Application of World Class Manufacturing Philosophy to Luxury Automotive Companies

Abstract

This essay looks at the applicability of World Class Manufacturing (WCM) philosophy to the luxury automotive companies, such as Aston martin. In doing so, evaluates the appropriateness of WCM as a quality philosophy, in the current climate of the industry.

Table of Contents

Abstract

Table of Contents

Table of Figures

Table of Tables

1 Introduction

2 World Class Manufacturing (WCM) overview, appropriateness & comparison with other quality philosophies

2.1 Potential drawbacks/disadvantages of the WCM philosophy & Conflicts between the principles or practice of WCM and those of Lean transformation.

3 Aston Martin Case Study

4 Conclusion

5 References and Bibliography

Table of Figures

Figure 1 : The growth of techniques associated with the WCM concept & The WCM Model by Schonberger (De Felice, Petrillo & Monfreda, 2013)

Figure 2 : World Class Manufacturing in Fiat Group Automobiles (De Felice, Petrillo & Monfreda, 2013)

Figure 3: Early Toyota, House of Lean (Bicheno and Holweg, 2016)

Figure 4 : The Lean Enterprise House  (Bicheno and Holweg, 2016)

Figure 5: Aston Martin AM37 (Aston Martin Lagonda, 2017)

Figure 6 : AML Volante Vision concept (Aston Martin Logonda and O’grady, 2018)

Table of Tables

Table 4‑2 – …..

Introduction

Recently, there has been a tremendous shift in the automotive/manufacturing industry. This has resulted in a highly competitive market space with consumer’s expectations/requirements increasing tenfold. As well as with growth and demand for electric vehicles, it is not a surprise that reducing costs for companies/organisations is a priority. Particularly, given the high RnD costs involved in developing electric vehicles (Daniel Thomas, 2019). These trends have also seen, a substantial change in the environment for manufacturing companies/the industry (Bruzzone and Longo, 2010). Manufacturing suppliers also, pay a pivotal role in the overall production of vehicles. Therefore, it is ever-present for not only OEM’s but suppliers also to look at quality improvement philosophies (Alonso et al., 2017) such as World Class Manufacturing (WCM).

World Class Manufacturing (WCM) overview, appropriateness & comparison with other quality philosophies

The idea of ‘World Class Manufacturing’ (WCM) was early coined by R.J. Schonberger (Schonberger, 1986). This was what he used, to define the many different techniques companies used to match/compare each against competitors (De Felice and Petrillo, 2015). These companies’ goals at the end were for continuous improvement (Kaizen) & in turn achievement of excellence in production.  In order to do this, they would have, various techniques and tools. Fabio et al, shows these tools, as well as how they were then understood by Schonberger to be encompassed into a WCM model, within figure 1.

Many of these techniques were known about before Schonberger and can be seen very similar, to some extent, to lean transformation. However, Schonberger had managed to integrate a flexible system, which was then capable of achieving High-quality output (De Felice, Petrillo and Monfreda, 2013).

From what De Felice et al. have shown in figure 1, WCM and lean practices are very similar. M. Holweg & J. Bicheno, say, Lean looks at continuous improvement in three dimensions; Waste reduction, people involvement and value enhancement. This is achieved through a series of tools such as the 5S’s, SMED (Single-minute exchange of die) and Kanbans (Bicheno and Holweg, 2016)

Furthermore, Total Quality Maintenance (shown in figure 2) is very much in for the manufacturing industry one and the same as WCM (De Felice, Petrillo and Monfreda, 2013).

Potential drawbacks/disadvantages of the WCM philosophy & Conflicts between the principles or practice of WCM and those of Lean transformation

While WCM can, be very beneficial, for example, in helping improve an organisation’s internal systems and processes. At the same time, It can also, cultivate its culture, where employees identifying emerging problems. (De Felice and Petrillo, 2015).

There are some drawbacks, however. Firstly, there is a lot of data that needs to be calculated to determine whether you are world-class, in the form of benchmarking. This can be problematic, for small or medium-sized companies, who do not have the resource (Flynn et al., 1997)(Kodali, Sangwan and Sunnapwar, 2004).

As well as this small and medium-sized business or even bespoke product manufactures, may not find the practices of WCM/Lean transformation not viable. Take for example the Aston Martin Works (Heritage centre), here traditional hammer formed panels are made and classic vehicles restored. The USP (Unique selling position) gained from these traditional manufacture methods are key here. The customer here would be willing to pay the cost for this more labour-intensive process, of manufacturing a body panel on their heritage car (that needs repairing for example).

Thereafter, also as the nature of WCM, is that it is sometimes confused with Lean transformation. This due to similar pillars. WCM goal is very much similar to Lean transformation whereby it looks to have zero waste & zero defects (Bicheno and Holweg, 2016).

Below in figure 2 and 3 shows some of these similarities. In figure 2 is highlighted the WCM house which within in has one of the pillars in the lean house (shown in figure 3) JIT (which looks at effectively removing excess or wasted stock).

The Issue, which from some of the literature looked at, has shown to be that WCM, has a similar notion to that of Lean. Become too focused on the toolkits/tools and losing focus of the goal (Bicheno and Holweg, 2016). This can become problematic. As with changes to the market or customer needs not being at the forefront of the objectives (Ackerman, Hemphill and Cowan, 2011), means then there is a risk to effectively leaning out unnecessarily (Sower and Fair, 2012). This mind-set would be considered Left to Right thinking which in turn has short benefits. However, over the longer term it would not be sustainable (Bicheno and Holweg, 2016). This mind-set begs the question “Where does the customer come in? what happens if you are failing your customers.” (Bicheno and Holweg, 2016).

However, this is addressed within Lean Transformation, when considered with the concept of Lean enterprise (see figure 4). Which is where an organization effectively looks for new chances to upgrade, its income by utilising its lean capability (Murman, 2012). This, in turn, could open up new value streams for the organisation, leading to future growth/profitability and sustainable (Sower and Fair, 2012; Bicheno and Holweg, 2016)

Aston Martin Case Study

Within Aston Martin, there is already very much this Lean enterprise thinking being implement where value streams/ opportunities for revenue are being considered. Take for example the various projects done outside of its traditional primary products, such as the Aston Martin AM37 and the Volante Vision Concept. (shown below in figure 5 and 6)

These projects, have major ramifications for Aston Martins future. The Right to left mind-set has been used here. Whereby customers’ needs have been identified (wealthy special vehicle buyers, who have excess wealth and are looking for bespoke and limited ultra-lux possessions). Then have looked t see what position they would need to in (i.e. what would be the ideal situation for the manufacture of this) (Sower and Fair, 2012). Then look at what the current situation is in terms of production processability. Thereafter would have looked into what steps are needed to move from the current state they are in to, that which can achieve the needs of the customer.

Another aspect, which would become critical for Aston martin, in order to achieve the goal of being categorised as a WCM.  Would be within its supply chain management. It is also critical to have world-class suppliers, in order to thrive in the current market  (Alonso et al., 2017). despite all methods and procedures being followed within WCM, it should not be assumed all is well. Epically, when throughput from suppliers is not up to specification. Therefore, Supply chain management is a critical element for world-class manufactures. As with the lack of proper supply chain management, being recognised as world-class manufacture is simply not feeble.

This case is quite prevalent within Aston Martin. Whereby a lean approach, to saving the utmost cost, now is taken, when nominating/selecting suppliers. This then sees, during the life of a project, an increase in costs from suppliers. As well as bad quality products reaching, manufacturing plant. Overcoming this is quite straightforward to rationalise. It would mean taking more time to properly evaluate suppliers before offering contracts. It would mean fostering a better and longer relationship with suppliers. Whereby the end of the project, there is a benefit for future projects. However, this is much more difficult to implement in reality, when short term cash flow can become a necessity, in order to help support other projects for example. Either rational targets need to be set, in order to compensate for these suppliers, or else the same stringent targets would be set. In turn, meaning that there is no change in condition (no continuous improvement also).

In addition, another aspect shown within the figures 1 & 2 is TPM (Total Product Maintenance). This, in essence, is looking to have a “smooth organisation” (De Felice and Petrillo, 2015). Which is something, that could be hugely beneficial to Aston Martin. This is, due to the short volume of vehicles been produced, there is not a great deal of urgency for fully automated production of vehicles. However, with the new SUV (DBX) being released, this will potentially see an increase in volume manufactured. TPM can help evaluate any bottlenecks in the production is they were to appear. For example, take adhesive bond applying robot in the tub shop. This robot is a bought-in & can overtime will need maintenance and repairs potentially carried out in it. To compensate for any downtime, a backup robot is required (which is a lot of capital ‘wasted’). If TPM is implemented & if a similar set up to that of ‘Fly by the hour/ Power by the hour’ system employed by Rolls Royce is used. There could be huge benefits in terms of costs saved. ‘Fly by the hour/ Power by the hour’ is a lease type service whereby an engine is sold for the number of hours it is being used (Rolls Royce, 2012)

Conclusion

Therefore, in conclusion, WCM has quite a wide range of applications. It is quite tightly associated with and almost encompasses the majority of the main quality philosophies, in some form. Such as TQM (with respect to manufacturing specifically) as well as Lean principles. This then also does bare into play whereby the overall goal of WCM should be focused onto. This is to not get lost in continuous improvement & lose focus of the larger goal of becoming a profitable organization. It was not mentioned to a large extent within this document, however, FCA (Fiat Chrysler Automobiles) could be considered a benchmark (for with respect to the philosophies and implementation of WCM).

As well as this Aston Martin, in particular, could adopt many of these practices that WCM offers. For example, looking to introduce a better supply chain management system, with the goal of having a much more long term and healthy relationship with future suppliers. Then also to look to implement TPM ideas, within areas such as robot tub shop. There are some areas where it may not be fully applicable. Take the heritage center (Aston Martin Works) or even the hand-craftsmanship that goes into the production of the seats and interior trim of the current DB11. All these processes are very labour intensive, so would be looked to be automated as much as possible. However, losing focus of the end goal, whereby the customer needs are the focal point/ key. Aston Martins USP (Unique Selling Position) is within this notion, handcrafted, luxury vehicles. This is why they cost considerably more than other vehicles. Therefore, some WCM would need to be tailored slightly to compensate for this.

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