In order to compare the manufacturing objectives of the participant organisations with those of World-Class manufacturers, we propose a two way classification called the manufacturing strategic intent (MANSI) grid. This compares the manufacturing objectives on two dimensionsto be an agile manufacturer, or to be a conventional manufacturer (stressing capacity utilisation).
This classification has two inherent assumptions:
- The stated objectives of the respondents were actually the strategic objectives of the responding companies; and
- The practices of the responding companies reflect their stated objectives.
Maskell (1994) defines agile manufacturing as ‘a series of techniques that have been used by good companies to bring about unprecedented improvements in quality, productivity and customer service. These techniques are not new, many have been available for several decades, and others have been developed gradually over the last 30 years by innovative companies like
Toyota.’ He identifies quality, just-in-time (JIT) manufacturing, people and flexibility as the bases of agile manufacturing.
Conventional mass producers are driven by internal objectives that are centered on efficiency.
The prime example of an efficiency-oriented measure is capacity utilisation. Agile manufacturers, on the contrary, are driven by multiple objectives (e.g. faster new product development, flexibility of volume and mix, quality, on-time delivery and lead time reduction,
etc.), which focus on effectiveness in meeting the needs of the external customer.
The objective of agile manufacturing is to produce to demand and avoid speculative production.
This brings manufacturing closer to the market. As Taiichi Ohno (1992) wrote, what is important is that the operable rate of equipment-2…the percentage of time for which the equipment is ready for operation when required-should be 100 per cent. The operating rate the percentage of available time for which the equipment was actually operated-should be determined by demand.
Manufacturers will have to achieve World-Class manufacturing status to compete effectively in the global market. Therefore, World-Class manufacturers emphasize agile objectives and deemphasize capacity utilisation. This classification places a manufacturer into one of the following four types (Figure 6.27):
- World-Class Players: Companies that have the potential to be World Class. These are those which rated agile objectives above 3 and capacity utilisation below or equal to 3 on a five-point scale.
- Transitional Players: Companies that rated both agile objectives and capacity utilisation above 3. These are companies that can make the transition to World-Class players.
- Licence-Regime Survivors: Companies which rated agile objectives below or equal to 3, and capacity utilisation above 3. These companies continue to operate with objectives that would have led to success before the liberalisation of the economy.
- Inertia Players: Companies that rated both objectives below 3 are surviving on inertia.
The reasons for their survival could include a monopolistic or oligopolistic market.
As we would expect in any emerging market, the largest chunk of the responding companies is in the transitional players’ quadrant. This signifies an industry in transition.
Having the right objectives may not always lead to superior performance. However, operating without these objectives is virtually guaranteed to lead to competitive disadvantage. The companies that are in the MANSI world-Class players’ quadrant have, therefore, achieved a necessary, but not a sufficient condition.
Figure 6.27: MANSI Classification of the Responding Companies