Intelligent Manufacturing € June € 1996 € Vol. 2 € No. 6

Manufacturer's Library

World Class Manufacturing: The Next Decade, by Richard J. Schonberger, Free Press, 275 pages, $27, ISBN 0-684-82303-9

Since the invention of double-entry bookkeeping, managers have judged a company's worth by sales and profits. This book reaches beyond "financials" to redefine excellence and reveals, with new benchmark data, how pioneers become dynasties.

This book's research reveals that, from 1950 to 1995, while "financials" dipped and soared repeatedly, industrial decline and ascendancy correlated perfectly with inventory turnover -- one of two key nonfinancial indicators and a bedrock measure, along with customer satisfaction, of a company's power, strength and value.

Moving beyond edicts, procedures and policies, the book captures these nonfinancial metrics -- which the author believes are the true predictors of future success -- in 16 customer-focused principles which have been tested in 140 leading-edge manufacturing organizations in nine countries (see chart below). The book redefines excellence in terms of competence, capability and customer-focused, employee-driven, data-based performance.

Schonberger is president of Schonberger and Associates Inc. (Seattle, Wash.).

Customer-Focused Principles
1) Team up with the customers; organize by customer/product family.
2) Capture/use customer, competitive, best practice information.
3) Continual, rapid improvement in what all customers want.
4) Frontliners involved in change and strategic planning.
5) Cut to the few best components, operations and suppliers.
6) Cut flow time and distance, start-up/changeover times.
7) Operate close to customers' rate of use or demand.
8) Continually train everybody for their new roles.
9) Expand variety of rewards, recognition and pay.
10) Continually reduce variation and mishaps.
11) Frontline teams record and own process data at workplace.
12) Control root causes to cut internal transactions and reporting.
13) Align performance measures with customer wants.
14) Improve present capacity before new equipment and automation.
15) Seek simply, flexible, movable, low-cost equipment in multiples.
16) Promote/market/sell every improvement.

The Transformation Imperative: Achieving Market Dominance Through Radical Change, by Thomas E. Vollman, Harvard Business School Press, 269 pages, $27.95, ISBN 0-87584-676-9

In the craze to create leaner, meaner and more flexible organizations, many manufacturers impose change programs that actually cast them adrift. This book offers a vision of why companies need to be transformed and a concrete process for making it happen.

This book shows why change initiatives like reengineering, continuous improvement and employee empowerment, when implemented by themselves, are not enough to achieve dominance in today's rapidly evolving business environment. Only when change programs are deep and fully integrated across the organization can an enterprise truly be transformed. And the alternative to transformation, according to the author, is certain destruction.

Drawing on the research efforts of Manufacturing 2000, a collaborative project between leading multinational companies and the Institute for Management Development International (IMD), this book present useful tools and a practical framework for analyzing, implementing and measuring change programs as well as for linking big-picture strategy with the nuts-and-bolts of change management.

The book poses four key questions that managers must ask of every transformation initiative:

Is it integrated with the long-term goals of the company?
Is it consistent with the company's culture?
Is it feasible based on available resources -- and could they be applied better elsewhere?
Is it desirable for all who must implement it?

Vollman is associate director of the Manufacturing 2000 project at IMD International (Lausanne, Switzerland).

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