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Achieving "World Class"
Performance in Manufacturing
Michael D Akers
BEng(Hons) DMS CEng MIEE
Prepared for Dr D Woodcock

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Background
Traditionally senior management has held a negative view of the manufacturing
function within their organisations. In their view the manufacturing function has
acted as a "dead weight" on the company's performance as if, somehow, the
organisation would perform better without the manufacturing function.
Increased competition from foreign and domestic competitors is forcing these
traditional companies to change these attitudes and traditions. However,
companies cannot atone for years of neglect simply by throwing money at the
problem. The challenge faced by these organisations is not simply one of better
product design, marketing ingenuity or financial strength. The competitors strength
is based on something much harder to duplicate - superior manufacturing capability.
The passage from a relatively backward manufacturing system to a "World Class"
system is a long and difficult journey which cannot be accomplished simply by
copying the competition. Becoming a world class manufacturer involves
commitment to a well developed strategy and cultural change. Hayes &
Wheelwright proposed a series of stages in the formulation of a strategy to become
"World Class". Advancing from stage to stage from stage to stage is difficult, it
involves new skills and, more significantly, new attitudes. The earliest attempts to
develop strategies concentrated on overcoming the traditionally negative approach
to manufacturing.
Simply moving from negative to neutral was seen as a significant advance.
The Internally Neutral Manufacturing Organisation
The lowest stage in the Hayes & Wheelwright series, stage 1, represents an
"internally neutral" view of manufacturing. Management regard the function as
neutral, incapable of influencing competitive success. they seek only to minimise
the negative effects it may have, they do not expect manufacturing to make any
positive contribution to the business and may well tend to discourage it from trying.
The management of these organisations typically view manufacturing capability as
the result of a few structural decisions about capacity, facilities and technology.

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When strategic issues involving manufacturing do arise management usually call in
outside "experts" in the belief that their own organisation lacks the necessary
expertise.
Similarly, technology is purchased "off the shelf" from external vendors and only to
add capacity when the need becomes obvious.
The function is typically staffed with low skilled workers and managers in the belief
that "anybody ought to be able to manage manufacturing". Measurements and
controls are geared to short term performance to ensure that "manufacturing does
not get too far off track" and yet at the same time management wants manufacturing
to be flexible so that the business can move in any new direction considered
necessary. This is a reflection of the lack of commitment to current products and
markets rather than true manufacturing flexibility which would enable them to better
serve their existing markets.
Competitive External Neutrality
Moving on from the internally neutral stage involves seeking a competitive external
neutrality which is simply a parity with major competitors on the manufacturing side
of the business rather than the "don't upset the apple cart" internal neutrality of the
previous stage.
Moving from the previous stage to this stage involves analysing the best competition
and determining industry standards. Typically investment in new technology and
equipment is aimed at achieving the industry standard, when product developments
occur manufacturing is expected to respond with suitable processes. They are
expected to buy in the technology to meet the current requirements. These
investments result in a series of step changes in performance with little substantial
improvement between these steps. Senior management of companies in this
situation regard this type of resource allocation as the most effective way of
addressing the major strategic issues in manufacturing.

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This approach of keeping up with the industry average is better than lagging behind,
but not much. Care must be taken with this approach as misinterpretation can lead
to poor investments.
Progressive companies will rationalise this approach as, "if you can't be as good as
the competition then you can't be better", and will use it to provide a base structure
to build on to create a competitive edge rather than use it in a purely defensive role.
The Internally Supportive Organisation
The next stage involves a considerable shift in attitudes and expectations.
Organisations at this stage, Hayes & Wheelwright stage 3, expect the organisation to
actively support and strengthen the company's competitive position and become
"internally supportive". This is perhaps one of the most difficult conversions as it
requires attitudinal changes as well as re-skilling of workers, staff and operatives.
Neutrality is replaced with support to the overall business strategy. Management
take a long term view of manufacturing and all manufacturing investments are
automatically taken into account, involving the manufacturing function in the planning
and decision making function becomes the norm rather than the exception.
Procedures which ensure the systematic examination of manufacturing issues when
forming the business strategy are developed, typically tools such as mission
statements and plant charters support this approach.
Management at this stage begin to see that manufacturing can contribute more than
simply lower costs. Manufacturing strategy is translated into a planned sequence of
events, investments and system changes. Point solutions such as the introduction
of CAD/CAM, robotics or JIT should be avoided as complacency can occur and the
company can slip back into a "business as usual" attitude.
A program of continuous improvement is often implemented at this stage. The role
of the shop floor worker will be reviewed as part of this activity and problems with the
necessary cultural changes may extend the time span required to make the
necessary changes.

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This stage is the most important one and the decisions taken affect the company
profoundly as the foundations of change are laid.
The Externally Supportive Organisation
The fourth, most progressive stage, of manufacturing development occurs when
manufacturing strategy rests to a significant degree on the company's manufacturing
capability. Manufacturing should not dictate strategy to the rest of the organisation
but should participate in a co-ordinated effort amongst functions. the aim of this
stage is to enable the company to "become a manufacturing company, rather than a
company that manufactures".
Manufacturing management is involved in development of overall strategic plans and
business strategies, not just responding to business strategy but actually helping to
form it. Management takes a longer term, integrated view and the potential of new
manufacturing practices and technology becomes part of the business plan. The
company is able to respond to technological developments far quicker and will be
involved in the proactive use of technology.
The search for new technology and practises starts before any market pressures
force the search and the source of ideas and solutions comes from the experience
and competence of the manufacturing function.
The company's own technical manufacturing experts avoid buying "off the shelf"
technology, which is easily copied by competitors, and advise general purpose
machine builders as to their exact requirements.
Senior management recognise the quality and value of the manufacturing solutions
which leads to a high level of managerial co-operation as the manufacturing
management are treated as peers by other functional managers.
These attitudes enable manufacturing to influence competitiveness, not simply react
to other peoples suggestions. The business develops its long term plans with the
expectation of manufacturing involvement in satisfying the market requirements.
Manufacturing strategies have equal footing with other functional strategies.

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Organisational Transformation
Moving from the stage 3 organisational structure into the stage 4 structure involves a
high degree of cultural and organisational change in the manufacturing infrastructure
affecting all areas. In particular technical competence is recruited into the
organisation and existing employees are trained to provide technical competence
from within.
The decision to pursue an externally supportive, and subsequently world class,
manufacturing organisation is based on a number of factors. Management must be
confident that the knowledge and expertise is present in the organisation and that
sufficient training programs are in place to provide future continued expertise.
Consideration must be given to the cultural state of the company, if sufficient
attitudinal changes have not occurred then pursuing a world class manufacturing
organisation will do more harm than good.
Financial consideration must also be given as this type of program will involve
significant financial investment.
The principal aim of these type of changes is to increase the advantage over the
competition. After consideration of the above points the company must make the
difficult decision as to whether pursuing this type of organisation is the right direction
to take.
The Development Continuum
As a company moves along the development continuum management of the
transition requires a special kind of leadership because the task at hand is to change
the way people think, not merely how they can be instructed to act. This is
particularly important in attitudes to human resources management.
Companies in stages 1 - 3 tend to adopt a command and control structure where the
emphasis is on direct supervisory control and the co-ordination of information. Stage
4 companies adopt a learning managerial structure where the emphasis is on
indirect control thorough systems and values where problem solving information is
important.

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Most young companies have manufacturing functions at stage 1 or 2 and are likely to
remain at this initial stage until external pressures force a change. As long as no
competitor develops superior manufacturing capabilities they will find this state of
affairs satisfactory. When such competition arises most of these companies are
unlikely to achieve a full, lasting move to stage 3 before reverting to stage 2. The
reasons for this are due to the move from stage 2 to 3 being made in a crisis
environment when management sees the objective as regaining competitive parity
with the competition. When such parity is restored the organisations natural
tendency is to return to a business as usual" mentality as soon as the crisis appears
to have passed.
Making the Move
The jump to a stage 4 organisation implies a deep shift in manufacturing's' role, in its
self image and in the view of it held by managers of other functions. It involves
changing the way that the rest of the organisation thinks about manufacturing and
interacts with it. because co-ordination among functions is crucial manufacturing
must have its own house in order. Becoming a stage 4 organisation is not
something that the organisation simply chooses to do. Because future
competitiveness rests on continued improvement and sustained effort the
organisation must have first done all the appropriate groundwork to provide a broad
base on which to build.