The Importance of Manufacturing
Manufacturing has traditionally played a key role in the economic growth and development of countries. In developing countries, the importance of manufacturing has diminished over the last 20-25 years, resulting in de-industrialization. However, industrialization — or increases in the share of manufacturing in Gross Domestic Product (GDP) — is a key feature of modern economic growth.
Historically, manufacturing has been the backbone of all developed and developing nations. It is where R&D starts, where new technologies are born, where scientists and engineers and others are challenged to develop new and better processes, products and technologies. Manufacturing provides many jobs at all levels and is a vital generator of employment. Among all sectors (services, agriculture, social, manufacturing), the manufacturing sector distributes wealth most equitably among the work-force; hence it is a key factor to pull people above the poverty line. E.g. In most of the fast-developing Asian countries such as Thailand, Indonesia, Malaysia, Taiwan, Philippines, Korea and China, manufacturing has contributed 30 to 50 per cent of GDP and thus helped in eradicating poverty. In India where the manufacturing sector’s contribution to GDP has moved from 16% to 18.32 % in the last 10 years, the government has created the flagship “Make in India program to lift manufacturings contribution to 25% of GDP by 2025.
The manufacturing industry has pioneered historic breakthrough improvements via concepts, tools and methodologies over the last century. Let’s run over the key developments.
As we know, all these concepts which originated in manufacturing are now used across various industrial sectors like IT, Financial Services, Hospitality, Logistics, Government and Armed Forces. This underlines the contribution and importance of manufacturing to industry as a whole.
Manufacturing Excellence (ME) Integrates 5 Basic Elements:
These programs emanated from the specific economic needs of a particular era. In today’s VUCA (Volatility-Uncertainty-Complexity-Ambiguity) world, manufacturing plants across the globe are facing challenges that are significantly greater than ever before. Whether we like it or not, we must perform for quarter-over-quarter financial results, which demands much shorter improvement cycles. Investments in manufacturing are difficult to get approved – making us ‘sweat the assets’ (fully use them) much more than before. The
customer has come to expect the following as ‘standard’: next-day delivery, Click & Collect, faster lead times, full order visibility, increased product choice and zero inventory. This significantly impacts the way we need to manufacture. Manufacturing has moved away from demand centers towards geographies with favorable regulations and taxation norms. In many regions, manufacturing is no longer the choice of employment for the best young talent. To address these challenges, manufacturing professionals need to invent their own improvement initiatives to keep doing better, as demanded.
Most of the organized manufacturing set-ups have used one or more concepts over the last two decades to improve their manufacturing performance as standalone initiatives without integration. E.g. in India initiatives like Kaizen, 5S, Quality Circles and Six-Sigma, etc. are excellent in themselves and remain restricted to employees in lower and middle levels. Such programs remain largely cosmetic in nature without creating any competitive advantage. In some multi-plant organizations, each plant is left to decide their individual program with limited or no horizontal deployment of best manufacturing practices. Often there is no integrated approach to such initiatives across the supply chain. Learning from other Units and sharing best practices is hence limited.
Today’s Manufacturing plants are not isolated from the end to end Supply Chain which consists of ‘Plan’, ‘Source’, ‘Make’ and ‘Deliver’. Hence Manufacturing improvement initiatives can’t be confined within the four walls of manufacturing. The objectives of a manufacturing excellence program have to be defined in the context of specific Supply Chain challenges. E.g. 1. An automotive component manufacturer has to build abilities to provide small batch sizes of a variety of parts within a short lead time as demanded by the customer factory, which may not be very good at Supply Chain planning. In such a case, the supplier plant has to focus on efficient layout, quick changeovers with minimum wastages and delayed differentiation. E.g. 2. A pharma plant has to be fully compliant with Good Manufacturing Practices (GMP) as defined by regulators. Thus, the objectives of its’ manufacturing excellence program will require practices like 5S, process capability improvement, SOP management ability to do exhaustive Corrective and Preventive Action (CAPA) and data integrity should be the key objectives of its’ manufacturing excellence program. E.g. 3. An ice-cream manufacturer has to focus on 100% up time and highest capacity utilization during summers and work with a minimum workforce and few shifts in winters. Thus, one has to learn quick capacity ramp-ups and best maintenance capabilities.
The best practice at the top manufacturing companies is to use an integrated program which may be generically called Manufacturing Excellence or Operations Excellence. It can be defined as “A structural approach in a Manufacturing Organization focused on improving throughput, quality, delivery and reducing costs by utilizing various methods of planning, workplace design, asset care and waste elimination through involvement of all the employees with the objective of meeting expectations of all the key stakeholders.” Or simply put “A comprehensive, sustainable, continuous improvement of operations to gain a competitive advantage, lower costs, and increase profit.”
While designing a Manufacturing Excellence program, the manufacturing leaders have to make it holistic to address the unique challenges of the business. A manufacturing plant has five basic elements which govern its performance. These elements are Assets, Processes, Place, Utilities and People. Any lack of plant performance can be traced back to suboptimal management of any/all of these 5 elements.
Many improvement efforts lack this holistic view and hence become limited in impacting the work culture and providing sustained results. It is the responsibility of leaders to learn the basic concepts of Lean, TQM, TPM, Six-Sigma etc. and design a customized program for the manufacturing business with scope to further customize it at the local plant level. The organization needs to select the most appropriate improvement or business philosophy out these and completely imbibe the same across the entire supply chain. ‘Lean’ is emerging as the most holistic business philosophy which incorporates all these methodologies.
The Aspects of Manufacturing Excellence
A comprehensive manufacturing excellence (ME) program has to ensure that the performance of all the five elements is improved to deliver a right quality product at the least conversion cost with the highest productivity and safety, with optimum inventory, at the right time. A manufacturing excellence program has to address the following basic aspects:
➢ Improving Asset Adequacy and Availability
Adequacy of asset means the bottleneck stage of manufacturing has enough capacity to meet the demand hence must be fed with orders which improve throughput. The concept of Theory of Constraints (TOC) has to be leveraged to make this happen. The bottleneck has to be fully exploited by focusing on Overall Equipment Effectiveness (OEE) improvement using TPM, Lean and Six-Sigma tools. Non-bottleneck stages of manufacturing have to be adequately available by rigorous implementation of Total Productive Maintenance (TPM). In some process and chemical plants utilities play a major role in deciding capacity which is often a function of product mix. Thus, implementing TPM in utilities to improve quality, availability and adequacy of utilities has to be part of any ME initiative.
When we think of assets in a traditional manner, we typically focus only on manufacturing assets. But often, in industries like pharma where large numbers of analytical testing happen for raw materials (RM), packaging materials (PM), finished goods (FG) and work-in-progress, Quality Control (QC) labs are important assets. QC labs have varied equipment for testing – which can become bottlenecks. Hence QC labs have also to be part of the ME program.
Another area to build excellence is building smart assets and IoT (Internet-of-Things) based asset management. The ability to build a connected plant where machines can communicate with one another, predict failures and measure their own performance is important for asset management.
➢ Improving Capability, Flexibility and Value of Manufacturing Processes
A plant uses many processes like capacity management, production planning and scheduling, asset maintenance and quality management which support the core production process. Improving the capability of these processes to reduce variations, defects, rework and delays has to be the objectives of cross-functional and functional projects, led by senior and middle level managers. Methodologies like DMAIC and SPC (Six-Sigma tools) need to be used for process improvement. Flexibility of support processes in terms of quick response time and shorter lead times are critical for plant flexibility. A process becomes valuable when it has minimal non-value adding activities and meets customer expectations in terms of time and quality. Manufacturing processes often have a lot of wastes which increase the lead time. Usage of tools like VSM (Value Stream Mapping) and 7 Wastes (Lean tools) are very effective in identifying wastes and designing improved processes.
➢ Workplace Organization
The workplace is like ether which fills all the space in a plant. Workplace care commences whilst designing the plant layout. Indian manufacturing has largely grown through brown field plants. Most of the old plants have poor layouts leading to problems like unwanted material handling, inadequate machine working area, poor illumination and ventilation and safety problems. Ensuring high quality workplace upkeep, hygiene and safety is quite a challenge. This is coupled with the insensitivity of some nationalities towards orderliness and discipline. In such regions a 20-year-old plant may look like a 50-year-old plant while a similar aged plant in (say) Thailand may look 10 years old. The inability of managers and workers to organize the workplace is the biggest challenge to any ME program in India. Thus, a robust 5S program coupled with strong intolerance towards “abnormalities” is the foundation of any ME initiative. It has to go hand in hand with initiatives like autonomous maintenance (AM). Making AM and 5S as part of the job description of all
shop floor workers, across skill levels, is critical to bring about a much-needed mind-set change.
➢ People Capability & Total Employee Involvement
The involvement of workers at the grass roots level is the foundation of any improvement initiative. A robust mass awareness and communication program is required to make the workers aware of the business challenges and the new improvement initiatives. It enables leaders to connect with employees and enables employees to see how their role needs to change with the changing context. Programs like 5S, Kaizen, Suggestion Schemes, Quality Circles, etc. have to be effectively used to achieve shop floor improvement objectives which get cascaded from the organizational thrust areas. Today, many customers want full visibility and access to the shop floor. The experienced customer or auditor of an international regulatory body assesses the work culture (during shop-floor visits) by interacting directly with supervisors and workmen. Little can remain hidden. Thus, we have to move from employee involvement to employee engagement. Creation of empowered cross functional Area Effectiveness Teams in each section (right from entry gate to scrap yard and ETP) is needed to improve workplace organization and employee engagement.
Upgrading skills is a continual process as manufacturing technology is ever-changing. Knowledge of basic 7 QC tools, Why-Why analysis, etc. are no longer ‘new’ skills. These are now basic skills to remain gainfully employed in todays manufacturing world. Most of the front-line staff lack adequate supervisory skills which hampers their effectiveness in daily management of their teams.
Plant managers need to build capabilities to understand the latest applicable manufacturing technology, and they have to be literate in IoT and digital technologies. Sadly, todays average Indian manufacturing manager is quite inadequate even in Excel skills! They need to practice high-level problem-solving skills using statistical analysis to solve complex problems, process reengineering skills and appreciate a supply chain view. Managing industrial relations is always important, more so in a situation where the workforce is going to shrink with the use of automation and robotics.
Each company has to design its own unique program aimed at building competitive advantage through manufacturing. A large multi-plant manufacturing organization has to develop the following core abilities under the umbrella of Manufacturing Excellence. These abilities have to become part of the company’s ‘manufacturing DNA’:
Manufacturing Excellence is a long-term commitment and a core competency for manufacturing leaders. To attain world class and competitive manufacturing, an organization needs to cultivate a culture of Manufacturing Excellence across the majority of its plants. This task is quite daunting and would call for much more collaboration among manufacturing companies facilitated by industry and trade associations. Some kind of mandating and incentivizing from respective Governments would help accelerate such efforts. For many corporations in developing countries, we are already late and there is much to catch up on, in search of manufacturing excellence.