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Evaluation of world-class manufacturing systems: A case of Indian

automotive industries

Article in International Journal of Services and Operations Management · June 2008

DOI: 10.1504/IJSOM.2008.018725

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Int. J. Services and Operations Management, Vol. 4, No. 6, 2008 687

Evaluation of world-class manufacturing systems:

a case of Indian automotive industries

K.S. Sangwan* and A.K. Digalwar

Engineering Services Division
Birla Institute of Technology and Science
Pilani-333031, India
E-mail: [email protected]
E-mail: [email protected]
*Corresponding author

Abstract: Many industries are implementing World-Class Manufacturing

(WCM) systems to compete in the global market. However, the researchers in
the area of WCM have not paid much attention to the techniques/
methodologies for the evaluation of WCM systems. This paper presents a
set of validated critical success factors and their performance variables for
WCM industries. The reliability and validity analyses were carried out by
using the SPSS® 11.5 statistical tool on the data obtained from the Indian
automotive industries. A multiattribute decision model, i.e., Performance Value
Analysis (PVA), was developed for the evaluation of WCM systems. The
usefulness of the model is demonstrated using a case situation of the Indian
automotive industry. By utilising this model, it is expected that managers/
decision makers will acquire sufficient confidence in evaluating world-class
automotive industries.

Keywords: World-Class Manufacturing; WCM; multicriteria decision

model; performance measures; critical success factors; Performance Value
Analysis; PVA.

Reference to this paper should be made as follows: Sangwan, K.S. and

Digalwar, A.K. (2008) ‘Evaluation of world-class manufacturing systems: a
case of Indian automotive industries’, Int. J. Services and Operations
Management, Vol. 4, No. 6, pp.687–708.

Biographical notes: Kuldip S. Sangwan obtained his BE and ME from Punjab

Engineering College, Chandigarh, and his PhD from BITS, Pilani. He is
presently working as the Assistant Dean of the Engineering Services Division
and is a Senior Faculty of the Mechanical Engineering Group, BITS, Pilani. He
has over 15 years teaching experience at graduate and postgraduate levels. He
has published a monogram on concurrent engineering and many research
papers in national and international journals. He is a reviewer of many
prestigious national and international journals. His areas of research interest
are CMS, green manufacturing, world-class manufacturing, TPM, concurrent
engineering, operations management, and the application of fuzzy mathematics,
genetic algorithms, simulated annealing and neural networks in the design of
manufacturing systems.

Abhijeet K. Digalwar received a PhD from BITS Pilani, India. Presently, he is

working as an Assistant Professor in Mechanical Engineering. He has over ten
years of teaching experience at graduate and postgraduate levels. His areas of

Copyright © 2008 Inderscience Enterprises Ltd.

688 K.S. Sangwan and A.K. Digalwar

interest are performance measurement systems, world-class manufacturing,

total quality management and manufacturing strategy. He has published many
papers in national/international conferences and international journals. He is a
life member of the Indian Society of Technical Education and a member of the
Performance Measurement Association, UK.

1 Introduction

Global competition, rapidly changing technologies and shorter product life cycles have
contributed in making the current environment in the manufacturing industry extremely
competitive. This new competitive environment and the constantly changing production
and trade standards have forced companies to thoroughly review their adaptative
strategies. Traditional manufacturing approaches, such as mass production of a few
standardised products, are no longer sufficient competitive weapons by themselves.
Organisations must consequently develop new methods and perspectives to meet these
market needs in a timely and cost-effective fashion. Creating world-class organisations
is one response to deal with such challenges. A world-class firm that possesses a set of
strategic options can respond effectively to dynamic and volatile environments (Digalwar
and Sangwan, 2007).
A review of literature reveals that there is no universally recognised definition of
World-Class Manufacturing (WCM) (Kodali et al., 2004). The term ‘world-class
manufacturing’ was coined by Hayes and Wheelwright (1985) to describe organisations
that achieved a global competitive advantage through the use of their manufacturing
capabilities as a strategic weapon. Schonberger (1986) defined WCM as analogous to the
Olympic Games motto citius, altius, fortius, which translates to ‘faster, higher, stronger’.
The WCM equivalent is continual and rapid improvement. WCM was described as a
collective term for a number of production processes and organisational strategies that all
have flexibility as their primary concern (Haynes, 1999). Oliver et al. (1994) observed
that to qualify as world class, a plant had to demonstrate outstanding performance
on measures of both productivity and quality. Todd (1995) defined WCM as being the
best in the world in one’s particular sector of industry. He also added that this must
be supported by a combination of product design, quality, low manufacturing cost,
innovation, shorter lead time, and reliable delivery performance and customer service.
Jesitus (1998) argued that WCM levels require an overall willingness to establish closer
connections with everyone from customers and suppliers to workers; an unwavering
commitment to self-analysis and improvement; and an aggressive approach to
technologies that can help turn visionary strategies into gold-medal realities. The
potential competitive impact of WCM is well recognised (Maskell, 1992).
However, the biggest hurdle in the adoption of WCM is the evaluation techniques and
methodologies (Sangwan, 2006). The literature has been inundated with a large number
of methodologies and evaluation techniques that look promising for the economic
justification process for advanced manufacturing systems (Canada, 1986; Raafat, 2002).
Several traditional financial techniques have been proposed that are complex and
exhaustive in nature, and require hard-core quantitative data that may be difficult
 Evaluation of world-class manufacturing systems 689

to retrieve or formulate (Kodali et al., 2004). Today, most major organisations are
struggling with their traditional investment justification procedures because they are
either misapplied or the information included in the calculations is inadequate for the
multifaceted problems being tackled. The complex, multiattribute nature of advanced
manufacturing systems may tend to be overwhelming to analysts and decision makers. To
overcome this dilemma, an effective multiattribute decision model, i.e., Performance
Value Analysis (PVA), has been developed for the evaluation of world-class automotive
industries. By utilising this performance value analysis, it is expected that
managers/decision makers will gain sufficient confidence for the evaluation of world-
class automotive industries. This paper presents a set of critical success factors (simply
called critical factors) and their performance variables for world-class automotive
industries. The reliability and validity analyses were carried out by using the SPSS ® 11.5
statistical tool on the data obtained from the Indian automotive industries. Finally, the
performance value analysis model was used to evaluate three Indian automotive
industries.

2 Background

Automobile production accounts for the largest manufacturing activity in the world
(Tovey, 2002). Globally, the last 25 years have seen profound changes in the automotive
industry. The trigger for these was the emergence of Japan as a world leader in the
automotive industry by the early 1980s because of their superior techniques in the fields
of quality, maintenance and inventory control. This forced the automotive industries
worldwide to reinvent themselves in order to survive. On the canvas of the Indian
economy, the automotive industry occupies a prominent place. Owing to its deep forward
and backward linkages with several key segments of the economy, the automotive
industry has a strong multiplier effect and is capable of being the driver of economic
growth (Singh et al., 2007). The well-developed Indian automotive industry ably fulfils
this catalytic role by producing a wide variety of vehicles: passenger cars; light, medium
and heavy commercial vehicles; Multiutility Vehicles (MUVs); scooters; motorcycles;
mopeds; three-wheelers; tractors, etc.
However, in India, a maze of regulations governing product, capacity, technology and
foreign investment perpetuated obsolete technologies and made the Indian automotive
industry out of synchronisation with the world automotive industry. It was only in the
1980s that the inflow of foreign technology and equity was permitted and manufacturing
capacity constraints lifted. The gradual opening up of the Indian economy in the 1990s
resulted in the entry of foreign competitors and expanded production by domestic
manufacturers. After the lifting of licensing in 1993, 17 new ventures have come up, of
which 16 are for the manufacture of cars. There are at present 12 manufacturers of
passenger cars, five manufacturers of MUVs, nine manufacturers of commercial vehicles,
12 of two-wheelers, four of three-wheelers and 14 of tractors besides five manufacturers
of engines (MEA, 2005). Almost all global players in the automotive industry such as
Ford, General Motors, Suzuki, Honda, Daewoo, Hyundai, Toyota, Piaggio, Yamaha,
Kawasaki, etc., have their plants in India (Singh et al., 2006). The industry has an
investment of a sum exceeding US$12 billion and the turnover of the automotive sector is
more than US$24 billion (Singh et al., 2007). The industry provides direct employment to
690 K.S. Sangwan and A.K. Digalwar

0.45 million persons and generates indirect employment for 10 million persons. The
contribution of the Indian automotive industry to Indian GDP rose from 2.77% in 1992–
1993 to 4% in 2005–2006. However, the Indian automotive industry is facing competition
from both imports and multinational companies in the domestic markets. The new
competition is in terms of reduced cost, improved quality, products with higher
performance, a wider range of products and better service, all delivered simultaneously
(Digalwar and Sangwan, 2007).
In WCM, the focus is on continuous improvement. Evaluation of projects within an
organisation or evaluation of organisations among themselves is necessary to activate
continuous improvement. As organisations adopt WCM, the traditional performance
variables like production, cost or profit are not sufficient to evaluate these world-class
organisations. They need new performance variables for evaluation based on business
strategy and corporate objectives (Digalwar and Metri, 2005). Although a number of
authors have identified various factors or performance measures for achieving excellence
in the business (for example, Saraph et al., 1989; Black and Porter, 1996; Ahire et al.,
1996; Flynn et al., 1994; Singh et al., 2006; Koh and Gunasekaran, 2006; Franceschini
et al., 2006; Maguire et al., 2006; Venkata Rao, 2007; Yusuf et al., 2007, Digalwar and
Sangwan, 2007), it has been observed that no work has yet been reported on the
development and validation of a set of performance variables that covers the entire
domain of WCM. A good attempt has been made by Flynn et al. (1994) to identify WCM
performance measures in the US and Japanese manufacturing industries. However,
these measures fail to capture the entire domain of WCM. Kodali et al. (2004) have
identified performance indicators for WCM, but these are purely theoretical in nature
with no input from industry. Multicriteria measures with the input from industry need
to be developed for Indian firms to cope with dynamic environment prevalent in the
automotive industries.

3 Methodology

A review of research articles was done to identify the performance variables for WCM
(Hayes and Abernathy, 1980; Swamidass and Newell, 1987; Utzig, 1988; Saraph et al.,
1989; Dixon et al., 1990; Reed, 1991; Maskell, 1992; Gerwin, 1993; Flynn et al., 1994;
Flynn et al., 1997; Kasul and Motwani, 1995; Ahire et al., 1996; Black and Porter, 1996;
White, 1996; Ghalayini and Noble, 1996; Voss et al., 1997; Gunasekaran et al., 1998;
Bond, 1999; Manoochehri, 1999; Ahmed et al., 1999; Koste and Malhotra, 1999; Sahay
et al., 2000; Medori and Steeple, 2000; Slack et al., 2001; Chan, 2002; Petroni and
Bevilacqua, 2002; Francisco et al., 2003; Neely et al., 2001; Lockamy, 2003; Vokurka
and Davis, 2004; Gosselin, 2005; Mosey, 2005; Wee and Quazi, 2005). A total of 172
performance variables were identified to evaluate the WCM systems. These performance
variables were categorised using nominal grouping technique into 12 critical success
factors or simply critical factors – top management commitment; knowledge
management; employee training and empowerment; innovation and technology; vendor
management; production planning and control; quality; flexibility; cost; environmental
health and safety; customer service and satisfaction; and company growth – for the
evaluation of WCM systems.
 Evaluation of world-class manufacturing systems 691

A questionnaire was then designed with the intention to tap the collective wisdom
of the professionals working with Indian world-class industries. To ensure
understandability, the questions were critically reviewed for their clarity and content. A
five-point Likert scale (1–5) – where 1 means Very low, 2 means Low, 3 means Medium,
4 means High and 5 means Very High – was used to allow experts to respond to the
survey items. Respondents were requested to rate the degree or extent of practice of each
item with reference to the respective performance variables in the five-point response
scale. A pretest indicated a questionnaire completion time of 40–45 minutes.
For data collection, the Indian automotive industries – which have won awards such
as MBNQA, Rajiv Gandhi National Quality awards, Golden Peacock National Quality
awards and Best Management Practices awards – have been targeted. The award-winning
companies were targeted for the data collection for the simple reason that they are using
world-class practices. It is fair to say that a sample drawn from the firms following world-
class practices could be considered a reasonably representative measure of the WCM.
Apart from this, samples from various firms located in different regions of India were
targeted for the survey. The questionnaires were mainly targeted to middle- and upper-
level management professionals, as they are likely to be ‘thought’ leaders with respect to
performance measurement activities in their organisations.
The survey was administered from March 2005 to August 2005. Next, importance
index analysis and, for statistical analysis, reliability and validity analysis of the data
obtained were carried out using SPSS ® 11.5 for Windows. The importance index analysis
was done to determine the numerical scores (importance index) of each performance
variable. The reliability and validity analysis was done to determine the relationship
between the performance variables and to validate the performance variables. From
the results of reliability and validity analysis, some of the performance variables were
found to be unreliable and statistically invalid for the WCM Indian automotive industry
and hence eliminated. Out of a total of 172, the 73 statistically reliable and validated
performance variables and critical factors for world-class Indian automotive industries
with their importance index are given in Table 1. Results of the importance index
analysis (Table 1) show that Indian automotive industries have given higher weightage
to top management commitment (average importance index 0.8880) followed by quality
(0.8731), customer services and satisfaction (0.8496), company growth (0.8465),
environmental health and safety (0.8353), knowledge management (0.8077), innovation
and technology (0.8035), production planning and control (0.8017), vendor management
(0.7896), flexibility (0.7747), employee training and empowerment (0.7716) and cost
(0.7687). This shows that the Indian world-class companies are not concerned about
the cost as compared to the quality, customer services and satisfaction. The study of
performance variables shows that the highest weightage has been given to monitoring
progress (0.9310) by the top management. It shows that the organisations are concerned
with the continuous improvement of the organisation, which is one of the basic
requirements for becoming world class.
692 K.S. Sangwan and A.K. Digalwar

Table 1 Critical factors and performance variables for Indian automotive industry

Direct/ Importance
Critical factor Performance variable Notation Indirect index
Top Resource allocation [TM1] ▲ 0.8897
management
Planning for change [TM2] ▲ 0.8483
commitment
Monitoring the progress [TM3] ▲ 0.9310
Involvement in strategic [TM4] ▲ 0.8828
quality management
Knowledge Availability of resources for KM [KM1] ▲ 0.8069
management
Suitability of organisation culture for KM [KM2] ▲ 0.7793
Willingness of employees to [KM3] ▲ 0.7931
share knowledge
Information, Communication and [KM4] ▲ 0.8069
Technology (ICT) used for KM
Number of times the knowledge has helped [KM5] ▲ 0.8069
to solve problems
KM helps to reduce response/lead time, [KM6] ▼ 0.8000
reduction in rejection process cycle time
Decrease in new product development cycle [KM7] ▲ 0.8345
time by KM
Presentations, meetings, discussion, etc., [KM8] ▲ 0.8345
help to create new knowledge
Employee Frequency of training and retraining [ETE1] ▲ 0.7517
training and
Training inside the company by in-house [ETE2] ▲ 0.7655
empowerment trainer (Excluding on-the-job training)
Training inside the company by [ETE3] ▲ 0.7310
outside trainer
Total expenditure for training [ETE4] ▲ 0.7586
Identification of training needs [ETE5] ▲ 0.7793
Satisfaction of employees with [ETE6] ▲ 0.7310
overall training
Workers authorised to inspect their [ETE7] ▲ 0.8207
own work
Workers encouraged to solve problems [ETE8] ▲ 0.8552
Extent of cross-functional team usage [ETE9] ▲ 0.7517
Innovation and Development in manufacturing processes [IT1] ▲ 0.8069
technology
Reduction in manufacturing lead time [IT2] ▲ 0.7931
Development of innovative products [IT3] ▲ 0.8138
Development of environmentally friendly [IT4] ▼ 0.8000
products and packaging
Environmental Investment in safety (safety training budget) [EHS1] ▲ 0.8414
health and safety
Levels of communication about health and [EHS2] ▼ 0.8414
safety issues
 Evaluation of world-class manufacturing systems 693

Table 1 Critical factors and performance variables for Indian automotive industry (continued)

Direct/ Importance
Critical factor Performance variable Notation Indirect index
Clarity in health and safety policies [EHS3] ▲ 0.8690
Organising for safety (control, [EHS4] ▲ 0.8759
communication, cooperation, competence)
Health and safety auditing [EHS5] ▲ 0.8276
Percentage of staff attending safety [EHS6] ▲ 0.8138
committee meetings
Top management and workforce involvement [EHS7] ▲ 0.8276
in health and safety
Testing of employees’ knowledge of health [EHS8] ▲ 0.7862
and safety policies
Vendor Suppliers selection based on quality rather [VM1] ▲ 0.7931
management than price or schedule
Thoroughness of supplier rating system [VM2] ▲ 0.8069
Extension of long-term contracts to suppliers [VM3] ▲ 0.7655
Clarity of specifications provided to suppliers [VM4] ▲ 0.7862
Suppliers’ responsiveness to requests [VM5] ▲ 0.7586
for changes
Relationship with supplier [VM6] ▲ 0.8276
Production Extent of preventive/productive [PPC1] ▲ 0.8414
planning and maintenance work
control ▲
Stability of production scheduled [PPC2] 0.7862
Degree of automation of the process [PPC3] ▲ 0.8207
Number of Kaizens performed [PPC4] ▲ 0.7586
Quality Development of quality policies and system [QC1] ▲ 0.8897
Product reliability, durability, functionality [QC2] ▲ 0.8897
relative to competitors
Percentage of surveyed customers satisfied [QC3] ▲ 0.8483
Consistency in quality [QC4] ▲ 0.8966
System effectiveness in identifying [QC5] ▲ 0.8414
nonconformance of product
Flexibility Extent to which quality is affected by product [FX1] ▼ 0.7379
mix/volume changes
Extent to which cost is affected by product [FX2] ▼ 0.7379
mix/volume changes
Extent to which delivery performance is [FX3] ▼ 0.7172
affected by product mix/volume changes
Use of e-procurement [FX4] ▲ 0.8345
Extent of IT tools usage [FX5] ▲ 0.8253
Extent of multipurpose tools usage [FX6] ▲ 0.7954
694 K.S. Sangwan and A.K. Digalwar

Table 1 Critical factors and performance variables for Indian automotive industry (continued)

Direct/ Importance
Critical factor Performance variable Notation Indirect index
Cost Product cost and process redesign cost [CST1] ▼ 0.7448
Cost related to material handling, distribution [CST2] ▼ 0.7931
and storage
After-sales service cost (warranty) [CST3] ▼ 0.7241
Percentage reduction in data [CST4] ▼ 0.7586
maintenance cost
Plant maintenance cost (equipment failure [CST5] ▼ 0.7931
cost, breakdown cost, repair or rework cost,
spare parts inventory cost)
Customer Interaction with customers/ [CSS1] ▲ 0.8483
services and potential customers
satisfaction
Feedback on quality, delivery and [CSS2] ▲ 0.8621
price performance
Responsiveness to customer needs [CSS3] ▲ 0.8759
Customer satisfaction by product (features, [CSS4] ▲ 0.8897
quality, cost, durability, reliability)
Sales by customer recommendation [CSS5] ▲ 0.8552
Quality and process of customer service [CSS6] ▲ 0.8897
Customer service representative knowledge, [CSS7] ▲ 0.8483
skill and attitude
Time taken in transferring the problem to the [CSS8] ▲ 0.8276
person who could solve it in the best way
ICT usage for customer service [CSS9] ▲ 0.8207
Technical support provided to the customer [CSS10] ▲ 0.7793
Company Profitability [CG1] ▲ 0.8138
growth
Increase in market share [CG2] ▲ 0.8138
Reputation of organisation in market [CG3] ▲ 0.9241
Increase in number of customers [CG4] ▲ 0.8345

4 Development of a performance value analysis model for the evaluation

of WCM

Most decision problems involve multiple and conflicting objectives, goals, or attributes.
In the past three decades, many approaches have been developed based on multiattribute
utility theory and interactive approaches based on the progressive articulation of
preferences. They are built on a sound theoretical foundation but rely on strict
assumptions about the underlying preference structures. It is not uncommon that the
numerical values of some alternative criteria are imprecise and ambiguous in complex
decision problems (Takeda, 2001). The evaluation of automotive organisations based on
 Evaluation of world-class manufacturing systems 695

12 critical factors and 73 performance variables is one such complex decision problem.
The PVA model is well received in literature (Sangwan, 2006; D’Angelo et al., 1996) to
cope with imprecise and ambiguous data. This model is a revised version of utility value
analysis. PVA, a multiattribute technique that aggregates the multiple-attributes, is used
to evaluate three Indian automotive industries based on the data obtained in the previous
section. The data have been asked in qualitative terms (Very low, Low, Medium, High
and Very high).

4.1 PVA algorithm

The steps to follow in using the PVA are as follows:
Step 1 Define the problem and determine the objective.
Step 2 Identify the alternatives (ai) available. (The alternatives are: Indian automotive
industries A, B and C designated as IAIA, IAIB, and IAIC respectively. The
industries have not been identified to maintain confidentiality.)
Step 3 Determine the critical factors governing the problem and the performance
variables (cj) measuring these critical factors (Table 1).
Step 4 Classify the performance variables into direct (performance grows while
measure increases) and indirect categories (performance grows while measure
decreases) (Table 1).
Step 5 Form the performance matrix, i.e., coefficient eij related to the performance
variables cj (j = 1, 2, …J) and the alternative ai (i = 1, 2, …I) (see Table 2).
Step 6 Assign absolute importance wj for each performance variable from the
importance index analysis of Table 1.
Step 7 Obtain the relative importance for each performance variable (cj) from absolute
importance wj as:
wj
Wj 

such that W  1.
j

wj

Step 8 Form the normalised performance matrix. This involves transforming the initial
performance measure in a score/weight for easier interpretation based on the
value function fj for each performance variable (cj) as follows:
 Direct category (when performance increases while measure increases)
eij
p  for each alternative ai related to attribute c j.
i
j max(ej )

 Indirect category (when performance grows while measure decreases)

min(ej ) for each alternative a related to attribute c .
pij i j
eij

The normalised performance matrix is given in Table 3.

696 K.S. Sangwan and A.K. Digalwar

Step 9 Obtain partial performance measure Zij by multiplying relative weightage Wj of

the performance variable to each of its row members (alternatives), i.e., pij as:
Partial performance of j-th variable: Zij  pij  Wj (i = 1, 2, . . . I).

Step 10 Aggregate the partial performance measures for each alternative as: overall
measure (Ni) of alternative ai is the sum of Zij
J

Ni   Zij .
j 1

(Steps 9 and 10 are shown in Table 4.)

Step 11 Rank the alternatives (ai) in accordance with decreasing value of Ni.
Step 12 Perform the critical factor analysis. The results of this analysis are obtained by
setting to zero the importance of each performance variable different from the
success factor being considered. Run Step 9 to Step 11. Repeat Step 12 for all
critical factors.
Step 13 Take the decision based on the above aggregated partial performance measures
and the aggregated performance measures of critical factors (see Table 5).
A highly user-friendly software, PVA is developed in VC ++ to aid the user to compute the
partial performance measures for all performance variables and to compute the critical
factor analysis. The decision can be taken based on the figures (Figures 1 and 2) and
tables (Tables 4 and 5) generated by the developed software.

Table 2 Performance measures

PV IAIA IAIB IAIC

[TM1] Very high Very high High
[TM2] High Very high Very high
[TM3] High Very high Very high
[TM4] Very high Very high High
[KM1] High Very high Medium
[KM2] High Very high Low
[KM3] High Very high High
[KM4] High Very high Medium
[KM5] High Very high Low
[KM6] High Very high Very high
[KM7] High Very high Very high
[KM8] High High High
[ETE1] Medium Very high Very high
[ETE2] Medium Medium Medium
 Evaluation of world-class manufacturing systems 697

Table 2 Performance measures (continued)

PV IAIA IAIB IAIC

[ETE3] High Very high Medium
[ETE4] Low High Medium
[ETE5] High Very high High
[ETE6] Medium High Medium
[ETE7] High Very high Very high
[ETE8] High Very high High
[ETE9] High High Low
[IT1] Medium High Very low
[IT2] Medium Very high Low
[IT3] Medium Very high Low
[IT4] Medium Very high High
[EHS1] High High High
[EHS2] High High Very high
[EHS3] Very high High Very high
[EHS4] Very high High High
[EHS5] Very high High Medium
[EHS6] High High Very high
[EHS7] Very high High Very high
[EHS8] Very high High Medium
[VM1] High High High
[VM2] Medium Very high Very high
[VM3] Medium Very high Very high
[VM4] Low Very high Very high
[VM5] High Very high High
[VM6] High Very high Very high
[PPC1] High High Medium
[PPC2] High High High
[PPC3] Medium Medium Medium
[PPC4] Medium Medium Medium
[QC1] High Very high High
[QC2] High Very high High
698 K.S. Sangwan and A.K. Digalwar

Table 2 Performance measures (continued)

PV IAIA IAIB IAIC

[QC3] High Very high Medium
[QC4] Very high Very high High
[QC5] Very high Very high Medium
[FX1] High Very high Very high
[FX2] High Very high High
[FX3] High Very high Very high
[FX4] Medium High Medium
[FX5] Medium High High
[FX6] Medium High Medium
[CST1] Medium Very high Very high
[CST2] Medium Very high Very high
[CST3] Medium Very high Very high
[CST4] Medium Very high Medium
[CST5] Medium High Very high
[CSS1] High Very high Very high
[CSS2] High Very high High
[CSS3] High Very high High
[CSS4] High Very high High
[CSS5] High Very high High
[CSS6] Very high Very high High
[CSS7] Very high Very high Very high
[CSS8] High Very high Medium
[CSS9] High Very high Very high
[CSS10] High Very high Very high
[CG1] Medium Very high Very high
[CG2] Medium High Medium
[CG3] Very high Very high Very high
[CG4] High Very high Medium
 Evaluation of world-class manufacturing systems 699

Table 3 Normalised performance measures

PV Relative importance index IAIA IAIB IAIC

[TM1] 0.0149 1 1 0.8
[TM2] 0.0143 0.8 1 1
[TM3] 0.0156 0.8 1 1
[TM4] 0.0148 1 1 0.8
[KM1] 0.0136 0.8 1 0.6
[KM2] 0.0131 0.8 1 0.4
[KM3] 0.0133 0.8 1 0.8
[KM4] 0.0136 0.8 1 0.6
[KM5] 0.0136 0.8 1 0.4
[KM6] 0.0134 1 0.8 0.8
[KM7] 0.0140 0.8 1 1
[KM8] 0.0140 1 1 1
[ETE1] 0.0126 0.6 1 1
[ETE2] 0.0129 1 1 1
[ETE3] 0.0123 0.8 1 0.6
[ETE4] 0.0127 0.5 1 0.75
[ETE5] 0.0131 0.8 1 0.8
[ETE6] 0.0123 0.75 1 0.75
[ETE7] 0.0138 0.8 1 1
[ETE8] 0.0144 0.8 1 0.8
[ETE9] 0.0126 1 1 0.5
[IT1] 0.0136 0.75 1 0.25
[IT2] 0.0133 0.6 1 0.4
[IT3] 0.0137 0.6 1 0.4
[IT4] 0.0134 1 0.6 0.75
[EHS1] 0.0141 1 1 1
[EHS2] 0.0141 1 1 0.8
[EHS3] 0.0146 1 0.8 1
[EHS4] 0.0147 1 0.8 1
[EHS5] 0.0139 1 0.8 0.75
[EHS6] 0.0137 0.8 0.8 1
[EHS7] 0.0139 1 0.8 1
[EHS8] 0.0132 1 0.8 0.75
[VM1] 0.0133 1 1 1
[VM2] 0.0136 0.6 1 1
[VM3] 0.0129 0.6 1 1
[VM4] 0.0132 0.4 1 1
700 K.S. Sangwan and A.K. Digalwar

Table 3 Normalised performance measures (continued)

PV Relative importance index IAIA IAIB IAIC

[VM5] 0.0127 0.8 1 0.8
[VM6] 0.0139 0.8 1 1
[PPC1] 0.0141 1 1 0.75
[PPC2] 0.0132 1 1 1
[PPC3] 0.0138 1 1 1
[PPC4] 0.0127 1 1 1
[QC1] 0.0149 0.8 1 0.8
[QC2] 0.0149 0.8 1 0.8
[QC3] 0.0143 0.8 1 0.6
[QC4] 0.0151 1 1 0.8
[QC5] 0.0141 1 1 0.6
[FX1] 0.0124 1 0.8 0.8
[FX2] 0.0124 1 0.8 1
[FX3] 0.0121 1 0.8 0.8
[FX4] 0.0140 0.75 1 0.75
[FX5] 0.0139 0.75 1 1
[FX6] 0.0134 0.75 1 0.75
[CST1] 0.0125 1 0.6 0.6
[CST2] 0.0133 1 0.6 0.6
[CST3] 0.0122 1 0.6 0.6
[CST4] 0.0127 1 0.6 1
[CST5] 0.0133 1 0.75 0.6
[CSS1] 0.0143 0.8 1 1
[CSS2] 0.0145 0.8 1 0.8
[CSS3] 0.0147 0.8 1 0.8
[CSS4] 0.0149 0.8 1 0.8
[CSS5] 0.0144 0.8 1 0.8
[CSS6] 0.0149 1 1 0.8
[CSS7] 0.0143 1 1 1
[CSS8] 0.0139 0.8 1 0.6
[CSS9] 0.0138 0.8 1 1
[CSS10] 0.0131 0.8 1 1
[CG1] 0.0137 0.6 1 1
[CG2] 0.0137 0.75 1 0.75
[CG3] 0.0155 1 1 1
[CG4] 0.0140 0.8 1 0.6
 Evaluation of world-class manufacturing systems 701

Table 4 Partial performance measures

PV IAIA IAIB IAIC

[TM1] 0.0149 0.0149 0.0119
[TM2] 0.0114 0.0143 0.0143
[TM3] 0.0125 0.0156 0.0156
[TM4] 0.0148 0.0148 0.0118
[KM1] 0.0109 0.0136 0.0082
[KM2] 0.0105 0.0131 0.0052
[KM3] 0.0106 0.0133 0.0106
[KM4] 0.0109 0.0136 0.0082
[KM5] 0.0109 0.0136 0.0054
[KM6] 0.0134 0.0107 0.0107
[KM7] 0.0112 0.0140 0.0140
[KM8] 0.0140 0.0140 0.0140
[ETE1] 0.0076 0.0126 0.0126
[ETE2] 0.0129 0.0129 0.0129
[ETE3] 0.0098 0.0123 0.0074
[ETE4] 0.0064 0.0127 0.0095
[ETE5] 0.0105 0.0131 0.0105
[ETE6] 0.0092 0.0123 0.0092
[ETE7] 0.0110 0.0138 0.0138
[ETE8] 0.0115 0.0144 0.0115
[ETE9] 0.0126 0.0126 0.0063
[IT1] 0.0102 0.0136 0.0034
[IT2] 0.0080 0.0133 0.0053
[IT3] 0.0082 0.0137 0.0055
[IT4] 0.0134 0.0080 0.0101
[EHS1] 0.0141 0.0141 0.0141
[EHS2] 0.0141 0.0141 0.0113
[EHS3] 0.0146 0.0117 0.0146
[EHS4] 0.0147 0.0118 0.0147
[EHS5] 0.0139 0.0111 0.0104
[EHS6] 0.0110 0.0110 0.0137
[EHS7] 0.0139 0.0111 0.0139
[EHS8] 0.0132 0.0106 0.0099
[VM1] 0.0133 0.0133 0.0133
[VM2] 0.0082 0.0136 0.0136
[VM3] 0.0077 0.0129 0.0129
[VM4] 0.0053 0.0132 0.0132
702 K.S. Sangwan and A.K. Digalwar

Table 4 Partial performance measures (continued)

PV IAIA IAIB IAIC

[VM5] 0.0102 0.0127 0.0102
[VM6] 0.0111 0.0139 0.0139
[PPC1] 0.0141 0.0141 0.0106
[PPC2] 0.0132 0.0132 0.0132
[PPC3] 0.0138 0.0138 0.0138
[PPC4] 0.0127 0.0127 0.0127
[QC1] 0.0119 0.0149 0.0119
[QC2] 0.0119 0.0149 0.0119
[QC3] 0.0114 0.0143 0.0086
[QC4] 0.0151 0.0151 0.0121
[QC5] 0.0141 0.0141 0.0085
[FX1] 0.0124 0.0099 0.0099
[FX2] 0.0124 0.0099 0.0124
[FX3] 0.0121 0.0097 0.0097
[FX4] 0.0105 0.0140 0.0105
[FX5] 0.0104 0.0139 0.0139
[FX6] 0.0101 0.0134 0.0101
[CST1] 0.0125 0.0075 0.0075
[CST2] 0.0133 0.0080 0.0080
[CST3] 0.0122 0.0073 0.0073
[CST4] 0.0127 0.0076 0.0127
[CST5] 0.0133 0.0100 0.0080
[CSS1] 0.0114 0.0143 0.0143
[CSS2] 0.0116 0.0145 0.0116
[CSS3] 0.0118 0.0147 0.0118
[CSS4] 0.0119 0.0149 0.0119
[CSS5] 0.0115 0.0144 0.0115
[CSS6] 0.0149 0.0149 0.0119
[CSS7] 0.0143 0.0143 0.0143
[CSS8] 0.0111 0.0139 0.0083
[CSS9] 0.0110 0.0138 0.0138
[CSS10] 0.0105 0.0131 0.0131
[CG1] 0.0082 0.0137 0.0137
[CG2] 0.0103 0.0137 0.0103
[CG3] 0.0155 0.0155 0.0155
[CG4] 0.0112 0.0140 0.0084
0.8579 0.9439 0.8113
 Ta
bl
e5
Ev
Ag al
gr ua
eg tio
ate n
d of
in w
dic or
Critical factor analysis es
Total ld-
for
performance the cl
Alternatives TM KM ETE IT EHS VM PPC QC FX CST CSS CG analysis alt as
er s
IAIA 0.0536 0.0924 0.0915 0.0398 0.1095 0.0558 0.0538 0.0645 0.0679 0.0640 0.1201 0.0452 0.8579 nat m
ive an
uf
IAIB 0.0596 0.1059 0.1167 0.0486 0.0954 0.0796 0.0538 0.0733 0.0708 0.0404 0.1428 0.0569 0.9439
ac
tu
IAIC 0.0537 0.0764 0.0937 0.0243 0.1026 0.0771 0.0503 0.0530 0.0665 0.0435 0.1226 0.0479 0.8113 ri

70
3
 704 K.S. Sangwan and A.K. Digalwar

Figure 1 Partial performance analysis

0.018

IAIA IAIB IAIC

0.016

0.014

0.012
Performance measures

0.01

0.008

0.006

0.004

0.002

[TM3] [TM1]
Performance variables

Figure 2 Critical factor analysis

0.16
IAIA IAIB IAIC
Performance measures

0.14

0.12

0.1

0.08

0.06

0.04

0.02

0
TM KM ETE IT EHS VM PPC QC FX CST CSS CG

Critical factors

4.2 Results and observation of PVA

The PVA is evaluated through the empirical approach. The approach is to test a
representative set of selected test problems obtained from the Indian automotive industry.
Tables 3 and 4 show the structured process of converting the qualitative data of Table 2
into crisp values for decision making. Figure 1 shows the comparative performance of
alternatives for all the variables (partial performance measures) and helps the decision
maker(s) to take decisions for the further improvement of the grey areas.
 Evaluation of world-class manufacturing systems 705

Table 5 shows the aggregated indices for the available alternatives based on total
performance analysis as well as the critical factor analyses. This table clearly shows that
IAIB (0.9439) is the best alternative based on the total performance analysis. However,
IAIA is performing better than IAIB and IAIC for Environmental Health and Safety
(EHS) and cost (CST) factors. In Production Planning and Control (PPC), both IAIA and
IAIB are performing at equal levels (see Figure 2).

5 Conclusion

This paper presents a set of statistically validated (using the SPSS ® 11.5 statistical tool)
critical success factors and their performance variables for Indian automotive industries.
The 12 critical success factors for the evaluation of Indian automotive industries
are top management commitment; knowledge management; employee training and
empowerment; innovation and technology; vendor management; production planning
and control; quality; flexibility; cost; environmental health and safety; customer service
and satisfaction; and company growth. A multiattribute decision model, i.e., PVA, has
been developed and used to evaluate three Indian automotive industries to demonstrate
the effectiveness of the model developed.
However, critical factors and their performance variables have been developed based
on self-reported information from the respondents. The performance variables in the
questionnaire were subjective in nature. Respondents were asked to rate these variables,
based on their perception on the extent to which the variables were applicable in their
respective companies. Hence, the lack of objective measures may have introduced a
certain amount of bias into the data collected. Moreover, this work can be extended to
evaluate the automotive industries worldwide.

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