Let's Fix It!

Overcoming the Crisis in Manufacturing

Richard J. Schonberger

• Publisher: Free Press
• Year: 2001
• ISBN:
  9780743223720
• Topic: Business
• Subtopic: Leadership
• Index: Business

No company is built to last, argues world-renowned manufacturing guru Richard J. Schonberger. In this devastating indictment of current manufacturing practices, Schonberger submits a four-part revolutionary plan to solve the manufacturing crisis for good. From his statistically reliable database of 500 top global manufacturers, Schonberger finds that by the critical worldwide standard of lean production—shedding inventories –General Motors, General Electric, Toyota, and other world leaders have stopped improving. He presents powerful evidence that in recent years record profits have covered up waste and weakness. Clearly a lack of will to renew and recover from the natural tendency toward regression and erosion, it is more than a matter of garden-variety complacency—devastating as that is in this new era of global hypercompetition. Schonberger asserts that the inclination of industry leaders to engage in stock hyping to gain a quick fix from the dot-com explosion has distracted attention from "the basics" of world-class excellence. Among other villains contributing to the crisis, Schonberger contends, are newly hired managers with no trial-by-fire experience; bad equipment, systems, and job design; and retention of unprofitable customers and anachronistic command-and-control managerial hierarchies.What to do? Just as he introduced the legendary "just-in-time" framework to the West in the 1980s, Schonberger prescribes strong medicine to cure our current malaise. Find your blind spots, he says. Roll confusing, time-sapping initiatives into a master program that is immune from "the flavor of the month." Put lean into heavy-handed control systems. Develop products and standardize processes at "home base" for ease of migrating volume production anywhere in the world.

NOTES

Note on Web citations: The initial Web address characters, usually http://www, have been omitted, except where the form is nonstandard, in which case the full address is written out.

Preface

1 John A. Byrne, “Visionary vs. Visionary,” in cover story entitled “The 21st Century Corporation,” Business Week, August 28, 2000, pp. 210-214.

2 Richard J. Schonberger, Japanese Manufacturing Techniques: Nine Hidden Lessons in Simplicity (New York: Free Press, 1982).

Chapter I

1 See Marvin B. Lieberman and Lieven Demeester, “Inventory Reduction and Productivity Growth: Linkages in the Japanese Automotive Industry,” Management Science 45, no. 4 (April 1999): 466-485; and Lieberman and Rajeev Dhawan, “Assessing the Resource Base of U.S. and Japanese Auto Producers: A Stochastic Frontier Production Function Approach,” unpublished paper, UCLA, August 4, 1999.

2 An interview with Federal-Mogul’s interim chairman and chief executive, a turnaround artis:, deals with the bankruptcy rumors: Joann S. Lubin, “Tips from a Turnaround Specialist,” Wall Street Journal, December 27, 2000, pp. B1, B3.

3 Jamie Paton, “CEO Departures at Federal-Mogul and ICG Follow Profit Warnings,” TheStreet.com/NYTimes.com, September 19, 2000.

4 Gregory L. White and Karen Lundegaard, “Ford Says Last Year’s Quality Snafus Took Big Toll—Over $1 Billion in Profit,” Wall Street Journal, January 12, 2001, pp. A3, A6.

5 Jeffrey E. Garten, “The War for Better Quality Is Far from Won,” Business Week, December 18, 2000, p. 32.

6 L. Weiss and G. Pascoe, “The Extent and Permanence of Market Dominance,” paper presented at annual meeting of European Association for Research in Industrial Economics, August 1983; D. Dueller, Profits in the Long Run (Cambridge: Cambridge University Press, 1986).

7 Jeffrey Garten, op. cit.

8 Kathy Chen, “Weak Economy Puts the Brakes on Job-Hopping,” Wall Street Journal, March 27, 2001, pp. B1, B18.

9 Robert W. Hall, Attaining Manufacturing Excellence (Homewood, Ill.: Dow Jones-Irwin, 1987), p. 173.

10 Of companies responding in Industry Week’s year 2000 Census of Manufacturing, 9.1 percent say they are delivering at least forty hours of training per year for their employees: Jill Jusko, “Manufacturers Measure Up,” Industry Week, December 11, 2000, pp. 23-43.

Chapter 2

1 Richard J. Schonberger, World Class Manufacturing: The Lessons of Simplicity Applied (New York: Free Press, 1986), pp. 217-18. The following year, Robert W. Hall included a table of sixteen “principles” of manufacturing excellence in his book Attaining Manufacturing Excellence (Homewood, Ill.: Dow Jones-Irwin, 1987), p. 264.

2 Richard J. Schonberger, World Class Manufacturing: The Next Decade: Building Power, Strength, and Value (New York: Free Press, 1996).

3 Geoffrey Boothroyd and Peter Dewhurst, Product Design for Assembly (Wakefield, R.I.: Boothroyd-Dewhurst, Inc., 1987).

4 For example, the Durango and Jeep have different windshield wipers and the five platform teams came up with three different types of corrosion protection for a rolled steel reinforcer used in plastic bumpers: Alex Taylor III, “Can the Germans Rescue Chrysler?” Fortune, April 30, 2001, pp. 106-112.

5 These quoted passages are from Chester Dawson, “Machete Time,” Business Week, April 9, 2001, pp. 42-43. The story notes, further, that Nissan is facing up to its high costs by teaming up with Renault (its parent) to buy standardized parts at big savings from fewer suppliers.

6 This according to John Helyar, “Sittin’ Pretty,” Fortune, June 11, 2001, pp. 133140.

7 Tom Archer, “How Productive Are You?,” Manufacturing Engineering (April 2000): 120.

Chapter 3

1 Eamonn Fingleton, In Praise of Hard Industries (New York: Houghton Mifflin, 1999).

2 Richard Wise and Peter Baumgartner, “Go Downstream: The New Profit Imperative in Manufacturing,” Harvard Business Review (September-October 1999): 133-141.

3 See, for example, the handbook, Geoffrey Boothroyd and Peter Dewhurst, Product Design for Assembly (Wakefield, R.I.: Boothroyd-Dewhurst, 1987).

4 Moon Ihlwan, Pete Engardio, Irene Kunii, and Roger Crockett, “Samsung: The Making of a Superstar,” Business Week, December 20, 1999, pp. 136-140.

5 Cited in Alex Taylor, “The Man Who Vows to Change Japan Inc.,” Fortune, December 20, 1999, pp. 189-98.

6 Kermit Whitfield, “Building Better Powertrains,” Automotive Manufacturing and Production (May 2001), pp. 70-73.

7 Roger G. Schroeder, John C. Anderson, Sharon E. Tupy, and Edna M. White, “A Study of MRP Benefits and Costs,” working paper: Graduate School of Business Administration, University of Minnesota, May 1980.

8 Brian Cargille, Steve Kakouros, and Robert Hall, “Part Tool, Part Process: Inventory Optimization at Hewlett-Packard Co.,” OR/MS Today (October 1999): 18-24.

9 Hank Zoeller, “Going Outside,” APICS—The Performance Advantage, January 2001, pp. 34-38.

10 Ibid.

11 Udo Nabin, Giovanni Quaglia, and Paul Wangen, “EFQM’s New Excellence Model,” Quality Progress, October 1999, pp. 118-120.

12 David Drickhamer, “Standards Shake-Up,” Quality Progress, March 5, 2001, pp. 37-40. The other two principles under ISO 9000:2000 are leadership (no surprise) and system approach to management.

13 While of the opinion that the ISO series is too broad in scope, Tito A. Conti notes that “the ISO 9000:2001 series finally incorporates many of the features of the so-called total quality management or excellence models,” in “How to Find the Correct Balance Between Standardization and Differentiation,” Quality Progress, April 2001, pp. 119-121. Conti, an Italian, is (in my opinion) perhaps the quality community’s best thinker and writer—in English; see, for example, his remarkable book on quality theory (hailed by Joseph Juran), Building Total Quality: A Guide for Management (London: Chapman & Hall, 1993).

14 Australia’s prerevision model is described in Robert J. Vokurka, Gary L. Stading, and Jason Brazeal, “A Comparative Analysis of National and Regional Qualify Awards,” Quality Progress, August 2000, pp. 41-49. The revised model, giving less emphasis to process-based quality, may be found in aqc.org.au/abef/index.html.

15 Another steck index, the Quality Progress Q-100, may be a truer test of the proposition that quality yields shareholder value. Created by Robinson Capital Management in 1998, the index tracks stock market performance of companies they consider as high users of quality tools and systems. In its first 3½ years, the index out-performed the S&P 500: Q-100 up 41.95 percent, S&P up 33.45 percent. “Q-100 Drops 9.3% in Volatile Market,” in “Keeping Current,” Quality Progress, April 2001, p. 28.

Chapter 4

1 The half-life concept, in a business context, was introduced by Arthur M. Schneiderman in “Setting Quality Goals,” Quality Progress, April 1988, p. 51.

2 Jill Jusko, “Turning Ideas into Action,” Industry Week, October 16, 2000, pp. 105-106.

3 The origi...

Table of contents

• Cover Page
• Title Page
• CONTENTS
• Complacency
• Renewal
• Competitiveness
• Programs and Their Half lives
• Success
• Performance Management The Human Side
• Performance Management ControlWithout Controls
• Focused Form and Structure
• Focus Within
• Strategy of Global Proportions
• Continuous Improvement Up to Date
• Manufacturing’s Burdens—and Responses
• Systems Some Come with an “E”
• THE STRONG AND THE WEAK
• INTERPRETATION
• WCP INTERNATIONAL BENCHMARKING STUDYPARTICIPANTS AND GLOBALBENCHMARKINGPARTNERS
• TWO ELEMENTS OF THE WORLD CLASS BY PRINCIPLES WCP INTERNATIONAL BENCHMARKING PROJECT
• NOTES
• INDEX
• RICHARD J SCHONBERGER PH D