The true meaning of world class manufacturing now becomes clear. It is the ability to compete anywhere in the world and to be able to meet and beat any competitor anywhere in the world with product price, quality, and on-time delivery. How to achieve this level is the real challenge.
MANUFACTURING MARKET SHARE
Figure 10-1
In order for a company to be World Class, it needs to implement Best Practices. However, Best Practices are not universal; they are not the same in every business market. Different markets and business conditions dic-tate what is Best at any given time. For example, in a market where com-petition dictates the price, cost control is imperative; margins are critical to control. In another market, where all the product that can be produced can be sold, capacity becomes the primary concern. Best Practices are also different for a new plant or facility than for a plant or facility that is going to be decommissioned in the next couple of years.
Regardless of the business environment, there are several universal Best Practices that can help any company improve its competitive posi-tion. These can be divided into three areas: quality, attitude towards com-petition, and automation technology.
Quality
A presentation at the AIPE national conference noted that 20 to 25% of a company’s average manufacturing operating budget goes for finding and fixing mistakes. If the costs of repairing or replacing flawed products are included, this level may be as high as 30%. What would the amount be if it included the cost of future sales lost due to a poor reputation for qual-ity? Estimates suggest that the cost of poor quality is as high as 10% of sales per year. Although U.S. companies have made inroads in this area, the “Made in the U.S.” label has not yet regained its full appeal, especially when compared to international quality standards. The entire concept of Best Practices in quality is to prevent defects, not to correct them. Unfortu-nately, correcting defects is all too often the common philosophy in United States.
Attitude Toward Competition
A company’s attitude toward its competitors is one of the most difficult attitudes to adjust. Moving from a domestic market to a world market, the perspective changes. Companies cannot sit back and wait for the govern-ment to impose restrictions and save any industry, no matter how funda-mental that industry is to the economy. If companies are to remain in busi-ness, they must focus on internal improvements, not depend on external protectionism. They must view each competitive situation as serious. The notion that “the customer will order from us because we are an American company” is based in fiction, not fact. Customers will buy where the price, quality, and service are the best.
Automation Technology
An article published in Plant Engineering Magazine (3/12/78) stated that only 20% of the plants in the U.S. were automated at the level of their over-seas competitors. Consider the number of jobs that moved from the US to overseas companies and plants in the last 25 years. The automated plants gave companies tremendous price advantages over their under-automated competitors. (This factor is independent of job losses related to wage dif-ferentials.) While some inroads are being made in this area, it is commonly known that plants in the US are still designed without full input from the operations and maintenance functions. This lack of input drives the life cycle cost of the plant or facility extremely high. Over the course of the life of the plant or facility, the plant is forced to pay higher operational and maintenance costs. Thus, U.S. plants are giving a large advantage to their overseas competitors. If these US plants are going to lower costs and raise quality, quality design and automation must be part of the solution. The international companies have many industries that are totally automated from order entry to delivery, from product design to product production. A warning to companies beginning in this endeavor is that while automation is the answer, automating waste is not.
World Class manufacturing requires the elimination of complexity. It requires simplicity in design and manufacturing processes. Simplicity is the key to eliminating waste. Companies that want to achieve World Class status would be wise to examine how maintenance is involved in the areas of quality, attitudes, and automation.
Quality
If equipment is operated in an environment where nothing is done to it if it is running, then the equipment will be in poor shape. All equipment re-quires maintenance activities; the frequency varies with age. If equipment does not receive proper maintenance at the correct interval, it cannot maintain standards. Poorly-maintained equipment seldom produces con-sistently good products. If quality programs are instituted in a company, maintenance must be a part of it.
A preventive maintenance program has several components. The equip-ment operator may perform inspections of equipequip-ment in a world-class or-ganization. If properly documented, these inspections can help to trigger replacements of defective components or necessary adjustments. This ap-proach relieves some of the less technical work from the maintenance or-ganization. It helps to promote good relations between maintenance and operation, while also helping to increase the quality of the product.
Predic-tive and condition based maintenance systems help to insure higher qual-ity products; the equipment condition should never deteriorate to the con-dition where it will be producing a defective product. Changing the present
“run-all-you-can” or “run-till-it-breaks” mindsets of plant managers is im-portant too, as discussed in the next section.
Attitudes
One of the attitudes that companies must address is one that favors sacrificing long term planning for short-term gains. This attitude has one meaning for the world market and the products a company plans to pro-mote. It also has meaning for maintenance. If management’s attitude favors short-term goals, then the maintenance organization will be affected in the areas of:
Preventive maintenance Labor planning
Inventory
Preventive maintenance suffers because no one will give the equipment to the maintenance department for routine service. This servicing may re-quire some lost production, affecting short-term goals. But the company needs to view matters long range. Keeping the capital equipment in good repair and producing high quality products should be the goal of main-tenance and operations. If they cooperate, long-term savings and higher product quality will result.
For example, one company, after instituting a preventive/predictive maintenance system, estimated its savings to be as high as 1.2% of the to-tal plant output. However, the costs for the PM program start-up pushed maintenance costs up for six months before the savings could be seen. Had the company insisted in keeping costs down over the short term, it never would have achieved the greater long-term savings.
Another attitude that often requires adjustment is that of management toward the position of maintenance in the organization. Organizations that have been successful in instilling best practices in their maintenance orga-nizations have been committed to raising maintenance management to the level of other management positions in the organization. Without this com-mitment, maintenance cannot improve. Foreign competitors learned this some time ago. Their organizations respect maintenance for the contribu-tions they make to overall profitability.
Still another attitude that may need adjustment is management’s atti-tude toward maintenance resources. These include:
Labor Materials Tools
Supplies and miscellaneous
Examine the maintenance budget for your organization. How much is spent annually on maintenance salaries? How much is spent on mainte-nance parts? You are likely to find these figures to be surprisingly low. Yet a company would probably never begin production without considering:
The material required The equipment required The labor required
The time required to produce the finished product
Now imagine the scenario presented in Figure 10-2. This scenario is so far removed from Best Practices that it qualifies for Worst Practices.Most
people would you want to own, invest in, or work for such a company. Any company operating in this type of mode, with this attitude, would never be profitable. It would be extremely wasteful and would create a frustrating work environment. The same feeling about a company that operates pro-duction in this manner should translate to misuse of maintenance organi-zations. Too many organizations operate their maintenance organizations