Viewpoint: Implementation is key to becoming a world-class manufacturer.

Hardly a week passes without some company shouting from the rooftop that it has discovered the set of initiatives that allows it to make a quantum leap ahead of the competition. But have you ever wondered if any companies actually follow through on the latest industry trends, or do they just talk about them? The Second Annual IndustryWeek Census of Manufacturers demonstrates that world-class companies typically don't just talk the talk; they're walking the walk right to the forefront of their industries. To be fair, it's not just world-class companies that are pursuing those trends that are considered critical. Plant managers and executives alike are implementing or starting to implement what they believe are the critical initiatives to achieving world-class status. For example, a majority of plant managers (61%) report that they consider a formal continuous-improvement program to be "extremely critical" to achieving world-class status. Of those, 24% have extensively implemented a formal continuous-improvement program, and another 65% have some implementation. Plant managers are not just talking about continuous improvement; they're taking steps to make it a part of their way of doing business. Continuous improvement clearly is viewed as critical to achieving world-class status, but why? Part of it may be that the notion of continuous improvement has been a part of the business lexicon for many years, and most manufacturers have had time to incorporate it into their business. More important though, continuous improvement, by its very nature, is an ongoing process. No company can hope to become truly world-class and maintain that distinction unless it is consistently striving to improve. A formal program drives this idea throughout the company ranks and helps keep a company ahead of its competition. The trend of criticality running parallel to the degree of implementation holds true for virtually every initiative in the Census -- those that are identified as extremely critical are getting more than just lip service at the plant level. The extent to which these initiatives are being implemented, however, still is somewhat in the eye of the beholder. When comparing the responses of the plant-level managers with those of the corporate executives, differences become evident. For every initiative identified, the corporate-level executives were more likely than the plant managers to believe the implementation was extensive. Some differences were negligible, but in some instances there was a clear disconnect between the two views. Executives were almost twice as likely to identify a formal continuous-improvement program as being implemented extensively (41% vs 24%), and were almost three times as likely (26% vs 9%) to view the use of agile manufacturing strategies as being extensively implemented. Why the differences? Perhaps executives see the world more through rose-colored glasses, or maybe they just have a broader perspective about where the company is as a whole. Either way, the gap raises questions about the degree to which executives and plant managers communicate and agree upon where a company is relative to its world-class initiatives. Relative to the inaugural IW Census survey, corporate-level executives perceive a much lower degree of implementation of the plantwide initiatives cited in the Census, despite no change in their perception of the criticality of these initiatives. The decrease in the percentage of executives claiming extensive implementation (or "widespread" in the inaugural Census) might best be characterized as an increase in managers' understanding of the extent of process and cultural change that these programs entail. In essence, companies have been confronted with the harsh reality that talk is cheap and implementation can be difficult. These are not initiatives that a company can just start taking up one day after years of doing things the same old way. They take a substantial investment in terms of people and resources. As companies progress beyond the initial stages of implementation, managers begin to recognize the sweeping nature of the task at hand and their perception of their progress is recalibrated accordingly. The Census reports that only 18% of plant managers believe the use of strategic outsourcing is "extremely critical" to achieving world-class status, yet 61% of them indicate at least some degree of implementation. Why? While the survey isn't definitive, it appears that manufacturers have begun to identify to their customers those activities in the manufacturing process that are non value-added (i.e., processing payroll, inventory management, etc.) and have outsourced them where feasible. This makes sense, as it allows companies to focus their limited resources on those activities that not only add value to customers but also help the company move toward world-class status. So while strategic outsourcing, in and of itself, is not considered critical to achieving world-class status, it does have significant benefits for an organization. Manufacturers are focusing resources where they bring value to the customer. There are exceptions to every rule. The plant-level survey response to criticality vs implementation of planning and scheduling strategies and technologies presented something of a dichotomy. While 51% of all respondents identified this initiative as "extremely critical" to the attainment of world-class status, only 14% reported extensive implementation. The explanation for this dichotomy may be that planning and scheduling technologies are just beginning to come into their own, and manufacturers have yet to make the commitment to the major process and culture shift required for their implementation. Developers of advanced planning and scheduling (APS) software have experienced meteoric growth in the past two years, and the market is expected to grow more than 60% per year over the next few years. More and more manufacturing companies are striving to realize the benefits from large information technology investments through supply-chain integration. The incredible growth rate in APS solutions highlights the fact that this market is in its infancy. Only the early-adopters have taken the plunge in APS implementation, but their favorable results, coupled with vigorous software research and development, suggest that APS will continue to build momentum. Staying on target and ahead of the competition is more difficult than ever. Manufacturers that regard the latest trends as passing fads most likely are the companies that are falling farther behind in their industry. Manufacturers must identify their standing against the practices of world-class competitors and move quickly to implement the critical initiatives -- even if they do not result in direct or immediately quantifiable benefits. Firms that hesitate to dive headlong into these initiatives are destined to miss the opportunity to make a quantum leap ahead of the competition and instead resign themselves to a continuous game of catch-up. World-class firms also recognize that not every initiative can be implemented at the drop of a hat. Many of the initiatives require difficult and even costly process and cultural changes. But because improved performance metrics translate into improved financial performance, the investment is well worth it. James Pfeiffer is a consultant with PricewaterhouseCoopers, Rosemont, Ill.; and Christopher Miller is a consultant with PricewaterhouseCoopers, St. Louis. This article first appeared in the Second Annual IndustryWeek Census of Manufacturers Research Report.

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