Levels of Dispute

Dec. 21, 2004
Plant and corporate leaders are at odds in strategic-deployment issues.

There may be no more delightful data to pick apart than those that compare the viewpoints offered by corporate executives with the responses elicited from plant-floor leaders. Although there is much to indicate that the two management types share similar philosophies on improving manufacturing performance, there is an equal measure that suggests just the opposite. And as for a meeting of the minds on the actual deployment of improvement initiatives throughout the manufacturing-industry landscape -- let's just say that the view is much rosier from the corporate boardroom than from the plant floor. First, a look at the similarities in thought and action between the two respondent pools. The Second Annual IndustryWeek Census of Manufacturers asked plant and corporate executives to identify from a list the critical nature of certain strategic initiatives to achieving world-class status -- either not critical, somewhat critical, or extremely critical (see "Critical Nature and Implementation of World-Class Initiatives" table.) A follow-up question then asked for the implementation levels of those same initiatives -- either no implementation, some implementation, or extensive implementation. When it came to naming the most critical factors, both survey samples identified formal continuous-improvement programs, quality-management programs, and cycle-time reductions as among the most critical initiatives, followed by planning-and-scheduling strategies or technologies and a flexible, cross-functional workforce. The continuous-improvement and quality initiatives were identified by more than 60% of both survey samples as extremely critical. "Experts such as Richard Schonberger, James Womack, and many others have told us a lot about what it takes to be a world-class manufacturer," notes Peter Ward, associate professor at Ohio State University's Fisher College of Business, Columbus. "In general, the expert literature on world-class manufacturing boils down to excelling across a number of specific dimensions that are captured in the overarching philosophies of just-in-time production, total quality management, and total people involvement. All three are considered important by the experts. The IW Census results show that these ideas are widely shared by practicing manufacturing people" (see "World-Class Manufacturing"). In most cases, the initiatives that were viewed as the most critical to a manufacturer achieving world-class status also were the initiatives being implemented to the greatest degree. Not only did quality-management programs receive among the highest percentage of extremely critical responses -- in both the corporate and plant surveys -- but those programs then were among the most frequently cited for extensive implementation. "The trend of criticality running parallel to the degree of implementation holds true for virtually every . . . initiative in the IW Census. Those that are identified as extremely critical are getting more than just lip service," note PricewaterhouseCoopers LLP consultants James Pfeiffer and Christopher Miller. On the other hand, data also indicate that manufacturers appear to have an easier time identifying those initiatives that are critical to their success than they do implementing those initiatives extensively throughout their facilities. For example, while 62% of the corporate survey respondents identified a formal continuous-improvement program as extremely critical, the percentage of respondents who said they had extensively implemented the program dropped 20 percentage points, to 41.1%. The disparity was even greater in the plant-level survey -- 61.1% identified a continuous-improvement program as extremely critical, yet just 23.6% identified it as extensively implemented in their plants. That's not surprising, suggest several manufacturing experts who reviewed IW Census data. "The Second Annual IndustryWeek Census of Manufacturers documents a classic dilemma faced by U.S. industry for at least the last 50 years -- the gap between ambitious, long-term manufacturing strategies and their actual implementation on the factory floor," says Thomas R. Hoffmann, president of APICS, the Educational Society for Resource Management. This disparity plays out over and over again. In every case, and in both surveys, the percentage of respondents who viewed an initiative as extremely critical exceeded the percentage that reported extensive implementation of that same initiative. In many cases, the gap is extreme. Factoring in respondents who reported some implementation narrows the gap, but the fact remains that implementation is lagging awareness. "These responses make it clear that the respondents generally believe that much work needs to be done to make their plants conform to their own beliefs about world-class operations," adds OSU's Ward. Several explanations may explain the discrepancies. In many cases, the initiative may be new to the manufacturing landscape and manufacturers simply haven't had the opportunity to fully implement it or even fully understand its implications. Another possible explanation for the apparent lag between identification and implementation of some of the critical initiatives is more mundane. It could be that while manufacturers recognize the need to pursue certain initiatives, they have other pressing issues that they believe require more immediate attention. Ultimately the data indicate that both plant and corporate respondents are making efforts to implement what they believe to be critical initiatives into their facilities or across their corporations. Aside from these areas of agreement, however, corporate-level manufacturers hold more optimistic views than their plant-level counterparts of the implementation of not only manufacturing's broad strategic initiatives, but of all customer practices, supplier practices, and manufacturing practices (see "Beating the Joneses"). "Executives often have a rosier view than their troops," notes Robert W. Hall, professor of operations management at Indiana University, Indianapolis campus. "Experience asking such questions in plants suggests that the leadership may think that a program is underway while those closer to the action are still trying to figure out what it is." For example, 34.2% of company executives report the extensive implementation of new information technologies compared with slightly less than 16% of plant-survey respondents making that same claim. While 66.1% of corporate executives report that proactive environmental compliance has been widely adopted throughout their company, just 48.4% of plant-level leaders report wide adoption in their facilities. Examples of the differing views on implementation and adoption levels by the two respondent pools are endless. Equally striking is the apparent lack of agreement between plant leaders and corporate executives as to the strategy manufacturers are pursuing heading into the new millennium (see "Manufacturing Strategies for the 21st Century" table). While the IW Census found top-level executives most likely to rally around enhancing flexibility and agility as their company's overall manufacturing strategy, the greatest percentage of plant-survey respondents said they were pursuing cost-reduction strategies. "This dichotomy illustrates that the traditional measure of performance -- cost -- still dominates everyday decision-making," says APICS' Hoffman. "Cost reduction is also more easily measured than agility and its impact more easily reported." Michael E. Kane, principal consultant at PricewaterhouseCoopers, says these divergent views between the two survey groups raise concerns. "Many reasons may exist for the gaps between the views of manufacturing executives and those of plant managers," he says. "Plant managers may simply evaluate operating performance more rigidly than vice presidents. Vice presidents may have the big-picture view of company operations. However, the issue of strategy deployment has large implications for all businesses and should not be overlooked. "The first and largest implication delivered by the IW Census is that there is a fundamental disagreement between the strategic level and execution of the business. This issue may have far-reaching effects for a company. . . . Another large issue, that of management capability, also should be evaluated in the strategic-deployment process. Senior managers should be assessing whether plant managers have the ability to absorb the strategic direction of the business and turn the vision into operating reality. "Manufacturing executives need to look at themselves in the deployment process as well. They must question whether their expectations have been communicated effectively to plant managers. Conversely, they also need to evaluate whether the degree of support they provide in terms of involvement could alter their perception of operational execution."

Sponsored Recommendations

Voice your opinion!

To join the conversation, and become an exclusive member of IndustryWeek, create an account today!