ProNET Enterprise Manufacturing - Association for Manufacturing Excellence
The fourth in a series on Manufacturing future visions.
Robert W. Hall and Jeffrey W. Anderson
One hundred years ago seventy-four national luminaries envisioned life a hundred years later - in the 1990s—as part of the publicity build-up for the 1893 Colombian Exposition in Chicago. Some predicted mass air travel (mostly by balloon). One predicted a combination of telephone and television. None predicted the gasoline-powered car; gasoline engines were then curiosities. Extrapolations of technology in use were insightful, but no one could imagine popular use of unfamiliar technology.
The worst forecasts idealized human changes, like one essay entitled, "Perfect Government, Improved People." No one foresaw World War 1, much less World War II, and none could imagine a world not dominated by European culture. The more accurate social predictions suggested although wealth would increase, human conflicts and delusions would go on forever.
Today we can likewise envision how extending currently-known technology and techniques will change manufacturing, but it's very difficult to see how business organization or human relationships will change, even when we know that they should. Learning how to function differently is a supreme challenge.
AME events reflect this difficulty. Eight years ago our workshops concentrated on sharing the techniques of Total Quality and JIT. Interest rapidly shifted to how to develop teamwork and how to sustain the momentum of continuous improvement.
Today computing technology is obviously one of the major factors undermining large hierarchical organizations. Less easy to see is what kind of organization will take its place. Will we combine telecommuting technology with quality improvement, waste elimination, and teamwork and genuinely function differently?
The technical issues are formidable: standardizing software, defining processes in detail, designing products to please customers, manufacturing for the environment, and so on. But these problems will only be casually addressed without the motivation to seriously tackle them, which means understanding the business incentives and dealing with the human issues.
The business issues center on creating a higher value-added to customers, and therefore higher margins, rather than making products that degenerate to commodities. The human and organizational issues center on teamwork-how to focus a combination of core competencies on the customer, plus the usual issues of working closely together.
Recent news articles illustrate confusion between keeping mass production viable and creating newer, more flexible approaches. USA Today recently reported that General Motors accused Ignacio Lopez de Arriortua of taking their plans for "agile manufacturing" with him to Volkswagon. The New York Times said that Lopez had called the plan "Plateau Six" at GM, but that at VW it's K.V.P. (the German initials for continuous improvement processes), and that it boils down to building a low-volume plant with surrounding suppliers in the Basque regions of Spain.
Speaking from the viewpoint of large-scale mass production-which GM purportedly wants to escape - rather than picturing a breakthrough in flexibility, experts commented that no supplier could consider a small plant making small quantities at slow speed. In addition to the technology, a challenge is trying to establish a stable direction amid instability of mind sets.
When determining how to go beyond TQM and JIT —the improvement direction espoused by AME since its beginning-the first issue is figuring out what is "beyond it." In the stories of the three-day car, three-day house and other products, two distinctions stand out.
The first is that a computer network allows us to do something unique for each customer rather than creating products with pre-planned options. Lean manufacturing stresses producing the same mix with less waste. Through computer control it is possible to switch work instructions rapidly, resulting in unique products from fast-flow, low-cost processes in design, in production, and in presentation to the customer. Success depends on ingenuity rather than deep pockets.
Part of the ingenuity is cultivating customers. For instance, McGraw-Hill now offers textbooks custom- to fit a professor's course. Customized manuals and other "publications" are likewise possible, but only for customers willing to be involved in determining what they want. A high-margin service business depends on identifying real needs.
The second distinction represents a major human challenge organizing an industry enterprise (not just a company) to concentrate on each customer's needs. Then real problems prompt the development of solutions from a range of possibilities, rather than having solutions chase problems.
For example, the depth and scope of the technical problems of a "three-day car" are so formidable that no one thinks they will be worked out soon by anyone, but in addition to the technical issues is the difficulty of combining multi-company expertise to do it. Re-organizing to span the boundaries of working organizations as they are established today is much more difficult than creating advanced computer communication links between people organized much as they are now. Yet that is what must happen to form an industry enterprise, a working combination of core competencies focused on the customer.
Today we use many approaches-JIT,, continuous improvement, business reengineering-to eliminate non-value added activities. Extending this manufacturing challenge takes us a few steps beyond today's charts, cells and JIT lines. However, more gains in production and engineering do not by themselves create products and services the customer will buy. Equally important is re-organization to add value to customers.
There are two paths to migrate from lean manufacturing to this world. One is the inside path, or the technology-first route, establishing network manufacturing capability inside a company and seeing where it leads in re-organizing to add value to customers. The other is the outside approach, enhancing the value of service to customers, then building up an industry network to improve it.
Another name for the new manufacturing is "agile manufacturing," meaning ability to respond rapidly to any change. While the term is catchy, agility is only one capability needed to add value, no more critical than quality, environmental soundness, and other capabilities. Any name selected for such a broad change has the same shortcomings as did the descriptor "just-in-time," which can never convey its implications to someone who does not otherwise understand them.
AME calls this new world "Enterprise Manufacturing." The term does not evoke all its necessary dimensions of performance, beginning with Total Quality, rapid product realization for each customer (more than rapid product introduction), continuous improvement, and teamwork of various kinds. Enterprise Manufacturing includes network manufacturing and the organizing of enterprises across operating companies as they are now defined, in order to focus various core competencies on specific customer problems.
Williams Technologies is still developing its approach to network manufacturing, but even before the idea germinated the company prepared by improving internal operations with simple systems, JIT, visibility practices, quality improvement processes, Total Productive Maintenance, and considerable employee involvement. They also established close operating ties with customers and suppliers. (See "Remanufacturing Excellence at Williams Technologies in the November/ December 1992 issue of Target.)
WTI remanufactures transmissions, that is, they bring in defective transmissions (called cores), disassemble, clean and inspect, often doing an analysis of cause of failure for the OEM. Then the parts are remanufactured to original OEM specifications. When the transmission is reassembled it is upgraded using the latest feasible engineering changes for that core. When the transmission is sent out. it may carry a stronger warranty than when the same core was originally manufactured.
Cores brought in can be as much as nine years old. Hundreds of engineering changes may apply to an old transmission. Therefore the problem is to identify what must be done to each transmission and execute it in a continuous flow operation.
Many of the engineering upgrades involve the control systems-the electronics and the control valve bodies, which are the fluid logic control devices for transmissions. Therefore, WTI began their new system with the valve body subassembly line, called the "leapfrog line," but the plan is bigger. The objective is to develop an infinitely flexible manufacturing system, networked by computer to reduce lead-times, from identifying a core in the field to returning a remanufactured transmission. Eventually the capability might be extended to create added value for some customers by participating in the recommendation of a transmission configuration to meet their needs. Initially the objective in the plant is to reduce the throughput time well below that achieved with garden-variety JIT.
What about the cost? It isn't big and shouldn't become big. Ordinary PCs are capable of handling the requirements at nearly every station. Williams is a small company. Not in the computer business, WTI isn't in the forefront of hardware and software development. It is a leader in making practical use of new technology. WTI expects to be able to adopt and adapt software with a very limited MIS staff. The data development and shake down of the overall system is being done by workers and those who directly support them-no big consulting bill to have a system designed from outside.
The Leapfrog Line
Figure 6. Leapfrog design team, left to right: Dave Malchano, Jean Dashnaw, Greg Allen, Evelyn Ashe, Lewis Smith, Vadene Echols, and Keith Grondines.
The valve body cell typifies the production processes of network manufacturing. The basic concept has been around better than a decade. The operator wands a bar code and a computer calls up a display showing what to do. Many PC board shops have long used this approach to download a program that moves a spot of light through the sequence of board locations into which an operator should insert components.
The subassembly of a valve body has similarities to a PC board, but the computer system teas many more features than moving a spot of light. Color images of components (look-alike doo-dads) and their assembly orientation pop up on the screen before each operator Assembly or routing text appears with the images. New engineering changes are highlighted in pink for two weeks to attract attention. Optional use component combinations are displayed in various exploded views. The system even allows the computers to dynamically shift operations between stations to improve line balance depending on the current load balance.
Associates can enter process change suggestions at their terminals. Many can be acted upon by either engineering or the work groups themselves almost immediately. WTI's continuous improvement process is starting to resemble an "expert system' with daily learning updates.
Using network manufacturing, WTI can re-manufacture transmissions and all subassemblies in lot sizes of one, sequenced in a continuous flow operation. Because of the detailed, unique instructions for many units, WTI previously had to group work of a similar type into lot sizes so that associates could keep straight what to do next.
Expansion of the Network Manufacturing System
From the leapfrog line pilot, WTI is now expanding network manufacturing to the entire plant, working from final assembly back to machining, and on to disassembly and cleaning. They are on the verge of being able to control a sequence of specific cores and their components from beginning to end of the process in the plant, with all the unique instructions presented to the right station at the right time. To do this, WTI must detail exactly what each process should do. The system is less dependent on "black art" operator experience, but much more dependent on the ability of all associates to contribute to its improvement.
After transforming the plant to network manufacturing, WTI will be in a position to extend the capability it offers to its customers and suppliers. Customers will directly schedule their assembly configurations by signing onto the network from any location. Since the network transfers images, CAI) information and all kinds of text, the next move is to use it to "manage cores"—that is, better satisfy their customers. Those include motorists who need a different transmission, the service shops that replace transmissions, and the OEM builders of them.
Figure 7. Leapfrog startup team members. back row, left to right are Crystal Bridge, Mary Gleaton, Margaret Farmer, Liz Melton, Dorothy Macke, Marie Creel, Sylvia Ford, Sonja Glover, and L.A. Atkins. Front row, left to right are Diana Simmons, Letia Chick, Esther Campbell, Norma Cross, Mattie Stephens, and Bob Scargil
The manufacturing and engineering advantages already achieved by WTI's network manufacturing have impressed customers. However, the business and organizational changes accompanying network manufacturing inside WTI are minor compared with the operating and communications adjustments between business partners that will be necessary to form a network with customers and suppliers. The hard part is vet to come.
The Outside Route: External Networks
So many companies now use bar codes to track shipments both inbound and outbound that we almost take them for granted. However, the wars over bar code standardization are far from complete, and we have only begun to resolve the issues of systems compatibility through EDI (Electronic Data Interchange).
These are external networks. So far they do not connect many operations very tightly Just to have computers communicate across companies the computer languages and software packages must link. In addition, the business and engineering drawing systems themselves must be compatible: otherwise communication does not proceed much beyond using computers as fax machines. As everyone knows system compatibility is often a nightmare inside companies, much less between them, and "enterprise integration" to fix this has become a staple offering of systems consulting companies.
However, the business protocols and discipline of a network are also important. Take the ordinary bank ATM network for instance. To be in the network, any financial institution must have a system compatible with the network. Internally the bank systems may be quite different, and at different levels of advancement. The important feature is being able to link into the network. Universal compatibility means that individuals are able to access their own bank account from almost anywhere-for a fee of course.
Security is important. Everyone is now familiar with the problems of losing bank card numbers. (Thieves now pick up added income by selling stolen numbers as well as using them.)
ATNI networks are limited function, limited access systems resistant to many forms of abuse. The same is largely true of numerous systems that track shipments. The systems do not communicate between themselves. Limited in function, they have no need to.
The Quick Response systems established by retailers are beginning to broaden in function. The original intent was to bar code small shipments by manufacturers for transport direct to the store shelves that need them. When this system is fully developed, the producer is paid when a purchased unit's bar code is scanned at checkout. and it is sometimes said that a retail package's bar code is turning it into a container that reorders itself. Achieving early expertise in these systems is one of the major reasons for the rapid rise of Wal-Mart.
Quick Response daily sales data is also a fast feedback system for market research. Retailers are now making good use of this data. So are a few manufacturers who analyze the trends in the daily downloads dumped on them. The intent is to respond faster than anyone else to changes in the market.
Computer companies like Dell and Gateway 2000 are well-known examples of companies building their business on external networks. The number of such companies is growing.
The next stage is linking engineering and manufacturing operations to the store Self - or really to the customer. What about TV marketing or direct customer access from a company's internal network? Achieving this requires revolutionary thinking, and not only for companies in consumer markets. The question is how to focus on customers, which generally means smaller units able to pay attention to them in small groups or even one at a time.
For similar reasons military combat operations are becoming more decentralized (a favorite analogy for organizational theorizing). A century ago battlefield visibility was so poor that field commanders gave orders from a superior vantage point. Infantry in the thick of it were more likely to prevail if they blindly followed orders.
Today, with electronic surveillance and communications, troops may know what is going on around them as well as the commander, and better if the combat area is not well defined and the action is rapid. The commander's role is assuring consistency of training and communications, and unity of overall objectives. To be effective, a soldier must also be more skilled.
Business and Organizational Issues
Imagine a man buying a suit from a high-tech tailor. He steps into a booth where his body measurements are taken by holographic scan. After his measurements are transferred to a work station, he samples various materials, and designs his own suit, possibly with advice on styling, if not on how to manipulate the program menu. When finished, the design and specifications are downloaded to a plant. The suit is made within twenty-four hours and shipped.
This technology is being developed by the Textile/Clothing Technology Corporation [TC2] of Raleigh, NC. The process avoids the wastes of retail inventory, markdowns of overstocked merchandise, and alter actions, so the cost will be comparable to buying a suit off the rack. No one doubts that the technology will become available.
The business and organizational changes are more uncertain. First, how many men will initially want to design their own suit? If not, how can they be persuaded? Second, if a significant market develops, how will this industry reorganize? Because of such uncertainty, the first trials are on men's suits, not on women’s clothing where both the styles and the marketing are more complex.
Will scanning booths appear in Sears and Wal-Mart or would the suits be ordered in "boutiques" operated by designer entrepreneurs? If any plant can make almost any suit, will plants become service bureaus for retail outlets? Will the one-piece flow plants be set up in current garment factories, or will they be so incompatible that they would be separate stand-alones? Perhaps the industry would organize as a different form of franchise system.
These questions will not be answered until the technology is tried on the public. Whether the "24-hour suit" becomes a commercial success after the design-your-Elvis-Presley-suit phase wears off will depend on marketing and entrepreneurship. If it is a social success, will men's clothing styles become more individualized? No one knows until it is actually tried. In any case, one can visualize a networked garment industry taking a form with historical precedent in business arrangements, but set up to respond instantly to the customer.
By contrast, the Mayekawa Company in Japan is being studied as a possible bellwether of a different form of industry organization, even for Japanese. It employs computer linkages, but the form of organization is based on Mayekawa simply assuming a role that allows their customers to serve their markets much better than they could do it on their own.
Mayekawa is a thermal engineering company whose main business is large-scale refrigeration systems for commercial and industrial clients. (It operates under the name Mycom in North America.) In Japan, over eighty small field organizations are each set up to focus on one customer. These are broader in function than the usual sales/service offices, often conducting engineering design and even research projects. On the other hand, Mayekawa's central engineering, research, and production plants are rather conventionally organized.
Each field organization is nearly autonomous researching its customer's needs and determining how to serve them, but can draw on resources from anywhere within Mayekawa, and sometimes from elsewhere. Every employee is partly responsible for marketing, and all are multi-functional. Each employee is a ten-year investment to break even. It takes that long to learn the total business well enough to function in this way.
The objective is not only to thoroughly understand the thermal engineering needs of each customer much better than they do themselves, but to understand the needs of their customers' customers. That too is a multi-year learning process. To truly sell service and solutions, Mayekawa is often embedded deeply in the customer's processes.
This remarkably flat organization works because the company has a well-defined core competence, and its organization focuses on each customer's problems. It also has a very strong corporate culture, which makes human communication easier. The operating responsibility and communication are diffused, but the corporate culture is top down. Mayekawa is a prime example of what the Japanese are now calling Holonic Management, or sometimes a "Vigorous Company."
An American organization with similarities to Mayekawa is Nypro, the custom plastic molder headquartered in Clinton, MA. Nypro lives by the motto, "One team, putting the customer first." The company replicates a version of one of their plants near any customer with the volume to support it. A "board of directors" for each plant guides its service to that customer (and any others it serves). The company forms teams with its customers, especially for design projects, an sometimes these include suppliers.
Nypro's factory system is occasionally called "McDonald" franchise.' This American approach combines core technical competence (including part-per-bi lion quality on many parts) with a customer-focuses organization, and has a strong corporate culture, well laced with entrepreneurship.4
There seems to be a pattern here. Mayekawa "Holonic" organization is a highly decentralized link age of technology and operating expertise with its customers' needs, whether known to them or not. Nypr works closely with customers to apply its leading edge molding technology to their problems. With the "24 hours' suit, the probable organization would connect the customer as directly as possible with expert solutions to make a suit just for them.
Around the world, the organizations of man companies are moving in this direction, although more slowly and less completely. The concept of the internal customer is common. Many suppliers either serve customers from a nearby plant, or actually run a manufacturing department for them. Companies like Dell and Gateway 2000 essentially are organized to unite technology with each customer's computer needs as direct!, as possible.
From Lean Manufacturing to Enterprise Manufacturing
Many lean manufacturing practices are intended to link everyone as closely as possible to customers and suppliers, even if these are only one work station removed.
Contact with the customer is one of the basic precepts of TQM. and so much so that executives sometimes jump on it and flatten hierarchies to the detriment of a disciplined approach to quality improvement. Visibility systems, kanban systems, Quality Function Deployment, concurrent engineering, and other practices share this principle. The techniques convert the sentiment into specific practices. But all too often the imagination stops at removing waste from processes.
For example, a computer network like that of Williams Technologies adds to the possibilities for simplifying complex processes. Expanding the network externally would also allow Williams associates to directly communicate with customers. If necessary, they could respond directly to the needs of motorists for re-manufactured transmissions when needed. If connected directly to auto service centers (or auto re-manufacturing centers) Williams, rather than the transmission's OEM, might even advise what level of upgrade is possible for a given core. WTI re-manufactures; the OEM doesn't.
But this raises organizational and legal questions. Re-manufacturing has been dependent on access to an OEM's engineering. A re-manufacturer such as WTI that works through partnerships with OEMs is legally and technically supported by the OEM, but only if their work conforms to the OEM's specifications. A re-manufacturer evaluates the causes of product wear and failure first hand. It might originate its own engineering upgrades, but those must obviously be compatible with the rest of the vehicle, and that's a different level of partnership.
In the future WTI, or teams from it, might participate in a larger network that remanufactures cars, which requires broader skills. Then Williams Technologies would do more than perform tasks to OEM specifications, suggesting the type of upgrade to give the customer the desired performance from a reconfigured vehicle. The tough issues will be business realignment and trust, rather than technology.
The most difficult break between lean manufacturing (high-volume, low-waste, standard options) and enterprise manufacturing (creating a solution for each customer if necessary) is human. Though enabled by technology, there is a huge difference between a person manning a work station in lean manufacturing and being directly responsible for the customer in enterprise manufacturing-or at least being in a team that has customer contact.
In the case of the 24-hour suit, a factory worker may talk with the customer at a remote order entry station if a request cannot be clarified by the customer's order menu. The same could become true for many workers at Williams Technologies, the transmission Re manufacturer. It certainly is true for personnel in the small field organizations of Mayekawa, and employees throughout that company may rotate through field organizations. The distinctions between functions blur, and in some cases the differences between white and blue collar work may become extinct.
When Enterprise Manufacturing requires multiple, direct interaction with customers and suppliers where once large mass production companies prevailed, the forms of business must change. Unless people actually try that, live examples will not go beyond those given here. If they do, a business revolution will break out.
The virtual team or virtual company is becoming a common expression. Many of the examples are of multi-functional, multi-company project teams. Some are partly assembled through voluntary association. Many concurrent engineering teams are now organized this way.
As soon as a combination of people from a number of different companies begins to function as a full business, more issues arise. Is it a joint venture, an independently financed company, or what? Does it have a business plan? To whom does intellectual capital belong? A single set of accounting records or several? How are gains, losses, arid liabilities allocated? Virtual teams only permeate the boundaries of current organizations.
1. From Weisberger, Edward A.; 'Predicting the Present," American Heritage, Julv!August 1993, V. 44. No. 4. pp 72-24.
2. Mavnard. Micheline; GM Says Ex-.Manager Has Stolen Its Furure," USA Today, May 27, 1993, p 1.
3 Levin Doron P.; "Is Tomorrow's Auto Plant Aborning?" New York Times, June 14,1993. p. C2.
4. Target will feature an article on an AME workshop at Nypro in the November/December 1993 issue..
Jeffrey W. Anderson is the general manager of Williams Technologies, Inc., Summerville, SC. He is also the vice-president of the Association for Manufacturing Excellence.
Robert W Hall is on leave as professor of operations management at Indiana University and is the director of new programs for the Association for Manufacturing Excellence
@) 1993 AME 'a For information on repeats, contact: Association for Manufacturing Excellence 380 West Palatine Road Wheeling, IL 60090 708/520-3282
The most difficult break between lean manufacturing (high-volume, low- waste, standard options) and enterprise manufacturing (creating a solution for each customer if necessary) is human.