PROPOSITION FACTOR
MODEL OF WORLD CLASS MANUFACTURING IN BRAZILIAN ENTERPRISES
Paulo Sergio Gonçalves de Oliveira
Universidade Ibirapuera, Brazil
E-mail: psgoliveira@hotmail.com
Dirceu da Silva
Universidade Nove de Julho and Unicamp, Brazil
E-mail: dirceuds@gmail.com
Luciano Ferreira da Silva
PUC and Universidade Nove de Julho, Brazil
E-mail: lf_ferreirabr@yahoo.com.br
Maria Cristina Tecilla
UniFMU, Brazil
E-mail: cristina.tecilla@yahoo.com.br
Meire dos Santos Lopes
Universidade Nove de Julho, Brazil
E-mail: meiresl@uninove.br
Submission: 19/05/2015
Revision: 23/05/2015
Accept: 30/01/2016
ABSTRACT
The present paper aims to develop a model of World Class Manufacturing.
To achieve this goal we designed a questionnaire with 35 items divided into 7
areas as suggested by a literature review. This questionnaire was sent to
manufacture specialists, product developers, and technicians through LinkedIn.
The participants were selected by researchers in discussion groups taking into
consideration their experience using the professional profile. About 1000
invites were sent to professionals from the metal-mechanic sector. One hundred
eighty valid questionnaires were returned. The data was analyzed through factor
analyses and 7 constructs were obtained, which explained 67% of the variance in
the data. The KMO was 0.84, which is considered good for analyzes purposes. The
seventh factor was eliminated because its Cronbach’s Alpha was below 0.6. The
remaining factors were nominated as: Lean Manufacturing, Human Resources,
Environmental Practices, Management to achieve flexibility, Marketing
Integration, Costs Reduction, and Flexibility.
Keywords:
World
Class Manufacturing, Production, Competitive Edge, Lean Manufacturing, and
Resource Management
1. INTRODUCTION
The emergence of global competition has pressed enterprises to reduce costs,
improve quality, develop products to achieve high performance, offer a larger
product portfolio for customers, and provide better and more dynamic services
(DIGALWAR; SANGWAN, 2007). Because of this, manufacturers who desire to
position themselves globally and who intend to become world-class manufacturers
must aim to deliver the same quality worldwide in order to gain consumers.
The term
world class manufacturing (WCM), however, needs to be more clearly defined
because current research on the topic demonstrates a lack of consensus about
what it is and which enterprises should be considered World Class
Manufacturers. Thus, the problem of this research was: Which criteria do
manufacturing and product development professionals think are required to
define a company as a World Class Manufacturing Enterprise?
The main
objective of this research was to develop a World Class Manufacturing Model
using professional opinions about required criteria to be considered a WCM
Enterprise. With this, we aim to create
a foundation model to serve as a base to create a possible certification model.
To achieve this
objective we developed a literature review to understand the current state of
the field. This review will be discussed
next in chapter 2. We then provide
methodological procedures, explained in chapter 3, provide our data and
research in chapter 4, and offer concluding remarks in chapter 5.
2. LITERATURE REVIEW
Consumer
globalization drives enterprises due to global competition, which causes
changes in consumer behaviors and affects the way which products and services
are manufactured. That situation is influenced by ICTs (Information and
Communication Technologies), which makes global transactions and cooperation
easier than ever by improving the conscious about manufacturing conditions and
process regulations worldwide. Nevertheless, large companies believe that
global action is a competitive advantage.
Therefore,
for enterprises to have a competitive advantage over their competitors, they
are starting to use a production system to become World Class. Thus, the World
Class Manufacturing (WCM) methodology is based in building a global competitive
advantage raising the profits and International Competitive Advantage (HOSSEINE
et al., 2012; MURINO et al., 2012).
The
literature about this topic revels that there is not a universal definition of
WCM (MASKELL, 1992; DIGALWAR; SANGWAN, 2007). The term was used by Hayes and
Wheelwright (1984) to describe organizations that use production capacity on a
global production system as a competitive strategy. Shonberger (2008) defined
the benefits sought by WCM as similar to the Olympic Games because the
athletes’ works are guided by the motto “Citius, altius, forties,” which can be
translated as “faster, bigger, and stronger.” Therefore, the WCM adopts a
continuous improvement approach which consists of changes in a lot of
organizations, such as: quality management, work relationship improvements,
support and training, improvement in relations with suppliers and customers,
inventory programming and management, equipment maintenance, and process
automation with information technology, among other things (SCHONBERGER, 2008;
LIND, 2001; DIGALWAR; SANGWAN, 2007).
Some
benefits that WCM can provide for organizations that use it are: profit
improvement, new manufacturing programs, alignment with customer’s needs,
suppliers reduction costs, production reduction costs, innovation, improvement
using metrics to measure performance, etc. (ANH, YEN & MATSUI, 2015;
HOSSEINE et al., 2012; FORTUNATO, 2007; MURINO, 2012; JUSKO, 2013).
Therefore
the WCM approach becomes a critical factor for an enterprise’s competitive
advantage because it promotes flexibility and ability to change more quickly to
address Market and customer needs. This flexibility is now essential due the
way globalization has affected all kinds of enterprises (FORTUNATO, 2009;
GAJDZIK, 2013; JIMÉNEZ and AMAYA, 2014).
Thus, an
industry that keeps the mass product rigid and maintains traditional practices
will not be able to keep up with changes and global demands (FINGER, FLYN and
PAIVA, 2014). The WCM approach presents a set of
practices and methodologies to meet customer’s needs while keeping high quality
and controlling production costs.
Normally, WCM
enterprises have the following characteristics: emphasis on strategic thinking
instead short term profits; systematic domination of global competition such
as: quality, costs, and flexibility; managerial attitude toward customer needs;
better performance in profits compared to their competitors; quick reaction to
changes in the external environment; elimination of unnecessary processes; good
information system; culture of innovation and quality; and self-sufficient
employees performing efficient maintenance and system corrections (ANH, YEN and
MATSUI, 2014, HOSSEINE et al. 2012; SCHONBERGER, 2008).
The WCM
is strongly related to the Lean Manufacturing concept because there is also a
focus on waste reduction. However, the WCM adds a new paradigm which focuses on
meeting customer needs as fast as possible and meeting the quick changes that
happen in markets with regard to preferences and produced volumes (ANH, YEN and
MATSUI, 2014; GORIWONDO, MHLANGA and MUTSAMBWA, 2013).
Wu,
Melnik, and Swin (2012) advocate that enterprises use operational practices to
achieve the WCM concept. Such practices include specific procedures, new
organizational arrangements, protocols, tools, techniques, and other ways of
organizing things. For example, to improve quality you can use learning process
and knowledge creation concepts. Wu, Melnik, and Swin (2012) also analyze
aspects related to WCM using studies about the more common organizational
practices used by organizations. These include:
·
Quality
Management Practices;
·
Just
in Time Practices;
·
Customer
Orientation Practices;
·
Supplier
Relationship Management;
·
Integrated
Product Development Practices;
·
Employee
Development Practices;
·
Leadership
Practices.
Thus,
these sets of practices contribute to create a new structure of competitive
differentials for enterprises that apply these practices in organizational
life. Furthermore, another new dimension is added for enterprises that desire
to become WCM enterprises. This dimension is environmental practices and,
according to Pinheiro et al. (2012), environmental practices may present a
conflict between the way organizations think and how they act.
Thus,
enterprises that want to build long-term competitive advantages are seeking to
develop WCM practices, while at same time remaining flexible enough to stay
updated with both new social values and new environmental management
strategies. However, this reality is relatively new for academic research and
for those in the management field, but is becoming an important area for
discussion.
Many
studies in WCM have been recently published. For example, Goriwondo, Mhlandga,
and Mutsambwa (2013) completed research with enterprises from Zimbabwe. Murino
(2012) examined one automotive supplier in 150 countries. Mey (2011) looked at Acelor Mital, among
others, to understand the process and benefits obtained by the enterprise by
changing the product. One study developed by Ghadikolei et al. (2011) stands
out. This study examined 12 critical
factors and 73 performance variables for the WCM. This study was based on a
similar study, which compared an Iranian automotive enterprise and an Indian
automotive enterprise.
To
understand the way WCM is treated, it is applicable to highlight the
methodologies applied in the production system area in the last two decades.
With this in mind, Furlan, Vinelli, and Pont (2011) studied the complementarity
between the two main production system methodologies, which are Just-in-Time
(JIT), and Total Quality Management (TQM). Their main contribution is the idea
that lean product is the ideal setting for WCM because the complementarity
integrates a lot of socio-technical practices aiming to eliminate the wastes
inherent in a long supplier chain in the enterprise (FURLAN; VINELLI; PONT,
2011; FUENTES; DÍAZ, 2012).
Studies
by Kedia, Gaffney, and Clampit (2013) can also help organizations to create a
knowledge management structure with the aim of evaluating mature practices,
allowing the managers to analyze the practices that better fit their
environment. To create this mechanism, they can use measurement tools such as
BSC, KPI, and CMM as suggested by Konsta and Plomaritou (2012). These practices
are related to the WCM model and aim to create a conceptual model about this
practice.
However,
Muda, Rahman, and Hassan (2013) alert us to the fact that many studies about
WCM studied the make-to-stock enterprises. It is necessary to develop research
about enterprises that use the make-to-order (MTO) approach because this kind
of methodology uses the Just in time and Lean Manufacturing Concepts, which are
integrated parts of WCM methodology. This aspect can be found in Lin, Ma, and
Zhou’s (2012) study that analyzes the Chinese Enterprise that analyzes bus
performance, whose success is not determined by high productivity and low
price, but by the quick response to customers through the integration of
modular logic and process optimization. These practices are coming from the MTO
concept, Lean Manufacturing, and Just-in-Time practices turned these
enterprises into WCM systems.
These
definitions corroborate with those pointed out by Harrison (1998) in his
research where he found the practices related to WCM: Quality Management, Lean
Production, Logistics, Organization and Culture, Manufacture Systems, and
Concurrent Engineering. He found that that enterprises that achieve an 80%
score in practices and an 80% in performance are considered to be WCM
enterprises.
3. METHODS
The
methodological procedures for this paper aim to get the specialists’ opinions
about WCM (World Class Manufacturing) methodology definitions. This is
important because this methodology needs to be explored and consolidated to
define how to become a managerial practice. For this aim, a descriptive
research method was chosen. This kind of research can be used to answer
questions about relationships between variables, including a cause and effect
model (MALHOTRA, 2006; SELLTIZ et al., 1987). The participant interviews
were done through questionnaires with questions about motivation and
characteristics.
The
paper was developed through a transversal survey because, in this type of
research, the questionnaire is applied one time to a population sample (BABBIE,
1999). Kerling (2007) explains that in survey research, small and big populations
are studied using samples to discover the incidence of relative variables,
variable distribution, and variable interrelations.
For the
interview, the respondents were given a questionnaire with closed questions
based on a seven-point Likert scale. The Likert scale is one scale type that
demands the respondents indicate how strongly they agree or disagree degree
with a series of responses. Normally one has five answer categories, from
totally disagree to totally agree (MALHOTRA, 2006).
The
research instrument was sent to respondents from the metal-mechanic
sector. The populations’ sample was
predominantly composed of product development specialists, production managers,
production supervisors, and production specialists. It is important to highlight
that the sample’s composition is only one representation of the population, and
questions were made for this population to identify other populations’ elements
(MALHOTRA, 2006).
The data
was analyzed through factor analyses because the aim was to identify which
constructs would emerge from collected data. Thus the presented results can
validate or refute the conceptual model, and can inform whether to keep or
change each one. The factor analyses are composed of a set of statistical
techniques used to explain and describe the correlation among variables
(PESTANA, GAGEIRO, 2005).
Hair et
al. (2005), define factor analysis as a technique to analyze multidimensional
complex relations that belongs to a class of multivariate statistical
procedures, which attempt to discover subjacent structures in matrix data. The
use of factor analysis in this study was to explain the factors that explain
the WCM methodology and how they can be used to provide a framework for
researchers and production enterprises who want to use and study WCM concepts.
The
questionnaire was sent through the LinkedIn Professional Social Network to
about 1000 professionals from the metal-mechanic industry area and 180 valid
research questionnaires were returned. The participants were selected by a
research group who analyzed and selected participants based on their LinkedIn
profiles. Each selected participant was
sent an invitation and was asked to respond to the questionnaire. The research
objective was explained in an email and the link to the questionnaire was sent.
4. RESULTS AND DISCUSSION
The research
results were collected, tabbed, and submitted to factor analyses using varimax
rotation, a principal component extraction method, suppressing values less than
0.4 to create a statistical model. The initial model presented 7 constructs.
The 7 constructs
explained 67% of the variance, which indicates that 33% of the variation is
explained by other factors. The next step was to analyze the internal
reliability of the factors and the KMO value was 0.84, indicating that the
reliability was sufficient for factor analyses (SELLTIZ et. al., 1987).
To verify the
internal reliability for each factor, we used Cronbach’s Alpha test, which
considers 0.6 to be the lowest limit for acceptance (HAIR et al., 2005). The
presented values are showed in Table 1:
Table 1: Cronbach’s Alpha Reliability Test
Factor |
Cronbach’s Alpha |
Items Number |
1 |
0.816 |
5 |
2 |
0.914 |
8 |
3 |
0.896 |
5 |
4 |
0.836 |
5 |
5 |
0.857 |
5 |
6 |
0.721 |
3 |
Factor 7 was eliminated because the presented
Cronbach’s alpha value was less than 0.60, as required by Hair et al (2005).
The remaining factors were named and described in Table 2.
Table 2: Conceptual Matrix of World Class
Manufacturing
Rotated
Component Matrix |
|||||||
|
|
Component |
|||||
1 |
2 |
3 |
4 |
5 |
6 |
||
Lean
Manufacturing |
13. They need to
seek continuous improvement. |
.689 |
|
|
|
|
|
1. They reduce
waste while processing products. |
.660 |
|
|
|
|
|
|
2. They have a
layout that facilitates the shop floor and reduces in process material stock. |
.624 |
|
|
|
|
|
|
12. They have
effective maintenance plans. |
.623 |
|
|
|
|
|
|
4. They invest in
reduced machine setup time at the expense other things. |
.616 |
|
|
|
|
|
|
Human
Resource Management |
17. They have
flexibility to suit customer needs. |
|
.780 |
|
|
|
|
18. They seek to
reduce the number of lost sales for delivery time reasons. |
|
.619 |
|
|
|
|
|
16. They always
are worried about sales orders’ agenda. |
|
.596 |
|
|
|
|
|
22. They always
are worried about keeping their workers motivated. |
|
.593 |
|
|
|
|
|
19. They have
mechanisms to manage customer service levels. |
|
.579 |
|
|
|
|
|
21. Always invest
in training to capacitate employees. |
|
.565 |
|
|
|
|
|
20. Always
encourage their managers to delegate responsibilities to other people. |
|
.548 |
|
|
|
|
|
23. Always
invests in training their leaders. |
|
.548 |
|
|
|
|
|
Environmental
Practices |
33. Always
develop environmentally-friendly products even if that harms their
competitiveness |
|
|
.838 |
|
|
|
34. They don’t
give up environmental practices even if it impacts the company’s revenue. |
|
|
.817 |
|
|
|
|
32. Always use
reverse logistics at end of a product’s lifecycle even if this raises the
costs. |
|
|
.697 |
|
|
|
|
35. They have
consistent environmental programs. |
|
|
.638 |
|
|
|
|
8. They seek to
make the product Project more flexible, involving suppliers in the development process. |
|
|
.540 |
|
|
|
|
Marketing
Integration |
28. Always
integrate the Marketing area with whole enterprise process. |
|
|
|
.753 |
|
|
30. They always
seek customers’ collaboration. |
|
|
|
.733 |
|
|
|
31. They always
involve the Marketing area in decisions about productive processes. |
|
|
|
.719 |
|
|
|
29. They always
promote integration with suppliers during the whole phase of products’
projects. |
|
|
|
.665 |
|
|
|
3. Requires that
supplier works in just in time mode. |
|
|
|
.494 |
|
|
|
Costs
Reduction |
27. Are only
worried about reducing production costs. |
|
|
|
|
.877 |
|
26. Only analyze
the value chain and don’t pay attention to other aspects. |
|
|
|
|
.864 |
|
|
25. Only invests
in keeping low stock volumes. |
|
|
|
|
.835 |
|
|
24. They always
invest in cost reduction without worrying about other aspects. |
|
|
|
|
.775 |
|
|
15. They don’t
have competitive delivery times because they understand that other factors
influence customer choice. |
|
|
|
|
.510 |
|
|
Flexibility |
6. They invest in
raising material output over other actions. |
|
|
|
|
|
.827 |
7. They invest in
raising the product delivery to Market. |
|
|
|
|
|
.749 |
|
5. They invest in
creating a lot of different processes. |
|
|
|
|
|
.710 |
Factor 1 was named “Lean Manufacturing” because
it contains variables 1, 2, 4, 12, and 13, which are all a part of lean
manufacturing. The important thing about this, according to Goriwond, Mhlanga,
and Mutsambwa (2013), is that it is an approach which focuses on attending to
customer needs, while the enterprise maintains quality patters and controls for
production costs.
Agile
manufacturing is strongly related to the Lean Manufacturing concept because of
the focus on waste reduction. However, it is worth mentioning that agile
manufacturing adds a new paradigm, which is a focus on attending to customer
needs as fast as possible. This posture allows the enterprises to adapt faster
to changes in the Market with respect to preferences and product volumes
(GORIWONDO; MHLANGA; MUTSAMBWA, 2013).
For this reason
Furlan, Vinelli, and Pont (2011) studied the complementarity between Lean
Manufacturing and Total Quality Management, aiming at auxiliary enterprises
that want to become World Class Manufacturing Enterprises.
The lean product
environment is the ideal place to study complementarity, because of the use of
practices of social techniques in the chain value of the company (FURLAN;
VINELLI; PONT, 2011; FUENTES; DIAZ, 2012).
To improve the
accompaniment, Konsta and Plomaritou (2012) suggested the use of established
approaches such as: Balanced Score Card, KPI (Key Performance Indicator) and
CMM (Capability Maturity Model) which have become popular in the last twenty
years, but it is up to managers to decide on the most suitable indicators to
reflect reality. All these practices are related to the WCM concept and aim to
compose a conceptual model about WCM practice.
Factor 2
was named “Human Resource Management” because it contains variables 16,
17, 18, 20, 21, and 23, which all relate to human resources and aspects related
to customer service, specifically to improve enterprise flexibility to better
attend to customer needs.
This
aspect corroborates with Muda, Rahman, and Hassan (2013). The authors pointed out the necessity of an
attitude change in WCM because the company needs to upgrade MTO production in
order to increase customer service.
Goriwond,
Hlanga, and Musambwa (2013) suggest that to achieve enterprise flexibility, it
is necessary to forecast market changes that corroborate with all of these
factors. To have success with the forecast, it is necessary to bring customers
closer and to keep employees motivated. Kedia, Gaffney, and Clampit (2013)
point to the organizations’ need to create knowledge management structures to
create a relationship network to keep the information change among customers,
employees, and stakeholders.
Kedia,
Gaffney, and Clampit’s (2013) studies can help organizations create a knowledge
management structure to evaluate these practices, enabling managers to evaluate
in which grade each methodology better fits to organization needs.
Hosseine
et al. (2012a), suggest that in human resource management the main
characteristics of a WCM enterprise are faster reactions to competitors,
meeting the customer needs, and organization flexibility. Therefore, this is an
important factor analyzed by Lin, Ma and Zhou (2012), who analyzed the Chinese
Bus Industry performance, whose success is not determined by high productivity
and low price, but by faster response to customer needs.
Factor 3
was named “Environmental Practices” because it contains variables 8, 32,
33, 34, and 35, which are linked to organization environmental practices. These
variables aim to meet current demands for the use of environmentally friendly
products, both in terms of disposal and in the use of recycled products to
improve the reuse of raw materials.
Pinheiro
et al. (2012), regards the environmental aspect as one dimension for
enterprises to achieve a WCM grade mainly because the environmental
consciousness influences the customers’ behavior. Furthermore, this behavior
reflects problems faced by society due to the unbridled use of raw material and
the pollution generated by the society as a whole.
To
achieve this dimension, the enterprises need to invest in reverse logistics,
product projects, use of recycled products in product projects, and partner
with customers and suppliers.
Factor 4
was nominated “Marketing Integration.” The importance of this factor
lies in the need for marketing research and knowledge about customer needs. It
complements factor 2, which prepares the human resource enterprise to achieve
flexibility to achieve organization flexibility by responding to customer
needs.
Although the WCM
studies concentrate mainly on production, questions about marketing practices
are important because this area develops research about customer needs. In this
way, an enterprise builds vision focused on offering customers products more
suitable to customer needs, focusing the production on customer demands instead
of on stocking up on products (pushed production).
Factor 5
was nominated “Costs Reduction” because it contains variables 15, 24,
25, 26, and 27 which all relate to lowering costs. This factor represents the
main enterprises aim when it applies a WCM approach. To achieve this, enterprises
look to apply production methodologies such as Lean Manufacturing, Quality
Management Systems, and Six Sigma MUDA; RAHMAN; HASAN, 2013; FURLAN; VINELLI;
PONT, 2011) because these methodologies change messy enterprises into clean and
organized places, reducing costs in this way.
Factor 6 was
nominated “Flexibility.” It is one of the main organizational objectives
needed to achieve WCM. This factor is dependent on factor 1 because both want
to reduce the enterprise manufacturing cycle. Thus, the practices cited before
assume a central role and enable organizations to attend to customer needs
through product development to meet customer needs.
5. CONCLUDING REMARKS
The main
objective of this paper was achieved when we developed a World Class
Manufacturing model using the respondents’ opinions and the data was analyzed
using factor analyses to elaborate a quantitative model.
To
elaborate the model, we showed that the respondents understand that the aspects
called lean manufacturing, resource management to achieve flexibility,
environmental practices, marketing integration, and flexibility are the most
important aspects for enterprises that want to become World Class Manufacturing
Enterprises.
Investments
in Lean Manufacturing means that enterprises need to invest in such
methodologies as Just-in-time and six sigma.
These techniques simplify product manufacturing, reduce costs, and
promote improvement in quality. However, the quality aspect can only be
improved with investment in human resources since the employees need to be
trained to face organizational challenges in order to make the product process
more flexible and to answer customer demands faster than competitors.
The
integration with marketing will enrich the customer and enterprise interface
because this department is very close to customers. Thus, they will understand
their behavior, creating a kind of symbiosis among enterprise departments to
fit and generate products that meet customer needs, generating a competitive
advantage in this way. The integration with marketing demands the investment in
human resource and lean manufacturing to generate enterprise flexibility to fit
the enterprise to the environment and face future challenges.
Future research
can develop studies using other countries or regions to validate the concept. A
limitation of the study is the fact that the research uses only Brazilian
respondants so the questionnaire can not be applied to other countires to
create a panel about World Class Manufacturing. New studies can establish
relations among the factors discovered in this study to create a new research
analyzing the aspects and grade of correlation among them.
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