Aim High

Not to confuse effort with results, but at the most basic level, North America's best manufacturers are simply doing more. That much is evident in the charts below. What's also evident is that, from lean-manufacturing techniques to IT systems, such initiatives can have a huge impact on performance. Comparing the Best Plants finalists from the past five years with respondents to the most recent IndustryWeek Census of Manufacturers (2001), a greater proportion of the finalists have adopted a continuous-flow production strategy, pull systems and a cellular work structure. These plants also invest significantly more effort, but not more dollars, in employee training. And as ambivalent as many manufacturing executives are about the huge investments they've made in ERP, CRM, PDM and APS systems, the best manufacturers have managed to implement more in the area of information technology as well. All of this work seems to have paid off in shorter order-to-shipment lead times, higher on-time delivery rates, higher inventory turns and better quality. Lacking direct correlation, such cause-and-effect conclusions are risky. But a new study by researchers at Ohio State University's (OSU) Fisher College of Business, to be published in an upcoming issue of the Journal of Operations Management, statistically links some of these organizational practices with better performance. The analysis is based on IndustryWeek's 1999 Census of Manufacturers. It reinforces many managers' intuitive understanding that diverse practices -- lean-manufacturing techniques specifically -- are more effective when implemented together as part an integrated program. Thus, supporting the Best Plants finalists' multipronged approach to operational improvement. "The biggest contribution of this study is that it confirms that lean programs pay off by analyzing objective data from a large number of plants across many different industrial situations," observes Peter Ward, associate professor of operations management at OSU. This "makes for a more convincing argument than the anecdotes and success stories we have largely relied upon in the past." Ward goes on to note that these practices are being implemented across all sectors. They aren't isolated to automotive, aerospace or electronics. And their conclusions hold true even after accounting for the effects of industry, plant size, plant age and unionization. This is a useful lesson for those who might discount the practices and results highlighted here as not being appropriate or realistic for their industries or markets. Based on an exceptionally small selection of North American manufacturing operations, the Best Plants data may not be deep enough to reveal precise adoption levels or raw performance by industry. But considering the diversity of this year's Best Plants winners alone, which range from automotive suppliers to aircraft to a chemical maker, manufacturing operations are more alike than some people care to believe. As the planning and goal-setting cycle for 2003 swings into full gear over the next few months, managers should take a moment to reflect and ask themselves, "If they can do it, why can't we?" Data Sources The Best Plants data cited here were reported by finalists (the top 25 from which IndustryWeek selects the 10 winners each year) from 1998 to 2002. Duplicate occurrences of the same factory were excluded; if a finalist from one year was a finalist or won the award in a subsequent year, the prior appearances were removed to avoid double counting. The Fifth Annual Census of Manufacturers was conducted from mid-April to mid-June 2001. The four-page written survey was mailed to 29,000 IndustryWeek subscribers; 2,511 completed surveys were received for a response rate of about 9%. The "world-class" results reported here are based on respondents' self-evaluation of their progress toward world-class performance. The Census research project is a joint effort of IndustryWeek and PwC Consulting. For access to the Census of Manufacturers and Best Plants databases, see IndustryWeek's Benchmarking Toolkit, 800-326-4146 or www.industryweek.com/products/toolkit. Management Practices -- Workflow, widely adopted