World class manufacturing: strategies for continuous improvement.

America's manufacturing competitiveness has been in serious decline for well over a decade. The authors and many others believe that the major reason is a weakness in the way U.S. managers have guided their companies, particularly in the areas of manufacturing and technology management. The current challenge for all American manufacturers is to regain and maintain a competitive advantage in the global market. To meet this challenge, various philosophies and approaches for managing manufacturing and technology are required. This article presents and discusses the strategies and approaches that may be used by American manufacturers to achieve world-class manufacturing status. This philosophy focuses first and foremost on continual and rapid improvement.

Slow productivity growth, lost market share, and growing trade deficits indicate clearly that the United States is losing its ability to compete. How did U.S. industry lose its competitive edge? The causes most often cited include high labor costs, outdated factories and equipment, and inflexible unions, as well as favorable government policies and incentives among the governments of chief competitors. Many authors and researchers however, believe that the real reason for the erosion of the U.S. competitive position is the way American managers have guided their companies, particularly in the areas of manufacturing and technology management. (1)

The challenge for American manufacturers is clear. They must try to regain and maintain a competitive advantage in the global market. To meet this challenge, they must be willing to try different philosophies and approaches for managing manufacturing and technology. The purpose of this article is to present and discuss a strategy that may be used by American manufacturers to regain world-class manufacturing status. This philosophy focuses on continual and rapid improvement. Examples of actual improvements achieved by selected manufacturing companies are also presented.

World-Class Manufacturing Philosophy

A manufacturing firm achieves world-class status when it has successfully developed manufacturing capabilities to support the entire company in gaining a sustained competitive advantage over its competitors in such areas as cost, quality, delivery, flexibility, and innovation. World-class manufacturers regard their manufacturing operations as being externally supportive, that is, playing a key role in helping the entire company to achieve an edge over its competitors. (2) They seek to outperform their global competitors in targeted areas; they are not content simply to copy their competition. They dislike being dependent on outside organizations for expertise; they want to develop their own work force, equipment, and systems, but they also respect the capabilities of others. Therefore, they continually scrutinize the outside world, particularly their top competitors, to ensure that they are aware of the newest ideas and approaches. The most recognizable characteristic of world-class manufacturers is their abi lity to adapt quickly to changing customer and market requirements and to get their new products designed, produced, and delivered to the customers better and faster than their competitors. The company that has this ability tends to grow faster and be more profitable than its competitors.

World-Class Manufacturing Defined

World-class manufacturing (WCM) is defined as a manufacturing philosophy or ideology that is used to achieve world-class manufacturer status. The essence of WCM philosophy is continuous improvement involving everyone in the organization. (3) Organizations that adopt this philosophy constantly seek opportunities for improvement in such key competitive areas as quality, cost, delivery, flexibility, and innovation. Such improvements are essential to survival and profitability.

The emphasis on continual improvement is the ultimate test of a world-class organization. Robert Hayes, Steven Wheelwright, and Kim Clark, the authors of Dynamic Manufacturing, explain that any well-run and adventurous company may seize a temporary advantage over its competitors by adopting a particular innovative product or process design, or by investing in a state-of-the-art production facility. (4) It may appear initially that such a company has achieved parity with those other companies that truly compete through their manufacturing capability, but if this new design or facility comes to be regarded as a goal in and of itself, if the organization does not immediately begin experimenting and trying new things, the advantage is soon lost. Richard Schonberger, author of World Class Manufacturing, suggests continual and rapid improvement as an overriding goal for world-class manufacturing. (5) Masaaki Imai, the author of KAIZEN, points out that KAIZEN (which means gradual, never-ending improvement, doing "li ttle things" better; setting and achieving ever-higher standards) is the key to Japan's competitive success. (6)

Framework for Continuous Improvement

Companies that are pursuing world-class status may take different paths that, in turn, require different precepts. There are four dominant principles of which these companies may choose one or more.

1. Just-in-Time (JIT) - The JIT principle focuses on the elimination of waste, with waste defined as anything other than the minimum amount of equipment, materials, parts, space, and workers' time, that are absolutely essential to add value to the product. (7)

2. Total Quality Control (TQC) Under the TQC principle, everyone in the organization must be involved in improving the product's quality to meet customer needs. (8) The emphasis is placed on defect prevention rather than defect detection and development of an attitude of "do it right the first time." (9)

3. Total Preventive Maintenance (TPM) - With the TPM principle, machines and equipment are maintained so often and so thoroughly that they rarely ever break down, jam, or misperform during a production run. (10)

4. Computer Integrated Manufacturing (CIM) - CIM involves the integration of the company's operations from design, production, and distribution to after-sales service and support in the field through the use of computer and information technologies."

Total Quality Management

The term Total Quality Management (TQM) has been discussed as an approach to achieving world class status. In fact, an entire issue of Business Week was devoted to "The Quality Imperative." TQM programs typically embrace several of the previously listed WCM principles.

The United States General Accounting Office (GAO), in its report, "Management Practices: U.S. Companies Improve Performance through Quality Efforts," concluded that although TQM applications are unique to participating organizations, certain attributes are common to all TQM companies. These commonalities are perhaps best represented by the criteria used for the Malcolm Baldridge National Quality Award which include:

* Customer Driven Quality

* Strong Quality Leadership

* Continuous Improvement

* Action Based on Facts, Data and Analysis

* Employee Participation

The methodology of the GAO Report was to survey companies competing for the Malcolm Baldridge Award that had qualified for site examinations (the group of finalists from which the winner is chosen). The objective of the study was to determine the impact of TQM on corporate performance by examining four areas:

* employee relations

* operating procedures

* customer satisfaction

* financial performance

The results of that study (Table One) show substantial improvements in each of the four areas studied. The study concludes that TQM is a clearly useful approach to improving a firm's competitive capabilities be it large or small, service or manufacturing oriented, domestic or international.

Imperatives for Increased National Productivity

Researchers and the MIT Commission on Industrial Productivity identified three long-term trends that are expected to have a major impact on future productive performance. (13)

First, the internationalization of economic activity is expected to continue, with an accompanying intensification of competition. Third World countries are expected to develop or increase their industrial capacity, thus increasing their potential for impact on the global marketplace.

Second, increased market sophistication is anticipated, including trends toward more segmentation and specialization, with a growing emphasis on product quality. Product requirements will become more customized, which will increase the need for more flexible manufacturing processes.

Finally, technological advances are expected to continue at their current pace. As market integration continues, information systems will become critical to providing timely market response through flexible production systems.

As a prescriptive response to these three anticipated long-term trends, researchers identified five imperatives that "...must be adopted by industry, labor, government, and the educational community." (14) The five imperatives include:

* Focus on the "New Fundamentals of Manufacturing"

* Develop a "New Economic Citizenship"

* Combine Individualism and Cooperation

* Focus on a World Economy

* Provide for the Future

Focus on the "New Fundamentals of Manufacturing"

The MIT Commission suggests that a new hierarchy of management concerns be developed that puts production ahead of finance and planning. New measures must be developed to accurately reflect long-term performance. New technology integration should support the company's strategic objectives. Manufacturing processes must be flexible and innovative, with a strategic move away from the outdated mass production system.

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