The research register for this journal is available at http://www.mcbup.com/research_registers/quality.

asp

The current issue and full text archive of this journal is available at http://www.emerald-library.com

IJQRM 17,2

Challenge to world-class manufacturing

Kyoto University, Kyoto, Japan
Keywords World-class manufacturing, Total productive maintenance, TQM, Just-in-time Abstract Deals with the basic requirements for world-class manufacturing and discusses the role of total productive maintenance (TPM) in helping to achieve world-class manufacturing. Examines the roles of TPM in TQM and JIT. Finally, impacts of TPM on the culture and structure of the organization are discussed and pitfalls of TPM implementation are dealt with. Provides an in-depth look at the development of Japanese manufacturing strategy and concludes with the view that the first step to world-class manufacturing is to implement TPM successfully and to create an active organization.

H. Yamashina

132

Introduction It is Japanese policy to create prosperity through industrialization and there is little doubt that the development of the Japanese economy has been well supported by the growth of manufacturing industry. In Japan it is firmly believed that the prosperity of a nation depends on the excellence of its production capability and that those who conquer manufacturing will eventually conquer technical innovation. It has been the Japanese commitment to continuous technical innovation in manufacturing industry that has allowed it to become a leading economic power. Currently, however, Japanese manufacturing companies are facing very tough competition primarily due to the appreciation of the yen and the dramatic improvements in competitiveness from both the advanced countries and the rapidly growing still-developing countries. The objective of this paper is to provide an insight into the strategies currently being adopted by Japanese manufacturers in an effort to meet the challenge of obtaining world-class manufacturing status to cope with these very serious issues. First, the basic understanding for competitive manufacturing from the viewpoints of organization and human resources are discussed. Second, the strategies used by Japan in the past are considered, combined with a discussion of the strategies being implemented by Japanese manufacturing firms to help maintain and strengthen Japan's competitive edge toward world-class manufacturing. Third, the role of total productive maintenance (TPM) to help reach world-class manufacturing is discussed and the roles of TPM in TQM and JIT are examined. Finally, impacts of TPM on the culture and structure of the organization are discussed and pitfalls of TPM implementation are dealt with. Organization and human resources Product technology and process technology One way of looking at the continuing evolution of the Japanese approach is indeed to consider the techniques that have been adopted in the West just-in-time

International Journal of Quality & Reliability Management, Vol. 17 No. 2, 2000, pp. 132-143. # MCB University Press, 0265-671X

production, total quality management, statistical process control, total productive maintenance, etc. They are certainly important, and Japanese firms are continuing to refine and perfect them. But confining the study to the mechanics of production risks discounts the importance of more subtle, longterm factors of organization and human resources in the pattern. In this light, it is more useful to think of the future of competitive manufacturing as humanintegrated manufacturing (Yamashina, 1994). To understand what this means, it is necessary to step back and look at the wider manufacturing picture. Unlike firms in the West, the Japanese have always believed that products and the processes by which they are made are two sides of the same coin. Process technology is as important as product technology. The two go together. In the same way, they also believe that creative development goes together with, and is as important as, creativity in invention. Table I shows five examples of important consumer products which were developed by Japanese firms after having been originated in the West. Far from more ``copycatting'', as some Western businessmen like to think, Japanese companies consider these as textbook examples of commercial creativity. It is true that, since World War II, Japan has been able to license or buy patents of attractive products from the West. This is especially the case for consumer goods. For that reason, in the pursuit of competitive manufacturing, its companies have been able to focus more attention and channel more resources into production techniques than their Western counterparts. Japan has made a concerted effort to strengthen its manufacturing capability over the last three decades. Over the last 30 years manufacturing techniques sections, departments, centers, headquarters and R&D have been added to organizational structures to support manufacturing capability through improvements in manufacturing technique. Japanese companies actively employ engineers. Japanese Ministry of Education figures from 1990 show that Japanese staff with science degrees totaled 14,217 (1990) compared with 68,520 in the USA (1988). Even after adjusting for the difference in population (the USA is about double Japan's population) science graduates are far more common in the USA. In the UK the number of science graduates was 21,900 in 1988 the UK's population is half that of the Japanese but still the UK has more science graduates. This, however, is in stark contrast to the situation in engineering 86,115 in Japan versus 15,200 in the UK. Even in the USA the number of engineering graduates still totaled only 126,341.
Item Transistor radio VCR TV Rotary engine CD Originator Regency Ampex RCA Vanchel Philips Developer Sony Sony, Victor Matsushita Mazda Sony

World-class manufacturing

133

Table I. Invention and development

IJQRM 17,2

A closer look at the production process To be able to manufacture attractive products at attractive prices, companies need not only plant and equipment but also different types of production staff. Competitive Japanese firms identify the key categories as : . basic research engineers;
. . . . .

134

applied research engineers; product development and design engineers; production design engineers; process improvement engineers; and operators.

Japanese companies generally concede that in basic research they are inferior to the West. In applied research and product development, honors are about even. In preproduction and process improvement, however i.e. on the factory floor the advantage shifts decisively to Japan (see Figure 1). In particular, Japanese engineering skills have been applied more consistently and intensively than in the West to the three crucial areas of quality management, value added per employee and the shortening of lead times. These policies are reflected in company organization. Comparing companies of similar size and business area in Japan and the West, the Japanese firm uses more engineers in applied research, product development and design and process improvement and far fewer operators in daily work. It is not just that there are more engineers in the ``applied'' areas; in each category the level of knowledge required is higher than in the West. The inevitable conclusion is that, as a total production resource, the Japanese company is much stronger than its Western counterpart.
Traditional
Level of knowledge

(e) (a) (b) (c) (d)

Key categories (a) Basic research (b) Applied research (c) Product development and design (d) Process Engineer (pre-production) (e) Process Engineer (improvement) (f) Operator
(f) Number of people

(a) Level of knowledge

Figure 1. Six categories of production staff

(b)

(c)

(d)

(e)

(f) Number of people

World Class

Japanese manufacturing strategy Four periods of Japanese manufacturing strategy From 1945 to 1996, four periods of Japanese manufacturing strategy emerged. The first period from 1945 to 1974 was the ``product out'' phase, when demand exceeded supply and Japan focused on increased production volume. The measurement of various factors such as output per hour, lost time due to machine breakdowns and defect rates, was undertaken to ensure that competitiveness in manufacturing and improvements to production capability were made. In 1973/74 the first oil crisis struck, and markets for consumer goods like washing machines, refrigerators and vacuum cleaners started to show saturation. After all, all the markets eventually become saturated! The second period began and was known as the ``market-in'' phase. Japanese manufacturing companies needed new strategies to cope with the fall in demand, and diversification theory emerged. Diversification theory encompassed the idea that if a certain product can sell a given volume, then if the good is differentiated produced with many variations to fit every different kind of market need there is an opportunity of an increase in demand. If people were all the same we would not need to make so many kinds of printers; but people are different. Based on this principle many companies started to produce goods with many variations, and firms began to develop an appreciation of customer needs and satisfaction levels. Diversification undeniably increases sales; it also carries costs. It requires more work in design. In addition, if production cannot cope with changing market requirements quickly enough, it can lead to waste as a result of mismatches between production and sales overproduction and inventory pile-ups of products in low demand, together with inability to supply products in high demand. In short, it is vital for the manufacturing company to provide customers with the right products at the right time at the right price in other words to implement just-in-time manufacturing. Increasing emphasis was placed on shortening the time between manufacture and distribution in order to create productivity improvements. This whole process was exacerbated by the improvements in information technology. The production-led years gave way to a marketing-led period. As a result, additional performance measurement techniques were introduced such as the number of claims from the customers the thinking was that if the customer was not happy with what they bought then they would not buy it again. Other measures included the direct going rate, manufacturing lead times, delivery lead time, set-up times and stock turns. Japan had been quite successful in supplying and creating market needs up to 1988 primarily due to strategies based on the theory of diversification. But there was a limit to this idea. The Japanese manufacturing philosophy, based on the concept of mass production of better products at lower prices in large volume, had come to saturation. During the ``market-in'' period, high level industrialization, strong competition and the maturity of particular markets resulted in a ``squeezing'' of the product life cycle and in 1988 a new period

World-class manufacturing

135

IJQRM 17,2

136

emerged known as the ``constantly launching new products'' period. It became an imperative for Japanese firms to secure profits earlier than their competitors. At the end of the decade, a variety of manufacturers responded to growing competition by launching a barrage of new products with even shorter lifecycles. Companies could launch new products using the media as a tool for the rapid and comprehensive transmission of their product information to the customer base, significantly assisting in the maintenance of old and the creation of new markets. In time, however, markets decline, so it becomes critical that the whole process from design, to manufacture, to distribution is shortened. The growth of information technology made productivity improvements a domestic necessity. To improve the process of launching and designing new products, measurement of product development lead times was introduced. For example, data taken from 1 April 1991 up to 31 March 1992 show that 89 of the 211 television models available during the year underwent model changes this translates into a life cycle shorter than one year (MITI, 1992). The lifetime of the products became shorter and shorter. To align production methods to the changing face of industry, changes in resource allocations were needed. In the 1960s most people were engaged in either direct manufacturing or production areas, with only a handful engaged in the research/system development areas. In the 1970s change was occurring; fewer people were in manufacturing and distribution and by the 1990s very few people, around 25 percent, were engaged in direct manufacturing and distribution (see Figure 2). This is reflected in the change in organizational structure of Japanese firms, dedicating more and more people to research/ system development areas or product/business development areas of the company (see Figure 3). At an organization like Toshiba, the number of employees has remained fairly static since the 1970s, but engineers involved in the indirect division have risen from 39 percent to 69 percent. This means that the company structure has changed from a business where technology is quite stable to one where the speed of technical innovation is fast that is from a labor-intensive industry of assembly to a technology-intensive industry of development and application of electronic engineering. This shift is in line with the changing pattern of consumer goods. The first generation was mass production. The second generation was the production of many variations to meet diversified needs, with higher quality than is possible through mass production. The third generation is a separate model for every customer in other words, mass customization. Industry needs to be ready to meet these market changes with competitive manufacturing capability. But, in 1991/92, manufacturing companies faced major fluctuations in demand, both in content and quantity, and the market no longer had enough capacity to absorb all the new incoming products. To make matters worse, intense competition from both developed countries and the newly industrialized economies started to seriously challenge Japanese manufacturing. This was

World-class manufacturing

137

1960s

1970s

1980s

1990s

Key Research/system development Product/business development Sales/management Manufacture/distribution Source: Nomura Research Institute (1990)

Figure 2. Change of human resource allocation regarding periods of creativity

exacerbated by the strength of the yen because the stronger yen translated into higher cost. Japanese manufacturing firms were forced to refocus on cost reduction. Intensified economic friction with America, Europe and Asia required an increased focus on international co-operation. After 1991, the fourth period emerged and was entitled the ``period of launching prospective profit-making products and manufacturing profitmaking products''. This phase also developed in response to various new market trends that emerged during the 1990s. One such change was the need for Japanese manufacturers to face the increasing problems related to the protection of the ecological environment and the disposal of industrial waste, by developing resource-saving factories producing less waste and little or no pollutants. Moreover, Japanese firms recognized the need to match market demand by manufacturing products which were energy saving, produced no pollutants and were recyclable at the time of disposal. Vision 2000 During the period of launching prospective profit-making products and manufacturing profit-making products, Japan has learned very important lessons on the necessary conditions for prosperity. They are: (1) the need to have growing products in line with market needs and in accordance with megatrends;

IJQRM 17,2

Productivity improvement by creativity Maturity of industrialization

Productivity improvement by rationalization of processes

138

Development of information oriented society

Productivity Improvement by logistics

R&D

Product development

System development

Business development

Period of creativity

Productivity improvement by concept development of technology, products, systems and business

Manufacture

Distribution

Sales

Management

Figure 3. Production improvement by industrialization: information and creativity

Product improvement by industrialization Source: Nomura Research Institute (1990)

Product improvement by information

(2) (3) (4) (5) (6) (7) (8) (9) (10)

very active R&D; needs-orientated product development; development of original and creative product techniques; further improvement of manufacturing techniques; very active organizations; progressive development of new businesses; extensive utilization of information technology; extensive use of cost management; and clear and easy management policy able to be implemented from the shopfloor to senior management.

It was time to reassess the manufacturing philosophy. After 1996/97, the fifth period emerged and was entitled the ``constantly launching many new distinctive products period''. This phase developed in response to the lessons Japan learned. All the signs are that this trend many new distinctive products with shorter and shorter product development time will spread. Table II shows the Japanese strategies toward the twenty-first century to respond to various new social and market trends that emerged during the 1990s, to combat the appreciation of the yen and to prepare for entering upon the twenty-first century.

The basic requirements for world-class manufacturing The basic role of TPM in world-class manufacturing As has been discussed above, market demand is highly variable in the current mature economic climate. From the manufacturing viewpoint, this climate generates three unfavorable conditions: diversified demand, greater difficulty of forecasting demand, and shorter product life cycles. Thus, the competitive power of the manufacturing company increasingly depends on the speeds of obtaining market information, and of creating advanced production engineering to develop new attractive products and to establish an appropriate production process, the production lead times and the speed of distribution. Particularly in manufacturing, this requires quality management, competitive pricing and product variety flexibility with short and accurate delivery. These pressures demand excellent maintenance practice in such a way that machines and processes are available whenever needed and produce wanted products with a required quality level. Good maintenance practices are essential to produce world-class manufacturers. These are the basic role of TPM. TPM in TQM and JIT In Japan it is said that in order to be strong enough in manufacturing one has to have good brains which require total quality management (TQM), but one also needs to have strong muscles or, in other words, strong manufacturing capability which requires total productive maintenance (TPM). Moreover, one has to have a good nervous system to connect the brains with the muscles, which means just-in-time production. So, in manufacturing, one needs to have TQM, JIT and TPM. TPM focuses more on hardware, and TQM more on software. From the conceptual viewpoint, TPM is a part of TQM. For JIT, it cannot be implemented without TPM. Thus, TPM is a base of JIT. The basic requirements for world-class manufacturing Manufacturing industries can only maintain international competitiveness by repeating the cycle of developing new technology, making continuous technical innovations and creating new markets. Think of production as an iceberg as shown in Figure 4. The innovative, diversified products which consumers see in the shops are the visible tip. Below the waterline is the necessary infrastructure of, in descending order, applied research, production technology and, right at the bottom, the bases on which
Development and design Knowledge-intensive products High-value-added products High-quality engineering products Production Autonomy Clean factory Resource-saving factory Usage Long durability Easy to dismantle Recyclable Renewal/disposal Modularity Easy to dismantle Recyclable

World-class manufacturing

139

Table II. Japanese strategies towards the twentyfirst century

IJQRM 17,2

New innovative products

1. Applied research

140

2. Production technology 3. Improvement capability 4. Detailed floor-level know-how

Figure 4. Functions to support new innovative product development

Importance of (1),(2),(3) and (4) to support new innovative product development

everything else floats, improvement capability and detailed shopfloor production know-how. Unless such infrastructure exists, new and attractive products that are produced quickly and efficiently will not result. Thus, what a world-class manufacturing company means is that it is strong enough in each of these four areas compared with its world competitors and that they also integrate these areas so that they can successfully launch many new distinctive products. In other words, the basic requirements for world-class manufacturing are: (1) to be outstanding in applied research, production engineering, improvement capability and detailed shopfloor know-how involving good maintenance; and (2) to integrate them as a system. The new roles of TPM Figure 5 shows how TPM has been developed. This process has taken place in response to various manufacturing needs that emerged over the years. TPM is often understood as autonomous maintenance in the West. But, obviously, there is a limit to the benefits of autonomous maintenance and, far from mere autonomous maintenance, today's TPM aims to be integral to the infrastructure shown in Figure 4. Because of this, TPM is often referred to as ``total productive manufacturing'' or even ``total productive management''. The major reason for the current popularity of TPM is because the benefits of any activity become more visible and tangible as one goes to a lower level of the infrastructure shown in Figure 4. In total, 954 plants in Japan have received TPM awards as of 1 December 1998 (JIPM, 1998a). Many world-class manufacturers are reporting dramatic improvements in product quality, operating effectiveness, and profitability from TPM (for example, see JIPM-TPM, 1997; 1998b). The magnitude of the improvement is staggering: quality

Cost reduction Clean factory Unmanned operation Concurrent engineering TPM in the office Safety/hygiene and working environments Quality maintenance Development of early equipment management program Scheduled maintenance Education and training Autonomous Maintenance Improvement of equipment effectiveness 5S 1961

World-class manufacturing

141

1971

1981

1986

1991

Year

Figure 5. Activated TPM development

improvement up to 100 percent, breakdowns reduced by 99 percent and profit increases in the millions. Few other programs provide such opportunities. Today's TQM aims, in the process of developing new products, to integrate the four areas of the infrastructure shown in Figure 4, giving more priority to the areas of upper level. Impacts of TPM on the culture and structure of the organization Very active organization To become a world-class manufacturer, the organization itself must be active. From the viewpoint of competence, any organization can be divided into the following five levels: Level 1. People deny that there are problems or don't want to see them. Level 2. People admit that there are problems but find excuses for not being able to solve them. Level 3. People accept the fact that there are problems but are unable to solve them because they don't know how to attack them. Level 4. People want to see potential problems and for this try to visualize them. They will attack them by learning proper methods. Level 5. People know their problems, methods to solve them and how to involve all the people to attack them. They are ready to attack any problem and to change their organization if needed after solving the problem. By focusing on strengthening the last two improvement capabilities and detailed shopfloor production know-how (see Figure 4), TPM tries to raise the level of organization from a lower level to a higher level, hopefully to the fifth level. To make this movement possible requires definite cultural changes of the organization. The top has to create an environment for accepting changes and making continuous improvement. Generally, the top can manage this by:

IJQRM 17,2

142

(1) obtaining competent leaders and managers; (2) investing in people through education and training; and (3) empowering and facilitating people under their supervision and constantly following up results and taking proper measures for support and freedom in terms of time, resources, etc. Structural changes of the organization If TPM has been successfully implemented, it will eventually create excess people. Thus, reallocation of people will be required. The author strongly believes that the structure of those companies which have successfully implemented TPM will gradually follow the pattern of worldclass organizations shown in Figure 1. Pitfalls of TPM implementation Those companies which try to implement TPM often face the following problems: (1) lack of long-term commitment of the top management; (2) how to relate TPM activities to cost reduction; (3) difficulty in obtaining a good and competent consultant; (4) how to get competent maintenance and quality managers because they are the key people to the success of the TPM journey; (5) shortage of process improvement engineers; (6) how to convince senior managers who are not interested in TPM, who do not believe in such a collective measure as TPM, who do not want to understand what TPM is all about, and who react politically against TPM; (7) resistance or indifference of managers and engineering staff as regards empowering the people of lower levels in the hierarchy; (8) how to convince workers, especially when they are unionized, because TPM eventually creates excess people; (9) risk of losing core people after giving extensive education and training; (10) risk of the leakage of confidential information via the consultant. To obtain substantially tangible and intangible benefits from TPM, these problems must carefully be tackled and resolved. Conclusion The first step to world-class manufacturing is to implement TPM successfully and to create a very active organization. When TPM has become a common practice in daily production, it can be said that the company has just commenced a journey to world-class manufacturing.

References JIPM-TPM (1997), Proceedings of the Japan Institute of Plant Maintenance Total Productive Maintenance Conference, Japan Institute of Plant Maintenance Total Productive Maintenance, June, Paris, France. JIPM (1998a), The List of TPM Excellence Awarded Companies as of 1998, December, Japan Institute of Plant Maintenance, Tokyo, Japan. JIPM-TPM (1998b), Proceedings of the Japan Institute of Plant Maintenance Total Productive Maintenance Conference, Japan Institute of Plant Maintenance Total Productive Maintenance, April, London, UK. MITI (1992), The Survey of Lifetime of Japanese TV Sets, April, Ministry of Internal Trade and Industry, Tokyo, Japan. Nomura Research Institute (1990), Strategy for Creativity, March, Tokyo, Japan. Yamashina, H. (1994), ``Human factors in AMT maintenance'', in Salverdy, G. and Karwowski, W. (Eds), Design of Work and Development of Personnel in Advanced Manufacturing, John Wiley & Sons, New York, NY, Ch. 30.

World-class manufacturing

143