Just In Time -- Are Your Best Practices Getting The Job Done?

Product innovation could be the key to turning around U.S. manufacturing, based on Singapore's recent success.

It's good to get out of the office every now and then, and last month I got way out, as in "other side of the world" out -- namely the Southeast Asian nation of Singapore. The occasion was the inaugural Manufacturing Excellence Awards (MAXA) program, which is analogous to IW's Best Plants program. The obvious difference between programs is that all the plants are based in Singapore (although the parent companies of all six plants that were named MAXA finalists are in the U.S., Europe and Japan).

If you haven't looked at a globe lately, Singapore is a small island situated at the tip of the Malaysian peninsula that has dedicated itself to being a world-class manufacturing center. In fact, in a recent study undertaken by KPMG, Singapore was named the world's most competitive place for business, while the World Bank dubbed the island nation the "world's easiest place to do business." More than 8,000 manufacturers are located in Singapore, and while the country feels the pressure from China's emergence every bit as much as Western nations do, Singapore expects to double its manufacturing output to S$300 billion (US$192 billion) within the next dozen years.

I mention all this not as a civics lesson, but to put what I'm about to say in its proper context. The country's single-minded focus on becoming a manufacturing hub is distinctly not centered on being a low-cost provider. In fact, Singapore outsources some of its low-skilled labor to nearby Malaysia and Indonesia. Nor is it centered solely on the high-tech industry, as Singapore also competes in such areas as pharmaceuticals, offshore oil rigs, flavors and fragrances, transport engineering and aerospace MRO.

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See Chain Reactions: David Blanchard's new blog about supply chain management, including the blog entry "The Best Manufacturer in Singapore Is From the U.S.A."
The secret to Singapore's success, in a nutshell, is customer-driven product development.

I asked Professor Kumar Bhattacharyya, the chair of the judging panel and an international expert on manufacturing, to describe the best practices that characterize Singapore's award-winning factories.

"All of the manufacturers that we visited are using best practices," Lord Bhattacharyya says. "Lean manufacturing, Six Sigma, kaizen, teamwork -- these are all things of the past. Every manufacturer these days has a continuous improvement or quality program going. To be the best of the best, you've got to have something extra."

The U.S. auto industry, he points out, knows everything it needs to know about Japanese production methods, and yet the Detroit Three are still in trouble. "Why? Because of their products. Product development is what interests the consumer. If you don't have a working environment that fosters and encourages innovation, your company will suffer because of a lack of products that get customers excited."

Hsieh Tsun-yan, a McKinsey & Co. director as well as a MAXA partner, agrees. "All the MAXA winners have strong operational performance. The competitive edge comes from a mindset that goes over and above the use of best practices by integrating manufacturing with product launch, design and R&D." The companies whose manufacturing excellence seems to be most sustainable, he adds, are "those that most value their people and demonstrate a high level of innovation."

I spent the better part of a week touring the island's manufacturing facilities, and everywhere I kept hearing the same song: "Invest In Innovation."

Certainly Singapore's government plays a significant role in promoting and helping to sustain its manufacturing industry, and it's debatable whether what they're doing is possible anywhere else. Singapore's politics really isn't the issue here, though.

The question I'll leave you with is simply this: If your production processes are state-of-the-art, but nobody is buying your product, could the problem lie not in how you're making your product, but in what you're making?

David Blanchard is IW's editor-in-chief. He is based in Cleveland. Also see Chain Reactions: David Blanchard's new blog about supply chain management.

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