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Question: Write on Manufacturing Organisation: Systems and Benefits
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Introduction
Manufacturing is an important part of any economy with "80% of the world trade among regions being merchandise trade (and only the remaining 20% in services) in 2014". (Wto.org, 2014), and being "the most important contributory industry in the economy" (Fruth, 1998). Manufacturing is essential for economic stability and robustness. One job in manufacturing creates 2.5 jobs in other sectors (Makingitincalifornia.com, 2016).
Manufacturing is also important on international stage as it is the foundation of the "power" of a country (Roosevelt Institute, 2011), as witnessed in the steady rise of China's financial and political clout and the growing worry among American thinkers (Morley, 2006). "A country where manufacturing has been exhausted becomes poor and weakened" (Hitomi, 1996).
Manufacturing is the process of taking tangible raw materials and using materials, machines, men and transformation processes to produce a good which may be for end-user consumption (e.g. a screw) or to be used as a part (e.g. an integrated circuit) of other more complex end-user product (e.g. an iPhone). All this is to be done at a large scale so that economies of scale can decrease the cost per unit of output with the increasing scale, and thus increase the profits for the business.
Thus, we want to mass produce items using raw materials, complex machines and skilled people, and with efficiency of resources and quality of the items produced. This introduces complexities common to every manufacturing concern and in this paper, I will be analyzing the current thinking on how manufacturing processes can be organized to maximize benefits i.e. efficiency and quality.
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Manufacturing Organisation for Efficiency
Businesses are run for profit and efficiency benefits everyone. Efficiency of raw materials, machines, men and processes mean lower cost per unit produced and thus lower price for the end-customer and better sales and profits. Also, profitable businesses mean more stable jobs and thus better lives of employees. Thus, we have every interest in efficiency and it has been the focus of a lot of research and implementation.
Efficiency is a capacity of performing a given task within the specified standard time, and is usually defined as the percentage of standard time over actual time. If this figure exceeds 100 then the manufacturing activity is efficient (Hitomi, 1996). And standard time is the time required by an average skilled operator, working at normal pace, to perform a specified task using a prescribed method (Maynard and Zandin, 2001).
Now, we want to increase efficiency and two factors have been identified - subjective and objective. Subjective factors focus on workers and includes their qualitative capability (skills, technical ability, etc) and quantitative capability (working effort, increase of working hours, etc). Subjective factors focus on the processes, environments etc e.g. technological innovation such as factory automation, enhancing the work environment, etc (Hitomi, 1996).
Also, the researchers emphasize that efficiency does not begin at the shop floor. "That's because when the issue of inefficiency is addressed at the time the product is being manufactured the damage is done and waste is already designed into the product." (Peluso, 2016).
Now, we focus on the methods of improving efficiency in manufacturing processes. We will be discussing just-in-time (JIT), lean manufacturing, 5S and kanban approaches. "The goal is an optimally balanced production line with little waste, the lowest possible cost, on-time and defect-free production" (Wikipedia, 2016).
Just-in-time (JIT) manufacturing: It is a Japanese management philosophy applied in manufacturing which involves having the right quality and quantity in the right place and at the right time. It was developed and perfected in Toyota manufacturing plants in Japan (Cheng and Podolsky, 1996). "It works on a demand-pull basis, contrary to hitherto used techniques, which worked on a production-push basis" (www.tutorialspoint.com, 2016).
Also, the birth of this manufacturing approach in Japan is not a coincidence. The culture of Japan, coupled with the work ethic which emerged shortly after World War II was a prime motivating factor behind the development of superior management techniques.
We notice here that the focus was on optimizing materials rather than the humans, as Japanese already have a work-is-worship mentality and "work itself takes precedence over leisure" (Cheng and Podolsky, 1996). "They built smaller factories (about one-third the size of those of their U.S. counterparts) in which the only materials housed in the factory were those on which work was currently being done. In this way, inventory levels were kept low, investment in in-process inventories was at a minimum, and the investment in purchased natural resources was quickly turned around so that additional materials were purchased." (Plenert, 2007).
JIT manufacturing intends to reach its goal by minimizing the presence of non-value-adding operations and non-moving inventories in the production line. This will result in shorter throughput times, better on-time delivery performance, higher equipment utilization, lesser space requirement, lower costs, and greater profits. It focuses on inventory reduction, quality control, waste reduction and smaller production lots and batch sizes (Improsys.in, 2016).
Lean manufacturing: It is the production of goods using less of everything compared to mass production: less waste, less human effort, less manufacturing space, less investment in tools, and less engineering time to develop a new product. There are seven original wastes which are identified and reduced in lean manufacturing: overproduction, excess inventory, waiting, transportation, unnecessary motion, over processing and defects (Wang, 2011). Later on, more wastes were added like manufacturing goods or services which do not meet the customer requirements, wastage of skills. More recent additions to wastes include improper use of computers, not having proper software etc
We notice that lean methodology has a long history and its roots can be found in pre-20th century with Benjamin Franklin's comment that a person who loses 5 shilling worth of time due to idling might as well throw his 5 shilling in a river, as both the scenarios mean the same thing. He believes in this theory so much that he proposes that if you save 1 penny, it is as good as earning 2 pennies. Other names associated with this are Frederick Winslow Taylor and Henry Ford.
To achieve lean manufacturing (or just-in-time) some tools are used like 5S, kanban and we will discuss them a little later. Now, we will discuss the steps to create a lean manufacturing system: (1) Design a simple manufacturing system, (2) Recognize that there is always room for improvement and (3) Continuously improve the lean manufacturing system design (O. Akinlawon, 2016).
5S methodology: It is a general and systematic approach to workplace organization and is one of the tools of efficient manufacturing processes like just-in-time and lean manufacturing. The aim is to "become more efficient, organized, and equipped to carry out daily tasks in a safe manner" (Wastradowski, 2015).
The 5S methodology gets its name from the Japanese words which when transliterated into Roman script start with letter S and are Sort, Set, Shine, Standardize, Sustain. The reason this methodology is successful is that with standardization, cognitive effort (in other words, the conscious thinking required to do something) decreases and the tasks become a habit and happen without thinking.
This results in benefits like improved profitability, more efficient workforce, better service for customers and a safer workplace (Wastradowski, 2015).
Kanban: It is a component of efficient manufacturing techniques like just-in-time and lean. It is an inventory control system which by means of messages controls the maximum inventory that is tied up in work-in-process. It is inspired from supermarkets and was developed by Toyota by viewing a process as being a customer of one or more preceding processes, and to view the preceding processes as a kind of store. Just like a store, buying of an item causes the store to restock it and there are guides to direct customers to the relevant part of the supermarket.
Teams within the manufacturing indicate excess capacity to each other using a card or kanban. For example, a door attaching team would deliver a kanban to a door assembling team when it is having excess capacity and is ready to pull materials (Radigan, 2016).
The benefits include simplicity, lower cost, agility, reduced inventory, minimal waste
Manufacturing Organisation for Quality
Quality is equally important as efficiency. If the product does not meet the customer's requirements or is lacking in fitness for its use, then it matters little if it was created efficiently and there was no slack in the materials and manpower. "A quality item (an item that has quality) has the ability to perform satisfactorily in service and is suitable for its intended purpose" (Wikipedia, 2016).
Quality as we know today emerged in the Industrial Revolution. Before Industrial Revolution, goods were made from the start to finish by the same person or the same team of people and it was their responsibility to meet the criteria of quality. Mass production brought huge teams of people working on a specific stage of production and depending on other teams for input and in turn having other teams depending on their outputs.
There are five aspects of quality from a business context: producing, checking, quality control, quality management and quality assurance. Also, we note that managing quality is fundamental to any activity and having a clear understanding of the five aspects, measuring performance and taking action to improve is essential to an organization's survival and growth (Wikipedia, 2016).
We will discuss Total Quality Management (TQM), Statistical Process Control (SPC), ISO 9000 and Six Sigma in this paper.
Total Quality Management (TQM): It consists of organization-wide efforts to install and sustain a climate in which an organization continuously improves its ability to deliver high-quality products and services to customers. While there is no widely agreed-upon approach, TQM efforts typically draw heavily on the previously developed tools and techniques of quality control, using the concepts of: customers (external and internal), never-ending improvement, control of business processes, upstream preventive management, ongoing preventive action, leadership and teamwork (Total Quality Management, 1994).
As with most other efficiency frameworks, quality framework like the Total Quality Management had its impetus in the competition from Japan, which after the atomic bombs, and due to the limited land and local raw materials, economic sanctions had to develop efficient and high quality methodologies. The countries which were enjoying great power like America and England faced stiff competition, and were woken awake from their complacency by the realities of the post-war market.
The key concepts in the TQM effort undertaken by the Navy in the 1980s, and indicative of the methodology in general include (Houston, 1988):
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Quality is defined by customers' requirements.
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Top management has direct responsibility for quality improvement.
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Increased quality comes from systematic analysis and improvement of work processes.
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Quality improvement is a continuous effort and conducted throughout the organization.
Statistical Process Control (SPC): It is a method of quality control which uses statistical methods. Statistical Process Control is applied in order to monitor and control a process. Monitoring and controlling the process ensures that it operates at its full potential. "Statistical Process Control takes the guesswork out of quality control and uses data for quality analysis and improvement" (Infinityqs.com, 2016).
Most of the other methodologies look at the final produced items, check if they meet the requirements specifications and decide whether to continue with the lifecycle of the product (package it and ship) or scrap the item. Statistical Process Control, however, looks at the data values of the processes and machines in real-time and alert if any variations are observed.
Benefits include reduced wastage, faster time to manufacture and instant feedback to any variability in process changes.
ISO 9000: It is a family of quality management systems standards and with the fundamentals of quality management systems. In addition to maintaining quality standards for internal profitability, ISO 9000 is also beneficial in advertising purposes so as to attract new customer and convince existing customers of the high level of quality being maintained in the manufacturing. In addition, ISO 9000 is sometimes mandatory requirements for contractors.
The foundation of ISO 9000 is the eight principles, as follows:
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1. Customer focus
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2. Leadership
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3. Involvement of people
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4. Process approach
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5. System approach to management
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6. Continual improvement
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7. Factual approach to decision making
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8. Mutually beneficial supplier relationships
The benefits include increased marketability, reduced operational expenses, better management control, increased customer satisfaction, improved internal communication, improved customer service, reduction of product-liability risks and attractiveness to investors (Referenceforbusiness.com, 2016).
Six Sigma: It is a set of techniques and tools for process improvement and seeks to improve the quality of the output of a process by identifying and removing the causes of defects and minimizing variability in manufacturing and business processes. "The philosophy of Six Sigma recognizes that there is a direct correlation between the number of product defects, wasted operating costs, and the level of customer satisfaction" (Harry, 1998)
There are two methodologies for Six Sigma implementation: DMAIC for improving existing business process and DMADV for new product or process designs. DMAIC is an acronym for Define, Measure, Analyze, Improve, Control and DMADV is an acronym for Define, Measure, Analyze, Design, Verify. To achieve the objectives, many methods are used including 5 Whys, cost-benefit analysis, histograms, Pareto analysis/chart, Pick chart, root cause analysis etc.
Six Sigma intends to formalize a hierarchy to include all business functions and levels and make them accountable for quality in their roles. These roles are Executive Leadership, Champions, Master Black Belts, Black Belts, Green Belts. Emphasis is on training. Even a casual study of Six Sigma indicates the inspiration from martial arts in naming the roles.
Advantages include lower wastage, errors, reduced costs and advertising benefits.
Conclusion
In this paper, we discussed the importance of efficiency and quality in manufacturing and the current thinking of organizations all over the world as to how to best achieve these goals. We appreciate that manufacturing is the main reason why money changes hands locally and internationally also. This has implications not only for local employment, profitability of organization but also for a country's power and financial clout.
Manufacturing contrasts itself from services in that it works on the physical using the 4Ms (Man, Machine, Material and Method) to produce something physical. Manufacturing became a large scale activity after the Industrial Revolution. Thus, the requirements of a physical structure, and the mass production coupled with the aims of efficiency and quality gave rise to the field of Industrial Engineering.
We also notice a common thread among the efficiency and quality methodologies in that necessity is the mother of invention. While countries like America and England were content with their manufacturing methodologies with no special attention to efficiency and quality, Japan, crippled by the atomic bombs in the World War II, and limited by the land and local raw materials had all the motivation to develop efficient and quality-ensuring methods of manufacturing. And when the other countries faced the heat of market reality, they too focused on the benefits, which is good for everyone.
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