Techniques To Improve Performance In Automotive Enterprises Commerce Essay

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Global competition has caused fundamental changes in the competitive environment of manufactures. Firms must develop strategic objectives which, upon achievement, result in a competitive advantage in the market place. However, for almost all manufacturing industry, an increased productivity and better overall efficiency of the production line are the most important goals. Most industries would like to find the recipe for the ultimate productivity improvement strategy. It often industry suffers from lack of a systematic and a consistent methodology. In particular the world of manufacturing has faced many changes throughout the years and as a result, the manufacturing industry is constantly evolving in order to stay current and ahead of the competition [1]. Innovation is a necessary process for continued change and economic growth for the manufacturing industry if it hopes 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 [2], [3]. 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 improvement "Kaizen" for excellence in production, trying to give a systematic conceptual 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, and how it is wrestling with the challenges faced to achieve the world class status across the globe. World class can be defined as a tool used to search for and allow a company to perform at a best-on-class level. It is useful to use the plant as the level of analysis because, although world-class manufacturing (WCM) is a strategic approach, many of its measurable improvements initiatives have occurred at the plant level.

The aim of the work is to present establishments of the basic model of the quality management World Class Manufacturing (WCM) for the system of production in the automotive industry. The car is one of the most advanced technologically products for common usage. It consists of over five thousands parts and each of them has its own projective, investigative, technological and productive process. The purpose of the realization of those processes is to achieve products of the highest quality. The quality of the work determinates the quality of cars and is the consequence of determined conditions of the work. The system World Class Manufacturing is based on the consequent eliminating of losses in all the fields of the factory through rigorous applying and improvement of work standards - operative cards. The purpose of WCM is to develop operations of the organizing system in the factory, just to achieve the world class level of competitiveness.

The chapter is organized as follows. Section 2 introduces World Class Manufacturing. This section illustrates literature review, mission and principles of WCM. Section 3 describes Tools for WCM with particular attention on theirs features and on Key Performance Indicators and Key Activities Indicators. Section 4 describes the research methodology through a real case study in the largest Italian automotive company. Finally results and conclusions are provided.

2. World Class Manufacturing: 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, minimum-cost [4].

Companies attempting to adopt WCM have developed a statement of corporate philosophy or mission to which operating objectives are closely tied. Hewlett-Packard emphasizes "customer satisfaction". Allen-Bradley, known for its state of the-art industrial control equipment, describes its objectives as "success factors". IBM's corporate philosophy centers on the concept of "customer service".

A general perception is that if an organization is considered as world-class, then it is considered as the best in the world. But in recent days, many organizations claim that they are world-class manufacturers. Hence, to understand this concept in a better way, a literature review was carried out.

World class manufacturing was described as a collective term for a number of production processes and organizational strategies which all have flexibility as their primary concern [5]. Womack et al. [6] stated a lead for quantifying world class while defining lean production, which uses less of everything - half the human effort in the factory, half the manufacturing space, half the investment in tools, half the engineering hours to develop a new product in half time. Oliver et al. [7] observed that to qualify as world class, a plant had to demonstrate outstanding performance on measures of both productivity and quality.

The term World-Class Manufacturing (WCM) means the pursuance of best practice in manufacturing. There is no universally recognized definition of WCM, several have been proposed depending on the nature of the firm.

Schonberger coined the term "World Class Manufacturing" to cover the many techniques and technologies designed to enable a company to match its best competitors. What is readily apparent from the literature is that the concepts were developed principally in relation to the needs of larger scale manufacturers [8].

Relatively little attention has been paid to the needs of the SME and there exists scope for framing the ideas implicit in WCM for the SME seeking to improve its competitive position. It is not sufficient, however, to attempt to apply techniques appropriate to large organisations to the operations of a small scale manufacturer. The techniques covered by WCM must be made recognisable and relevant to the SME if there is to be any possibility of them being adopted.

When Schonberger first introduced the concept of "World Class Manufacturing" into popular parlance, the term was seen to embrace the techniques and factors as listed in figure 1. However, techniques of competitive manufacturing were well established before 1986 and would include statistical process control as one of the early manifestations. 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. In recent years, it has expanded most notably to include simultaneous engineering, bench marking and increasing emphasis on issues relating to manufacturing strategy.

Clearly, the management of a company seeking world class status would appear to be faced with a far more complex task than was the case previously.

Figure 1. The growth of techniques associated with the concept of WCM

These techniques have been known for a long time, but with Schonberger, was obtained a perfectly integrated and flexible system, capable of achieving a competitive company with products of high quality. Here below in Figure 2 is shown WCM model by Schonberger.

Figure 2. WCM Model by Schonberger

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.

Here below in figure 3 is shown the WCM program at the Fiat Group Automobiles Prof. Hajime Yamashina from 2005.

Figure 3. The World Class Manufacturing

Fiat Group Automobiles has customized the WCM approach to their needs with Prof. Hajime Yamashina from Kyoto University (he is also member of Royal Swedish Academy and in particular he is RSA Member of Engineering Sciences), to redesign and implement 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 to do it quickly enough [9]. The WCM is developed in 7 steps for each pillar and the steps are identified in three phases: reactive, preventive and proactive. In the figure 4 is shown as example a typical correlation between steps and phases, but this correlation could change for each different technical pillar; in fact each pillar could have different relation of these phases. The approach of the WCM needs to start from a "model area" and then extended to the entire company. The WCM "attacks" the manufacturing area. The 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".

Figure 4. The World Class Manufacturing and steps

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. The company mission statement is the foundation stone to begin this process. This statement should be clear and understandable by all in the company. This should be taken as the guiding principle in on-going decision making at all levels of the company. Since this will govern the work attitude of all, all employees should be able to "buy-into" this statement, if not feel ownership towards it. Customer needs and expectations is another very important element in WCM. These needs may be real or perceived. These may be for current or target customers. The company's marketing department should be dedicated to bringing in this information as accurately as possible. The manufacturing strategy should be geared to support these needs Taking into account the company's mission, the customer needs and self assessment, realistic company goals can be set. These could be dealing with certification, market share, company growth, profitability or other such global targets. These goals then can be translated into individual departmental objectives. 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 bringing about their involvement. 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 was introduced the World Class Manufacturing takes into account already known disciplines such as: Total Quality Control; Total Productive Maintenance; Total Industrial Engineering; Just In Time and Lean Manufacturing. Thus, the 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 "value" non-derogable;

the customer's voice should reach in all departments and offices;

all leaders must demand respect for the standards set;

methods should be applied with consistency and rigor;

all forms of waste MUDA is 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, for the achieving the standard of excellence, it is necessary parallel development of all the pillars. Each pillar focuses on a specific area of the production system using appropriate tools to achieve excellence global.

Figure 5. Temple of WCM

Here below in Table 1 is reported features for each technical feature.

Table 1. Description of the pillars

As regard 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) Commitment of the Organization; 6) Competence of Organization towards Improvement; 7) Time and Budget; 8) Level of Detail; 9) Level of Expansion 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 has been 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 manufacturing system the following tools are necessary (see Table 2):

Table 2. Main Tools and description

3.1 Key Performance Indices and Key Activity indicators

In World Class Manufacturing the focus is on continuous improvement. Performance measurements should therefore activate continuous improvement. As organizations adopt world class manufacturing, they need new method of performance measurement to check the continuous improvement. Traditional performance measurement systems are invalid 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 [10]. 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".

Kodali et al. [11] identified 81 performance indicators for WCM and divided them into nine categories - productivity, flexibility, quality, cost, inventory, customer relations, safety, morale, and competitive advantage - for the justification of WCM using performance value analysis. However, the performance indicators were not validated.

Wee and Quazi [12] established seven performance measures for environmental management - top management commitment, total involvement of employees, training, green product/process design, supplier management, measurement and information management. According to Wee and Quazi, there is a need to focus on environmental issues for improving the performance of organizations. Digalwar and Metri [13] identified eleven performance measures of WCM - top management commitment, customer service, price/cost, quality, facility control, speed, innovation and technology, flexibility, vendor and material management, global competitiveness, environmental health and safety.

Utzig [14] has suggested a list of operating measures for advanced manufacturing - lead time, total value-added versus non-value added time and cost, schedule performance, product quality, engineering change notices, machine hours per part, plant/equipment/tooling reliability, cycle time, broad management/worker involvement, problem support, high value-added design, and forecast accuracy. However, some authors [15; 16] proposed only productivity as a measure of manufacturing performance. Kennerley and Neely [17] identified the need for a method that can be used for development of measures that can span diverse industry group.

The limited literature available on the performance measurement of WCM, which is based either on examinations of current best practices or the authors' personal experience, indicates the need to identify, test and validate a comprehensive set of performance measures and their variables which take into account all the aspects of WCM. From this point of view we would like to note that it is necessary to develop more systematic approach in order to improve project and a process. In particular in WCM we can use two type of indicators: Key Performance Indicator (KPI) and Key Activity Indicator (KAI). KPI represents a result of improvement project, e.g. sales, profit, productivity of labor, performance rate of equipment, quality product rate, Mean Time to Failure (MTBF) and Mean Time to Repair (MTTR) [18, 19]. KAI represents a process for achieving a purpose of improvement project, e.g. a total number of education times 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 [20]. In Figure 6 is shown an overview KAI & KPI of Workplace Organization (Autonomous Activities pillar).

Figure 6. Overview KAI & KPI of Workplace Organization

4. Industrial case study

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 information flow between process equipment and higher level systems, supporting both manual and automatic interfaces. World Class Manufacturing is a manufacturing system defined by 6 International companies including Fiat Group Automobiles with an intention to raise their performances and standards to World Class level with the cooperation of leading European and Japanese experts and which consists of all the processes of the plant including quality, maintenance, cost management and logistics etc. from a universal point of view. A case study methodology was used to collect detailed information on division and plant strategic objectives, performance measurement system, and performance measurement system linkages. The result of this research was the development of principles on strategic objectives, performance measurement system and performance measurement system linkages for improved organizational coordination. The purpose of this study is to examine the relationship between division ad plant performance measurement system 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. It is headquartered in Turin, Italy and employs over 137,801 people [21]. 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 [22]. 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 was to increase the flexibility and productivity in a ETU (Elementary Technology Unit) of Mechanical Subgroups in a part of the process of assembling of FGA 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 Not 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 matrix material and the matrix of flows. 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 the improvement of productivity, the 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 handling process (LOG)

In this first part (PLAN) we analyzed the losses in that area of the assembly process in manner that to organize in the second part of the analysis (DO) the activities to reduce the losses identified. Figure 7 shows the layout of the Mechanical Subgroups ETU (in a part of Cassino Plant Assembly Shop) object of the study.

Figure 7. Lay-out Mechanical Subgroups ETU

The aim of this analysis was to identify a program that allowed us to generate savings policy based on Cost Deployment:

Identifying relationships between factors of cost, processes that generate costs and various types of waste and losses;

Finding relationships between waste and losses and their reductions.

In fact, in general a production system is characterized by a several waste and losses (MUDA), such as:

Not value added activities;

Low balancing level;

Handling losses;

Delay in procurement of materials;


Troubleshooting Machines;



It is important to give a measure of all the losses that are identified in processes examination. The data collection is therefore the "key element" for the development of activities of Cost Deployment. Here below in Figure 8 is shown an example of losses identified from CD from the Assembly Shop and in Figure 9 is shown an example of CD data collection about NVAA (Not Value Added Activities) for WO (for this case study we excluded check and rework losses) in the Mechanical Subgroups area. Finally Figure 10 shows Analysis of losses Cost Deployment.

Figure 8. Analysis of losses Cost Deployment - Stratification of NVAA losses for Mechanical Subgroups ETU (underline the most critical workstation)

Figure 9. Analysis of losses Cost Deployment - Pareto Analysis NVAA Mechanical Subgroups ETU

Figure 10. Analysis of losses Cost Deployment - Pareto Analysis Line Balancing Losses or Insaturation on Mechanical Subgroups ETU

4.2.2 DO - Analysis of the Not Value Added Activities, of re-balancing line and analysis of re-balancing of work activities

According to figure 9 and figure 10 we analyzed the losses about NVAA and Insaturation. In fact we analyzed all 4 critical workstations (because them have worst losses) and we identified 41 type of non-value added (walk, waiting, turning, picking ....) in the various sub-phases of the production process. In Table 3 are shown some examples of them (MUDA Analysis).

Table 3. MUDA Analysis - NVAA

Here below in Figure 11, 12 and 13 are shown some examples of standard tools used to analyze NVAA reduction (MUDA Analysis) for the 4 workstations: 1) job stratification (VAA - Value Added Activities; NVAA - Not Value Added Activities; LBL - Low Balancing Level; EAWS - European Assembly Work Sheet - Ergonomy); 2) Spaghetti Chart and 3) Standard Kaizen.

Figure 11. Details of the 4 workstations

Figure 12. Spaghetti Chart Example

Figure 13. Standard Kaizen analysis Example

In the figure 14 shows initial scenario analyzed the initial situation to identify problems and weaknesses.

Figure 14. Details of the 4 workstations

At this point we have assumed the new flow of the complete damper (corner) = damper + complete hub sequencing according to the matrix material considering losses relating's handling (material matrix classification - see Figure 15). The material matrix classify the commodities (number of drawings) in three main groups: A (bulky, multivariations, expensive), B (normal) and C (small parts) and subgroups (the mix of the A group: bulky and multivariations or bulky and expensive etc.). For each of this group we have the flow matrix that define the correct flow associated: JIS (and different levels), JIT (and different levels) and indirect (and different level). After the identification of the correct flow, in this case JIS, we proceeded to study and build a prototype of the box (bin) to feed the line that would ensure the right number of parts to optimize the logistic handling. But the new box (bin) for this new mechanical subgroup must to feed the line in a confortable and ergonomic way for the worker in the workstation, for this reason we simulated the solution before the realization of the box (bin) (see Figure 16).

Figure 15. Material matrix example

Figure 16. Simulation of an ergonomic workstation

At the end of the MUDA analysis (NVAA analysis) we applied all solutions found to have a lean process (the internal target is to achieve the 25% of average NVAA losses) and we reorganize the line through a new line balancing level (rebalancing) to achieve the 5% of the average line balancing losses (internal target). Other important aspect was the analysis of logistics flows (see Figure 17) considering advanced warehouses (Figure 18). Simulation scenario was using the truck from warehouses to Cassino plant that feed also other commodities to achieve high level of its saturation to minimize the handling losses.

Figure 17. Initial logistic flows

Figure 18. Logistic flows considering advanced warehouses

At the end of handling analysis (flow, stock level…) thanks this new "lean" organization according to material matrix we use the correct line feed from warehouse in Just In Sequence. We reduced the internal warehouse (stock level), the space used to sequencing (square metres), the indirect manpower used to feed the sequencing area and we have zero forklift in the shopfloor because we use the ro-ro (roll in - roll out) system. Figure 19 shows the final scenario in which we have 1 operator instead of 4 operators.

Figure 19. Details of the final workstation

4.2.3 CHECK - Analysis of results in order to verify the improvement of productivity and ergonomic improvement and optimization of logistics flows

In details main results and savings can be summarized as follow:

Improvement of productivity +75% (Figure 20) direct labour;

Improvement of Ergonomics +85% (Figure 21) according the rest factor;

Optimization of logistic flows (Figure 22) according flow matrix.

Figure 20. Optimization of productivity

Figure 21. Improvement of Ergonomics

Figure 22. Optimization of logistic flows

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 are shown activities and status adopted. To achieve the result shown in the "check" we used traditional tools and methodology for the analysis but also new tools to realize the simulation of the sceneries on the line and for the logistic problems involved other resources outside the plant (ELASIS and CRF - FIAT Research Center, FIAT Central Department and Public Universities).

Table 5. Activities and status


A key industrial policy conclusion is that intelligently designed selective policies can be effective in developing production systems. Intelligent industrial policy needs to be shaped by, and 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 because the concept of what constitutes "World Class Manufacturing" has received considerable attention in the academic literature, even though it has been developed principally in relation to the needs of larger scale manufacturing organisations. Given that small and medium size enterprises make up a significant proportion of the manufacturing capacity in industrial economies there is a clear need for a rethink of the concept in order to make it relevant to their specific needs. Faced with a growing list of the elements needed for "world clam" manufacturing the management of SME's appear faced with daunting task. Focusing on the manufacturing operation in an SME using the "gap analysis framework'' has proved its utility in assisting the management of one SME to make progress towards a model of WCM that is applicable to their circumstances.

Regards our case study we can conclude that the WCM allows to reduce losses and optimize logistics flows. Thus 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 with most 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 brands on the same assembly line: Alfa Romeo Giulietta, Chrysler and 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.


We would like to express our gratitude to Fiat Group Automobiles S.p.A. - Cassino Plant, at his Plant Manager and at his staff who gave us the possibility to do the necessary research work and to use own data.