Industrial Excellence Award
Transcrição
Industrial Excellence Award
Christoph Loch, Ludo Van der Heyden, Luk Van Wassenhove, Arnd Huchzermeier, Cedric Escalle Industrial Excellence Management Quality in Manufacturing February 24, 2003 Springer Berlin Heidelberg New York Hong Kong London Milan Paris Tokyo Contents Part I Introduction 1 Industrial Excellence Revisited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1 In Search of Industrial Excellence: Linking Total Quality Management with Management Quality . . . . . . . . . . . . . . . . . . . . 1.2 Four Basic Industrial Processes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2.1 The Supply Chain Process . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2.2 New Process Development . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2.3 The Product Development Process . . . . . . . . . . . . . . . . . . . 1.2.4 The Strategy Formulation and Deployment Process . . . 1.3 Operationalizing Management Quality . . . . . . . . . . . . . . . . . . . . . 1.3.1 Fundamentals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3.2 Enablers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3.3 The General Framework . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3.4 Best-Factory Tours and Awards . . . . . . . . . . . . . . . . . . . . . . 3 5 9 11 12 12 13 14 14 16 18 18 Part II The Four Basic Processes 2 Visteon Charleville-Mézières Plant: Mastering Production . . . . . . 2.1 Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2 Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3 Supplier and Customer Integration . . . . . . . . . . . . . . . . . . . . . . . . . 2.3.1 Suppliers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3.2 Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3.3 Forecasting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4 Production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5 Quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6 New Product Development/Process Improvements . . . . . . . . . 2.7 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 25 30 32 32 32 33 33 39 40 42 X Contents 3 Faurecia’s Neuburg Plant: Customer Integration Excellence . . . . . 3.1 Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2 Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3 Quality Control and Trouble Shooting . . . . . . . . . . . . . . . . . . . . . . 3.3.1 Cooperation Between Faurecia and Audi . . . . . . . . . . . . . 3.3.2 Defect Rate and Error Handling . . . . . . . . . . . . . . . . . . . . . 3.3.3 Internal Quality Measures . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4 Production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4.1 The Paper-less Picking Area . . . . . . . . . . . . . . . . . . . . . . . . . 3.4.2 The Assembly Area . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4.3 Inventory Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5 New Product Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5.1 Small Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.5.2 Large Development Programs Process . . . . . . . . . . . . . . . 3.5.3 Local Development Organization . . . . . . . . . . . . . . . . . . . . 3.6 Supplier Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.7 Moving Forward . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.8 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 45 46 47 47 48 49 50 52 55 56 57 57 58 59 59 60 61 4 Alstom Transport Equipment Electronic Systems (EES): Supplier Integration Excellence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1 Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2 A New Beginning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3 Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3.1 Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3.2 Make or Buy Objective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4 Production Area . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.5 New Product Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.6 Servicing Over 30 Years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.7 Supplier Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.7.1 The Alstom and Gespac Partnership . . . . . . . . . . . . . . . . . 4.7.2 The Alstom and Ardelec Technologies Partnership . . . . 4.8 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 63 65 67 67 68 69 69 74 75 75 79 82 Schwan-STABILO Heroldsberg – Technikum: Process Development Based on People . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1 Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2 Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3 Fractal Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3.1 Production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3.2 Quality Control and Assurance . . . . . . . . . . . . . . . . . . . . . . 5.4 Product and Process Development . . . . . . . . . . . . . . . . . . . . . . . . . 5.4.1 Product Changes and Process Improvement . . . . . . . . . . 5.4.2 New Product Development . . . . . . . . . . . . . . . . . . . . . . . . . 5.5 People . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85 85 86 88 88 91 92 92 93 94 5 Contents 5.6 Customer Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.7 Supplier Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.8 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 7 Fresenius Medical Care Deutschland GmbH: New Product Development Excellence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1 Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2 Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2.1 Industry and Competitive Strategy . . . . . . . . . . . . . . . . . . 6.2.2 Strategy Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3 New Product Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3.1 Customer Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3.2 Technology Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3.3 Combination of Basic Research and Product Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3.4 Product Modularity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3.5 NPD Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4 Production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4.1 Production Planning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4.2 Quality Assurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5 Supplier Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.6 Customer Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.7 The Future . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.8 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Solvay Automotive Group’s Laval Plant: Excellence in Strategy Formulation and Deployment . . . . . . . . . . . . . . . . . . . . . . . . 7.1 Background: Becoming a Major Plastics Supplier to Automotive Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2 Strategy: Competing in the Automobile Industry . . . . . . . . . . . . 7.2.1 The Plastics Automotive Supplier Industry . . . . . . . . . . . 7.2.2 SAG’s Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3 Customer Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.4 Production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.5 Deploying Strategy: Delegating Quality and Improvement to Laval’s Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6 Organizing Work Cells for Participation, Improvement, and Flexibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.7 Quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.8 Product and Process Development . . . . . . . . . . . . . . . . . . . . . . . . . 7.9 A Communication Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10 Measuring Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11 Looking Ahead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.12 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . XI 96 96 97 99 99 100 100 103 103 104 104 105 105 105 107 109 110 110 111 112 112 115 115 118 118 120 121 122 124 128 132 132 133 135 136 136 XII Contents Part III Management Quality 8 Johnson Controls’ Bochum Plant: People at the Center . . . . . . . . . . 8.1 Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.2 Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.3 Production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.3.1 Forecasting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.3.2 Quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.4 Supplier Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.5 Product Introduction: Integration with NPD . . . . . . . . . . . . . . . . 8.6 Process Development and Improvement . . . . . . . . . . . . . . . . . . . . 8.6.1 A History of Continuous Improvement . . . . . . . . . . . . . . 8.6.2 Kaizen Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.7 Culture/Human Resources Policies . . . . . . . . . . . . . . . . . . . . . . . . 8.8 Moving Forward . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.9 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Procter & Gamble Crailsheim: The Management Quality Heptathlete . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.1 Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.2 Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.3 Supplier Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.4 Customer Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.5 Production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.6 Quality Assurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.7 New Product Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.8 Process Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.9 Employee Development and Delegation . . . . . . . . . . . . . . . . . . . . 9.9.1 Employee Development and Delegation in the Materials Operations Department . . . . . . . . . . . . . . . . . . . 9.9.2 A View from a Process Engineer . . . . . . . . . . . . . . . . . . . . . 9.9.3 Operations Manager of Alldays Panty Liner . . . . . . . . . . 9.9.4 Motivation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.10 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 SEW Usocome: Consistent Management Quality in Operations . . 10.1 Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.2 Strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.3 Perfambiance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.4 Production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.4.1 Production Forecasting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.5 Customer Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.6 Supplier Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.7 New Product Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141 141 142 143 145 145 145 148 150 150 151 152 154 154 157 157 159 161 162 163 165 166 167 167 168 168 169 170 171 173 173 175 177 179 182 182 185 186 Contents XIII 10.8 Process Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 186 10.8.1 Working Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 188 10.9 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 191 Part IV Plants in the New Millennium 11 Empirical Validation of the Management Quality Model . . . . . . . . 11.1 Process Improvement Rates and Volume Growth . . . . . . . . . . . . 11.2 How Management Quality Boosts Improvement Rates . . . . . . . 11.3 Management Quality as an Interlocking System of Practices . . 12 Manufacturing at the Beginning of the 21st Century: a New Mindset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.1 Excellence Now: What Manufacturing Organizations can Learn . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.2 How to Use INSEAD’s IEA Questionnaire to Progress: The SEW Bruchsal Usocome Example . . . . . . . . . . . . . . . . . . . . . . . . . . 12.3 The Shifting Frontier of Excellence in the 21st Century: a New Mindset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195 195 197 199 203 203 205 208 Part V Appendices A The Industrial Excellence Award (IEA) . . . . . . . . . . . . . . . . . . . . . . . . 215 B The Questionnaire . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 221 C Data and Measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 231 C.1 The Sample . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 231 C.2 Measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 232 D About the Authors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 237 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 241 Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 245 1 Industrial Excellence Revisited What is industrial excellence? This question has generated enormous activity over the past century, fuelled especially by the changing business landscape arising out of the industrial revolution. Industrialization is concerned with the emergence of explicit (as opposed to artisanal) ways of producing goods. Setting up an explicit process for making cars has allowed repeatability and scale, as best testified by the evolution of the automobile industry, from garage job shops at the beginning of the century to the extensive global automobile enterprises we know today. Similar transformations have happened in other industries, including equipment manufacturing, pharmaceuticals, electronics, and – more recently – housing construction and services. McDonalds, Pizza Hut, Carrefour, Wal-Mart, Benetton, Gap, and Zara are vivid corporate illustrations of this phenomenon. Industrialization is often regarded as a “mature” or “pre-modern” concept. But is it really? We found it intriguing to revisit the state of industrial excellence at the end of the twentieth century – one that has seen so much progress in this regard. To conduct an adequate survey of the existing state of affairs would necessitate a detailed description of leading industrial practices. We soon concluded that we also needed a precise framework or “lens” to guide our evaluation of the industrial sites we were about to visit. These thoughts prompted us to initiate two Industrial Excellence Awards (IEAs). A first competition was initiated in France in 1995. Our “Top Usine” award was offered in collaboration with the French industrial magazine L’Usine Nouvelle, that provided the essential publicity for the competition as well as recognition and exposure for the winning factories. Since 1997 we have been offering the same award to German plants and industrial units with the title of “Die Beste Fabrik”, in partnership with the German economic weekly WirtschaftsWoche. Participating firms fill in a questionnaire which is detailed in Appendix B. Answers containing supporting corporate documents are then analyzed. A small number of candidates are selected for an on-site audit comprised of an INSEAD faculty team, one or two members from WHU, and several representatives of our two media partners. Win- 4 1 Industrial Excellence Revisited ners and runners-up are selected by a jury comprised of INSEAD and WHU faculty members and our media partners. Decisions are based on the documents provided by the corporate contenders as well as notes from the site visits. Eight years of the award programme have provided us with a rich source of knowledge concerning the state of excellence among industrial firms in France and Germany. This book aims to render a representative picture of industrial excellence as identified by the IEA. Indeed, most chapters are descriptions of the practices of a recent winner of the award. Other chapters complement this “picture gallery” with general comments offered in introduction or in conclusion. First, however, let us make explicit the questions that motivated us when visiting these firms: • What does an excellent factory look like? How is it managed? And how is such a factory experienced by its employees? • What are the “pillars” of industrial excellence? What should the industrial manager particularly pay attention to? Is it technology, people, process, or product, or a combination of these? And what, then, is their mutual relationship? • What about the deployment of practices like SPC, JIT, or TQM that have received so much press over the last few decades? What place do such approaches hold in a broader picture of industrial excellence? • What about supply chain and new product development activities, which are receiving increasing attention in both the professional world as well as in the operations management literature? These were the questions we formulated when devising the questionnaire shown in Appendix B, with the aim of contributing to the ongoing journey towards industrial excellence. Our contribution comes in two parts. First, we present our “stories”– factual evidence of the state of industrial excellence in some of our winning plants. The book’s second contribution consists of providing a framework for understanding and analyzing industrial excellence. Our major conceptual observation is to overlay the classical industrial process view with a second, distinct dimension characterizing the quality with which the industrial process is managed. Simply put: process excellence requires managerial excellence. They are the two pillars of industrial excellence. The result is a more elaborate framework of industrial excellence incorporating both the industrial process and the management that governs its performance and its evolution. A more complete and accurate picture of the factors responsible for industrial excellence emerges which formalizes some of the “conventional wisdom” surrounding industrial excellence: it is not the processes alone nor the people that manage them, it is the fact that both factors are at play – beautifully designed processes managed in a superb way. Beyond this dual causality of industrial excellence, we have attempted, in keeping with industrial tradition and the requirements of our questionnaire, 1.1 In Search of Industrial Excellence 5 to further specify what we mean by “process” and “management quality”. We identify four fundamental processes and seven managerial characteristics that, for us, underpin the factors yielding industrial excellence. This, then, is essence of the book’s contribution: a representative description of leading industrial practices coupled with a framework for presenting and understanding excellence of this kind. The framework is based on the dual notions of industrial processes and management quality; our argument is based on descriptions of industrial excellence. Before commencing a preliminary explanation of our framework, we briefly review the huge literature relevant to our topic. 1.1 In Search of Industrial Excellence: Linking Total Quality Management with Management Quality Industrial excellence often evokes images of people rigidly tied to their machines, putting in time at the expense of their personal lives, much like the central character portrayed by Charlie Chaplin in the film Modern Times (a must for any student of industrial excellence). Eight years of Industrial Excellence Awards have left us with a totally different image; an image capturing a rich and diverse range of operators and managers jointly tackling and conquering industrial challenges for the benefit of the world around them, in a way that gives meaning to their work and their lives. Our IEAs provide overwhelming evidence for the primary role played by the quality of management – the primary focus inevitably being the manager of the industrial unit. There is no question that the ability of a plant manager to articulate a clear direction, communicate this vision, and impress upon all collaborators a collective responsibility for the unit’s sustained performance, is a key characteristic portrayed by the managers of our awardwinning units. Over these eight years our conviction has been strengthened that – more than competitors, more than technologies or government regulators – the key threat potentially facing any industrial unit is a change in its leadership. Paradoxically, the tree of industrial excellence takes root at the top. This recognition of the key role of the plant’s management does not imply that these senior managers are necessarily recognized corporate “superstars” – though, in our eyes, they should be. These individuals indeed project the characteristics of management at its best: an understanding of the upcoming challenges facing their industrial unit, a humble view of their own role and of the limited capacity of any single person to change things on his or her own. These leaders are deeply imbued with the necessity to continuously recognize and respect the critical contributions made by their colleagues in the management team on the one hand, and by all operators across the industrial unit on the other. In sum, we reached the view that the quality of an industrial unit is determined, more than by any other factor, by the quality 6 1 Industrial Excellence Revisited of the management of the unit understood in its broadest and most collective sense. To the physical dimension that binds the operators along an assembly or transformation line, one needs to add a managerial bond that links them all, operators and managers alike. This conclusion is hardly startling in one sense. Does not the widelytouted Total Quality Management (TQM) movement make the same claim? After all, continuous improvement practices based on operator training, the use of statistical methods, and a focus on customer quality, point in the same direction. The TQM movement has spurred three continental contests – the Deming Prize in Asia, the Malcolm Baldrige National Quality Award in the United States, and the European Quality Award (awarded by the European Foundation for Quality Management). All three promote TQM as the key to industrial competitiveness, upgrading its implementation to a national imperative! In this book, we go beyond TQM and probe for the managerial and organizational levers that provide an improved map of the journey to industrial excellence. Let us not forget that the 1992 Baldrige Award winner, the Wallace Company, single-mindedly pursued TQM into bankruptcy two years later (Hill 1993, p. 75). TQM by itself cannot ensure industrial success. The formula is more complex, as is evident from the approach guiding the European Quality Award. The success or failure of TQM, its proponents say, hinges largely on intangible factors including management commitment, corporate culture and climate, the level of administrative skills, and “learning” within the organization (Powell 1995, pp. 15–16). Unfortunately, to an executive deciding whether to invest in a costly and time-consuming TQM program, such observations provide an insufficient guide. What is an “appropriate” culture? Can one measure when a culture is sufficient to warrant the introduction of TQM, and, if so, how can one measure the contribution TQM might make to the culture of the firm? To explain these discrepancies of outcome and offer more operational directions for improvement, several lines of argument have emerged. The most prominent, surely, is the “Business Process Reengineering” (BPR) school (Hammer and Champy 1993), which many saw as a direct competitor of TQM. BPR shifts the emphasis to more “radical” methods of change applied to the (re-)design of a unit’s industrial processes. Rather than concentrating on incremental and bottom-up improvements to existing processes, as recommended in the TQM scheme, BPR targets the entire organization for a complete redesign of its critical processes. According to Hammer (1996, pp. 81–82): “TQM is, at its heart, a problem-solving regimen [that] isolate[s] the particular problems [. . . ] Re-engineering no longer seeks to enhance individual process stages, but reconsiders anew how they might best be put together.” 1.1 In Search of Industrial Excellence 7 Notwithstanding the differences in their approach, TQM and BPR are fundamentally similar in concentrating on process improvement and redesign (Cole 1994). They are increasingly viewed as complementary rather than incompatible, being aimed at different levers of change. As is the case with TQM, the evidence supporting the BPR school is largely anecdotal. Hard evidence that either process improvement school – pursued on its own – has consistently enhanced industrial performance is scant (Powell 1995). Resources Activities Dynamic Capability Development Fig. 1.1. From resource-based view of the firm towards dynamic capabilities Other parts of the strategy literature also have salience for our purpose. One approach called the “resource-based view of the firm” goes back to Penrose (1959) and has been further developed by authors like Wernerfelt (1984), Rumelt (1984), and Powell (1995, 1996), among others. This approach concentrates on how to best exploit the firm’s resources so as to enhance efficiency and reveal “optimal product-market activities” (Wernerfelt 1984, pp. 171–172). Wernerfelt defines a resource as “anything that could be thought of as a strength (or weakness) of the firm”. The fundamental idea is that the firm has at its disposal a finite stock of resources (R&D, process knowledge, HR, etc.) that form the basis of its performance. These resources are deployed in the firm across a set of activities which generate its basic revenue flows. The recognition that a firm’s resources take time to build, whereas its activities can be changed relatively quickly (Dierickx and Cool 1989), thus highlights the need for the management to pay due attention to the dynamics of resource development. Indeed, the underlying source of a firm’s performance is not to be found in its activities – which directly generate profits but are easily imitable – but in its underlying resources which are much more difficult to acquire. The key to performance, according to this school of strategy thought, is the way resource endowments are built up (or down) over time, something that is referred to as a firm’s “dynamic capability building” (Teece et al. 1992). (See also Fig. 1.1.) The resource-based view acknowledges the usefulness of TQM and reengineering school techniques as being part of a firm’s resource stock. Its main limitation is that its criteria for success are too abstract for the industrial manager and do not provide a clear guide for action. From a conceptual 8 1 Industrial Excellence Revisited viewpoint, the resource-based view leaves too much for the manager “to fill in”. Our framework aims at bridging this gap. On a more conceptual level, we also diverge from the sharp distinction between resources and activities, instead relying on the more operational notion of “industrial process.” This avoids the huge “grey area” surrounding questions of definition like when a process becomes a resource and when it remains an activity. We find the process notion a better concept for strategic thinking: it is clear for all to see and must be seen in conjunction with the quality of the management that is applied to it. When managed successfully, processes can over time become real “core competencies” for the corporation. Our final comment on the resource-based view is that it is precisely through excellent process management applied to core processes that dynamic capabilities are built. Industrial processes and their management are, for us, the keys to organizational competence and performance. A more externally-oriented strategic approach builds on the extensive industrial organization literature of economics. Its most modern proponent is Michael Porter who therein found sources for his theory of sustainable competitive advantage – of which industrial excellence is a crucial aspect. It is remarkable that Porter’s approach, which had a quite different origin, converges to the same conceptual conclusion: competitive advantage rests on the preservation of unique “assets” within the firm that cannot be easily imitated by its rivals. Also referred to as “differentiation”, uniqueness is embodied in a wide variety of forms including brand image, technology, product and process features, customer service and the like (Porter 1980, p. 37). In a subsequent article appropriately titled “What is strategy?”, Porter (1996) makes a statement more directly relevant for those interested in industrial practices. According to Porter, the fashionable search for quality and process improvement will, at best, yield “operational effectiveness”, or what economists might refer to as “economic efficiency”, that is, finding the most economic way to use valuable and limited resources. Benchmarking activities are ways to ensure that the industrial unit is on the “efficiency frontier”. Porter dismisses operational effectiveness as only a first step, albeit a necessary one, which, at best, allows the industrial unit to operate on a par with other market competitors. Porter’s major point is that this “benchmarking with the market” should not be confused with wider considerations of strategy aimed at preserving differentiation of the firm’s activities from those of its competitors. He argues that the exclusive focus on operational effectiveness is actually homogenizing firms, driving down profit margins as firms copy each others’ production methods (or “best practices”) and engage in brutal price competition. Porter’s prescription for differentiation lies in choosing a clear strategy for pursuing differentiation and then sticking to it. The creation of consistency in activities and, beyond that, of mutual reinforcement among all facets of a company’s operations, is paramount for Porter. Uniqueness requires all 1.2 Four Basic Industrial Processes 9 of the firm’s multiple activities to become “aligned” and self-reinforcing. Therein lies the heart of differentiation. This book takes the same view, with one major caveat: we disagree with Porter when he states that operational effectiveness is at best an equalizer, not a differentiator. We present clear evidence – through example and statistical data – that Management Quality represents a system of interlocking parts. Such a system is not easily imitable and can thus be a firm’s source of competitive advantage. In a sense, Porter’s view of strategy is faithful to the great tradition of one of the fathers of manufacturing strategy, Wickham Skinner, who so forcefully argued for the value of “focus” in operations (Skinner 1969, 1974). A clear direction understood and pursued by all and the substitution of costly tradeoffs imposed by an overly broad corporate agenda for a focused operational agenda allows the realistic and sustained pursuit of performance. Skinner considered these to be the fundamentals of industrial excellence. Porter can be viewed as having extended them to include a clear choice about a set of complementary and self-reinforcing activities. The work on “lean thinking” by James Womack and Daniel Jones – derived from a careful study of leading practices in the automobile industry – can also be considered a further characterization of the “focus” concept (Womack and Jones 1996). Going beyond the need for a clear value proposition as argued by Skinner, Womack and Jones introduce concepts such as waste elimination, flow management, “pull” methods of manufacturing, and the pursuit of perfection in operations as being fundamental to industrial excellence. At the cost of some conceptual elegance, theirs is indeed more operational and prescriptive than competing strategic frameworks. Womack and Jones do not limit themselves to ex-post references to well-known success stories. In contrast, they provide the industrial manager with recommendations of an operational nature that help in the formulation of an action agenda aimed at excellence. In this book, like Skinner and Womack and Jones before us, we take up the quest for a clear and operational characterization of industrial excellence. As stated before, our characterization rests on the dual notions of process and management quality. We start our characterization with a discussion of four processes that we view as fundamental to industrial performance. Thereafter, we will present our definition of the “management quality” that needs to be applied for these processes to achieve excellence. 1.2 Four Basic Industrial Processes This section examines the content of industrial excellence: What is it that an industrial firm needs to do well in order to perform at an excellent level in a sustainable manner? 10 1 Industrial Excellence Revisited Operations strategy formulation and deployment New product development Process development Resource technology Knowledge management Supply chain Supplier integration Manufacturing Customer integration Fig. 1.2. The four fundamental processes of the industrial unit Our answer consists of four sub-parts, each pertaining to a business process fundamental to industrial excellence. The originality of our contribution lies in identifying industrial excellence in clear process terms, as opposed to the traditional performance metrics of cost, service, speed, quality, and flexibility, which are then seen as the consequences of process management choices. Before elaborating, we first define the four process pillars of industrial excellence (see Fig. 1.2). 1. The supply chain process encompasses the physical supply activities of goods and services, from the delivery of material and information inputs to the industrial unit, to their transformation inside the unit, and their delivery to the client using existing distribution channel activities. 2. The process development process refers to those activities aimed at the improvement of the industrial unit’s processes and activities, whether they pertain to the supply chain, to product development, or to other tasks of the organization, including strategy formulation and deployment. 3. The product development process consists of activities concerned with the improvement of the firm’s current portfolio of products and services as well as with the development of the industrial unit’s next generation of products and services. This process is concerned with ensuring the company’s future product and service portfolio. 4. The strategy process is concerned with the formulation and deployment of the strategy chosen by the industrial unit in a way that engages the entire unit (and its current and future suppliers and clients) and sets clear goals for it. 1.2 Four Basic Industrial Processes 11 1.2.1 The Supply Chain Process This process is concerned with the execution of current business: receiving material inputs (supplies), converting them into products and services, delivering them, capitalizing on the flow of information, and managing the physical side of “value creation”. Excellent managers have the ability to design and manage physical production as an entire system, from procurement to customer integration. Such individuals aim for the optimization of the overall system, including its constituent parts and their interrelationships (reaching all the way to the customer), rather than concentrating on individual aspects of industrial operations. In the language of the BPR school, such managers aim to “tear down walls” between supply, procurement, internal operations, and “downstream” operations in a commendable effort to engender cooperation in the pursuit of mutual long-term interest (Hammer 1996, pp. 168–190). Marking a sharp break with past short-term adversarial relationships, these closer industrial ties allow corporations to enhance the quality of their operations and services while simultaneously cutting costs. Suppliers are enticed to participate in this never-ending search for quality and continuous improvement by the prospect of longer-term contracts and enduring business relationships. Furthermore, information on company and supplier performance must be shared throughout the industrial system. This includes feedback from customers via the distribution network and evaluation of suppliers in the procurement network, quality controls, benchmarking, and supplier and customer input on potential improvements of the industrial unit’s processes. Indeed, the sharing of this information allows downstream clients to better manage the impact on their own activities of problems arising upstream in the supply chain. This shift to a more horizontal view of industrial activities is further fostered by the growing focus of many corporations on their core competencies. This reduced industrial scope is realized through the outsourcing to supply partners of a number of activities previously handled inside the firm. The imperative to incorporate the best and often most technologically-advanced components in their products has forced companies to increasingly scan the market for superior supply capabilities and thus elevated supply chain issues in the mind of managers. The globalization of supplier networks has also added tremendous cost pressure and has resulted in further disintegration of traditionally integrated companies (Trent and Monczha 1999). Few are the firms today that are not active in the supply chain “game.” Finally, we wish to stress the need for the supply chain to include a clear interface with the customer. “Customer integration” has become the final link in the supply chain. In our view insufficient attention has been paid to the way the supply chain interacts with the customer. The “Intel Inside” campaign is a reminder that the supply chain reaches all the way to the customer’s mind. Over time, a plant’s performance does influence the cus- 12 1 Industrial Excellence Revisited tomer’s final purchase decision and satisfaction. Critical, then, is the correct definition of the customer, especially in the industrial context where the immediate client tends to differ from the final customer and what he or she seeks (Kim and Mauborgne 1997). Customer integration may indeed be a firm’s differentiator and the cause for an industrial unit’s performance. An overly internal focus may lead a firm to pay insufficient attention to customer requirements, even to the point of ignoring the customer experience. These issues, too, must be part of the supply chain debate inside an industrial unit. 1.2.2 New Process Development Herein lies one of the great contributions of Japanese manufacturers over recent decades: the view that process improvement and development is key to industrial competitiveness. This was well described in the MIT study of the automobile industry, entitled “The Machine That Changed the World” (Womack et al. 1990). Products and services are only the outputs of ongoing business processes or “ways of doing things.” Competitiveness must thus be rooted in a superior ability to run these business processes. Furthermore, “best practices” diffuse over time, making process improvement an ongoing competitive requirement. Pushing this argument to its conclusion, sustainable competitiveness must, then, be rooted in a superior ability to improve one’s processes faster and better than one’s competitors. This view is articulated in “Dynamic Manufacturing: Creating the Learning Organization” by Hayes et al. (1988) and in the widely-read “The Fifth Discipline” by Senge (1990). This emphasis on learning has been fuelled by the IT revolution. The remarkable development of information technologies has promoted the view that information should flow freely throughout the organization and become available to all. This associates process development closely with information and knowledge systems, which have both gained in prominence over the last decade. We recognize this important development by including process development as a separate process in our excellence framework. 1.2.3 The Product Development Process In the last decade, much attention has been paid to the importance of product development for the economic health of the industrial unit (Wheelwright and Clark 1992, 1995). Any industrial framework today must explicitly integrate this fundamental aspect. The mission of product development is to create the means to generate future business; it does so through the design of new products and services or through upgrades of current products and services. In a competitive market, firms are required to regularly develop new products or upgrade existing ones. Distinguishing their own products from those offered by competitors is a necessity. Yet product parameters cannot 1.2 Four Basic Industrial Processes 13 be planned in isolation from the industrial processes. It is well understood that product and manufacturing process design are, in fact, one system that must be designed as a whole: product design influences manufacturing performance, and the manufacturing system influences the product design’s functionality (Nevins and Whitney 1989). For example, product variety and product costs, design quality and costs all require trade-offs between what is ideally desirable and what is economically justifiable. Given rising – but also more volatile – consumer expectations, striking the right balance between time-to-market, price, and quality in products and services has become a critical challenge to managers (Ulrich and Eppinger 2000). The speed and effectiveness with which the product development process is managed is thus critical to the unit’s performance; indeed, it is from this that new responses to customer desires and challenges emerge. The product development process has come to the forefront of the industrial landscape. 1.2.4 The Strategy Formulation and Deployment Process We have already referred to the view advocated by Porter (1996) that all activities of an industrial unit must contribute to the pursuit of a clearly formulated and shared goal for the unit. The formulation and deployment of a clear and distinct strategy thus represents a process of critical importance: the process by which targets and goals are set as well as criteria for success. This process should engage both management and workers by setting priorities in the pursuit of a common collaborative agenda. It then involves the systematic evaluation of progress in this pursuit and the formulation of corrective actions should goals prove elusive or not well-formulated. One too easily assumes that the process of defining a goal and checking progress towards it is simply a matter of “strategic leadership” and synonymous with having a leader for the industrial unit of appropriate “strategic” vision. This, in our opinion, is too simple a view as we will illustrate. The leader works in a context which he/she influences, even shapes, but only to some extent. While leadership succession is indeed important, every leader typically is chosen as the outcome of a decision process (e.g., Collins and Porras 2000, pp. 170–173). Before a leader appears on the scene, many processes are in place, poised to contribute to that leader’s success, and vice versa. Possibly the most important leadership action is the design and execution of the process by which business strategy is formulated, information gathered and analyzed, and goals and progress measured, communicated, and evaluated. It is this “process view of strategic leadership” that is presented here: the view that competitiveness is rooted in business processes more than in the innate qualities of any particular individual who happens to assume, for a period of time, the ultimate responsibility for the performance of an industrial unit. If this were not the case, the fortunes of industrial units would go up and down with their leaders. This may be the case, but one should then talk about leadership excellence, not industrial excellence. Subscribing to the 14 1 Industrial Excellence Revisited view that a leader is only as good as his support team, we will examine how leadership teams systematically interact with each other so as to formulate strategy and deploy it throughout an industrial unit. Our strategic framework thus lines up with the “process” side of the strategy literature and is more neutral on the actual content of the pursued strategy. In other words, regardless of the details of their precise strategic plan, excellent industrial managers share a few characteristics in the way they formulate and deploy strategy. First, they ensure a strategy is formulated whose pieces work together so that the company moves forward in a coherent direction. This requires that the various business processes “fit” together and that options that would not make sense for the entire system are eliminated, at least until the sub-processes that might create obstacles to success are made to evolve in the right manner. Second, the “fit” has to be clear to the actors of the various processes. This means that top management has to (1) communicate its strategy effectively, from middle managers to operators on the factory floor, and (2) be open to input from these individuals regarding the problems that may arise in the pursuit of the chosen strategy. Excellent managers do not merely dictate what must be done, they clearly articulate company goals and the motivation behind them while allowing for adequate flexibility in implementation (Porter 1996). Having positioned a strong process orientation as one of the two pillars of our basic framework, we now turn to our second pillar, which concerns the management quality that needs to be applied to these key processes if they are jointly to excel. 1.3 Operationalizing Management Quality Repeated observation of the leadership of some of the best industrial units in France and Germany has led us to formulate a model of management quality that formalizes the best managerial practices observed. The model proposed thus has the validity of being grounded in repeated observation and also in common sense. Other models of management quality (e.g., Powell 1995, Ittner and Larcker 1997, Miller and Roth 1994) share features with our model, but none is as precise and complete in its operational description. 1.3.1 Fundamentals The first three aspects of management quality are well known and are typically regarded as the essence of “good management”. At this level, our contribution might be that we single out “integration”, at the same level as the other two, namely “direction setting” and “delegation” (see Fig. 1.3). 1.3 Operationalizing Management Quality 15 Direction setting Integration Delegation Measurement Communication Participation Employee development Fig. 1.3. Components of management quality Direction setting. Management starts with clear direction- (or goal-) setting. Short of a clear direction, actions can be at best partial and at worst confusing, communication remaining incomplete and ambiguous. Though direction-setting alone is not synonymous with management quality, it certainly is its first necessary condition. At the plant level, directionsetting is facilitated by a clear focus, as well argued by Skinner (1974). No one set a better example of direction-setting than President John F. Kennedy when he challenged his fellow Americans to send a man to the moon, or than Winston Churchill, when, as Prime Minister, he committed his British compatriots to resist the enemy during World War II. These examples underline the necessity for direction-setting: to be clear, motivating, and operational. By “operational” we mean that upon hearing the direction set, each individual concerned will start thinking of ways to contribute to the announced goal. Delegation. It is equally clear that management essentially consists of organizing work for others. In short, management entails substantial delegation. One regularly hears of “poor managers” trying to do too much themselves, perhaps driven by the conviction (maybe rightly) that their contribution is of higher quality than that of their collaborators. Today, factories employ more complex, capital-intensive technologies than in the past. They must respond more quickly to changes in globally competitive markets with employees that may be more difficult to lead than before. So it is not simply work that needs to be delegated, it is the traditional top-down, command-and-control structure that needs to be reviewed, literally from top to bottom. Senior executives are increasingly learning to delegate decisions to functional departments and teams that 16 1 Industrial Excellence Revisited have more direct and detailed knowledge of manufacturing or service processes. This trend toward decentralization of decision-making is also referred to as “employee empowerment” (Powell 1995, Ittner and Larcker 1997). Integration. The complement of delegation is integration. The more decision-making is decentralized, the more one must regularly re-align all to the common goal. This is the case both within the firm and in relations with suppliers. Horizontal integration ties the firm into the supply chain, aligning it not only with its suppliers but also with its customers. These links are considered vital to achieve fast response times, high quality, and competitive costs. Vertical integration refers in this book to the strategy deployment process, requiring the formulation of consistent sub-goals for each organizational sub-unit as well as prioritization and the assignment of responsibility. Finally, temporal integration of the firm – the near-simultaneous execution of research, marketing, design, and manufacturing problem-solving – further reduces time-tomarket and enhances manufacturability (Wheelwright and Clark 1992; see Hendricks and Singhal 1997, Datar et al. 1997 on the advantages of being early to market). These integration linkages rely on both open information (to see all effects of individual decisions) and aligned incentives (to pursue the global rather than the local goal). 1.3.2 Enablers Direction setting, delegation, and integration are supported by four enabling managerial practices if they are to function well. Communication. First, directions and goals need to be communicated frequently and to all employees in order to become a shared reality within the industrial unit. Delegation and integration similarly require excellent communications. Effective communications establish an open culture and equip employees with the information necessary to make decisions consistent with the goals of the firm, and foster alignment and integration. Measurement. Second, measurement, both qualitative and quantitative, allows managers to keep track of performance as well as its drivers (for the study of causality). If the processes are not well-measured, no amount of progress can be validated with sufficient certainty which makes direction-setting a sterile exercise. Employee participation. Third, a proper attitude of participation in the activities of the industrial unit is paramount to achieving success. Employees need to be motivated to make contributions to the unit that transcend their job descriptions. To foster such behavior, team-based forms of cooperation as well as non-financial and teamwork performance measures are frequently employed (Ittner and Larcker 1997). For example, one 1.3 Operationalizing Management Quality 17 plant manager told us: “We have employees who responsibly and competently manage a large budget of, say, €50,000 in their local sports club at home. But when they arrive to change in our locker rooms in the morning, they literally check out their brains together with their clothes. The managerial and organizational challenge is to get all employees to use their intelligence here as well; the payoff would be huge.” Employee development. Fourth, too often employees are eager to contribute to the goals set by the management but lack the proper know-how to do so. Employee development is an essential tool to foster employee participation and to contribute to decision-making. This includes continuous training as well as the management of career paths that offer opportunities for personal development and career advancement. Employee development is shown at the bottom of Fig. 1.3 not because it is “lowest in the hierarchy”, but because it is the absolutely fundamental pillar for management quality. Delegation of ever-more-complex decisions can only be successful if employees are given the chance to acquire new knowledge and develop new skills and confidence through such development challenges. This may be ultimately seen as a matter of fairness: can it be fair to ask employees to participate in the firm’s destiny and make best personal efforts that go far beyond standard job descriptions, if they are not given the chance to advance themselves and their careers? The above definition confirms and repeats many common views of management quality, but it does so in a framework that seeks completeness. Each characteristic is easily seen to enhance management quality by itself; it does so even more in presence of the other characteristics. Better communication clarifies the chosen direction, motivates employees, and results in increased employee participation. On the contrary, the absence of communications could just as easily be conceived as leading to unsatisfactory unit performance. The “enablers” can be seen as the glue necessary to “make the fundamentals stick”. Another comment to make in support of our definition of management quality is that it applies across a very broad spectrum of organizational units and sub-units. The definition applies to a firm, a plant, a work group, and a project team. A faculty member working with a group of students can benefit from the framework. As stated earlier, the absence of any one of the characteristics can easily be thought to lead to sub-optimal learning by the class. Similarly, to achieve optimal results, no TQM or BPR effort can succeed unless it applies the effort with a due level of “management quality”, as defined above. Again, a checklist of “quality attributes” is easily generated from our list. We have thus outlined the key of our industrial excellence framework: management quality applied to the processes that drive the performance of an industrial unit. Our framework of industrial excellence can be seen as an 18 1 Industrial Excellence Revisited extension of the TQM and BPR schools in a manner that integrates management quality with process excellence. 1.3.3 The General Framework The four processes – supply chain, process development, product development, and strategy – overlap and support one another. So do the attributes defining management quality (see Fig. 1.4 for a graphic representation of both process view and quality of management). Coherence and synergy can thus be found within each of our two broad categories. But deeper coherence can also be found between our two broad categories in that it is management quality that is needed to reach excellence in each of the fundamental processes and also in the industrial unit itself. In other words, management quality “oils” the performance excellence of the individual processes, and also of the entire unit. The framework, basing a process view of industrial excellence on a foundation consisting of management quality, is the conceptual contribution of the book as illustrated in the chapters to follow where nine selected industrial units are described from this dual perspective. This was the perspective that guided us when formulating the IEA questionnaire that became our principal instrument in our search for and validation of industrial excellence. 1.3.4 Best-Factory Tours and Awards The 10-page IEA questionnaire is broken down into four segments, corresponding to the four basic business processes (Appendix B). Across each process we probe for the extent to which the seven dimensions of management quality are applied. Respondents are managers of industrial units in France and Germany which put themselves forward as candidates for our IEAs. Together with their management teams they fill out the questionnaire. As attested by a number of plant managers, this exercise is a learning activity in itself, providing the team with a useful and novel analysis of the workings of their industrial operations. (See Chap. 12 for the story of one company that has resolutely adopted our questionnaire for its own benchmarking and progress activities.) The submitted questionnaires are then graded by our faculty team and the top scorers are selected for intensive one-day follow-up visits. It is the approximately one hundred factory visits accomplished over the last eight years that have provided us with the opportunity for learning grounded in industrial excellence. Each year, the selected winners and their operations are described in feature articles in L’Usine Nouvelle and WirtschaftsWoche, respectively. These winners have also provided the empirical content for this book. The basic business processes 1.3 Operationalizing Management Quality 19 Operations strategy formulation and deployment New product development Process development Resource technology Supplier integr. Knowledge management Supply chain Manufacturing Customer integr. Management quality Employee development CummuniParticipation Measurecation ment Integration Delegation Direction setting Fig. 1.4. Management quality applied to the four basic business processes The nine chapters that follow consist of detailed case studies of a sample of past IEA winners. Each was selected for this book with a view to illuminating how industrial excellence is achieved and each also illustrates an aspect of our excellence framework. So each chapter serves a dual purpose. Before beginning a detailed examination of these industrial units, we preview the major aspects illustrated by each case. The first six chapters illustrate and explore the process view of industrial excellence, whereas the last three focus more on management quality (see Table 1.1 for a summary view of how the chapters illustrate our framework). We start the plant tours with an illustration of excellence in supply chain management. The Visteon plant (Chap. 2) in the French Ardennes illustrates 20 1 Industrial Excellence Revisited Table 1.1. The plan of the book Part I Introduction II The four basic processes Chapter All are introduced All are introduced 2 Visteon Manufacturing 3 Faurecia Customer integration Supplier integration Process development, technology management New product development Strategy deployment Direction, communication, measurement, participation Direction 6 Fresenius Medical Care 7 Solvay Laval 8 Johnson Controls Manufacturing 9 Procter & Gamble Strategy deployCrailsheim ment, manufacturing 10 SEW Usocome Strategy deployment, manufacturing, customer integration IV Plants in the new millennium 11 Empirical validation 12 Our summary view and future outlook on industrial excellence V Appendices Management quality dimensions 1 Introduction 4 Alstom 5 SchwanSTABILO III Management quality Basic business processes A The Industrial Excellence Award B The questionnaire C Data and measures All processes analysed Integration Participation, delegation Direction, measurement Direction, delegation, participation, communication Direction, people development, participation, integration, communication All dimensions All dimensions All dimensions commented upon 1.3 Operationalizing Management Quality 21 the complexity of the manufacturing system prevalent in the automobile sector. Management strengths described include direction-setting, communication, measurement, and employee participation. The Faurecia factory (Chap. 3) provides an excellent example of customer integration, though new product development and production processes are also noteworthy. The Alstom plant (Chap. 4) exemplifies integration in supplier management; its new product development and customer integration activities appear as complementary strengths as well. The Schwan-STABILO plant (Chap. 5) is a remarkable example of process development and technology management. Plant management is very attentive to foster the participation of all employees in its goals and the unit exemplifies delegation. With Fresenius (Chap. 6), we turn to new product development (NPD), earlier referred to as an essential weapon in determining the future competitiveness of the unit. Solvay’s Laval unit (Chap. 7) shows the long and difficult road that must be travelled to reach world-class performance status. It also shows that strategy formulation and deployment must be accompanied by clear direction-setting, participation, communication, and delegation. With Chaps. 8–10, we look more specifically at management quality. Johnson Controls (in Chap. 8) illustrates people management and development and how such activities contribute to industrial success. The P&G industrial unit (Chap. 9) offers evidence of all dimensions of management quality, as defined in our framework. SEW’s plant in Hagenau (Chap. 10) demonstrates the consistency that needs to be applied for industrial success, and that such consistency does not come at the expense of performance or employee satisfaction but, in fact, can generate both economic and human rewards. Chapter 11 shifts from “examples” to systematic data analysis. Based on data from the 1997 IEA competition, we demonstrate that the application of management quality across an industrial unit’s basic processes strongly predicts that unit’s performance, measured as growth. Moreover, the data show that management quality represents a system of interlocking elements that reinforce one another. Management quality, seen as a systemic feature, can thus be seen as a core competence of an industrial unit, yielding competitive advantage over time. Our concluding chapter (Chap. 12) reviews the insights gained from these “best factory explorations” and from the statistical patterns associated with them. We conclude the book with some views on the trends in industrial excellence that emerge from the examples described. We hope that, at the end of this journey, the reader will feel better informed and equipped to understand the contours and shapes of industrial excellence in the coming century. The journey is far from over.