Global competition has caused fundamental changes in the competitive environment of manufacturing industries. Firms must develop strategic objectives which, upon achievement, result in a competitive advantage in the market place. However, for almost all manufacturing industries, an increased productivity and better overall efficiency of the production line are the most important goals. Most industries would like to find the formula for the ultimate productivity improvement strategy. Industries often suffer from the lack of a systematic and consistent methodology. In particular the manufacturing world has faced many changes throughout the years and as a result, the manufacturing industry is constantly evolving in order to stay ahead of competition . Innovation is a necessary process for the continuous changes in order to contribute to the economic growth in the manufacturing industry, especially to compete in the global market. In addition to innovation as a mode for continued growth and change, there are many other vehicles for growth in the manufacturing industry , . One in particular that has been gaining momentum is the idea of World Class Manufacturing (WCM) developed by Richard J. Schonberger (in the 80s) who collected several cases, experiences and testimonies of companies that had embarked on the path of continuous “Kaizen” improvement for excellence in production, trying to give a systematic conception to the various practices and methodologies examined. Some of the benefits of integrating WCM include increased competitiveness, development of new and improved technology and innovation, increased flexibility, increased communication between management and production employees, and an increase in work quality and workforce empowerment. This work takes you to the journey of World Class Manufacturing System (WCMS) adopted by the most important automotive Company located in Italy, the Fiat Group Automobiles. World class can be defined as a tool used to search and allow a company to perform at a best-on-class level.
The aim of this work is to present establishments of the basic model of World Class Manufacturing (WCM) quality management for the production system in the automotive industry in order to make products of the highest quality eliminating losses in all the factory fields an improvement of work standards.
The chapter is organized as follows: Section 2 introduces World Class Manufacturing and illustrates literature review, mission and principles of WCM, Section 3 describes Tools for WCM with particular attention on their features and on Key Performance and Key Activities Indicators and Section 4 describes the research methodology through a real case study in the largest Italian automotive company. To conclude, results and conclusions are provided.
2. Literature review
Manufacturers in many industries face worldwide competitive pressures. These manufacturers must provide high-quality products with leading-edge performance capabilities to survive, much less prosper. The automotive industry is no exception. There is intense pressure to produce high-performance at minimum-costs . Companies attempting to adopt WCM have developed a statement of corporate philosophy or mission to which operating objectives are closely tied. A general perception is that when an organization is considered as world-class, it is also considered as the best in the world. But recently, many organizations claim that they are world-class manufacturers. Indeed we can define world class manufacturing as a different production processes and organizational strategies which all have flexibility as their primary concern . For example Womack et al.  defined a lead for quantifying world class. Instead Oliver et al.  observed that to qualify as world class, a plant had to demonstrate outstanding performance on both productivity and quality measures. Summing up we can state that the term World-Class Manufacturing (WCM) means the pursuance of best practices in manufacturing. On the other hand we would like to note that one of the most important definition is due to Schonberger. He coined the term “World Class Manufacturing” to cover the many techniques and technologies designed to enable a company to match its best competitors .
When Schonberger first introduced the concept of “World Class Manufacturing”, the term was seen to embrace the techniques and factors as listed in Figure 1. The substantial increase in techniques can be related in part to the growing influence of the manufacturing philosophies and economic success of Japanese manufacturers from the 1960s onwards. What is particularly interesting from a review of the literature is that while there is a degree of overlap in some of the techniques, it is clear that relative to the elements that were seen as constituting WCM in 1986, the term has evolved considerably.
These techniques have been known for a long time, but with Schonberger, a perfectly integrated and flexible system was obtained, capable of achieving company competitiveness with products of high quality. The WCM model by Schonberger is illustrated here above in Figure 2.
According to Fiat Group Automobiles, “World Class Manufacturing (WCM)” is: a structured and integrated production system that encompasses all the processes of the plant, the security environment, from maintenance to logistics and quality. The goal is to continuously improve production performance, seeking a progressive elimination of waste, in order to ensure product quality and maximum flexibility in responding to customer requests, through the involvement and motivation of the people working in the establishment.
The WCM program has been made by Prof. Hajime Yamashina from 2005 at the Fiat Group Automobiles. The program is shown here below in Figure 3.
Fiat Group Automobiles has customized the WCM approach to their needs with Prof. Hajime Yamashina from Kyoto University (he is also member of the Royal Swedish Academy and in particular he is RSA Member of Engineering Sciences), by redesigning and implementing the model through two lines of action: 10 technical pillars; 10 managerial pillars.
The definition proposed by Yamashina includes a manufacturing company that excels in applied research, production engineering, improvement capability and detailed shop floor knowledge, and integrates those components into a combined system. In fact, according to Hajime Yamashina the most important thing continues to be the ability to change and quickly . WCM is developed in 7 steps for each pillar and the steps are identified in three phases: reactive, preventive and proactive. In figure 4 an example of a typical correlation between steps and phases is shown, but this correlation could change for each different technical pillar; in fact each pillar could have a different relation to these phases. The approach of WCM needs to start from a “model area” and then extend to the entire company. WCM “attacks” the manufacturing area. WCM is based on a system of audits that give a score that allows to get to the highest level. The highest level is represented by “the world class level”.
2.1. Mission and principles
The process to achieve “World Class Manufacturing” (WCM) has a number of philosophies and elements that are common for all companies. Therefore, when applied to the manufacturing field, TQM and WCM are synonymous. We would like to observe that customer needs and expectations is a very important element in WCM. The manufacturing strategy should be geared to support these needs. These could be dealing with certification, market share, company growth, profitability or other global targets. The outcomes should be defined so that they are measurable and have a definite timetable. These are also a means of defining employee responsibilities and making them feel involved. Employee education and training is an essential element in a World Class Manufacturing Company. They must understand the company's vision and mission and consequential priorities. As introduced in World Class Manufacturing, well known disciplines such as: Total Quality Control; Total Productive Maintenance; Total Industrial Engineering; Just In Time and Lean Manufacturing are taken into account. Thus, World Class Manufacturing is based on a few fundamental principles:
the involvement of people is the key to change;
it is not just a project, but a new way of working,
accident prevention is a non-derogated “value”;
the customer's voice should reach all departments and offices;
all leaders must demand respect for the standards set;
methods should be applied with consistency and rigor;
all forms of MUDA waste are not tolerable;
all faults must be made visible;
eliminate the cause and not treat the effect.
2.2. Pillars: Description and features
WCM foresees 10 technical pillars and 10 managerial pillars. The levels of accomplishment in technical fields are indirectly affected by the level of accomplishment in administrative fields. The pillar structure represents the “Temple of WCM” (Figure 5) and points out that, to achieve the standard of excellence, a parallel development of all the pillars is necessary. Each pillar focuses on a specific area of the production system using appropriate tools to achieve excellence global.
Here below in Table 1 features for each technical pillars are illustrated.
As regards the ten Managerial Pillars there are: 1) Management Commitment; 2) Clarity of Objectives; 3) Route map to WCM; 4) Allocation of Highly Qualified People to Model Areas; 5) Organization Commitment; 6) Competence of Organization towards Improvement; 7) Time and Budget; 8)Detail Level; 9) Expansion Level and 10) Motivation of Operators
3. The main tools for World Class Manufacturing: Features and description
WCM requires all decisions to be made based on objective measured data and its analysis. Therefore, all the traditional data analysis tools such as scatter diagrams, histograms and checklists are used. Thus, from literature survey it is inferred that it is not possible to use the specific single tool to achieve world-class performance and address all the manufacturing components. It is inferred that to address all the components of the manufacturing system the following tools are necessary (see Table 2):
3.1. Key Performance Indices and Key Activity Indicators
In World Class Manufacturing the focus is on continuous improvement. As organizations adopt world class manufacturing, they need new methods of performance measurement to check their continuous improvement. Traditional performance measurement systems are not valid for the measurement of world class manufacturing practices as they are based on outdated traditional cost management systems, lagging metrics, not related to corporate strategy, inflexible, expensive and contradict continuous improvement . To know the world class performance, measurement is important because “if you can’t measure it, you can’t manage it and thus you can’t improve upon it”.
Here below in Table 3 is shown a brief report on different indices and indicators defined by several authors in order to “measure” WCM.
|Indices/Indicators||Kodali et al. ||Wee and Quazi ||Digalwar and Metri ||Utzig |
|Broad management/Worker involvement||+|
|Engineering change notices||+|
|Green product/Process design||+||+|
|Innovation and Technology||+|
|Machine hours per part||+|
|Measurement and information management.||+|
|Top management commitment||+||+|
|Total involvement of employees||+|
However, some authors [15; 16] proposed only productivity as a measure of manufacturing performance. Kennerley and Neely  identified the need for a method that could be used for the development of measures able to span diverse industry groups. From this point of view we would like to note that it is necessary to develop a more systematic approach in order to improve a project and process. In particular, in WCM we can use two types of indicators: Key Performance Indicator (KPI) and Key Activity Indicator (KAI). KPI represents a result of project improvement, e.g. sales, profit, labor productivity, equipment performance rate, product quality rate, Mean Time to Failure (MTBF) and Mean Time to Repair (MTTR) [18, 19]. KAI represents a process to achieve a purpose of project improvement, e.g. a total number of training cycles for employees who tackle performance improvement projects, a total number of employees who pass a public certification examination and an accumulative number of Kaizen cases . A KAI & KPI overview applied step by step is seen in Figure 6.
4. Industrial case study
The aim of this work is to present establishments of the basic model of World Class Manufacturing (WCM) quality management for the production system at Fiat Group Automobiles in order to make products of the highest quality eliminating losses in all the factory fields an improvement of work standards. In fact, World Class Manufacturing is a manufacturing system defined by 6 International companies including Fiat Group Automobiles with the intent to raise their performances and standards to World Class level with the cooperation of leading European and Japanese experts and this includes all the plant processes including quality, maintenance, cost management and logistics etc. from a universal point of view. Thus, automotive manufacturing requires the ability to manage the product and its associated information across the entire fabricator. Systems must extend beyond their traditional role of product tracking to actively manage the product and its processing. This requires coordinating the information flow between process equipment and higher level systems, supporting both manual and automatic interfaces. A case study methodology was used to collect detailed information on division and plant strategic objectives, performance measurement systems, and performance measurement system linkages. The result of this research was to develop principles on strategic objectives, performance measurement systems and performance measurement system linkages for improved organizational coordination. The purpose of this study is to examine the relationship between division and plant performance measurement systems designed to support the firm’s strategic objectives and to improve organizational coordination. We will focus our attention on the Cost Deployment Pillar, Autonomous Activities/Workplace Organization Pillar and Logistics/Customers Service Pillar.
4.1. Company background
Fiat Group Automobiles is an automotive-focused industrial group engaged in designing, manufacturing and selling cars for the mass market under the Fiat, Lancia, Alfa Romeo, Fiat Professional and Abarth brands and luxury cars under the Ferrari and Maserati brands. It also operates in the components sector through Magneti Marelli, Teksid and Fiat Powertrain and in the production systems sector through Comau. Fiat operates in Europe, North and South America, and Asia. Its headquarters is in Turin, Italy and employs over 137,801 people . Its 2008 revenues were almost € 59 billion, 3.4% of which were invested in R&D. Fiat’s Research Center (CRF) can be appropriately defined as the “innovation engine” of the Fiat Group, as it is responsible for the applied research and technology development activities of all its controlled companies . The group Fiat has a diversified business portfolio, which shields it against demand fluctuations in certain product categories and also enables it to benefit from opportunities available in various divisions.
4.2. Statement of the problem and methodology
The aim of the project is to increase the flexibility and productivity in an ETU (Elementary Technology Unit) of Mechanical Subgroups in a part of the FGA’s assembling process in the Cassino Plant through the conventional Plan-Do-Check-Act approach using the WCM methodology:
- PLAN - Costs Analysis and Losses Analysis starting from Cost Deployment (CD) for the manufacturing process using the items and tools of Workplace Organization (WO) and for the handling process the Logistic and Customer Services (LOG) applications.
DO - Analysis of the non-value-added Activities; analysis of re-balancing line and analysis of re-balancing of work activities in accordance with the analysis of the logistics flows using the material matrix and the flows matrix. Study and realization of prototypes to improve workstation ergonomics and to ensure minimum material handling; Application of countermeasures found in the production process and logistics (handling).
- CHECK – Analysis of results in order to verify productivity improvement, ergonomic improvement (WO) and the optimization of the internal handling (in the plant) and external logistics flows (LOG). Check of the losses reduction according to Cost Deployment (CD).
- ACT - Extension of the methodology and other cases.
Here below is a description of the Statement of the Problem and methodology.
4.2.1. PLAN: Costs analysis and losses analysis (CD) for the manufacturing process (WO) and for the handling process (LOG)
In this first part (PLAN) were analyzed the losses in the assembly process area so as to organize the activities to reduce the losses identified in the second part of the analysis (DO). Object of the study was the Mechanical Subgroups ETU - Elementary Technology Unit (in a part of the Cassino Plant Assembly Shop). The aim of this analysis was to identify a program allowing to generate savings policies based on Cost Deployment:
Identify relationships between cost factors, processes generating costs and various types of waste and losses;
Find relationships between waste and losses and their reductions.
In fact, in general a production system is characterized by several waste and losses (MUDA), such as:
Low balancing levels;
Delay in material procurement;
It is important to give a measure of all the losses identified in process examination. The data collection is therefore the “key element” for the development of activities of Cost Deployment. Here below in Figure 7 an example of losses identified from CD from the Assembly Shop is shown and in Figure 8 is shown an example of CD data collection regarding NVAA (Non-Value-Added Activities) for WO (for this case study we excluded check and rework losses) in the Mechanical Subgroups area. Finally Figure 9 shows Analysis of losses Cost Deployment.
4.2.2. DO - Analysis of non-value-added activities, of the re-balancing line and analysis of re-balancing of work activities
According to figure 9 and figure 10 were analyzed the losses regarding NVAA and Insaturation. In fact were analyzed all 4 critical workstations (because they have the worst losses) and were identified 41 types of non-value-added activities (walking, waiting, turning, picking....) in the various sub-phases of the production process. In Table 4 is shown some examples of non-value-added activities analyzed (MUDA Analysis).
Some examples of standard tools used to analyze NVAA reduction (MUDA Analysis) for the 4 workstations are shown here below in Figures 10, 11 and 12) job stratification (VAA - Value Added Activities; NVAA – Non-Value-Added Activities; LBL - Low Balancing Level; EAWS - European Assembly Work Sheet – Ergonomy); 2) Spaghetti Chart and 3) Kaizen Standard.
Figure 13 shows the initial scenario analyzed to identify problems and weaknesses.
At this point was assumed the new flow of the complete damper (corner) = damper + complete hub sequencing according to the material matrix considering losses relating to handling (material matrix classification – see figure 14). The material matrix classifies the commodities (number of drawings) in three main groups: A (bulky, multi-variations, expensive), B (normal) and C (small parts) and subgroups (a mixture of group A: bulky and multi-variations or bulky and expensive etc.). For each of these groups was filled out the flow matrix that defines the correct flow associated: JIS (and different levels), JIT (and different levels) and indirect (and different levels). After identifying the correct flow, in the JIS case, was built a prototype of the box (bin) to feed the line that would ensure the right number of parts to optimize logistic handling. However, the new box (bin) for this new mechanical subgroup must feed the line in a comfortable and ergonomic manner for the worker in the workstation, for this reason was simulated the solution before the realization of the box (bin) (see figure 15).
At the end of the Muda analysis (NVAA analysis) were applied all the solutions found to have a lean process (the internal target is to achieve 25% of average NVAA losses) and was reorganized the line through a new line balancing level (rebalancing) to achieve 5% of the average line balancing losses (internal target). Another important aspect was the logistics flows analysis (see figure 16) considering advanced warehouses (Figure 17). The simulation scenario was defined using trucks from the Cassino plant warehouses that also feed other commodities to achieve high levels of saturation to minimize handling losses.
At the end of the handling analysis (flow, stock level…) thanks to this new “lean” organization of material matrix was used the correct line feed from the Just In Sequence warehouse. It was reduced the internal warehouse (stock level), the space used for sequencing (square metres), the indirect manpower used to feed the sequencing area and we obtained zero forklifts on the shopfloor because we used the ro-ro (roll in - roll out) system. Figure 18 shows the final scenario in which we have 1 operator instead of 4 operators.
4.2.3. Check – Analysis of results to verify productivity and ergonomic improvement and optimization of logistics flows
In detail the main results and savings can be summarized as follows:
4.2.4. Act - Extension of the methodology and other cases
Future developments include the extension of the methodology to the entire plant. Here below in Table 5 we can see the activities and status adopted. to achieve the results shown in the “check”. We used traditional tools and methodology for the analysis and new tools to simulate the sceneries on the line and for the logistic problems we involved other resources outside the plant (ELASIS and CRF - FIAT Research Center, Fiat Central Department and Public Universities).
A key industrial policy conclusion is that intelligently designed selective policies can be effective in developing production systems. Intelligent industrial policies need to be shaped to respond to contingent factors which are specific to a sector, period and country. Fundamentally, it is not a question of whether these selective policies work, but under what circumstances they work.
From this point of view, World Class Manufacturing is a “key” concept. This is the reason why the concept constituting “World Class Manufacturing” has received considerable attention in academic literature, even though it has been developed principally in relation to the needs of larger scale manufacturing organisations. Regards our case study we can conclude that WCM allows to reduce losses and optimize logistics flows. Thus, the main results can be summarized as follows:
greater efficiency because the inner product is cheaper because it is possible to use external warehouses or suppliers - outsourcing - specialized and more cost-effective for the company;
greater flexibility because it is possible to work more models (in Cassino with these logical sequencing and kitting there are 4 different model brands on the same assembly line: Alfa Romeo Giulietta, Chrysler, Lancia Delta and Fiat Bravo;
no space constraint (in this example we get only 1 container already sequenced line side)
Definitely the new process and the internal flows are very lean and efficient. In this case study it was implemented a servo system using Low Cost Automation. This system ensures only one picking point in order to have only one container at the side of the production line.