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Technology is key to world class status.

World-class manufacturing companies are beating their North American compatriots because of their use of advanced technology. And the gap is likely to widen in the future. That's just one of the conclusions of a new study, the fourth Annual Survey of North American Manufacturing Technology, by Deloitte & Touche Manufacturing Services, Cleveland, OH.

World-class manufacturers are most dominant in innovative products, products with high R&D content, state-of-the-art manufacturing-process capabilities, and work forces with a superior understanding of technology and an aptitude for applying it, the study indicates.

As a group, world-class manufacturers are much further along toward achieving computer integrated manufacturing (CIM). Nearly 50% indicate they have already implemented islands of automation, compared with less than 33% of all other manufacturers.

Overall, 62% of US manufacturers are somewhere between the CIM planning stage and the implementation stage.

According to the survey, a poorly skilled work force is one of the greatest barriers to the adoption of CIM for most American manufacturers. Other reasons cited in addition to inadequate education, training, and technical skills are the difficulty with financial justification and a lack of management vision and initiative.

And you can imagine where the burden for providing world-class human resources will fall--right on the doorstep of those manufacturers who are serious about competing in a world economy. What will be needed are superior education and technical training--skills not likely to be produced by the US educational system, the study indicates.

Survey results are based on 872 responses from manufacturing executives--42% from Fortune 500-sized firms-- throughout North America and Canada. Over 85% of all respondents identified themselves as either president (32%) or vice president (54%).

The survey reported results based on responses of "world-class" companies for the first time this year. Companies were classified according to their own perception: as world class or approaching world class (23%); competitive but in need of improvement (68%); and noncompetitive and in need of substantial improvement to become competitive (9%).

In general, world-class manufacturers have developed their competitive arsenal by placing significantly greater attention on manufacturing processes, human assets, supply, chain management, facilities development, and customer services than typical manufacturers.

World-class manufacturers continue to outmaneuver their counterparts on quality, on-time delivery, speed, and total manufacturing costs, though all other North American manufacturers have narrowed the gap in quality and customer service--both of which are increasingly being regarded as only a prerequisite to compete.

The survey indicates that manufacturing excellence in the 1990s is being defined for the first time more by nonfinancial measures.

Of the common financial measures of manufacturing performance, only total manufacturing cost was ranked in the top ten. This represents a marked change from past surveys where executives explicitly cited materials, direct labor, and manufacturing overhead costs as key factors.

Time-based measures of competitive advantage, except for on-time delivery, were notably absent. Total cost reduction is expected to remain an important company-wide barometer, with US manufacturers showing increasing attention to controlling the drivers of manufacturing costs, such as labor time for rework, the number of engineering change orders, materials yield, and delivery speed.

The difference in familiarity (moderate experience) with "hard" and "soft" technologies between world-class and other manufacturers produced a little surprise. World-class companies were significantly more involved with both.

The study reported the gap for "hard" technologies was relatively easy to understand because they are capital intensive. These hard technologies are dominated by computer and information-based applications (e.g. CAT--computer-aided testing, CAE, CAD, LANs, industrial computers) and sophisticated shop-floor technologies (e.g. robotics and FMCs).

The experience gap with the "soft" technologies is even more pronounced and less explainable, survey results indicate. These noncapital intensive techniques are where world-class companies have most distanced themselves from all other manufacturers.

"Soft" technologies include DFM--design for manufacturing, total productive maintenance, predictive preventive maintenance, JIT, simultaneous/concurrent engineering, Kanban, value analysis/engineering, integration of manufacturing systems, MRPII, fail safing (kaeyoke).

The study, while noting that there is a significant gap between the use of Manufacturing Resource Planning (MRPII) by world-class manufacturers (74%) vs only 59% for non-world-class companies, cites strong statistical evidence that MRPII has peaked. The study believes that the MRP investments of the 70s and 80s will be dismantled during the 90s.

"Over the last 25 years, MRP implementations have suffered a number of problems, such as length of time and magnitude of effort to implement, the cost to implement, and the maintenance discipline required to use the system properly. Very few, if any, MRPII users have enjoyed inventory turns in excess of four, although there are exceptions." Respondents indicate that JIT and Kanban are expected to be the techniques of the future.

Key factors for future success
 Percent indicating
 Factor significant
1. Perceived quality 81%
2. Reliable delivery time 72%
3. Conformance quality 71%
4. Prompt handling of complaints 64%
5. Product reliability 62%
6. Expand customer relationships 55%
7. Strong supplier relationships 55%
8. High value products 55%
9. Delivery speed 52%
10. Product functionality 52%
COPYRIGHT 1991 Nelson Publishing
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1991 Gale, Cengage Learning. All rights reserved.

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Title Annotation:World-class manufacturing
Publication:Tooling & Production
Date:May 1, 1991
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