April 1996 € Volume 6 € Number 4

Resources

Resource Management in the 21st Century:
A roundtable discussion


By Gregory A. Farley, Editor

At the invitation of APICS -- The Performance Advantage, a handful of resource management professionals -- consultants, practitioners and academics -- met during the APICS International Conference last October to discuss the changing nature of manufacturing, new production and inventory control technologies, and the changes they will mandate in the structure and function of business.

The participants were Richard Haas, CPIM, QMS Inc.; Nancy Seifert, CPIM, The Clarkson Company; Rhonda Lummus, Central Missouri State University; Hal Mather, Hal Mather, Inc.; Gene Crepeau, CFPIM, CIRM, Gene Crepeau, Inc., and Keith Launchbury, CFPIM, CIRM, Keith Launchbury & Associates, Inc.

This focus group addressed the following specific questions:
The whole wide world
The discussion began by focusing on the phenomenon of worldwide competition. "We haven't seen nearly the full extent of globalization," Hal Mather said. "And aside from the fact that we'll be facing more competition in manufacturing, we have to examine the issue of global sourcing . . . where are we going to find the raw materials and components we use in manufacturing? If companies are going to become more globally oriented in manufacturing, then the resource manager is going to become a global resource manager, which means a lot of changes."

Roundtable participants agreed that the traditional manufacturing paradigm -- making a product in one country and then shipping over the oceans to another country to capitalize on a stronger foreign marketplace -- is no longer relevant. This arises from the fact that manufacturing costs in many industries are dropping dramatically, while distribution costs are dropping slowly, if at all. Mather suggested that the import and export of goods may be replaced by the import and export of small factories producing specific products for specific markets.

That idea was echoed to some degree by Nancy Seifert, who suggested that the manufacturing manager is being replaced by a project manager someone "familiar with the entire company who can take a project or an order and determine, based on each facility's capacity, capability and local market conditions, which plant is best able to meet the customer's needs."

"We'll be working with smaller factories," said Mather, "which is simpler, but we're going to have networks of these small factories, which is going to be much, much more complex."

The questions presented by this development are numerous:
A new way of doing things
"The management skills needed to manage this new manufacturing environment differ significantly from those skills that are common today," Keith Launchbury said. "Current management practice is built around the idea that dedicated resources are owned by the manufacturer, that the manufacturer controls resources. Now the resources are external to the company and outside of our control."

This deficit of management wherewithal is compounded by recent trends -- downsizing, rightsizing, reengineering -- that have reduced the management work force. In driving out overhead costs, many companies are taxing the abilities of their human resources. Companies are performing the same functions with fewer and fewer people.

"Graduates moving into manufacturing jobs need to have more skills than they've ever had before," said Seifert. "There is no training time available anymore. These graduates have to hit the floor running, and they'd better be able to do the job and do it well. The nature of manufacturing today precludes any tolerance for mistakes."

"Rightsizing presents us a dilemma," said Launchbury. "As we've cut costs, we've reduced the funds available for education and training. Those left working within our companies are being asked to do their jobs as well as the tasks previously performed by those who've been downsized out of the company."

Moderator Steve Melnyk steered the conversation toward another trend: the growing number of "knowledge workers" in the work force. These workers move from company to company to gain knowledge, which they then take to a new company to gain more knowledge. "Unlike the past," said Melnyk, "workers' allegiances are to themselves and not to their employers."


Taking out the trash
This is not necessarily bad news. Technology advances too quickly for most companies to retain in-house expertise in a specific field, but knowledge workers can bring that experience to their new positions. This is helpful, too, Melnyk said, because 95 percent of new technology is garbage. And only about half of the remaining technology is crucial to business success. An experienced knowledge worker, hired into a new position, can steer the new employer away from garbage technologies.

And technology, of course, will remain a key factor in the realm of resource management. Mather foresees an "exportable factory," consisting of a boss, perhaps 10 highly trained people, some machinery and the right software to produce the same capacity and quality of merchandise that once required 500 workers.

"There's no question we will do that," Mather said. "The question is when. And at that point, it is truly your knowledge workers -- your 10 or 12 of them -- who are adding value for the customer.
Melnyk suggested that such operations would run counter to the fact that developing countries have long embraced manufacturing because it represents a process for developing a technology base.
Mather said that's all history now. "Rich countries are going to grow richer and poor countries are going to grow poorer, because manufacturing is going to cease to be source of employment for the masses."


The virtual factory
Much of the conversation revolved around the notion of supply chain management and, by extension, the virtual factory. The key issue: Where does the supply chain begin and end?
"Manufacturing capability is dwindling inside the plant," said Richard Haas. "That's forcing most manufacturers to move toward virtual-type concepts."

That's leading to "tighter and tighter integration between companies -- between vendors and customers," said Rhonda Lummus. "In the grocery business, it manifests itself in suppliers writing purchase orders for their customers. Because of EDI, the suppliers know exactly how much of their product was sold today."

Seifert said the supply chain extends even beyond the customer. "Even packaging is becoming an issue. It costs money, time and effort to dispose of packaging materials, and customers are not willing to incur those costs."

So, in some ways, supply chain management is an idea whose time has already come and gone, because manufacturers, to meet the demands of their customers, are being forced to provide support throughout the useful life (and beyond) of their products. Lummus, who has done much work with the food industry, says Quaker Oats sums it up by managing the product "from seed to sewer." And growing environmental awareness is forcing many companies to adopt a mind-set that embraces the final disposition of their products.


The horizontal manager
The consensus of the roundtable participants holds, without surprise, that resource managers with only one specialty cannot succeed in the world of modern manufacturing. "A limited skill base is going to kill you, professionally," said Mather.

The difficulty is in throwing away the traditional management mind-set and teaching young managers how to view manufacturing as a process, and not as a series of discrete activities. "How do we train people to think about the product 'from seed to sewer?'" Mather asked.

"The functional manager," said Launchbury, "is a dying breed. Those managers with their 20-year-old mind-sets are going to have to be replaced by generalists. But how do you prepare a student to be a generalist? When you put a traditional MBA graduate into a general manager's role, you realize there's a lot we didn't teach him. It's all the stuff about running a business, about suppliers and managing workers that he never had the opportunity to learn. The bottom line is that you can't teach someone to be a general manager."

"But you can teach people where to find information, and you can teach a problem-solving process that the general manager, in practice, can refine through application," said Lummus.

"That certainly has to begin at the university level," Seifert said, because that's not what is happening now. The people coming out of universities now are entering the work force with a very defined set of skills, and that's all they know and they walk into your business expecting to take it by storm."

"Graduates don't understand their role in an organization," said Lummus. They see only their jobs and they can't visualize what other departments do, or how what they do affects those other departments. There is no understanding of the relationships within the business."

Launchbury said that the traditional functional-based organizations and the hierarchical nature of the management structure will give way to a new horizontal architecture. "People communicate upward through the organization -- from supervisor to manager to vice president to senior vice president and so on. This will change. Communication will go sideways across departments, and even across the boundaries to the outside of the organization."

This horizontal communication is crucial to meeting customer demands. Managers must be empowered to muster and organize all the resources necessary to deliver the goods at the right time and in the right place.

Gene Crepeau said that the tool most necessary to manufacturing managers is the ability to change and to adapt to change. "There's no such thing as a steady state," he said, "so we must provide our workers with tools and training that make it easier to adjust to changing requirements and to assimilate new technologies.

"The body of knowledge grows and changes," Crepeau continued. "We don't make it grow-it does that on its own. We need to be able to document those changes and adapt the body of knowledge to embrace those changes as quickly as possible."

Would you like to participate in a roundtable discussion at APICS '96? Contact Greg Farley, (770) 431-0867, ext. 212 or .
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