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The threat posed by foreign competition, the problem of industries suffering from “blue-collar blues,” and the increasing complexity and frustration of life in the factory have forced public attention back
to the industrial sector of the economy. Many years
of taking our industrial health and leadership for
granted abruptly ended in the 19705 when ourdeclining position in world markets weakened the dollar and became a national issue. In the popular press and at the policy level in government, the issue has been seen as a “productivity crisis.” The National Commission on Productivity was established in 1971. The concern with productivity has appealed to many managers who have firsthand experience with our problems of high costs and low efficiency.So pessimism now pervades the outlook of many managers and analysts of the U.S. manufacturing scene. The recurring theme of this gloomy view is that (a) U.S. labor is. the most expensive in the world, (b) its productivity has been growing at a
slower rate than that of most of its competitors, and therefore (c) our industries sicken one by one as imports mushroom and unemployment becomes chronicin our industrial population Centers.
In this, article, I shall offer a more optimistic view of the productivity dilemma, suggesting that we need not feel powerless in competing against cheaper forcing labor. Rather, we have the opportunity to effect basic changes in the management of manufacturing.
which could shift the competitive balance in our favor in many industries. What are these basicchanges? I can identify four:
1 Seeing the problem not as “How can we increase
productivity” but as “How can we compete?”
2 Seeing the problem as encompassing the efficiency of the entire manufacturing organization, not only the efficiency of the direct labor anti the work force (In most plants, direct labor and the work force represent only a small percentage of total costs.)
3 Learning tofocus each plant on a limited, concise, manageable et of products, technologies, volumes, and markets.
4 Learning to structure basic manufacturing policies and supporting services so that they focus on one explicit manufacturing task instead of on many inconsistent, conflicting, implicit tasks.
A factory that focuses on a narrow product mix for a particular market niche will outperform theconventional plant, which attempts a broader mission.
Because its equipment, supporting systems, and procedures can concentrate on a limited task for one set of customers, its costs and especially its over-head are likely to be lower than those of the conventional plant. But, more important, such a plant can became a competitive weapon because its entire apparatus is focused to accomplish the particularmanufacturing. task demanded by the company’s overall strategy and marketing objective.
In spite of their advantages, my research indicates that focused manufacturing plants are surprisingly rare. Instead, the conventional factory produces many products for numerous customers in a variety of markets, thereby demanding the performance of a multiplicity of manufacturing tasks all at once from oneset of assets and people. Its rationale is “economy of scale” and lower capital investment.
However, the result more often than not is a hodgepodge of compromises, a high overhead, and a manufacturing organization that is constantly in hot water with top management, marketing manage-merit, the controller, and customers.
A simple but telling example of a failure to focus is uncovered in this case,study of a manufacturer, the American Printed Circuit Company (APC):
APC was a small company which had been growing rapidly and successfully Its printed circuits were custom-built in lots of i to ioo for about 20
principal customers and were used for engineering tests and development work. APC’s presidents consisted of about i5 operations using simple equipment, such
as hand-dipping tanks,...
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