how we address each of these will define the overall responsiveness of an operation. Human beings have overcome the Mass problem through the development of materials handling devices, lift trucks, hydraulics and other supportive systems. We have overcome the distance constraint through the development of high speed trains, trucks and cars, and we have addressed the time problem through the development of computer networks, e-mail and mobile telephones. It is now possible for people across the world to be in contact with colleagues around the globe during an extended working day. From Europe it is possible to catch Japan at the end of the Japanese working day while it is possible to contact the USA at the end of the European working day. We are living in a truly global environment.

The Winning Organisations in this global environment will be those who manage the problems that come from having many geographically distributed facilities through the use of effective and efficient logistics systems and suitable IT infrastructure. Local markets will be supplied on time, in the required quantities at the necessary quality standards with market specific customised product in an efficient and effective manner.

Todays market is characterised by rapid innovations, driven and supported by emerging

fig 6: Product Life Cycle Changes

technologies. We have moved from product life cycles of two years to ones of 6 to 8 months fig 6. Computers, mobile phones and personal electronics are classic examples of rapidly changing market offerings and short life cycles. The modern market place is full of products and services, it is not very difficult for consumers to decide not to buy a product. Very many products fall into the discretionary spend category. Many products are not bought because they are not completely new, offering a new benefit to consumers. Many are not bought because they are not completely new, offering a new benefit to consumers. Many are not bought because they are not first to the market, they are me too products. Many products are not bought because they are unattractive, not impressive or not original.

At the other end of the buying spectrum customers dont buy products because they are not cheap or dont sit well on the Value for Money balance.

To succeed in these turbulent markets leading organisations are working hard to be extremely cost competitive when they face competitors. They are working to enhance their flexibility, responsiveness and speed to produce products that the consumers really want, and are prepared to pay for, as and when they are wanted. These challenges are being met through increased innovation throughout the businesses, and along their supply chains. The challenges and responses of management to this challenging environment is presented in fig 7 Environment Response.

The traditional approach taken by business has been to try and forecast market demand and then match forecast demand with production capacity to deliver forecast product into market place warehouses. Consumers are then serviced in a timely fashion from the warehouses or storage areas. This system works well when the market demand and environmental and technological circumstances are steady and not fluctuating. Todays market place is anything but steady and this, in turn, demands a different organisational arrangement. In days gone by, inventory was seen, and managed, as an asset. Today it is seen as a liability.

fig 7: Environment Change Management Response

But, what do these economic changes mean to operations management? What are the necessary tactics to be followed to deliver on the strategic direction and insight?

At a practical level this equates to manufacturing managers focusing on

1. Cost Competitiveness CFM

2. Speed

3. Flexibility SCM Supply Chain Management

This cost competitiveness, speed and flexibility in the manufacturing area needs to be paralleled with highly innovative product development. Design and development managers need to focus on:

1. Customers Viewpoint

2. Quality, Cost and Delivery in product development Knowledge Management

3. Better after service than competitors

These capabilities at the operational level need to be continually enhanced and developed creating competent human resources, capable of continuously researching, developing, manufacturing, launching, sustaining and recycling new and attractive products to the increasingly demanding and fickle market place.

It is an essential pre-requisite for success that companies who develop these operational capabilities need to be supported and challenged with world class sales teams, administrators and senior management. Successful business will and do challenge across all key processes of a business and not just at the operational level.

Chapter 2

Ten Key Phrases to Understand Manufacturing in Japan

This chapter focuses on providing an insight to the key drivers behind Japanese manufacturing. These drivers are spread across strategy, culture and tactics. A study of them will help explain what practical things leading Japanese companies are doing to retain competitiveness.

1.Focusing on Production Engineering (Strategy)

Production engineering focuses on how products are manufactured. It is obvious that if even the best designed product in the world is badly manufactured then it will be a poor quality product. Equally it should be obvious that Products and the Processes by which they are made are two sides of the same coin. In an efficient and effective operation the two must work together.

As products have become more complicated, sophisticated and demanding to manufacture so too has the Production Engineering response, see fig 8. As the level of automation has increased so too has the necessary support infrastructure to ensure its effective operation. As the support tools such as Computer Aided Design, Manufacture and Engineering have developed, along with MRP II , Value Analysis, Robots and Automation so too has the requirement for skilled competent staff able to bridge the gaps between product design, product production and production process development. These skills have been developed for the primary objective of delivering enhanced production performance but leading firms have found ways to leverage these skills and move themselves into emerging technological areas,

fig 8: General Trend of Organisational Change Increasing Sophistication

The emergence of new technologies has led to the necessary development of new processes to bring them to the market. Major corporations who have developed production process capabilities using advanced techniques find themselves ideally placed to move forward with breakthrough process technologies the Better you are the Better you get!

A classic example of this can be seen, table 1, if we look at some technologies and see the difference between who created the technologies versus who commercialised them.

ITEM

ORIGINATOR

DEVELOPER

TRANSITOR RADIO

REGENCY

SONY

VCR

AMPEX

SONY, VICTOR

TV

RCA

MATSUSHITA

ROTARY ENGINE

WANKEL

MAZDA

CD

PHILIPS

SONY

Table 1: Invention Vs Development

Despite the fact that American and European companies invented the technologies it was Japanese companies who brought them to the mass market. It was Japanese companies who developed the production processes that enabled these, certainly at the time of invention, complex and sophisticated technologies to be mass produced and sold at prices the mass market could afford and was wiling to pay. The focus on developing process capability has lead to a clear market advantage where sophisticated products can be delivered at reasonable cost to mass markets.

What is the Japanese Understanding of Production Engineering?

The success of much of Japans leading manufacturing businesses is based on sound Production Engineering principles. But what are these principles and how are they developed?

There are three key areas of expertise fundamental to the understanding of Production Engineering:

1. Tooling Tools and tooling are used to create products by working on materials. Production Engineering deals with all tools, jigs and machines within an operation. It focuses clearly on the point of contact between the product or material and the tool. This is known as the Processing Point, the point where raw material is converted to a saleable product. It is in fact the point of Creation of Customer Value.

2. Process The process of making products and creating value is a key point of Production Engineering. The focus starts at the point of production planning, where asset utilisation is balanced with competing market demands. Production Engineering strives to optimise the balance. The focus shifts to the manufacturing and assembly sequences in an effort to boost efficiency, and concludes with the creation, definition, refinement and continuous improvement of Standard Operating Procedures (SOPs). It is important to understand that the creation of a Standard Procedure is the first step in the continuous improvement process.

3. Layout Physical movement through a plant, or an office, can often lead to the accumulation of wastes and losses. Production engineering will often focus on mapping the physical process flow with a view to reducing the distances travelled by products, materials and operators during the manufacturing process. This analysis often leads to the re-organisation of equipment, machines and resources to minimise travel distances.

The Process Engineer (PE) works in an area between Operating Principles and Operating Standards, see fig 9. To be effective the PE needs to understand the fundamental principles underpinning the processes they use. They need to understand materials and their properties and the principles of material transformation using tools. This basic understanding of the key elements of process principles to ensure that any standard operating procedures developed for production are based on sound principles. If these principles are not understood and adhered to it will prove impossible to deliver consistent, high quality products from any given process.

fig 9: Operating Principles and Standards

Roles of Production Engineers.

Production engineers play a very important role, or roles, in the Japanese manufacturing environment. A logical progression exists for the development of the capabilities of such engineers as they progress from the position of a Production Engineer to the role of a Total Production Engineer. This is best illustrated by looking at the example of the capability progression of an engineer within Denso Corporation, itself part of the Toyota group.

On joining the Production Engineering function the new recruit would be introduced to the basic tools of quality, advancing with gained experience to the more advanced tools. Their focus would be on learning about Quality Control as a means of understanding the fundamentals of processes their management and the use of quality tools to facilitate and drive process improvement.

When this fundamental grounding has been absorbed sufficiently they are introduced to the concepts and practice of Industrial Engineering. They learn about work practices, ergonomics, people facilitation and management and how to create and develop systems of manufacture. On a recent study mission to Japan a group of leading European managers were shown the training room of one of the worlds leading air conditioning manufacturers, Daikin. This room contained much of the knowledge of industrial engineering that the firm had captured over its existence to date. One aspect in particular related to two markings on the floor. One of the group was asked to walk the distance between the two lines as if they were an operator. He strode over the distance, quite pleased with the short length of time it had taken him to complete this task. Then the Japanese host complimented him on his speed but duly explained that he trains his staff to walk at approximately 60% of the European speed because that was a speed they could sustain all day, every day, without causing stress to the worker.

The new Production Engineering recruit has to learn, and learn quickly the accumulated knowledge of the company in an effort to ensure continuity of the performance norms already achieved and also to develop the capability to improve processes at sustainable rates of performance.

Having mastered Quality Control and Industrial Engineering concepts and practice the production engineer is focused on developing an understanding of and expertise in the area of Preventive Maintenance. It is self evident that if a process is to produce high quality, consistent products at a specific time then the machines, tools and systems that go to make up that process must operate consistently without disruption due to breakdowns, intermittent faults or low performance outputs. Consistent running of machines and processes can only be assured by effective preventive maintenance (PM). The tools, concepts and practices of PM are studied, practiced and deployed by production engineers to give them a professional understanding of the techniques.

The second last step in the development process for Total Productive Engineers is to give them responsibility for Production Control. The move from support functions to direct line responsibility can be difficult. The pressure of meeting production deadlines within quality, cost and delivery constraints can be high. This challenge will often help engineers come to terms with the commercial realities of a business, but at least they have developed expertise and experience in the fundamental support areas before taking on the responsibility for production output.

The last step in the process of building highly capable Total Productive Engineers is the migration into the area of Product Development. By this time the engineer has learned about quality, its maintenance and also the main reasons and causes of loss of quality. They have learned about and gained experience of how to make products, how to create systems of production and how to work with people to produce goods. They have also learned about how different processes and materials affect the reliability of machines and systems. And finally, they have experienced the responsibility of meeting market demands. Armed with this experience they are ideally placed to move into the Product Development role. They can bring a wealth of experience on what goes wrong when manufacturing products and what tasks, jobs and processes lead to losses and wasted effort in assembly and manufacture. The reduction of manufacturing effort required to complete a task starts at the early design stages. It is very difficult to efficiently manufacture a badly designed product it is very easy to manufacture and remove production costs from a well designed one.

One of the biggest issues with modern day product designers and developers is their lack of true understanding of the details of the manufacturing process. The Denso route to creating Total Productive Engineers addresses this issue. In many ways it mirrors the professional development programmes once favoured in Western businesses, where future managers were immersed in key processes of the business to give them first hand knowledge, understanding and experience as a basis for their future managerial roles. Practice leads to experience which leads to understanding which in turn leads to improvement.

What Defines a Competent Production Engineer?

We have looked above at the process to develop competent production engineers but how can the characteristics of such a being be defined? What are those key characteristics that are required, or can be developed and fostered?

1. The first and possibly most important characteristic of a competent production engineer is the ability to look at the current process or system, to be able to see what they are looking at, to be able to understand a). What is being done, and b). What is trying to be achieved? The competent production engineer then has to take this understanding and be able to visualise clearly a better way of achieving the desired goal and do something to deliver the new, improved process performance, fig 10.

fig 10: Production Engineering Spiral of Improvement

Probably the biggest challenge facing the inexperienced Production Engineer is the realisation that the process needs to be repeated, over and over again. Once the initial state has been made operational, standardised and proven to be effective it is time to re-examine this process to search for insights, based on facts, that can be used to develop a better system to meet the required needs. And yes, once this new system has been implemented, standardised and proven effective the process needs to be re-examined for further potential improvement. This process, known as continuous improvement is possible because as knowledge, experience and capabilities develop it becomes possible to stretch performance to ever high levels.

2. The production engineer does not deal in opinions. Their actions need to be grounded firmly in fact and based on a professional and sound footing of well understood operating principles, the science of materials and knowledge of machines. The competent Production Engineer can then clearly and efficiently, without ambiguity, establish clear operating standards. This small point is, in fact, extremely important.

Many Western businesses operate within a range of operating conditions. These operating conditions tend to be defined by engineering and management with machine and system operators then adjusting equipment to their own, detailed settings. This often results in significant variations in output and quality levels between shifts, and between operators, for no apparent reason. The defining of clear operating standards, and the strict adherence to same helps remove one more source for variability within processes and, consequently, helps reduce waste.

A further beneficial aspect to defining operating standards is felt in the serviceability and extended life of equipment. If machines are worked too hard or too fast their life expectancy is greatly reduced. If they are worked at an appropriate level they can give many years of dependable, consistent service.

3. The competent Production Engineer is a good communicator. They need to be able to absorb and understand what are quite often complex and sophisticated processes, machines and problems. They need to be able to make sense of what actions and control parameters are required for effective operation, and they need to be able to communicate their conclusions simply and clearly. The Production Engineer often has to communicate at different levels of abstraction:

a) Simply and clearly to operators.

b) Clearly and professionally to non technical management colleagues.

c) Technically to fellow engineers.

Effort spent in helping technical people improve their communication skills has the potential to deliver significant benefits to the business.

4. Facts and figures are the mainstay of management and improvement activities. The competent Production Engineer needs to understand how to capture data from systems and processes and, most importantly, needs to know how to translate data into information that can help them prioritise issues, direct actions and counter-measures and ultimately monitor ongoing performance improvement activities.

5. The key characteristics of the competent process engineer started with the ability to look, see, understand and do things to improve performance. The final key characteristic relates very closely to the first characteristic. The competent and professional Production Engineering needs to have a challenging and pioneering spirit. It is not enough to have training and exposure to the tools and techniques of Production Engineering or Continuous Improvement. A tool is only as good as the use that is made of it. Tools are most effectively used by people who are not limited by the obvious. Truly effective Production Engineers are those who want to move forward. Truly exceptional Production Engineers are those who cant help being pioneers. President John F. Kennedy could have been talking about exceptional Production Engineers when he said:

The problems of the World today cannot possibly be solved by people who are blinded by the obvious realties. We need people who can dream things that never were, and say why not? J.F.K.

The role of the exceptional Production Engineer in Japanese business is, indeed, a very important one.

This focus on the skills of engineers and the development of their process and product improvement capabilities and experience has led to a re-balancing in the numbers and types of people employed in leading businesses, fig 11.

fig 11: Balance of Staff Skills Traditional Vs WCM Companies

The world class company operates with less people and significantly less operators. They have invested in brain power, focused on developing saleable products and efficient manufacturing processes. It should also be noted that the world class company focuses less on basic research than a traditional company. They tend to take basic research and commercialise it rather than creating new concepts at the basic research level; as we saw in Table 1.

One of the key characteristics of a competent production engineer is the ability to communicate clearly and effectively with the people actively involved in delivering results from a process. One of the most striking characteristics of Japanese factories is the widespread use of charts, graphs, figures and graphics to:

a). share knowledge, and

b). to manage processes.

Western managers often ask So what is the point of all these Visual Measures? or Is that all? when they see the materials. This is a little strange to hear as we all know the old adage: A picture paints a thousand words. It has been determined that the amount of information that a single figure can relay can take up to eight minutes to relay the message with words. It has also been determined that people can retain messages more easily if they are delivered pictorially. The Tao, an ancient Chinese book brought us the phrases:

I hear, I forget

I see, I believe,

I do, I understand

and it is for all these reasons that competent Production Engineers develop a skill in visual representation and experience in delivery improvement initiatives as part of their professional development.

The importance of the use of graphics is easily demonstrated in fig 12.

Imagine that you were trying to describe an elephant to a blind person. Your description would probably take the form of the following:

An elephant has a long nose, two big ears and a big body. This apparently straight forward description could lead to a number of different interpretations, two of which are presented here

fig 12: The Power of Graphics in Communications

This little example should help demonstrate the truth of the adage Seeing is believing, and also demonstrate the ease with which a simple sketch or graphic can convey the true position. The emphasis on visualisation puts an emphasis on the management staff to identify the key measures for a given operation and then to develop clear means of managing to achieve performance while sharing necessary information with all staff. Visualisation techniques are used widely for normal process management, staff training, corporate knowledge management as well as long term strategic objective setting and sharing.

2. Continuous Improvement (Culture)

Performance excellence and in particular manufacturing excellence are built on hard worked and hard earned experience. A key driver behind this hard work is the concept of Continuous Improvement. This is not a gentle approach to making processes better over time. It is a relentless driving principle underlying all aspects of a business. It provides a coherency to all improvement activities providing continuity. To quote Roy Coleman, VP of Advanced Systems, Harley Davidson Motor Corporation:

We need to be better at 10 oclock than we were at 9 oclock, and better at 11 oclock than we were at 10!

It is this relentless drive for improvement that underpins much of leading manufacturing worldwide.

In the natural state assets and equipment deteriorate over time, see fig 13.

fig 13: Continuous Improvement

The use of CI techniques will ensure that, in the future, the performance level of the system will be higher than today. Without CI the future performance level will be lower. This mindset, this culture of Continuous Improvement is one that is embedded in Japanese culture and is generally missing from Western culture.

Some people misunderstand the Continuous Improvement philosophy and they think that CI operates independently of Innovation. In fact, the opposite is the truth. CI is fundamentally based on Innovation, but at an operational level, at the day to day level. CI also works in conjunction with high level Innovations as can be shown in fig 14 and 15. In fig 14, we see a system where a high level innovation is made, say a new machine is bought or a new software package introduced into the office. Over time the machine deteriorates, or the software package ceases to be exactly right to meet the business needs. In effect the performance level of the investment (the innovation) reduces. The time comes to re-invent, to seek the latest, current innovation in the field, to secure an improved level of performance. The cycle repeats itself. Overall, an increase in performance is achieved, but quite a lot of

fig 14: Innovation Without Kaizen

potential performance has been lost. This is represented by x and y.

If we look at the situation where Kaizen or Continuous Improvement techniques are employed we see a different picture, fig 15.

fig 15: Performance with Kaizen.

The difference in performance with the Kaizen approach can be represented by A&B.

But, when compared with the non-Kaizen approach, the actual improvement in performance is:

X + Y + A + B.

This improvement is achieved with the same level of investment in innovation or capital investment. In turn, these improvements are achieved based on the involvement of shop floor and production engineering staff. This improved capability and experience is retained within the Kaizen business, and continues to deliver on future improvements. It helps build a foundation for sustained competitiveness through improved performance and, ultimately, lower requirements for capital investment.

We can see this difference in performance by looking at fig 16.

fig 16: Performance Without and With Kaizen

In the company on the left in fig 16, operating without Kaizen, the level of performance jumps with each new innovation. We see that after the introduction of the new innovation performance gradually deteriorates until the next new innovation is introduced. In the company on the right Kaizen continues after the introduction of each new innovation. After each new introduction we see a gap in performance developing between the two companies. After two, three or four introductions the performance gap can be quite considerable.

The Continuous Improvement or Kaizen approach is based on a specific approach to business. Philosophical differences exist between the ways the companies in fig 16 are managed. The difference is between that of a failure driven operation and a prevention driven one. A number of techniques have been developed to help people deliver Continuous Improvement.

Statistical process control techniques are often used by high volume production companies. The technique analyses a key characteristic of the product or process and maps the results, fig 17. On the left we see the results of a process that has been brought under control. This is known as a capable process. Products made with this process are deemed to be acceptable, at least most of them. In this case approximately x hundred parts per million would be outside specification or below the quality standard. But, the process is deemed capable and the company moves on to address the next problem it faces, accepting the x hundred reject parts and the quality overhead associated with checking all 1 million parts, managing customer complaints and administering client claims and refunds due to poor quality parts being delivered to customers. It is the best they can do and they accept this reality.

On the right we see another company, starting with the same process, with the same level of process capability. The difference with this company is that they are not prepared to accept a capable Process, they are committed to developing a zero Defect process. In modern manufacturing this is known as a six sigma process. They achieve this result over time. The next result of their effort is a process that runs at 6 sigma, equal to 3.4 parts per million defect. This in turn means that they have a lesser need for product quality checking as their processes are under such tight control. Their customers receive quality products and they encounter very few if any customer complaints or refunds. Almost as an aside they have also built the experience and capability of their people to world class standards. Their own peoples abilities provide the basis for a strategic advantage in the market place they have developed the internal capability to tackle serious, complex and often technical issues and resolve them. It is an asset that cannot be bought, it can only be learned.

fig 17: Statistical Process Control Chart Philosophical Differences

With the Kaizen approach to Continuous Improvement processes are made secure. Once this has been achieved and the fundamentals of operation have been defined the process is standardised, fig 18.

fig 18: Kaizen Increasingly Sophisticated Methods

But what are the reasons for adapting Continuous Improvement? Why would we take the time and effort to develop capable and professional Production Engineers? In very many factories large amounts of wastes and losses are the norm. It has become an accepted fact of many manufacturing plants to have:

Machine breakdown

Lost time due to set-up delays

Defective parts

Minor stoppages

Delays of part delivery from suppliers

Absences of operators, and many others.

All of these wastes and losses take away from the bottom line of a business. Customers dont and wont pay for defects or breakdowns or any of the other wastes. This means that the producer pays through a reduction in Profits. Most factories do not clearly identify these wastes. If the wastes are identified visually and resolved quickly then manufacturing can grow in strength, providing a strategic advantage to the overall business. On the other hand if they are not addressed then production becomes weaker and weaker eventually leading to harm for the business.

Best Practice in Continuous Improvement combines both rigorous attention to detail as well as visual aids. This is illustrated in fig 19.

fig 19: Logical Process Improvement

The creation of a structured form, outlining the problem and determining targets and objectives, analysing and addressing issues and recording solutions and possible next steps provides a simple process for all to follow. These simple sheets also provide an effective means of capturing corporate knowledge. The gathering together of many of these sheets leads to the creation of an invaluable source of training material for people within the business, and, finally the creation of structure helps people to focus on the task in hand rather than spending time thinking How to start a job.

But not all companies are Continuous Improvement type organisations. There is a wide spectrum of commitment, dedication and commitment. Five distinct levels have been identified.

Level 1

People deny there is a problem or they dont want to see them. They want to continue in blissful ignorance, hoping that the problem will go away or that someone else will fix it for them. Problems seldom fix themselves and they typically lead to and create further problems. This approach of ignoring problems is not sustainable in the long term.

Level 2

People admit that there are problems but find excuses for not being able to solve them. People can be too busy to face realities and can often be very creative in making excuses. At the end of the day they are only making excuses to themselves the problems will still be there, no matter how good the excuse.

Level 3

People accept the fact that there are problems but are unable to solve them because they dont know how to attack them. By the time a company has reached Level 3 awareness they are beginning to have a sense of reality. They are at least admitting to the existence of problems. Their future is in their own hands now. They can decide to throw their hands up in the air and say they dont know how to fix the problems or they can begin to learn about tools, techniques and methods that will allow them to progress.

This is a very delicate and important time in the life of a business. If they do decide to learn and try to move forward they have some chance of survival. But, they need to be careful and move forward from a clear understanding of the basics. They have to build a strong foundation by developing the skills, experience and competitiveness of their people. They need to progress at a speed that they can absorb and be careful not to stretch too far, too fast. There is a strong need and desire to jump forward to Best Practice but this is only sustainable if it is based on a solid foundation of Good Practice.

Level 4

People want to see potential problems and they try to visualise what they may be. They use Risk Assessment on processes and products. They attack identified problems, learning the appropriate tools. They apply proper, structured method to their improvement activities. By Level 4 managers and workers are not just looking at and dealing with the obvious day to day issues. They are thinking ahead, identifying potential problems in the future and taking counter-measures to ensure the problems dont arise either within the plant or out in the market place.

Level 5

People know their problems and key methods to solve them. They understand how to involve all their people to attack problems. They are ready, willing and able to tackle any problem that may arise and are prepared to change and re-organise their operation if this is required to address the problem. By Level 5 people have become accustomed to identifying, tackling and resolving issues. They know how to work as teams with the core objective of driving the operation forward. The improvement of the business and the sustainability of the operation is paramount.

The involvement of all people in the Continuous Improvement effort is a key characteristic of the Japanese approach to improvement. This is not to say that everyone has the same level of time commitment to improvement activities throughout the business.

Managers should spend a greater proportion of their time on improvement activities than shop floor workers, see fig 20.

fig 20: Improvement Daily Work Balance

The higher up the organisation a person is the more of their time should be spent on improvement type activities rather than on daily grind work. The more the focus is on improvement the more the pressure comes to create and implement change as no improvement can be delivered without change. The more the focus is on change and effective change management the more the focus is on strategic alignment of manufacturing operations with overall business objectives. Manufacturing can be a significant strategic advantage for a company as long as key manufacturing staff are focused on improvement within the framework of the overall business strategy.

3. Zero as Optimum Concept (Culture)

The third key driver of Japanese manufacturing is the concept of zero as Optimum. This moves away from setting a target which is achieved or nearly achieved. It is an absolute whether it refers to zero effects, zero breakdowns, zero stock holdings or zero customer complaints.

This focus on zero removes the normal discussion that arises when managers spend time and energy discussing what are optimum stock levels or what is the optimum balance between quality controls, checks and counter measures and customer complaints or defective products.

The challenge of reaching zero is often quite extreme. It is not something that can be achieved overnight and is a goal that is achieved based on solid foundations and hard work, fig 21.

fig 21: Zero as Optimum

4. Knowledge Management (Culture)

The fourth key characteristic of successful manufacturing companies is Knowledge Management. The aggregated knowledge and experience of a business is an incredibly valuable asset and one which should be guarded, developed and nurtured. Experience in Japan has shown that major advances in product and process can be secured by structuring the knowledge management process. This structuring leads to standardised, repeatable processes that can deliver new results in the future. Another benefit of standardising the knowledge management process comes from the ability to focus on the process itself. The application of the Continuous Improvement approach to the Knowledge Management process leads to improved performance. Without this structure companies are relying on the skills and abilities of individuals, and luck to resolve issues and develop new products. It is clear that Knowledge Management processes balance creativity with structure. The structure helps direct and guide the creativity rather than stifling it or demanding of the creative person to keep too many thoughts, plans and projects in their heads. The leading companies have developed specific approaches to Knowledge Management and a number of sample sheets are provided in Appendix I (pg.26-27, 28, 29, 30 slides 52, 53, 54, 56, 57, 58, 60).

The overall process of Knowledge Management is shown in an example, fig 22. A key feature of the Knowledge Management approach is the use of feedback loops. As knowledge and experience are gained this is fed back to earlier stages of the process to make even better decisions.

fig 22: Knowledge Management

Knowledge Management in the manufacturing area integrates Quality functions and Manufacturing functions. It is essential that Quality becomes a central driver for manufacturing efficiency and effectiveness. It is essential that Manufacturing decisions and actions are made to enhance Quality. Information and feedback needs to be delivered and used all along the supply chain. Visual measures greatly help this sharing of data and information in the effort to mobilise all elements of the supply chain from ultimate consumer to the manufacturers of the smallest components.

As knowledge is gained and recorded it becomes essential that this knowledge is shared horizontally along the supply chain. If we think about this it is obviously silly if one part or department of a business learns how to solve a problem and they do not then tell the other departments how this is done. The same argument applies along the supply chain. Knowledge is truly powerful when it is shared.

5. Visual Management (Culture)

One of the most striking features of leading Japanese companies is the use of Visual Management. Strong efforts are made to help managers to SEE what is happening in their factories. Factories and production areas are arranged so that anything abnormal can be detected easily and from a distance. If something is out of place it is immediately recognised as being out of place.

Efforts are made to avoid having machines, materials or equipment blocking the line of sight. If a particular area is hard to integrate in to the normal visual management approach then some form of creative visualisation is developed.

Seven key factors to achieving Visual Management have been developed:

1. The visual tools must be seen at a glance from a distance.

2. The visual tools must be put on those items which require Management and Control.

3. If something goes wrong, everybody should be able to notice it by the visual tool.

4. Everybody can easily use the visual tool, they must be convenient for doing jobs.

5. It should be seen how quality is built in at each process with the visual tools.

6. Everybody can observe and follow using the visual tools, and correct them if needed.

7. The factory becomes light, bright, neat and streamlined with the visual tools.

Factories tend to be complex areas, with many different activities taking place at the same time. This complexity makes it hard for managers to manage. Focusing energy on developing methods that naturally highlight the exceptions will assist managers to quickly and efficiently identify which activities and areas require their attention and effort. The Visual Factory enables operations management to Manage by Exception.

Capability in Visual Management develops over time. As with the other World Class practices, people develop capability and experience that allows them to use more challenging and sophisticated techniques. This is represented in fig 23.

fig 23: The Visual Workplace

The over-arching goal of Visual Management is the prevention of abnormalities. This can be abnormalities in the product or the process. We know that abnormalities lead to losses and problems for customers and the business. The first steps relate to cleanliness and order. The 5S system, now the 7S with the addition of Safety and Security, is a basic approach to getting operations into an orderly fashion. The old saying: Shipshape and Bristol Fashion is well known to many people. It describes a well ordered, non-cluttered environment where people can do their jobs effectively and efficiently.

Many Western businesses have taken on board the use of computers throughout their operations. Computers can be useful in many ways when trying to manage operations. They are not very useful, however, when the objective requires shared understanding and ownership of an operation. How can we expect a group of people to know what is happening, to care about results being achieved or help improve on them if only one person has access to the computer screen. Most of our screens are fifteen inches wide most of our factory and office walls are measured in many multiples of this. The use of wall charts, graphs and other visual methods enables information to be shared with many people at one time.

The Visual Management Triangle, fig 24, represents the underlying logic behind Visual Management. As managers are charged with Managing rather than Doing they obviously need means and methods to get numbers of people to See, Know and Act as a group. Before people can commit to an action they usually need to see what is required of them. They need to know what levels of commitment have been made, to fellow workers, up and downstream colleagues and to customers and stakeholders. They need to see what is expected of them in terms of Goals and Objectives. If a standard of performance is not set, if output and quality levels are not set then it frequently happens that standards of performance drop. They also need to know what is acceptable and unacceptable performance, actions and interactions they need to know the rules. They need to See these as a Group and not as individuals, because they need to act together to achieve the desired results.

But knowing what is required of them is not enough. They need to know also just how well they are doing. They need to know how close they are to delivering on what is required. They need to know what the current level of production is, what the inventory levels are, what machines are available and also what ones are not. They need to have ready access to this information on an ongoing basis.

These two legs of the Visual Management Triangle can be summed up by the following quotation:

People need to know what is required of them, and what they have done so far. - Denis Keegan

The third leg of the triangle refers not to today or the current state of an operation. It is focused on Continuous Improvement. People working in a Group need to Act in a Group to look for ways to improve the processes and products they are working with. They need to agree together that the techniques, methods and processes they are using are the right ones, for the present. This is very important where plant, equipment or processes, either in manufacturing or the office, operate for more than a single shift. Many multi shift operations suffer due to differences in operation method between people on different shifts. Adjustments and changes are made to machines, processes and procedures that lead to changes and abnormalities. Groups need to reach consensus on what works for the Group and move together.

The second part of Acting as a Group relates to the constant drive for improvement. This focus is on the future. It demands that people operate the system as agreed but that they also challenge themselves and each other to find new, more efficient ways of delivery customer value to achieve a challenging Future State.

fig 24: Visual Management Triangle

The 5S System

Visual Management, self actualised teams, management by exception, minimum non-conformance: all these are objectives and goals for management. But how can they be delivered? What are the practical steps required to deliver benefits to an operation? The 5S System is the fundamental key to delivering a Visual workplace. 5S focuses on practical actions and building blocks that help managers and workers to develop their experience and capabilities to achieve operational excellence.

Ten principles have been developed to help implement 5S in a structured way:

1. 5S is a process. Be careful to remember that the 5S system is a tool, a process that helps deliver the goal of a well ordered, smoothly flowing operation or production line. 5S is not the goal, it is a method.

2. Only keep what is necessary. Spend some time and effort distinguishing what is necessary for the operation. Remove any unnecessary items as soon as possible. If they are needed in the future, then store them safely. If they have become obsolete then remove them completely from the premises.

3. Tackle Work-in-Progress. Identify all work in progress. Define the maximum levels and stick to them. Removing work in progress will help stop processes getting bogged down. Start thinking about how processes and machinery could be re-designed and re-laid out to provide. U-shaped cellular arrangements. Organisation and orderly lines will follow by removing Work in Progress and by ensuring minimum space is allocated to the operation.

4. Put things where they are needed. Lots of time is wasted spent looking for things. Where are tools, parts and consumables kept? Remove the necessity for workers to have to walk to the stores area to get parts or consumables. Place tools beside machines, beside where they are used.

5. Discipline. Management need to take a lead and show their people that they are committed to the 5S process. Management need to take the necessary steps 1 to 4 and show commitment to the process. When workers see that management are committed they will follow the system. If the workers see that the 5S approach is only a management fad then they will return to the old ways.

6. Toilets are important! The state of the toilet facilities says a lot about the state of mind of management and workers. If the toilets are dirty, damp or cold then it is highly unlikely that the operational area will be of a high standard. Creating a good environment in the toilet area helps create a clean and hygienic atmosphere throughout the plant.

7. Pick it up! Everyone should be responsible for picking up litter and debris. This should and must include top management. When workers see that management are interested enough to care to pick up a piece of paper then they are likely to come to understand the importance of cleanliness.

8. Cleaning provides an opportunity to do spot checks on the equipment. Workers can often detect problems with machinery at an early stage if they clean it. Leaks of product or lubricants can often cover a machine and lead to losses or failures of critical components. Close co-operation between workers and maintenance staff can lead to improved machine performance and availability as small problems can be detected early and fixed before they become big problems. Daily cleaning and inspection schedules should be developed and implemented.

9. No electrical wires dangling from the ceiling. Clean up the electrical, air and water supply lines. Use trunking and cable trays where appropriate. Remember the need for access for cleaning. Make it as easy as possible for machine operators and maintenance staff to do their work, cleaning and inspection duties.

10. Bring the 5S methods into the offices too. Very much time is wasted in offices looking, moving, checking and distributing paperwork. Look to see how the 5S approach could be applied to the development of the administrative area.

The move to a 5S environment is not necessarily an overnight affair. Table 2 provides a series of 3 stages in the process, all moving towards the goal of 5S implementation.

Table 2: 5S Implementation

Progress towards 5S should be incremental, sustained and needs to be seen clearly as a standard way of doing business and not just a management fad. The effective use of 5S can lead to the energised involvement of people throughout the business. The creation of this pooled energy is very, very helpful when it comes to addressing the Sixth Key Characteristic of a successful World Class Operation.

Detail Oriented (Culture)

The Devil is in the Detail.

This is familiar saying to Westerners from our folklore. In Japan the saying is

God is in the detail

This seemingly small difference is very illuminating. We in the West are often traditionally not very good at details, at carrying through to the ultimate conclusion. In the East they traditionally have developed a focus on detail and have reaped the benefits of this focus. Attention to detail is a key distinguishing feature of all exceptionally good things. Whether it be in the detail of a table setting, a fine car or the organised working of a world class factory or office, we can all see when true attention has been given to detail.

The focus on detail does really deliver results at the business level. There is little hope of a successful outcome if the fundamental items are not dealt with properly.

We can visualise the effects of attention to detail by reference to the Machine Loss Pyramid, fig 25.

fig 25: MACHINE LOSS PYRAMID

In a factory many hundreds of Hidden Failures can be happening at any one time. Lots of small deteriorations in state can develop through natural wear and tear and operation of machinery. In a number of cases, but not all, these can lead to Minor Failures. These failures do not always lead to loss of function or lost output but they often lead to variability in product quality and sometimes, in a number of cases, lead to Minor Stoppages and loss of function and output. These losses are often quickly recovered from and production continues, as in the example (fig 25) when the motor cools down.

In a small number of cases the Hidden Failures grow and develop to the point where a Breakdown occurs. Machines and processes are stopped and output and function are lost. These cases require a more significant input to restore function and output. Careful analysis of the root cause of failures at this level will lead back to a single hidden failure. In most cases hidden failures are eventually responsible for major losses, unless they are addressed early.

The high number of these Hidden Failures means that it is often difficult to address them with a traditional maintenance approach and a traditional We will fix it when it breaks business model. The 5S model focuses attention at the lower level of the Machine Loss Pyramid and tackles the root causes of nearly all machine failures. The development of soundly based cleaning and checking procedures will help identify early Hidden Failures ensuring that they do not grow into a Breakdown.

Most businesses deal with breakdowns in a very focused way. When the machine stops every effort is made to get it going again. Very few organisations tackle the causes of the failure. Very few have systems in place to track down and remove the causes of Hidden Failures. If the root causes are not eliminated then it is purely a matter of time until the machine will fail, again.

This focus on the Hidden Failures helps a business to galvanise their workforce on problems and issues that can be tackled effectively at shop floor level. Workers can be easily trained, enabled and required to perform checks and adjustments at the base of the Machine Loss Pyramid that will have a very positive effect on the overall efficiency and effectiveness of the plant. By tackling the root causes of machine weaknesses equipment failures will not occur. This is one of the true works of a World Class company.

7. Focusing on Quality (Tactics)

Quality costs nothing but is very highly prized. The Greek root of the word quality is arte. This can be translated as either Quality or Excellence. In actual fact when we are pursuing quality of product or production we are pursuing excellence. We are working to be the best we can be.

This focus on quality has been a key driver of Japanese companies for many years. The understanding of quality in the manufacturing arena has expanded over the years from the early days of Inspection where the quality control department operated separately and independently of a business. With the introduction of Process Quality control the number of departments and functions within a business involved with quality grew. Manufacturing, manufacturing techniques, purchasing, and the general business were now involved with quality and took an active part in the Quality Control process.

The introduction of Total Quality Control moved quality to another level within the business world. Effort was expended to achieve certain levels of quality and further elements of the business became involved in delivering the new Total Quality Control system. Marketing, R&D, Product planning, Design, production preparation and general management became involved and helped deliver significant quality improvements through focusing on their own areas and how they affected the quality of the product process.

The advent of Total Quality Management closed the circle on the business. Quality became a strategic element of a business and its customer interface. Quality had grown up and out of the shop floor and was now fully integrated into the board room. Or, at least, in those leading companies who could see the big, quality picture.

As the focus on quality has developed so too has the emphasis of management. As strengths, capabilities and experience evolved the measure and areas of attention of managers also evolved. As problems were fixed and resolved managers were able to turn their attention to higher level issues. Managers were able to focus their attention on the tactical and subsequently the strategic issues as operational problems were addressed and mastered. This progression of the Quality areas over time is represented in table 3.

TABLE 3: Transition to TQM

The key driver behind this move to TQM is a very practical one based on minimising the full costs to a business. A business that operates at Acceptable Quality Levels (AQL) levels of 1%, that is acceptable piece part quality levels of 1% with 99 out of hundred cars perfect, is likely to have between 30,000 to 50,000 defects in a million cars produced. The company which operates at parts per million quality levels for piece parts is likely to have 3 to 5 cars with defects for every million cars produced.

The profit margins on individual cars is at such a low level that even the smallest of defects that requires post-assembly intervention can result in the manufacturer recording a loss on that car. Manufacturers that dissipate their profit margins fixing problems with their products are finding it very difficult to compete with those who operate at the PPM level. The way forward is clear and hard to travel but the benefits to be obtained are equally clear.

8. Standardisation (Tactics)

The eighth keyword describing Japanese manufacturing is Standardisation. Standardisation provides a basis for shared understanding of what is required of both workers and processes. The standards provide a basis to identify when something is working right and when something is going wrong. The definition of a standard provides a basis for a shared understanding of how things should be. The standard removes the possibility of individuals doing things their own way and, most importantly, it provides a solid base from which to move forward. The setting of a standard, today, gives the possibility for an improved standard in the future. The standard acts as a solid foundation, a benchmark to move forward from, into the future.

What is a standard? A standard is a clear image of a desired condition. It defines what is acceptable and what is not acceptable. A standard can be as easily applied to a person, a process, a machine or a system.

Standards are centrally important in a WCM environment as they make abnormalities immediately obvious. Once the abnormality is identified ACTION can be taken to address it. If a standard has not been defined and set then how difficult is it for managers or workers to identify the abnormality?

A good standard is a simple, clear and visual one. The easier it is to see good from bad the easier it is to use the standard. The easier it is to use the standard the more likely it is that it will be used and the more the standard is used the more quickly problems are tackled and eradicated.

Standards come in many forms and types. We are probably familiar with Quality Control standards, inspection standards, standards for responding to and dealing with customer complaints. People within organisations also operate to standards. Means and methods of operation, sequences of manual operations, work instruction standards, personal behaviour standards are all examples of standards as they apply to people. Plant and equipment standards are set in relation to maintenance and operation standards. Standards also are evident in the support and administrative functions in terms of production orders, item labelling, invoicing and purchasing and operations management paperwork. Work environments are protected with health and safety standards. Management can use standards effectively to sustain current performance and to drive future improvements.

The real benefit of standards comes from their use in the improvement process. The challenge facing management is to make standards an active part of the business and not to have manuals and standards stacked on a shelf gathering dust. A work standard that is presented, at the place of work, in the form of a printed instruction can be more effective. If this work standard is presented in a graphical form then its effectiveness increases. We can take the example of a quality standard for a paint finish as an example.

If the quality standard is written and kept in a manual then its impact is obviously going to be low. If it is presented as a picture, posted at the place of work it is certainly going to be more powerful than the written, filed quality standard. Probably the most powerful standard would be actual samples of good and bad work pieces, made available at the place of work. Each of the three standards described above are valid standards, but the effectiveness of each means of presenting the standard, and achieving the required objectives of top quality production is different. Each company chooses their own way to present standards, to share with their workforce what is required of them. Equally, each company can limit the effectiveness of the impact of standards based on these decisions.

9. Reduction of Lead Times.

The ninth keyword to understanding the Japanese manufacturing approach is Lead Time. Lead Time can be taken as the time between starting a job and delivering a result. The term is widely understood in the manufacturing arena, becoming understood in the design arena and hardly thought about in the administrative arena.

Lead Time is extremely important for a number of reasons. We are all aware of the old adage Time is money, and this is particularly true in a business environment. The longer materials are on a premises before they are converted into saleable products and consumed, the bigger the financial burden on a business. A second time dependent aspect of the business customer interface is that the longer lead-time the greater the opportunity for the customer to change their mind. If the lead-time is long it is very possible for the customers circumstances and requirements to change. This change can result in either a desire to cancel or change the order or dissatisfaction with the delivered product. A further aspect of long versus short lead times arises once again in the customer interface area.

If a manufacturing company has evolved to the point where its production lead time is less than the delivery lead time acceptable to the customer the manufacturer can effectively service the market without need for expensive finished goods stocks. The corollary is also true, unless manufacturing lead time is less than market expectations then expensive finished goods stocks are required. A final aspect of Lead Time Reduction relates to the pressurising of systems within a business. If people are made to believe that action is required by a certain time then they are very likely to meet this time constraint. If there is no time constraint then the work will usually expand to fill the time available. Time is a very easily understood thing that can be readily used to develop a shared belief and energy to deliver improved performance.

We will now look at lead time from both the European and the Japanese perspectives in an effort to better understand the concepts behind Lead Time Reduction.

Looking at the business fulfilment cycle we can break the process down into three elements, fig 26.

fig 26: Business Fulfilment cycle

This high level analysis gives an indication of the many opportunities for delay between the customer placing the order and the customer receiving their ordered goods. We must remember that this is only a high level view, we will look at a more detailed process shortly. While this is only a high level view it still only looks at lead time from the perspective of the customer. Lead times exist too with suppliers and also with customers when the finance department goes looking for payment. Each of these lead times account for some element of lost time and incurred cost. A close examination of the business processes involved in doing business can provide a major opportunity to identify priority areas for action. Reducing Lead Times reduces the time from Cash to Cash. In fig 27 we take a more detailed look at the system that turns raw materials into transferred cash from customers.

fig 27: Manufacturing Lead Times

So far we have only considered Lead Time Reduction in terms of existing products and services. The rate of change in the market place today is very rapid. Product life cycles are reducing all the time. This short life cycle puts significant pressure on product development teams. But this pressure can also lead to positive results. If mature industries can realise that product development is a process, that can be standardised, mapped and subsequently improved, then they can realise significant savings in the costs of development per new product introduced. Shorter development cycle times can be cheaper - provided the development process itself has been optimised.

10. Equipment Independence

The final keyword to the Japanese Manufacturing system is Equipment Independence. This relates to companies developing the expertise and confidence to design and fabricate production equipment in-house. This final step is a significant one. It demands that the company has, acquires or develops the necessary technical competencies to understand both base processing techniques as well as production process needs and wishes.

A number of benefits derive from taking this step. Machines purchased from equipment suppliers are usually compromised. They are manufactured to meet a variety of market needs and end user requirements. They must be designed this way if they are to have a sufficient market. But this flexibility and compromise often means that they are sub-optimised for any specific task.

If a company has taken the time and given the effort to develop its own in-house design and fabrication capabilities then new equipment can often be manufactured at lower cost and often in less time. Because the machines can be optimised for the specific task at hand they can often be more productive than standard, compromise equipment. A further benefit of designing and building your own equipment comes from the deep understanding developed of process technologies and production requirements. This knowledge helps people to be a little more adventurous in trying out new production techniques. Creativity and innovation can be released into the equipment and can lead to enhanced performance.

Because the machinery is being designed and built within the business it is relatively easy to involve operators in the process. Their inputs, knowledge and experience of operating equipment can be incorporated into the new equipment. This close involvement of all levels of the business with the new equipment often leads to a heightened sense of ownership, improved understanding of how and why a machine works and frequently leads to better maintenance of their machine over its productive life.

The final key benefit of realising independence is ability to gain competitive differentiation. If new machines are made in-house they can be cheaper, delivered and functioning sooner, include new processes or technologies, be modified more quickly to deliver enhanced performance and have lower full life costs due to better maintenance. All these attributes can lead to enhanced competitiveness as they are all based around the Captured Knowledge of a capable and dedicated team.

It is very difficult to compete against such a depth of excellence when buying standard, compromise equipment.

Chapter 3

Strengths and Weaknesses of the West and Japan

Differences exist between the business approaches followed in the West and Japan. This Chapter will look at some of those differences and provides a basis for examining where businesses located in either the East or West can move forward to strengthen their competitive positions by maximising the positive and minimising the negative aspects of their business approach. One of the worlds most creative and effective geniuses, Michelangelo, said:-

Ancora Imporo I am still learning.

We will look at a manufacturing business from the early stages of research right up to product manufacture, fig 28.

fig 28: East and West

The focus in the West is on discovery and invention. On breaking new ground, on discovering and creating new technologies. Westerners have a serious interest in new ideas and a relative disdain for the old. One of the problems with this is that invention and discovery are discontinuities. There is no continual, defined process that will deliver new discoveries. There is no predictability for genius.

The East has more of a focus on development and innovation. Concepts and technologies are secured and continuously improved. New products and ideas are based on proven forerunners. Synergies are exploited to meet customer needs and wants and to utilise productive capacity. A well managed innovation system is both predictable and derivative. Former investments in capital, capabilities, knowledge and technologies can help deliver new products effectively. The time to develop new derivatives of products can be judged with a good degree of certainty. Product life cycle planning can be facilitated with two, three and more product generations being catered for. This security in the product generation process can help sales and marketing, finance, purchasing, manufacturing and logistics personnel to optimise their respective roles in the value chain over extended periods. This formalisation of the process also leads to the opportunity to benchmark the innovation process and to seek and secure continuous improvement in the process. These improvements typically lead to improved product capability and or reduced lead times for product to the market place.

These fundamental differences in approach to the Innovation process leads, in turn, to the development of different capabilities and characteristics. These are summarised in Table 4.

TABLE 4: Strength Comparisons West and Japan

The strengths and characteristics outlined in Table 4 lead to different axes of movement in the market place. If a company is focused on Basic Research then it has limited energy to focus on Applied Research. Applied Research focuses on how new ideas and technologies can be applied to create wealth. This wealth can, in turn, be used to pay for further innovations and increased wealth generation. It creates a virtuous circle without many of the potential pitfalls in carrying out Basic Research. Unless the basic research leads to inventions and new ideas it is very unlikely that the investment made will be recouped. By focusing on Applied Research companies can decide which proven technology can work for them, without the necessary investment in basic research. There is a balancing act in all of this and it is not completely clear which is the pre-eminent approach. It could well be that a balance between the two approaches could lead to an optimised response.

We have looked at the basic strengths of the West and Japan. Managers in both areas are conditioned in how they think and act by these strengths and general characteristics. But how does this affect how they ACT as managers? In Table 5 we look at the management characteristics of Western and Japanese Managers.

TABLE 5: Western and Japanese Management

Managers all over the world are faced with the same problem.

How to get their strategies and high level plans implemented successfully.

Western managers achieve this with the use of Manuals. SOP Standard Operating Procedures, where high level strategies are fed down to the shop floor through layers of middle managers. The key to success with this system is the skill of the mid