Literature Reviews

Agile_Manufacturing_the_21st_Century_Competitive_S..._----_Part_II_-_Design_and_Development_of_Agile_Manufacturing_Systems.pdf

Home >Business & Finance homework help >Operations Management homework help >Literature Reviews

Part II

D E S I G N AND D E V E L O P M E N T OF A G I L E M A N U F A C T U R I N G SYSTEMS

Gunasekaran, A.. Agile Manufacturing: the 21st Century Competitive Strategy, edited by A. Gunasekaran, Elsevier, 2001. ProQuest Ebook Central, http://ebookcentral.proquest.com/lib/harrisburg-ebooks/detail.action?docID=318107. Created from harrisburg-ebooks on 2020-11-24 13:19:42.

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

This Page Intentionally Left Blank

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

A S t r a t e g i c A p p r o a c h to D e v e l o p A g i l e M a n u f a c t u r i n g

Jens O. Riis and John Johansen

Center for Industrial Production, Aalborg University, Fibigerstraede 16, DK-9220 Aalborg, Denmark

1. N E W C H A L L E N G E S TO INDUSTRIAL ENTERPRISES

Industrial conditions have changed radically over the last 15 - 20 years. In this period of time technology, market conditions, and customer demands have changed at a speed and in directions barely seen before. This for instance includes dynamic market fragmentation, shrinking time-to-market, increasing product variety and production to customer specifica- tion, reduced product lifetimes, globalization of production, etc.

At the same time, competition is becoming global, as the global economy is rapidly replacing local markets. The emergence of the open markets, reductions in trade barriers and improvements in transportation and communications links have led to a situation where local competition and markets operate in the context of global standards. As a consequence, today's industrial enterprises face new challenges and competitive pressures. The Next-Generation Manufacturing Project at MIT emphasizes agility and customer responsiveness, networking in a global market, employee participation, integration in an extended enterprise, knowledge management and competence development.

The changed industrial context calls for new capabilities. The ability of industrial enter- prises to adjust quickly and accurately to changing conditions will be an important key to success in the future. Within this process enterprises must be able to integrate a multitude of technological, organizational and managerial viewpoints.

Especially within the last two decades literature has brought forward new manufacturing philosophies each offering a solution as to how a company should be managed and organized to be competitive. The list includes concepts like Just-In-Time (JIT) and Total Quality Man- agement (TQM); but also concepts like Continuous Flow Manufacturing, Integrated Logis- tic/Fast Cycle Time, Time Based Manufacturing and Supply Chain Management may be seen in this connection. Some of the recent manufacturing philosophies that have appeared on the industrial scene are Lean and Agile Manufacturing focusing on leanness and agility, respec- tively.

Within several of the manufacturing philosophies a tendency can be traced from an enter- prise view to an extended enterprise view; and from an intra- to an interorganizational com- pany perspective, where the role and the development of the company are discussed more explicitly in connection with its markets, customers, distribution and supply networks. The company's cooperation with other companies and suppliers is especially important. Fur- thermore the discussion is closely attached to concepts like core competence and key tech- nology and the ongoing discussion about externalization and outsourcing to specialized sup- pliers, (Kragh-Schmidt & Johansen, 1998).

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

54 J O. Riis, J Johansen

1.1 Agility and Lean Manufacturing Lean Manufacturing concept integrates the most essential Japanese production manage-

ment principles from the 1970s and 1980s, e.g. by emphasizing the elimination of waste from Kaizen, Just-In-Time principles applied to the entire supply chain, TQM principles, and the empowerment of employees to take on the responsibility for their own work. The Lean Manufacturing concept was first coined in The International Motor Vehicle P r o g r a m - IMVP in which a collection of automotive assembly plants in North America, Japan and Europe were described and analyzed in a number of measurement and performance areas, e.g. quality performance, flexibility and productivity, (Womack et al, 1990). The Lean Manufacturing was launched as a concept describing Best Practice within the automotive industry, but has gradually evolved, and today the concept is widely used in industry.

Whereas Lean Manufacturing presents a well-structured set of methods and enablers, Agile Manufacturing is rather a broad philosophy originated from the work of the Agile Manufac- turing Enterprise Forum (AMEF), which is affiliated with the Lehigh University and was initiated in 1991. The work is documented in the report 21 st Century Manufacturing Enterprise Strategy. The point of departure of Agile Manufacturing is the increased dynamics and unpredictability of industrial enterprises' environment. Accordingly, agility can be defined as the capability of operating profitably in a competitive environment of continually and unpredictably changing customer opportunities, (Goldman et al, 1995).

Agility is more than the traditional interpretation of organizational flexibility. Organiza- tional mastery of uncertainty and changes is in focus in the agile organization; therefore people and knowledge are regarded as the most important organizational assets. Also organ- izational learning and the capability to reconfigure the business on a continuing basis are im- portant characteristics of an agile enterprise - often associated with the ability to intelligently innovate and invent new responses, e.g. to new markets demands and business processes.

Agile Manufacturing accepts the significant trends for industrial enterprises towards working in networks, and consequently seeks enablers to facilitate appropriate responses to the dynamics imposed on a network of companies. Often a total product life cycle design phi- losophy is implemented, in such a way that design is integrated into a holistic production pro- cess incorporating the company's business processes from supplier relationships to product disposal.

Accordingly, the organization should be capable of performing well in cooperative rela- tionships, in internal and inter-company teams that are cross-functional and require multi- skilled members. Agility also embodies such social concepts as self-directed business cells and virtual partnerships for the rapid formation of multi-company alliances to introduce new products to the markets in ways previously considered impossible, (Gunneson, 1996).

In the literature one can observe a divergence in the perception of the concepts of lean and agility. Some authors see the concepts as two opposite or orthogonal philosophies, others claim that Agile Manufacturing has an enterprise view whereas Lean Manufacturing is usu- ally associated with the efficient use of resources on the operations floor. Others again regard the concepts as complementary philosophies mutually supporting each other.

Industrial companies often view the two manufacturing philosophies as modern buzzwords competing for the attention of industrial managers to the extent that one is superior to the other. Furthermore, some companies hold the position that there is no hurry to decide which one of the two to adopt, because in one or two years' time a third manufacturing philosophy probably will appear.

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

A Strategic Approach to Develop Agile Manufacturing 55

We want to adopt a more constructive view by relating the two manufacturing philosophies to two opposing criteria that any industrial enterprise somehow must reconcile. The first crite- rion is productivity, i.e. the ability to utilize and optimize the resources of the company. The other criterion is effectiveness, pointing to the ability to select and implement strategies and market opportunities with interesting future perspectives for the enterprise. Also the capability of the organization to reconfigure and change the business on a continuing basis are important characteristics.

With the risk of simplifying the issue, we see Lean Manufacturing as very much related to productivity, and Agile Manufacturing to effectiveness. This implies that any company actu- ally needs to address both manufacturing philosophies and to seek a company-specific recon- ciliation of the two criteria. Manufacturing strategy development is very much about finding such a balance.

However, they are strongly interconnected. For instance, an effort to reduce time will con- tribute to both leanness and agility, as compressed time in business processes often results in increased productivity and quality which pertains to productivity. At the same time, speed and fast response time in business processes are often a pre-requisite for an effective reor- ganization and reconfiguration of the enterprise that relates to effectiveness. Similar examples could be found in relation to learning and organizational competence.

In this chapter we shall present a process for developing a manufacturing strategy. An essential underlying theme is to analyze and synthesize the balance between leanness and agility. This includes a phase aimed at achieving a broad acceptance of the need to change and to initiate a strategic manufacturing development process and a phase for the development of an overall manufacturing vision to depict the future production system and its mode of operation. Three case examples will be presented illustrating how a strategic manufacturing development process may be staged and which type of manufacturing system has emerged. Finally we shall draw implications of the process and case examples for a company-specific strategic response to the quest for agility.

2. A S T R A T E G I C M A N U F A C T U R I N G D E V E L O P M E N T P R O C E S S

In this section a process for developing a manufacturing strategy will be presented. It aims at supporting enterprises in their strategic effort to develop innovative, agile and competitive manufacturing systems. An essential underlying idea is that managers and employees have unreleased ideas and capabilities to develop new solutions. However, they are seldomly voiced explicitly, discussed jointly or brought into a unified context. Accordingly, the frame- work is grounded on a collaborative dialogue designed to capture managers' and employees' innovative ideas and knowledge about the present situation in their company. Placed in the right strategic perspective, such ideas and knowledge, in our experiences, often have great potential for contributing significantly to the survival of the company.

The process is designed to develop the knowledge, attitudes and motivation of managers and employees in such a way that they are willing to take responsibility for the implementa- tion of a production strategy with speed and efficiency. Part of the strategic manufacturing development process is therefore organized as intensive seminars involving both managers and employees. Between the events project groups or appointed taskforces will detail and consolidate results and inputs from a seminar, and prepare the agenda for the next seminar. The process can be characterized as a gradual refinement process where resources in a con- tinuous assessment process are canalized to clarify critical points in the strategy.

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

56 J O. Riis, J. J o h a n s e n

One of the corner stones in the process is a so-called manufacturing vision. With its stra- tegic aim it adopts a holistic and extended enterprise point of departure focusing on creating innovative and visionary, forward pointing solutions at the expense of details and detailed analysis. A manufacturing vision is different from existing solutions, which is often a pre- requisite for creativity and innovation. Furthermore, a manufacturing vision should represent a coherent picture of the future production system illustrating and integrating many comple- mentary perspectives. This includes technological, organizational, and managerial perspec- tives as well as a business process perspective.

In our experience a manufacturing vision contributes to form an overview of the produc- tion system and its mutual interplay of systems and organizational units in the enterprise, and therefore contributes to secure coherence between the various subsystems. Consequently, design and implementation of production systems are not only concerned with technical specifications and system design; but also with creating an organizational consensus among the many interested parties with their different background and individual opinion about cri- teria for a good and a poor solution. A production system interacts with different internal and external sections and organizational units. Perhaps, this mutual interplay may be the most crucial element for developing an appropriate production system.

Phase i. Initiation

2. External trends and strategic challenges

3. Development of a manufacturing vision

4. Evaluation of the manufacturing vision

5~ Application and planning of the next steps

Figure i i A five-phase process of developing a manufacturing vision.

Content Staging ~cl organizing the process, plus clarifying

the starting point and the ambition and scope of the process.

Creating an org~izational shared picture as- regards the need for change, external trends and the strategic challenges of the enterprise.

A collaborative dialogue based process designed to capture managers and employees' innovative ideas and knowledge.

Evaluation of ideas and elements Of a manufac- turing vision with respect to strategic challenges defined, and an examination of the risks and resources associated with implementing the develop- ed manufactufi'ng vision.

Planning how to proceed by malting use of the organizational momentum created, the potential strategic contribution of the manufacturing vision and critical areas for designing a production system

We shall propose a five-phased process for developing a manufacturing vision, as the first step in design and implementation of a production system. The process will include creative elements that encourage a mood of dreaming and play~lness. This will stimulate generation of new ideas even if they are not well-thought out, because there is no risk of loosing face. In this way experimenting with new ideas is encouraged. It is our experience that such an experimental mood will enable a company to develop a manufacturing vision within a short period of time and with a relative limited effortl

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

A Strategic Approach to Develop Agile Manufacturing 57

The phases will be c a r d e d out in a spiralling process that includes both sequential and iterative elements, as illustrated in figure 2 and discussed below.

Figure 2: Phases of strategic manufacturing development are part o f a spiraling process.

2.1 Initiation Before starting the actually work of developing a manufacturing vision, the stage must be

set and the process carefully prepared, organized and planned. In particular this includes a discussion of t h e scope of the process - does it embrace the entire extended enterprise or is it delimited to a production plant, or a production cell. Also it is important to harmonize the expectations of the organization and the interested parties. This m a y also influence w h o m to involve in the process.

The starting point and the ambition of the process should also be carefully discussed in this phase. Clearly it is not sensible to develop a manufacturing vision in isolation; it needs to be done in the context of an overall strategy process, as it should be consistent with corporate strategy.

In our work in industry we often have seen different degrees o f clarification of an enter- prise's strategy. For enterprises with a well-defined corporate strategy a manufacturing vision can be deduced with a clear focus. In this situation the manufacturing vision helps formulate the role of the production more precisely i n accordance with the corporate strategy.

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

58 J.O. Riis, J Johansen

If a corporate strategic situation is characterized by uncertainty and no clear direction, e.g. due to dynamic and unknown surroundings, then it is difficult to develop a clear manufactur- ing vision as a response to distinct strategic challenges. In this situation the manufacturing development process will play quite a different role. Here the process Can be used to develop several alternative holistic manufacturing visions and thus contribute to a strategic clarifica- tion process in the enterprise.

The defined scope of the process naturally will influence the resources needed, as it will influence who should attend and be involved in the process, which is not an easy question to answer. On the one hand, developing a manufacturing vision within a short time frame may call for professionalism, which points to a smaller group of specialists. On the other hand, it is important to involve managers and employees who are expected to implement the developed solutions in order to get their acceptance. At least the key players of the process should be involved.

To balance the -point of views presented here, we have successfully held seminars with up to 15 - 20 participants combined with appointed task forces or project groups working out the details in between the seminars. In this way ideas, opinions, and expectations are harmonized during the seminars by developing a shared picture of the need to change and of future direc- tions. Details are worked out in between the seminars with participation of experts, if neces- sary. Furthermore, one can add discussion meetings and other meetings to inform people not participating in the project.

2.2 External trends and strategic challenges One of the most important prerequisites for accomplishing a successful strategic develop-

ment process is that members of the organization share a common picture of the need to change, of external trends and of strategic challenges of the enterprise. For several years we have been concerned with, through a participative process, to find ways of developing such a shared picture which would form a sound basis for developing an overall vision of the future role and functioning of production.

To capture future external and internal trends we have developed a so-called "world-pic- ture". The picture is divided into three spheres representing different views of the challenges of the enterprise. The first sphere concerns what we name the production task of the enterprise covering internal conditions, as for instance current planning and control systems and production technology. The second sphere relates to the close surroundings of the enterprise including markets, the community, and other functions of the company. The third sphere is the one furthest away from the enterprise and deals with the world society including general trends in economic, demography, technology, environmental issues, ethics, and welfare etc. An example of a "world-picture" can be seen in figure 3.

Most often the "world-picture" is used at a seminar where managers and employees are asked to identify future trends related to the three spheres that somehow may affect the enter- prise. The time horizon is typically elected to be about 4 - 6 years. The seminar is usually conducted over a one-day seminar.

The trends identified are then used to derive a commonly shared picture of future chal- lenges and conditions for the company, thus serving as a platform for seeking appropriate future solutions. Based on our experiences with these methods it seems fair to conclude that it is in fact possible to develop a broadly shared appreciation of the need to change, even when a seminar leaves a number of questions that need further investigation and explanation.

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

A Strategic Approach to Develop Agile Manufacturing 59

The World Society

Changes in~

/ Commune-/ fP~od~ction to~k\ M~ \ \ lOOt,on~ / ..... \ \ lob, I \

Figure 3: An example of a "world picture".

Some times it is appropriate to assess the present mode of operation. In this context we have developed a rather simple method, called Problem Matrix. The tool is useful for a group of persons from different sections and functions in a company to achieve a comprehensive understanding of the mutual interaction between departments and sections, (Riis, 1994). Also this method is used at a one-day seminar.

Management has a key role in prioritizing the future challenges and to select focal areas for the improvement effort. This will include an indication of the desired combination of agility and leanness derived from future challenges.

2.3 Development of a manufacturing vision While the previous phase was concentrated on forming a common organizational under-

standing of the strategic challenges of the enterprise, this phase will focus on the development of a manufacturing vision. It seeks to combine creative thinking and professional production management and engineering knowledge and uses a combination of seminars and task forces.

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

60 J.O. Riis, J. Johansen

In our terminology a manufacturing vision is a holistic picture of the way in which future production will be carried out, expressed by (i) structural elements and subsystems of a pro- duction system and (ii) processes in which they interact. Emphasis is placed on including only the essential features in order to provide an overall view. Furthermore, the holistic nature is underlined by focusing on the mutual interplay between different systems.

In our work we have identified three major challenges associated with the development of a manufacturing vision:

�9 The vision should integrate different elements of a production system and inte- grate complementary perspectives. A technical, organizational, economical and managerial perspective needs to be employed at the same organizational unit. This requires a bridging language to allow different disciplines and professionals to communicate constructively about the same object of study, e.g. industrial company, plant or workshop, (Riis et al., 1996).

The vision should be developed through a participative process involving man- agers and employees from various functions and sections. In this way the manu- facturing vision will represent a commonly shared opinion about the future pro- duction, as also discussed by Senge, (Senge, 1990).

The vision should be innovative and address important future manufacturing capabilities. By addressing future expected situations the vision should capture novel ideas and break new grounds. Hence, the process of developing a manu- facturing vision needs to be experimental and allow for opportunities to play with new ideas without fear of being committed to a yet unknown solution.

In this creative process of developing a vision there is not just one single procedure to be followed. In fact we have tried several different paths; for example (i) to let the group be inspired by one or more of the existing manufacturing philosophies, e.g. Lean Manufacturing, and Agile Manufacturing; (ii) to adopt ideas from Best Practice companies; and (iii) to record all ideas among managers and employees related to either the overall operations or to a specific subsystem. We have learned to include both structural and process oriented elements, and in particular to focus on their interaction. The structure, e.g. plant-layout, organizational structure, the structure of the product program, will provide the stage, whereas the processes will describe the daily life in the company, e.g. handling of a customer order, procurement, and development of a new product through to its launching on the market. We have noticed how the process point of view holds a key to visualize how future production may look by capturing sequences of events. It becomes a story telling about a day in a plant of the future.

Along the same lines, Maslen and Platts (1997) suggest that ideas be clustered into manu- facturing decision areas according to (i) structure (facilities, process technology, capacity, vertical integration, products), (ii) infrastructural (production control, quality, new product introduction, supphers, performance measurement), and (iii) human aspects (culture, organi- zation, skills and training, rewards and incentives, communications).

In many respects the process of developing a manufacturing vision is an organizational learning process that prepares the mind-set for new options and may generate an organiza- tional momentum for change pointing to both short-term and long-term initiatives. The pro- cess is highly experimental and offers opportunities for playing with ideas without being forced to make firm commitments to specific details. The process holds many elements of divergent thinking, as contrasted with the typical convergent thinking of daily operations in which decisions are to be made quickly.

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

A Strategic Approach to Develop Agile Manufacturing 61

In view of the behavioral patterns pointed out in the introduction, the experimental climate established during the process of developing one or more visions may hold a key to over- coming resistance to divert from a working mode suitable for the daily operations, partly because the risk associated with exploring new grounds is significantly reduced. Ideas and proposed solutions are deliberately kept floating and undecided for a long time and a playful climate is stimulated. Visualization is important, because ideas, visions and concepts are often better expressed in terms of pictures, images and metaphors.

Few managers and employees are accustomed to the abstract thinking implied in devel- oping a manufacturing vision. However, when supported by facilitators, we have seen how they are able to engage themselves very actively in the process, and how it is possible to develop an idealized manufacturing vision through a mixture of seminars and task forces. On the basis of future challenges to production we have asked participants at seminars to propose ideas and solution elements. Usually a task force, with assistance of external consultants, has been asked to combine these ideas into one or two manufacturing visions, which were then presented at a seminar for discussion, refinement and approval.

A major task of an industrial enterprise is to continually aim at developing new capabilities that are valued by the customers better than or different from those of competitors. This often implies a shift of paradigm. For example, a new production technology that may require new competencies and working modes; a new way of managing customer orders may imply assignment of new roles; or the demand for shorter delivery times may require a closer coop- eration between engineering design, sales, purchasing and production.

If a manufacturing vision implies a drastic shift of paradigm, the process brings to the open this drastic future change. It is not an easy managerial task to handle such a shift of paradigm that often requires a shift of corporate culture, working modes and qualifications. However, the process of developing a manufacturing vision holds potential for a shift in mentality, especially if it is combined with experimental activities, such as role-playing games and simulated demonstrations. A consequence may be that it becomes obvious to both manage- ment and employees that some persons may not be part of the future organization and better be asked to seek other jobs.

In our industrial research we have proposed to adopt a dialectic planning approach in which opposing ideas or visions are developed. In some cases the visions represent rather extreme cases to be combined at a later stage into a new vision. The process will generate a sense of robust direction with stable conceptual elements that are expected to be applicable for future solutions. Also, the discussion has led to identification of areas of future attention.

2.4 Evaluation of the manufacturing vision Before a manufacturing vision is approved by management as a basis for negotiating new

modes of cooperation with sales, purchase and product development and for further detailing a new production system it is useful to evaluate the vision. Due to lack of details, this will not constitute a rigorous assessment, but an early evaluation of the potential of t h e proposed vision with respect to the strategic challenges defined. Traditionally it is unusual that such an evaluation is carried out at this early stage. But the existence of a holistic picture of how the future production will look provides a better basis.

Instead of asking a taskforce to do the evaluation and submit the result to management, we have proposed and tested a mixed process. After a taskforce has completed a proposal for a new manufacturing visions and evaluated its potential, it is presented at a seminar to manage-

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

62 J.O. Riis, J. Johansen

ment and representatives from production, sales, purchase and product engineering for an evaluation. Participants will look at the vision from their own point of view and identify advantages and limitations and in this way provide a broad evaluation of the potential of the vision and identification of areas of attention.

Partial evaluations may take place during the process of developing a vision when a pro- posed guiding principle is held against strategic challenges. The more well defined these strategic challenges are, the more likely it is that they will guide the process of selecting prin- ciple solutions.

A manufacturing vision is comprehensive and embraces many dimensions as the vision relates to corporate strategy of the enterprise. Consequently, the evaluation process should also be multi-dimensional. Inspired by Maslen and Platts (1997) we suggest the following dimensions as a checklist to be elaborated in view of the specific company situation:

�9 Corporate strategy

1. Does the vision support the corporate strategy and the strategic challenges identi- fied?

2. Does the vision provide a clear focus for change? 3. Does the vision express manufacturing contribution to corporate strategy?

�9 Economic and business opportunities

1. Does the vision open up new business opportunities? 2. Does the vision have a satisfactory return on investment?

�9 Market and competitors

1. Does the vision provide capabilities that are valued by customers? 2. Does the vision contribute to provide a competitive edge?

�9 Manufacturing

1. Do the vision and chosen solutions appear consistent? 2. Does the vision support leanness and agility? 3. Are the chosen manufacturing solutions mutually coherent, sufficiently innovative

and visionary? �9 Organization

1. Does the vision support and build on the core competencies of the organization? 2. Does the vision hold new possibilities for management and employees? 3. Does the vision imply a drastic change in working mode and corporate culture?

If the evaluation is not convincing, the development process should return to a preceding phase. Relatively little effort has been spent so far, and no commitments have been made. The significance of this early comprehensive evaluation is that it is rather easy to repeat earlier phases. It is important for the next phase that the potential of the new manufacturing vision has been subjected to a broad discussion and that there is a broad organizational support for pursuing its realization.

2.5 Utilization of the manufacturing vision and planning its implementation �9 The manufacturing vision represents an idealized solution not associated with any time

horizon. To exploit its potential we need to transform it to a number of holistic solutions each related to a specific time horizon, e.g. a short-term solution, a medium-long-term solution, and a long-term solution. This transformation should be carried out with due regard to the current situation O f the enterpris e , e.g. its manufacturing system, management systems, corpo- rate culture, and capabilities for carrying out major organizational changes.

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

A Strategic Approach to Develop Agile Manufacturing 63

Because industrial enterprises may have different strategic situations with respect to tur- bulent environment, a manufacturing vision may play different roles:

�9 A manufacturing vision merely may serve as a coordinating role to align current im- provement activities to secure maximum synergy, thus serving as a vehicle for a con- structive dialogue with other functions of an industrial enterprise.

�9 A manufacturing vision may be used to point to a new paradigm of operations. Few investments may be necessary, but a shift in mentality is needed. In this way the vision may help orchestrate a concerted effort in different functional areas.

�9 A manufacturing vision may serve as a blue print for future investments and as a master plan for an innovative, concerted effort in which production engineering, management systems and organizational initiatives are integrated into a new, coher- ent solution. The vision thus provides a basis for a coordinated detailed development and design of the production system.

It is our experience from several action research projects that the high degree of involve- ment o f middle management and employees in the process will create an organizational mo- mentum that may support implementation of more drastic changes that may represent para- digm shifts and cultural changes. For example, the process may have convinced many persons in the organization that it is indeed necessary to improve the performance and that there exist ways of realizing it. If an organizational momentum is not utilized by initiating a change process that within a short period of time may show visible results, the motivation and morale in the company may fall far below the original level. Thus, in a sense, the process of devel- oping a manufacturing vision has irreversible features.

In this chapter we shall not discuss how an implementation plan may be prepared taking into account both business, technical and organizational aspects; but refer to some of the extensive literature Kotter (1996), Riis & Mikkelsen (1997).

3. C A S E E X A M P L E S In this section three cases will to illustrate various aspects of the proposed process. The

main emphasis will be on how a strategic manufacturing development process was staged and how a manufacturing vision was developed. The cases cover a spectrum of different types of industrial enterprises, as well as manufacturing and market situations.

3.1 A l p h a - a supplier manufacturing vision Alpha is a medium-sized supplier of welded parts and equipment for a number of different

industries (chassis parts for buses, shovels for front loaders for construction, ventilators for cement factories, hydraulic lifts for trucks, etc.). The enterprise has been in a continuous development, and many ideas for improvement are waiting for the needed capacity and finan- cial capability. Yet, management was not clear of the direction to move.

As a supplier with great variations in customers and their demands, the company needs to be flexible. However, as a first step it was possible to divide the portfolio of tasks into three distinct categories: (i) continuous flow manufacturing; (ii) Flexible welding; and (iii) Small batch production of equipment. The volume and flexibility requirements vary from category to category and support an idea of three mini factories in a factory.

The decision to divide the factory into three sections according to the three distinct groups of tasks allowed a clear focus for developing a manufacturing vision for each category with

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

64 J.O. Riis, J. Johansen

specific ideas for production planning, production processes, work organization and man- agement, etc. Not only did the vision hold significant potential improvements in terms of reduced delivery time and costs, but it also provided a clear picture of desirable customers and the company's competitive strength for different types of customers. The three manufacturing visions inspired management to implement a number of changes, e.g.

�9 Adjusting the plant-layout towards three separate production units and in particular to improve flow in the first mini factory

�9 Introducing production groups that could be given a clear role in the respective production unit

�9 Developing a pallet with parts for a specific customer order organized in the sequence in which the welder was to use them (this method is known from assembly as kitting).

In this way, the manufacturing visions were able to bridge short-term initiatives and long- term thinking and action. Some of the changes implied in the manufacturing vision were seen as a continuation of the current thinking and working mode, but they could now be placed in a larger, strategic context. Other initiatives represented a mental shift in working mode that implied a new paradigm. For example, the new production groups suggested a change in production planning whereby the foremen were given new roles.

The division of the plant into three mini factories provided an opportunity to discuss dif- ferent aspects of agility and leanness, and their mutual interaction. For example, the continu- ous flow factory encouraged focus on modular welding equipment to support the capability to configure and produce a large variety of different shovels. In the case of the production of equipment agility should be achieved by versatile and skilled workers.

3.2 B e t a - a process industry manufacturing vision Beta is a small plant affiliated with an international group producing among other thing

enzymes and natural colors for the food industry. Dairies for manufacturing cheese use the enzymes. For several years the plant has not maintained its technology and management. The former plant manager was inefficient and managed the plant in an old fashioned way. Consequently, middle managers and many of the employees lost their motivation and interest in developing the business.

To revitalize the plant and to reestablish the responsibility of middle managers for running the production a new manufacturing vision was developed. In fact, headquarter had consider- ed moving production abroad and closing down the plant, unless it was able to demonstrate considerable enhancements in productivity and flexibility within one or two years. However, if the plant was able to produce a powerful and visionary plan for developing the business, the headquarter was willing to invest considerable resources and capital in renewing the com- pany. To support the process a new plant manager was recruited.

The process of developing a manufacturing vision was planned in cooperation with the new plant manager and middle management. The process followed the suggested phases of the presented framework and was organized as a mixture of seminars, project groups and task forces. It soon became clear, however, that it was necessary to include educational activities to prepare and upgrade middle managers' business knowledge, as their understanding of the internal interplay and of the plant's interaction with external supply chain and customers was inadequate.

It was decided to involve as many employees as possible in the development process. For all practical purposes, two persons from each department were chosen to represent the era-

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

A Strategic Approach to Develop Agile Manufacturing 65

ployees and were made responsible for informing the rest of the group about the progress of the process. In addition, seminars and meetings were organized with participation of the entire company. Altogether about 40 people were involved in the process.

The resulting manufacturing vision of the plant is illustrated in figure 4. It consists of three autonomous "production" units and a support center offering services, e.g. administrative and maintenance tasks, bookkeeping and IT.

Besides the support center, manufacturing was divided into three focused production units, each with specific tasks and features.

�9 An extraction unit to produce concentrated quality enzymes, high volume at low costs. Its bulk products are sold to internal and external customers. Production is organized in a continuous flow layout supported by specially developed technology.

�9 A flexible packing unit to manufacture high-tech quality enzymes customized to indi- vidual customer orders. The unit is using new advanced flexible packing equipment, e.g. new innovative principles for tapping liquid into plastic bags and cans.

�9 A powder-manufacturing unit to produce mass customized products, in terms of unique powder mixes and strengths, but packed in standard packaging sizes.

Figure 5 illustrates the vision for one of the autonomous production units. Besides an illustrative drawing, the capabilities and functionality of each production unit are described. To validate some of the advanced technological solutions several pilot experiments have been carried out.

Figure 4: The manufacturing vision of Beta.

The case has shown that it is possible within a short period of time to create an overall, visionary and coherent picture of how a production unit could function and be organized in

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

66 J.O. Riis, J. Johansen

the future. Besides convincing the headquarter about the viability of the business, the vision has pointed to new innovative solutions and has re-established the optimism of management. In addition, through the process employees also have realized that they can contribute to develop the plant.

Compared to the situation at the outset of the development process, the manufacturing vision that is now being implemented represents a combination of improved agility and lean- ness, and thus demonstrates that they may support one another.

Figure 5: The new plant-layout for the unit for extracting the enzymes.

3 . 3 G a m m a - a n i n t e r n a t i o n a l m a n u f a c t u r i n g v i s i o n

Gamma produces exhaustion systems for various industries such as the wood industry and industries using welding processes. Gamma is positioned among the 10-15 largest manufac- turers of industrial ventilation systems in the world with an ambition to become among the top three. In the beginning of 1998 the company merged with two other factories, one in Germany and one in England, each with own product program and production facilities. Management wanted that production activities should function as one production center and was interested in developing an overall production strategy 1.

The work force was anxious, because of the change in ownership. They were worried about their future jobs due to fear of rationalizations and transfer of part of the production to other countries. Also white-collar employees were nervous, and several key personnel had left for other companies.

The production manager at Gamma was faced with the dual challenge to develop a manu- facturing strategy for his production facility and an international production strategy that would indicate how the three distributed facilities would function as an integrated unit. He

1 The case is adopted from a Ph.D. project carried out by Brian Mr Aalborg University.

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

A Strategic Approach to Develop Agile Manufacturing 67

would present the strategy to the manager in charge of international production and the top- management of group.

Several people were invited to participate in the strategy development process. Head of pro- duction, head of orders, head of purchasing, and an export salesman represented management. Correspondingly, shop stewards and selected members of the workforce represented employ- ees of the company. The method applied in this case was concentrated around four seminars, figure 6. In between the seminars a task force worked on the results from each seminar. Typically, a seminar was conducted over one day. External persons facilitated the entire process.

Figure 6: A series of four seminars represented comer stones of the development process.

At the first seminar where the "world-picture" was presented, the participants were asked to think about 3-4 trends or tendencies that they thought would affect the company in the future. The objective of the first part of the seminar was to generate as many statements as possible and in the second part to cluster the statements into overall themes. Most of the statements dealt with trends in conditions close to production, such as employees, products, markets, environmental issues, supplier-relationships and communication.

The objective of the second seminar was to generate solution elements concerning the challenges identified at the challenge seminar. The third seminar aimed to integrate the solu- tions developed at the second seminar into one integrated holistic vision. In view of the dual strategy task it was decided to develop two manufacturing visions in parallel, one for the Danish factory and one for the international manufacturing including the joint operation of the three factories. The two visions were mutually interdependent; how would it be possible to develop a vision for the Danish factory without knowing its role and production tasks; and how would it be possible to develop a vision for international manufacturing without knowing the capabilities of the Danish factory.

The employee representative and shop stewards together with the head of production were asked to address the Danish factory. They developed the notion of a self-propelled factory indicating that employees would themselves solve problems, plan production, organize work, initiate changes etc. Two distinct production tasks were identified that suggested a division of the factory into two separate plants, a streamline and a flexible plant. The former should focus on costs and process optimization, whereas the focus of the latter should be on flexibility and multi-skills. The resulting manufacturing vision held potential for significant improvements in terms of increased productivity and faster response time for customer orders.

The head of purchasing and the head of orders were asked to lead the development of an international manufacturing vision with focus on the overall logistics. The group agreed on the following headlines as a basis for the idea generation: Gamma's role as one production center out of three; Order flow; Material flow/layout; Supplier collaboration in Supply Chain Management context; Planning/capacity control; and Operation economy.

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

68 J.O. Riis, J. Johansen

Each headline was written on large sheets of paper and attached to the wall. Participants were then given 10 minutes to write down or draw ideas regarding different areas directly on the sheets. Afterwards the ideas were presented and discussed succinctly, which spurred even more ideas. After a while it was suggested to draw a picture illustrating the flow of orders from the first customer contact to the final delivery of a ventilation system. This method was used to create an overview of the entire logistic chain and to join the different ideas generated previously into one coherent picture.

During the period of sketching the order process, several questions were raised as to how various tasks should be solved in this new situation. Trying to make many of the ideas con- crete and integrate them through a sketch made it clearer which concrete solutions had to be developed for the entire system to function. Drawing of sketches worked as a way to exter- nalize and make explicit many aspects of the various ideas and suggestions, see figure 7.

Figure 7: A sketch illustrating the international ordering process at Gamma.

The sketch describes the process from the configuration of a ventilation system through a dialogue between the customer and the salesman until the customer has his system installed. In the sales phase the salesman will be supported by a system configurator, that through a series of questions will be able to provide a price estimate that is 70-90% accurate. If the customer decides for the system, the salesman can confirm the order through the IT-system.

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

A Strategic Approach to Develop Agile Manufacturing 69

Then the project department will prepare specifications of the remaining 10-30% of an order and submit a tender to the customer. If the customer accepts, the order is confirmed and bro- ken down and spread out to the different production facilities.

Each production facility will be an expert on a set of primary products and will be capable of also manufacturing secondary products in periods of over-capacity. The primary products are usually secondary products for another production facility and vice versa, which means that ideally the production facilities only manufacture primary products.

The project department will be the only contact to the customer.

A global shipping company will handle all transportation of goods from the production facilities to the customer. It will be hooked up to the computer system of the project/logistics centers such that they are automatically notified when they have to carry out a transport.

The vision is still very crude and many things need to be worked out for the concept to be feasible. However this is a preliminary sketch of an emerging vision, where many of the ideas are beginning to appear, although unpolished and relatively abstract.

The Delta case examples shows how two manufacturing visions are developed in parallel, representing two distinct, but interdependent areas, respectively a national factory and the international level including all production facilities. The sketches of the two visions helped the international production manager initiate a strategic process through a dialogue with the three international production factories. The sketches demonstrate, by providing a holistic picture, the possibility to increase both agility and leanness.

4. D I S C U S S I O N AND I M P L I C A T I O N S

The management literature is rich on proposals for development of a vision, e.g. Kotter (1996) and Womack & Jones (1996). But very few authors discuss in detail how a vision may be developed, how it may look, and which roles it may play.

From practice we have learned that the development process may itself be just as valuable to the company as the emerging vision, because of the broad discussions of essential issues. In this way an organizational momentum is generated. However, further studies are needed to understand the role of a manufacturing vision and how the development process may be staged and supported. However, based of more than ten case studies that we have been working with, we have derived a set of both descriptive and normative propositions, which we offer as postulates for further dialogue and research:

�9 Agile and Lean Manufacturing philosophies may be combined into a company- specific manufacturing vision. Although a manufacturing philosophy often represents a comprehensive framework, its proposed principles and methods need to be transformed into a company-specific context. As Agile and Lean Manufacturing may be viewed as representing two opposing criteria relevant to any company, respec- tively efficiency and productivity, they may be combined into a manufacturing strat- egy and visualized through a manufacturing vision.

�9 Significant results with limited time and effort. The proposed method for collabo- rative conceptual design for manufacturing has several advantages in comparison with traditional methods for production systems design. By challenging individual experiences and ideas and by bringing them into a common picture it has proven pos- sible within a short period of time to develop a shared vision of the company's future production.

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

70 J O. Riis, J. Johansen

Complexity syndrome. In a turbulent environment with different interests, it is more likely that the organization implements an improvement that is merely an adjustment or an amendment to the existing system. This is saving much energy and time. However, this behavior is likely to increase the complexity of the system. A manufacturing vision holds great potential for overcoming the complexity syndrome by providing a coherent picture of the way in which the organization functions, especially the intricate mutual interaction processes between individuals, sections and departments.

Experiential working mode. Experimentation is encouraged in such a way that it can be carried out without fear of loosing face, e.g. by addressing an idealized future situation like a manufacturing vision, which does not directly relate to their current operations and position. Examples of methods are role-playing games, simulation, virtual solutions, Technology of Foolishness, and creation of diversity (appointing new staff with alternative background). The dialogue is important.

Connecting different time horizons. As mentioned in the previous proposition, it is important to focus on connecting activities of different type. But it is equally essen- tial to connect activities with different time horizons.

Relating short-terrr~., to long-term activities. Look for long-term aspects of a short- term activity to see, if it could be "a step in the fight direction".

Relating long-term to short-term activities. From long-term solutions identify im- plications for the organizational and cultural dimensions, and seek to identify specific short-term activities that may support these future dimensions and which may be seen as part of organizational learning processes.

The development of a manufacturing vision may provide a solid basis for identifying both types of relationships.

�9 Early anticipation o f a drastic change. The sooner future drastic changes are anticipated and accepted broadly in the organization, the easier it is to implement the change in the organization, even if the change-over takes place during a short period of time. This supports involvement of a large part of the organization in appreciation of a need to change and in discussing and experimenting with future solutions. In the predominantly departmentalized organizations very few persons have a com- prehensive picture of what is going on. This emphasized the benefit of initiating a collaborative process whereby commonly shared pictures are established of the cur- rent situation, future challenges and, later on, of future solutions.

�9 Orchestrating implementation. An improvement activity is often carded out as a self- contained project in a section or function with its specific focus, approach and performance measurement. If they could be better orchestrated, a more significant overall effect could be achieved. We have observed that the number of ideas and proposed solutions at any time may far exceed an organization's capability to im- plement them, although, at the same time, many organizations have much unused 'slack' change capacity. This also calls for a careful orchestration of the implementa- tion process.

A manufacturing vision will provide a coherent picture that may serve as a vehicle for relating implementation initiatives. Furthermore, it may help managers and em-

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

A Strategic Approach to Develop Agile Manufacturing 71

ployees involved in implementation to define the role of their own activities in a larger context which may release more energy in the organization.

Involve people in both exploitation and exploration. In most companies exploitation and exploration are organized into separate functions. Would it not be desirable to loosening this to allow operations people to be involved in recognition of a need to change and creative development of new solutions, and to engage development people in the mechanisms of daily operations?

5. C O N C L U S I O N

In this chapter we have presented a process for developing a company-specific manufac- turing vision to serve as a bridge between corporate strategy and production systems design. A manufacturing vision may include a combination of lean and agile strategic elements suited to the specific situation of the industrial enterprise.

The five-step process aims at involving managers and employees in a constructive dia- logue that leads to a commonly shared appreciation of the need to change and a common vision of the structure and operation of future production.

We identified three challenges associated with developing a manufacturing vision: (i) to integrate different elements and perspectives of a production system; (ii) to ensure a col- laborative process with a high degree of participation; and (iii) to include innovative features.

A manufacturing vision may play different roles. If the corporate strategy is clear and robust, a manufacturing vision may constitute a blue print for (re)design of a production sys- tem. If, on the other hand, the environment is turbulent, a dialectic planning approach may be applied. Two opposing manufacturing visions may serve as a means for generating a con- structive dialogue and may contribute to clarification of directions and potentials for the entire company.

Three case examples demonstrated different manufacturing visions and how elements of agile and lean manufacturing could be combined.

A C K N O W L E D G E M E N T S

The authors wish to thank members of the P2000 project team: Steen Hildebrandt, Mogens Myrup Andreasen, Kfistian Stokbro, Kresten Kragh-Schmidt, Jesper Olesen, Niels Rytter, Brian Mr and Irene Odgaard for inspiration through a collaborative process of developing ideas and testing them in practice.

R E F E R E N C E S

1. Goldman, S. L., Preiss, K., Nagel, R. N., and Dove, R. (Eds.): 21 st Century Manufac- turing Enterprise Strategy: An Industry-Led View, 2 volumes, Iacocca Institute at Lehigh University, Bethlehem, PA, 1991.

2. Goldman, Steven L., Roger N. Nagel & Kenneth Preiss (1995): Agile Competitors and Virtual Organizations, Strategies for Enriching the Customers, Van Nostrand Reinhold, USA.

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

72 J.O. Riis, J. J o h a n s e n

3. Gunneson, A. O. (1996): Transition to AGILITY- Creating the 21 st century enterprise. Addison-Wesley Publishing Company.

4. Kotter, John P. (1996): Leading Change, Harvard Business School Press.

5. Kragh-Schmidt, K. & John Johansen (1998): An outline of production philosophies, Department of International Marketing and Management, Southern Denmark School of Business and Engineering.

6. Maslen, Roy & Ken W. Platts (1997): Manufacturing vision and competitiveness, Inte- grated Manufacturing Systems 8/5 p. 313 - 322.

7. Riis, Jens O. & Hans Mikkelsen (1997): Capturing the nature of a project in the initial phases: Early identification of focal areas, Project Management Vol. 3 No. 1, pp. 1 8 - 22.

8. Riis, Jens O. (1994): Situational production management: a practical theory for the development and application of production management, International Journal of Production Planning & Control, Vol. 5, No. 3, p. 2 4 0 - 252.

9. Riis, Jens O., de Haas, Henning, Drejer, Anders and Mr Brian (1996): An Experi- mental Production System Design Lab for Increasing Creativity in Manufacturing System Education, in Proceedings of the International Conference on Education in Manufacturing, San Diego, Society of Manufacturing Engineers.

10. Senge, Peter M. (1990): The Fifth Discipline, Random House.

11. Womack, James P. & Daniel T. Jones (1990): The Machine that Changed the World, Rawson Macmillan.

12. Womack, James P. & Daniel T. Jones (1996): Lean Thinking, Simon & Schuster.

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

B M _ V i r t u a l E n t e r p r i s e A r c h i t e c t u r e R e f e r e n c e M o d e l

G. D. Putnik*

University of Minho, Department of Production and Systems Engineering 4800 Guimar~es, Portugal

The virtual enterprise (VE) reference model, named BM_Virtual Enterprise Architecture Reference Model (BM_VEARM), is proposed. The BM_VEARM is defined as a hierarchical multilevel model of the enterprise/manufacturing system control and satisfies the requirements for integrability, distributivity, agility and virtuality. It is conceived to cover all processes in an enterprise, from the macro to the micro level, and for any type of production. A formalization of the BM_VEARM is presented, as well as a laboratory installation for the VE enterprise, BM_VEARM based, demonstration and validation.

1. I N T R O D U C T I O N

The combination of the shorter life span of new products, rapid technological developments, frequent changes in demand as well as "social and political environment changes" increase an enterprise's need for a new organisational model to keep competitiveness.

In (Kim, 1990) is given a very illustrative specification of the performances required for a new manufacturing system, or enterprise, organisational model. An "ideal" (target, future) manufacturing system, or enterprise, should be able to: 1. manufacture from 1 to 1.000 products simultaneously; 2. accommodate lot sizes from 1 to 1.000.000; 3. the system should reconfigure for a new product within 1 second (in order to satisfy 1 and

2). The requisites 1) and 2) express the need for the highest level of the manufacturing system,

or enterprise, adaptability. But, the adaptability is not sufficient by itself. If the enterprise takes too much time to adapt the opportunity may be lost, and therefore the competitiveness is not achieved. So, one of the most important factors is the manufacturing system's, or enterprise's, capability of fast adaptability or fast reconfigurability, i.e. flexibility, in order to satisfy the new circumstances (the new market opportunity, new demand, new tasks, optimisation of old tasks, "deadlocks", etc.).

As an answer to the above-mentioned requisites for the enterprise organisation, it is conceived the concept of virtual enterprise (VE).

There is not a universally accepted definition of the virtual enterprise concept (depending on application domain there are also referred terms, or concepts, as virtual company, virtual corporation, virtual organisation, virtual factory, virtual manufacturing, etc.). Our analysis shows at least two (main) approaches in virtual enterprise concept definition, or specification.

"Prof. Goran D. Putnik, Department of Production and Systems Engineering, University of Minho, 4800 Guimaraes, PORTUGAL, fax: +351-253-510268, e-mail: [email protected]

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

74 G.D. Putnik

By t.he firstapproach the most important characteristic of the virtual enterprise concept is dynamic networking of enterprises, see e.g. (Goldman et al., 1995), (Kidd, 1994), (Hormozi, 1994), (NIIIP, 1996), (Browne, 1995).

The second approach emphasises the "virtuality" of the system as something "not physically existing as such but made by software to appear to do so" (Oxford Dictionary). For the second approach enterprise networking is irrelevant. The VE is reduced to the simulation program, see e.g. (Kim, 1990), (Onosata and Iwata, 1993), (Fujii et al.; 1999), (ISR, 1995).

Regarding virtual enterprises reference models we didn't find too much of them, e.g. (NIIIP, 1996), (Camarinha-Matos et al., 1999). Usually VE definitions are presented but VE reference models are not presented.

In this text we present a reference model for virtual enterprise architecture, named BM_Virtual Enterprise Architecture Reference Model, under development at the University of Minho, concerning primarily the production or manufacturing enterprises.

The text is organised as follows. In the first part of the text, we introduce basic concepts, which make a framework for the virtual enterprise reference model development (Chapter 2). The second part of the text is dedicated to the presentation of the BM_Virtual Enterprise Architecture Reference Model derivation and structure (Chapters 3 and 4). Finally, the third part of the text presents shortly a project on development of the demonstrator of distributed and virtual manufacturing systems that follows the reference model conceived (Chapter 5). At the end of the text the conclusions and references are provided.

2. H I E R A R C H I C A L S Y S T E M M O D E L OF T H E M A N U F A C T U R I N G S Y S T E M

BM_Virtual Enterprise Architecture Reference Model is based on a hierarchical system model as a global view of the enterprise/manufacturing system. The underlying starting formalisation is a theory of hierarchical multilevel systems (Mesarovic et al., 1970).

The hierarchical, multilevel, systems are specified in a following way:

The system S is specified as

S �9 X----> Y (1)

where X is the set of outside stimuli and Y is the set of responses. Both, X and Y, are representable as Cartesian products, i.e. X and Y are assumed as a families of sets such that:

X = X , x . . . x X n and Y = Y, x . . . xYn (2)

representing ability to partition the input stimuli and responses onto components. Each pair of (X~, Yi), 1 < i < n, is assigned to a particular level of a system S i, represented

as a mapping, Figure 1"

( i ) ( i i ) ( iii )

S : X i x W i - - - > Y i, if i = l , Si: Xi x Ci x Wi -----> Yi, if 1 < i < n, Si: Xi x Ci ----> Yi, if i = n.

(3)

A family of systems S i, 1 < i < n, represents a hierarchical system S if exist two family of mappings hi: Yi -''> Wi-1 , 1 < i < n, and gi: Yi --> Ci§ 1 _< i < n, such that for each x in X and y=S(x):

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

BM_Virtual Enterprise Architecture Reference Model 75

( i ) ( i i ) .(iii)

y, = S, (x,, h 2 (Y2)), Yi = Si (Xi, gi-1 (Yi-1), hi+l (Yi+l)), i f 1 < i < n, Yn = Sn (Xn, gn-1 (Yn-l)).

(4)

The mappings h i and c i are referred as the i~ information function and decision function respectively.

The hierarchy of the system means that there are no influences between C i, and Ci+ 1, and W i and Wi. ,. In other words there is a complete decomposition between two levels in a hierarchical system (from practical point of view a complete decomposition is a strong condition and represents an idealised case).

X, ,,.j I Y, ,.. " 1 s , I "

X~ ~11 S., I Y2 .. I "

l'w,.,., • ,....t t v,,,,...

" l . s,, I "

Figure 1. A hierarchical multilevel system.

By application of sequential ("AND"), parallel ("OR") and feedback ( " 7 ' ) operators for system composition/decomposition it is possible to represent (or model) different engineering systems and, especially, manufacturing system and its components. It is important to notice that the composition/decomposition operators enable not only development of a rigorous hierarchical control processes structure, equal to a tree structure, Figure 2a, but also enable representation of sequential and parallel processes with, or without, feedback, Figure 2b.

Although some advance concepts advocate "heterarchical" architectures, we strongly believe that hierarchy can't be avoided, especially in manufacturing enterprises. One simple reason is that in practise, as well as in theory, we have to recognise the structural complexity of processes.

By analogy, and necessary abstractions, we have extended the model to the higher level processes of an enterprise. Consequently, the enterprise system is modelled as a hierarchical process based system. The model is further specialised in order to build the specific (reference) model of a virtual enterprise.

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

76 G.D. Putnik

I I ! 1 ! I I I a) b)

Figure 2. a) Model of the multilevel system with rigorous hierarchy of the processes; b) Model of the multilevel system with hierarchy and sequences of processes.

3. I N T E G R A T E D , DISTRIBUTED, A G I L E AND V I R T U A L S Y S T E M O R E N T E R P R I S E

There are four global properties that the virtual enterprise architecture reference model should provide to a particular virtual enterprise model:

1) integrability, 2) distributivity, 3) agility, and 4) virtuality. The specialisation of the general model of a hierarchical, multilevel, system, building the

specific (reference) model of an virtual enterprise and implementing the above-mentioned four properties is presented over two control levels (S i, St§ The pair of two control levels (S t, S J is an elementary structure for specification of different functional systems each one of two hierarchical levels having different terms in different areas. Some terms used are e.g., "controller-object of control", in area of production control or devices control, "client-server", in area of communication and object-oriented programming and modelling, "principal-agent" (Tirole, 1986) in economics and organisational sciences, "control-resource", etc.

Another term that we will use frequently is "resource". A resource is (a view of) an enterprise object which is used to realise, or "to support the

execution of", one or more processes and it is the subject of control (or management). In the context of open distributed systems, a service is a kind of resource. A "service" is "an object which can perform one or more specific operations" (Vernadat, 1996). In terms of implementation the "resource" is a physical support for the service realisation or execution, e.g. material, machine tool, computer, human operator, time, money, software. The resource is a recursive construct, i.e. resources can be made of resources. So, we recognise primitive a n d c o m p l e x resources. But, a process is not a resource.

An enterprise or a company is a resource (primitive or complex) when the enterprise (server), or its part, is used (contracted) by other enterprise (client) to carry on some process (service) required by that enterprise.

We will use interchangeably the terms "resource" and "enterprise".

3.1. I n t e g r a b i l i t y One of the most important requirements for the virtual enterprise is the capability for

efficient access to heterogeneous candidate resources (enterprises) to be integrated in the enterprise, efficient negotiation between them and their efficient integration in the virtual enterprise. By "heterogeneous" resources here we mean that the resources work internally in their own specific, proprietary language, e.g. in the case of software or "business" application,

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

BM_Virtual Enterprise Architecture Reference Model 77

or they don't conform to the same standard(s), e.g. in the case of mechanical or electrical/electronic devices.

For our purposes we would say that the integration is primarily the task of improving interactions among the system's components using computer based (information and communication) technologies with the following goals (Vernadat, 1996):

1) to hide underlying heterogeneity and distribution of functions, data, knowledge, and functional entities to business applications and users, therefore ensuring portability;

2) to facilitate information exchange and~or sharing among applications, and 3) to provide an open environment, i.e. an interoperable 'plug and play' environment in

which new components can be easily added or connected, updated, or removed, for integrated enterprise operations.

A portability and interoperability among heterogeneous applications and devices (platforms), as well as extendibility, reconfigurability, longevity, are the characteristics of the so-called open system architecture.

An open system is defined as: "Open systems are those that conform to internationally agreed standards defining computer environments that allow users to develop, run and interconnect applications and the hardware they run on, from whatever source, without significant conversion cost" (Hugo, 1991). The condition "without significant conversion cost" in fact makes the difference from the other systems. Phenomenologically it is possible to make conversion between any two systems but the problem is the conversion cost.

The open system architecture uses some integration mechanism. One way to support open system architecture is based on the well-known "neutral file data

transfer" principle. This principle is applied as a standard approach in Computer Aided Design (CAD) systems. This approach is standardised through the ISO STandard for Exchange of Product model data (STEP). The product model data are interchanged between two heterogeneous CAD systems transferring the corresponded file which contains the product data presented by the STEP formal language EXPRESS. The STEP data format is called "neutral format" and the STEP file is called "neutral (format) file". The process of data interchange is called "neutral file data transfer".

From CAD systems has came another important example. For the problem of the product model visualisation in the CAD environment the computer graphics committee of ISO has developed a basic reference model for computer graphics. Graphical output and input are provided in a device- and language-independent manner. As an interface it uses the concept of a workstation, or normalised device, which is an abstraction from physical devices. Transformations to the coordinate system of the physical display device, from the user application, is accomplished in two stages (Encarnaqao et al., 1990): 1. normalisation transformation, maps from world (user) coordinates (WC) to normalised

device coordinates (NDC) and 2. workstation transformation, maps from NDC to device coordinates (DC).

The same logic was followed in different domains of manufacturing systems. There is developed a number of international standards with the objective to provide integrability of the systems.

Another way the open systems are applied are "distributed computing system", or distributed software applications, or simply "distributed systems". By (Wu, 1999): "A distributed system is one that looks like an ordinary system to its users, but runs on a set of autonomous processing elements (PEs) where each PE has a separate physical memory space and the message transmission delay is negligible. There is close cooperation among these PEs. The system should support an arbitrary number of processes and dynamic extensions of

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

78 G.D. Putnik

PEs". Obviously, there should exist some integration mechanism for the distributed systems (as well as for the enterprise integration). An example of the integration mechanism for the distributed systems, conceived for integration of the object-oriented software components, is the well-known Common Object Request Broker Architecture (CORBA). CORBA is "the object bus" architecture which "lets objects transparently make requests to - and receive responses from - other objects located locally or remotely. The client is not aware of the mechanisms used to communicate with, activate, or store the server object . . . . (it) lets objects discover each other at run time and invoke each other's services" (Orfali et al., 1997).

The "distributed system" concept is of the greatest importance for the VE concept and we would say that it is a model of the VE. Virtually, there is a homomorphic relation between these two concepts primarily on an abstract level.

In BM_Virtual Enterprise Architecture Reference Model the integration mechanism is presented through the "Integration Mechanism" (IM) "level", Figure 3. Conceptually, both a translator as the integration mechanism (e.g. the file transfer mode, STEP) and a distributed systems integration mechanism (e.g. CORBA) are supported. Furthermore, the IM ',level" will play the role as a component of the Normalised Virtual Enterprise (NVE) Model.

" i Control level i

(/, i+1) , § r

.I ] Control level i+1

Figure 3. Elementary structure for an integrated and open hierarchical multilevel system control.

3 . 2 . D i s t r i b u t i v i t y Distributivity has different views. One view of distributed systems, i.e. distributed software

applications, is already discussed shortly in the previous section. Another Views of distributivity, especially for the manufacturing system or enterprise are

related to the distributed control of the (manufacturing) enterprise, based on multi-agent system model, and to the spatial (or geographical) distribution of the (manufacturing) enterprise functions and physical components.

In the context of the VE reference model the distributivity will be considered from the view of the VE components spatial distribution.

The spatial distribution of the VE components is important from the following reasons. The VE requirement for reconfigurability, as a part of flexibility, implies the new resources

search, to be allocated to the task to be performed. However, the traditional organisational model, for the problem of reconfigurability, uses

the own resources existing within the organisation, i.e. "within the company boundaries". The set of the own resources of the company represents the resources selection domain. As

the selection domain is of a relatively limited, small, size in general it can't provide t h e desired performances neither for actual products nor for new products. To solve the problem of the lack of resources that could bring to the company a competitive advantage, the

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

BM_Virtual Enterprise Architecture Reference Model 79

company searches for co-operation with other companies simply buying components, subcontracting other companies or creating strategic or joint-venture associations. In other words, the company tends to integrate independent resources "across the company boundaries". This requisite implies that the resources candidates to integrate an association, to fulfil a specific market opportunity, i.e. to integrate VE, are, in the best case, globally distributed and inter-connected using Wide Area Networks (WAN) communication and telematics technologies, with the objective to enable the negotiation capability (to integrate the association or virtual enterprise) and operation (of the virtual enterprise, as they got into it) in effective and efficient (real time) way.

The effective and efficient access and operation of spatially distributed objects is the main idea under the concept of Distributed Manufacturing Systems (DMS) or Distributed Enterprise (DE). We define a "distributed manufacturing system or enterprise" as a manufacturing system or enterprise which performances does not depend on the physical distance between the enterprise elements (Putnik et al., 1998).

In BM_Virtual Enterprise Architecture Reference Model the distributivity of the VE is provided through the use of Wide Area Network (WAN) communication and telematics technologies that enables efficient access to remote resources distributed geographically (all over the world), Figure 4.

Con ollevel / t

,.~l Control level i+1 "[

Figure 4. Elementary structure for a distributed hierarchical multilevel system control.

3.3. Agility To be agile means to be "quick-moving, nimble, active" (Oxford Dictionary). "The

competitive foundations (of the agile manufacturing or enterprise) are continuous change, rapid response, quality improvement, social responsibility and total customer focus" (Kidd, 1994). We could say that the agili~ is a capability for fast adaptability or fast reconl~gurabil~ in order to respond rapidly to the market (or customer demand) changes (see Chapter 1). We also state that the flexibility is either equal (synonym) to agility or is a part of it (flexibility c agility). Regarding development of the VE reference model the virtual difference between "flexibility" and "agility" is irrelevant.

In any case, the reconfigurability, as a part of agility or flexibility, implies the new resources search, which we would allocate to the task to be performed. If the enterprise searches for resources "within the company boundaries" then we talk about intracompany agility. On contrary, if the enterprise searches for resources "across the company boundaries" then we talk about intercompany agility. The concept of virtual enterprise concerns intercompany agility (by the "first approach", Chapter 1).

As the virtual enterprise, or agile enterprise, implies interactions between various independent companies, i.e. enterprises, there will need to be controlled inter-company

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

80 G.D. Putnik

organisational configuration management to permit and manage these interactions. It is essential to be able to define domains of responsibility for configuration management, which

�9 -I Control level i I "1 I § I'

..__.__~ RESOURCE MANAGEMENT 1 LEVEL i+1 - _

~1 Control level i+2 "!

Figure 5. Elementary structure for an agile hierarchical multilevel system control.

reflect organisational policy and permit limited configuration management facilities to be offered, or to be contracted, across company boundaries. A domain, i.e. an environment, for configuration management could represent a set of enterprises, or companies, being managed by a particular manager, or a set of enterprises, or companies, to which a particular access control policy applies. We designated the domain for configuration management by the Market o f Resources (Cunha et al., 1999). The management structuring needs to be flexible to reflect a wide range of organisational policies. The enterprises may be members of multiple domains to represent the fact that an enterprise is subject to multiple different management policies in different contexts. For example, an enterprise may be a member of a trading domain indicating it is offering a particular service while at the same time it is a member of the domain which is the responsibility of a particular manager. Subdomains are domains containing groups of enterprises, which are members of other domains and provide the means of structuring management and partitioning responsibility. Some special subdomains for configuration management are designated as the Focused Market o f Resources (Cunha et al., 1999).

In the section 3.1 we have said that virtually there is a homomorphic relation between the "distributed system" concept and the VE concept, i.e. the "distributed system" concept is virtually a model o f the VE. In fact, the above paragraph is the paraphrased paragraph about "domains for open (distributed) systems" from (Twidle et al., 1992). We did it changing the terms "object" by the term "enterprise" and similar, as we have adapted and added some specific information.

Based on the previous discussion, the VE's agility must be carried on by some "organisation configuration manager". For the "organisation configuration manager" we will use the term resource manager or broker.

In BM_Virtual Enterprise Architecture Reference Model the "organisation configuration management", i.e. the agility function is presented through the "Resource Management_l" level, Figure 5.

From the implementation point of view, the "Resource Management_l" level can be owned by the control level i or it can be independent. There are arguments that the "Resource Management_l" level should be a part of, or owned by, a control level i. This model is the classical "two-layer hierarchy" organisation model. Another expressions used for the model are "principal/agent" or "manager/worker" hierarchy. The "principal" is the owner of the

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

BM_Firtual Enterprise Architecture Reference Model 81

vertical structure and the "agent" is responsible for production and affects the principal. But CONTROL L E V E L i CONTROL LEVEL i+ 1

LEGEND:

Diferent kinds of resources, globally distributed, candidates for VE integration:

Diferent kinds of resources, globally distributed, integrated in the VE:

I I

L-am Figure 6. Agile enterprise operation scheme (elementary structure).

in organisational theory are known higher-order vertical structures as well. The independence of the resource management function in VE corresponds to the "three-layer hierarchy" organisation model or, in other words, "principal/supervisor/agent" or "manager/foreman/ worker" hierarchy. The main motivation for application of the "principal/supervisor/agent" model is that "the principal, who is the owner of the vertical structure or the buyer of the good produced by the agent, or, more generally, the person who is affected by the agent's activity, lacks either the time or the knowledge required to supervise the agent" (Tirole, 1986). The direct implication of this approach is that the "resource management" function is carried on by an independent agent resource m a n a g e r or broker.

In the Figure 6 is presented a scheme of the agile enterprise elementary structure operation. It is important to notice that the structure proposed provides the enterprise reconfigurability between two operations, assuming that during one operation there is not changes of the organisational structure. When the operation is finished the resource manager, or broker, can

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

82 G.D. Putnik

reconsider the organisation structure and act with the objective to adapt it (to reconfigure it). The resource manager, or broker, is the principal agent of agility.

The model could be described as a model by the operation off-line reconfigurability of the enterprise. The consequence of the "operation off-line reconfigurability" model is that the underlying physical structure of the enterprise is not hidden to the manager, i.e. to the "principal" as the broker acts only between the operations. During the operation the manager, (the "principal") has direct contact with the worker (the operator or the "agent"), who provides the service (or production).

Although the model is represented as three-level hierarchical system, in practise the model can work as a rigorous hierarchy as well as a non-rigorous hierarchy.

3.4. V i r t u a l i t y Our critic to the definition of the VE as "dynamic (agile) networking of enterprises" only

("the first approach", see Chapter 1) is that there is not present the original meaning of the word "virtual". "Virtual" means something "not physically existing as such but made by s o f t w a r e t o appear to do so". So, although the VE is interpreted as an agile enterprise integrated over "intercompany" domain we would say that these enterprises are still only agile enterpriw as they exists as real. The "virtuality" is only in the design phase. Another argument to keep the term "virtual" for the agile networked enterprise, for which we think it is a better argument, could be that although we work in a real enterprise at one moment the actual real organisational structure will be virtually changed in some future. Thus, the actual organisational structure is a virtual one. However, we would keep only the attribute "agile" for the networked enterprises (the attribute "extended" seems to be good as well, as it points to the "intercompany" integration domain. The attribute "flexible" also fits very well). We critic also "the second approach" where the VE is reduced to the simulation program. First, we don't find justification to substitute the designation (enterprise) "simulation" or (enterprise) "simulator", although the simulation could be now much more advanced (including multimedia and virtual reality). Second, the real enterprise in fact doesn't exist.

In the conclusion, no one approach applied as a pure concept is acceptable by our requirements. And our requirements are that we need the real, physical enterprise, which will produce real products (not simulated), and in the same time to keep the meaning of the word "virtual", i.e. to keep some part of the enterprise that doesn't exist in reality. How it is possible to conciliate these two requirements? Another question could be, if we need the real enterprise why we need some virtual part.

We will introduce the virtuality in the similar way as it is introduced in CAD systems and in distributed (software) systems.

To implement the "virtuality" in the enterprise we think on introduction of an interface layer between the "Control level i" (principal, manager) and the "Control level i + l " (agent, "worker"), which passes now to be the "Control level i+2". The role of this level is management of underlying physical structure, i.e. management of resources, which will carry on the process ordered by the upper level, or by itself based on the delegated responsibility. Therefore, the V E ' s agility must be carried on by some "organisation configuration manager", i.e. resource manager or broker, similarly as for the concept of agility.

In BM_Virtual Enterprise Architecture Reference Model the "organisation configuration management", i.e. the function which provides virtuality is presented through the "Resource Management_2" level, Figure 7.

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

BM_Virtual Enterprise Architecture Reference Model 83

~l RESOURCE MANAGEMENT_2 " ! , LEVEL i+1

,~1 Control level i+2 "1

Control level i

Figure 7. Elementary structure for a virtual hierarchical multilevel system control.

The model is represented as a three-level hierarchical system" with a rigorous hierarchy. During the operation the "Control level i" (principal, manager) and the "Control level i+2" (agent, "worker") communicate through the "Resource management level i + l " , i.e. through the resource manager. During the operation the manager, (the "principal") does not have the direct contact with the worker (the operator or the "agent"), who provides the service (or production).

In the Figure 8 is presented a scheme of the virtual enterprise elementary structure operation (includes agility as well). It is important to notice that the structure proposed provides the enterprise reconfigurability during the (single) operation, i.e. the organisational structure changes during the operation, at the run time. The resource manager, or broker, is the principal agent of virtuality (and agility).

The model could be described as a model by the operation on-line reconfigurability of the enterprise. As a consequence of the "operation on-line reconfigurability" model, the underlying physical structure of the enterprise is hidden to the manager, i.e. to the "principal". The broker must provide the transition from one physical structure to the another in a way that the "principal" can't be affected by the system reconfiguration, in which case the operation would be interrupted and split in two implying immediately some lost time. The lost time can have two components: by interruption of the operation itself (e.g. set-up time for restarting the operation), and the principle' s adaptation time to the new specific organisational (hardware) structure. Additionally, the three-level hierarchical model, i.e. the "principal/supervisor/agent" organisation model, as it is conceived here, is in fact an application of the principle of "simultaneity" of the processes. In the previous Chapter we referred that the main motivation for application of the three-level hierarchical model, i.e. the "principal/supervisor/agent" model is that "the principal lacks either the time or the knowledge required to supervise the agent". But, even in the case the principal has "either the time or the knowledge required to supervise the agent", in order to cut further processing time of the production operation and the enterprise reconfiguration it is necessary to perform them in parallel. This is the main principle of the concurrent or simultaneous engineering. In the "agility" scheme, as it is defined in the previous Chapter, the production operation and the enterprise reconfiguration are still performed in a sequence.

These are the reasons why we need the virtuality. The virtuality in this sense (the hidden underlying hardware structure) is actually present in the (open) CAD systems and distributed (software) applications. All these systems are virtually the models of a VE. In other words, the "Resources Management Level" together with the "Integration Mechanism Level", e.g.

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

84 G.D. Putnik

the translator, emulate the underlying organisational (hardware) structure in a format that is CONTROL LEVEL i

Figure 8. Virtual enterprise operation scheme (elementary structure).

understandable by the manager, or "principal". The "principal" doesn't see the real structure, he sees some "virtual" structure that doesn't exist.

3.5. Virtual enterprise model space - Integrated, distributed, agile and virtual enterprise The integrability (I), distributivity (D), agility (A) and virtuality (V) are four independent

("uncoupled") functional requirements to be satisfied by an enterprise model, and in the same time we will say that they represents four "design parameters" for the enterprise model synthesis. An enterprise could be integrated by only one of the "design parameters" or by any combination of them.

We would say that integrability, distributivity, agility and virtuality, as an enterprise design parameters, form a kind of a 4-dimensional enterprise model (meta) space, which is presented on the Figure 9 (each dimension is further defined by some model subspace, meaning additional dimensions of an enterprise characterisation. For other important enterprise model

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

BM_Virtual Enterprise Architecture Reference Model 85

space dimensions see (Petrie, 1992). Naturally, it is necessary further research in order to clarify relationship among different enterprise model dimensions).

In this space we can recognise 2 4, i.e. 16 different enterprise model classes. We will use the following notations: I-class will be the class of "integrated" (only) enterprise models, IA-class will be the class of "integrated and agile" (only) enterprise models, etc. IDAV-class will be the class of "integrated, distributed, agile and virtual" enterprise models. The set of 16 different enterprise model classes is { 0 , I, D, A, V, ID, IA, IV, DA, DV, AV, IDA, IDV, IAV, DAV, IDAV } (model of the type O means that the enterprise is neither I nor D, nor A, nor V).

The question is: which model maximises the enterprise performances. To answer this question we could use an algorithm which will compare models and select

the best one. The requirements for competitiveness to be satisfied are 1)-3) from the Chapter 1, over global market.

Our hypothesis is that the "IDAV" model is the best one. Why? One simple argument could be that the IDAV-model is the most complex and all other

models are its special cases. Another argument is based on the following reasoning: 1) An enterprise should be integrated (by computer based technologies as an open

system). This feature implies an I-model. We will call this model Integrated Enterprise (IE);

2) An enterprise must be integrated and distributed. Capability to perform globally distributed tasks (remote design and control of the system) brings to the enterprise independence of the physical distances among enterprise's elements and an additional spatial and temporal flexibility. The distributed system could be conceived as a proprietary system but on the cost of flexibility. Therefore, the system should be integrated and distributed. These features imply an ID-model. We will call this model Distributed Enterprise (DE);

Figure 9. Enterprise model (meta) space.

Figure 10. Relationship among Integrated, Distributed, Agile and Virtual Enterprise.

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

86 G.D. Putnik

3) An enterprise m u s t be agile. The agility could be implemented over intracompany resources. It is expected that use of computer based open systems as a tool for agility would contribute to improve it (the agility). But to improve further the enterprise performances it is required to integrate the most competitive resources "across the company boundaries". To access any candidate resource at any point of the globe, it is necessary to apply technologies inherent to distributed enterprise. These features imply an IDA-model. We will call this model Agile Enterprise (AE);

4) An enterprise must be virtual. To improve further the agile enterprise performances it is introduced the feature of "virtuality". The virtuality provides the system with the capability of the system on-line reconfigurability without interruprtion of any process: The virtuality, combined with the agility, distributivity and integrability, brings to the enterprise the highest level of flexibility. These features imply an IDAV-model. We will call this model Virtual Enterprise (VE).

Based on the above considerations, we would establish the following relationship among Integrated, Distributed, Agile and Virtual Enterprise, see also Figure 10:

Integrated Enterprise c Distributed Enterprise c Agile Enterprise c Virtual Enterprise

We could give now an informal definition of the VE:

A Virtual Enterprise (VE) is an optimised enterprise synthesised over universal set of resources with the real-time substitutable physical structure. The design (synthesis) and control o f the system is performed in an abstract, or virtual, environment.

The "universal set of resources" means that the VE integration can consider any kind of resources, primitive or complex, that they can be distributed globally and that they can belong to some domain "within the company boundaries" or to some domain "across company boundaries". The combination of "the real-time substitutable physical structure" and the "virtual environment" for the enterprise design and control gives the highest level of the enterprise flexibility or agility, i.e. gives the enterprise the ability to "reconfigure within 1 second". Additionally, the "virtual environment" justifies the attribute "virtual" of the VE.

4. B M _ V I R T U A L E N T E R P R I S E A R C H I T E C T U R E R E F E R E N C E M O D E L

BM_Virtual Enterprise Architecture Reference Model is defined as a hierarchical multilevel model of the enterprise/manufacturing system control and satisfies the requirements for the integrability (I), distributivity (D), agility (A) and virtuality (V).

The BM_Virtual Enterprise Architecture Reference Model is build up of the BM_Virtual Enterprise Architecture Reference Model Elementary Structures. The BM_Virtual Enterprise Architecture Reference Model elementary structure is synthesised over elementary structures of the VE architecture, which provide I, D, A, and V (described informally in the previous chapter, Chapters 6.). Thus, I, D, A, and V, are the design parameters of the BM_Virtual Enterprise Architecture Reference Model elementary structure and of the model as a whole.

Recalling the general definition of the multilevel hierarchical system (1) - (4) (Chapter 2) and specialising it, the BM_Virtual Enterprise Architecture Reference Model is specified as follows, Figure 11 and Figure 12.

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

BM_Virmal Enterprise Architecture Reference Model 87

Figure 11. BM_Virtual Enterprise Architecture Reference Model Elementary Structure.

Each 'input-output' pair, i.e. each pair (Xi, Y ) , i = 1, 3, 5 ..... n (n odd), is assigned to a particular Control Level represented by:

( i ) S~: X i x W i ~ Yi, if i = 1, ( ii ) Si: Xi X Ci X Wi ~ Yi, i f 1 < i < n, (iii) Si: Xi • Ci ---9 Yi, if i = n,

(5)

and each pair ~ Y ~ (X i, i), i = 2, 4, 6 . . . . . n - l , is assigned to a particular Resource Management Level represented by"

(iv) RMi: xRMi )< cRMi X wRMi---> yRM i (6)

There are defined the folowing families of mappings, i.e. there are defined decision functions, information functions and translation functions:

hi: Yi ~ Ci+l R M �9 R M R M

h i+~ Y i+~ .--~C i+2 (decision functions)

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

88 G.D. Putnik

gi: Yi -"YWi-I RM . RM RM

g i+t " Y i+1 - - ) w i (information functions)

RM RM tg i+,: Ci§ --o C i+~ twi: wRMi---> W i

C i§ ~ Ci+l tgi+l: P ~ t WRM

tw i: W i ~ I

(translation functions) (translation functions)

such that for each x in X and y=S(x), with i = 1, 3, 5 ..... n (n odd):

= twi(3cV i ) ) , if i = 1, ( i ) y, Si(x i, (ii) yi Si(x i, m w = tgi(C ~), t i(W i)), if 1 < i < n, (iii) Yi = S~(x~, tgi(C i)) if i = n,

(7)

and for each x TM in X TM and y ~ = R M ( x ~ ) , with i = 2, 4, 6 . . . . . n-1"

(iv) ~ = ~ t y ~ RM~(x ~, w i ( ~ i ) , t g ~ ( C i ) ) (8)

The integration mechanism functions, i.e. the integration mechanism blocks from the Figure 11. are not levels of the model. They only represent the interface (translation functions) between control levels and resources management levels.

Additionally, we propose a concept of the Normalised Virtual Enterprise (NVE) Model, Figure 12, similarly with the CAD systems. The NVE model is "an abstraction" from the physical VE and it serves as an interface, i.e. together with the translation functions serves as an integration mechanism between two control levels. Transformations, communications or integration between two particular (heterogeneous) enterprises, or resources, on two Control levels i, i + l , is accomplished in two stages (by analogy with the CAD systems):

1) "normalisation transformation", maps information (orders) from the "principal" (enterprise, or resource) or manager on the Control level i, to the normalised VE model, and

2) N V E transformation, maps from N V E to or "agent" enterprise, or resource on the Control level i+l.

(conceptually it is not important whether the transformations are performed between levels i and i + l , i.e. between "principal" and "resource manager", or between levels i + l and i+2, i.e. between "resource manager" and "agent").

The expected advantage of the N V E definition is independence of the VE components, i.e. tools and technologies development, as well as VE formal theory development. Also, an independent (of VE tools and technologies producers) organisation or institution, for example ISO, could provide the specification of the N V E model.

5. D E V E L O P M E N T O F T H E V E D E M O N S T R A T O R B A S E D O N B M _ V E A R M

The validation of the V E reference model proposed will be carried on along with the number of research projects under development at the University of Minho on VE theory and VE design and control tools and technologies. However, in the same time, the VE reference model proposed already serves as a framework for cooperation and coordination of the group of research projects refe~ed.

In order to fulfil the requirements of the project(s) validation, including the VE reference model, it is implemented a laboratory installation which will serve as a demonstrator for the VE design and control. The laboratory installation is conceived as a Distributed/Virtual

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

BM_Virtual Enterprise Architecture Reference Model 89

Figure 12. BM_Virtual Enterprise-Architecture Reference Model and the corresponded Normalised Virtual Enterprise (NVE) Model.

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

90 G.D. Pumik

period the laboratory was used for research of distributed manufacturing system. In the second (present) period the laboratory is extended with the components which are expected to provide the full demonstration of the VE concept based on the BM_Virtual Enterprise Architecture Reference Model.

The components of the D/V MS Cell structure which will be used in the first phase for the VE model validation, based on the BM_Virtual Enterprise Architecture Reference Model and therefore for its validation as well, is composed of, Figure 13"

1) Machine cell: Two machine simulators, PLC, external sensors and actuators, Robot SCORBOT ER-VII, vision system, conveyor system, computer based local controller;

2) Broker: Computer based remote resource manager; 3) Control center_l" Computer based remote machine cell controller; 4) Control center_2: Computer based remote machine cell controller;

The cell formal specification (ESTELLE based) is given in the Figure 14.

Figure 13. An informal scheme of the virtual enterprise demonstrator based on the BM_Virtual Enterprise Architecture Reference Model.

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

BM_Virtual Enterprise Architecture Reference Model 91

The reconfiguration of the system consists of switching between two manufacturing cell

SYSTE~

Rc i t ~ l ~ ~r

[ CONTROL 1

I 2 l ~ I ~ 1 I@~=

I~t~1 I ~

SYSTEM CONTROL 2

! 'lJo /l l

J ~ 0

m m lm | m lm lm m.,mm lm m #m ,m lm lw | m-lm (mlm (m | m m ~ m | ~ m m | | m | m | | | m | | m | | m | | m | m | | m

RESOURCE M A N A G E M E N T (BROKER) ~ k

MANUFACTURING CELL j

I'D

(~2 ~ ~.

I k. External Actuators

) Robot

) External Sensors

Figure 14. A formal scheme ( E S T E L L E based) of the virtual enterprise demonstrator based on the BM_Virtual Enterprise Architecture Reference Model.

controllers in accordance with their availability, service cost and quality. The broker performs the function of the system configuration management. Manufacturing cell controllers, as well as broker, could be located at any point in the world as the system communication is based on WAN, in particular in this phase it is used Internet as a communication protocol and JAVA based applications for resources management and the manufacturing cell control.

The creation of the network of the system controllers, brokers and other manufacturing cells or services (e.g., CAD, CAPP, CAM, business processes, etc.) is planned for the near future. The network will include in principle laboratory installations and researchers from academia as well as it will be open for other participants from academia and especially for participants from the industry.

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

92 G.D. Putnik

6. C O N C L U S I O N

Besides the integrability, distributivity, agility and virtuality, the VE reference model presented is characterised by the following additional attribute values (of an enterprise integration (EI) model space dimensions referred in (Petrie, 1992)):

1) Semantics o r i e n t e d - the reference model provides translation of the syntax between particular models as well as a part of semantics. The part of semantics is implemented through the Normalised Virtual Enterprise (NVE) Model proposed;

2) Global - it is conceived to link any particular model to any other model; 3) T r a n s l a t o r - it is chosen a "translator" as an intermediate mechanism as it doesn't

require modifications of the actual applications; 4) Unification - the reference model is conceived to serve as a unification model, i.e. all

other models must translate to it, but its internal structure should support a "federation" approach as it would surely integrate international standards already specified, e.g. STEP. In the future a "federation" with other VE reference models is considered;

5) Dynamic - it is conceived to support the highest dynamics of the enterprise reconfiguration ("within 1 second") for any type of production. This is provided by specification of the "three-levels" hierarchical organisation model and by introduction of the principle of virtuality;

6) Intercorporate - it is conceived to support the enterprise integration over (domain of) intracompany resources.

Additionally, it is intended to cover all processes in an enterprise "from business management to end effector", from macro to the micro processes level, for any type of production.

By the BM_Virtual Enterprise Architecture Reference Model (BM_VEARM) the VE is seen as a general enterprise model from whom all other enterprise models are special cases. For example, the agile, distributed, integrated and other enterprise models are special cases and can be derived from the BM_VEARM.

It is a proprietary model, as it is not developed within some standardisation organisation. At the end we would mention some important research topics related with the VE

reference models development (for some topics see e.g. (Gielingh, 1992), (Petrie, 1992)): 1) Algebraic specification of the VE reference models; 2) Representational classes for VE models; 3) Reference model(s) integration; 4) Reference model modifications; 5) Reference model extensions for other views (e.g. information system,

implementation); 6) Reference model extensions for domain-specific models; 7) Metrics and certification criteria for EI models and software developed under the

particular reference model, etc.

(Note: All figures in the text, except the Figure 1, are originals published by the first time)

R E F E R E N C E S

1. Browne J. (1995) The Extended Enterprise - Manufacturing and The Value Chain, in Camarinha-Matos L. M., Afsarmanesh H. (Eds.) Balanced Automation S y s t e m s - Architectures and design methodologies, Chapman & Hall;

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

BM_Virtual Enterprise Architecture Reference Model 93

2. Camarinha-Matos L. M. et al. (1999) Partners search and quality-related information ezchange in a virtual enterprise, in Mertins K. et al. (Eds.) Global Production Management, Kluwer Academic Publishers;

3. Cunha M., Putnik G., Avila P. (1999) Towards Focused Markets of Resources for Agile/ Virtual Enterprise Integration, (submitted for publishing);

4. Encarnaq~o J. L., Lindner R., Schlechtendahl E. G. (1990) Computer Aided Design - Fundamentals and System Design, Springer-Verlag;

5. Fujii S., Kaihara T., Morita H., Tanaka M. (1999) A distributed virtual factory in agile manufacturing environment, in Proceedings of lCPR '99;

6. Gielingh W. (1992) Requirements for the Development of Layered Information Models, in Petrie C. (Ed.) Enterprise Integration Modeling, The MIT Press;

7. Goldman S. L., Nagel R.. N., Preiss K. (1995) Agile competitors and virtual organizations, Van Nostrand Reinhold;

8. Hormozi A. M. (1994) Agile Manufacturing, in Proceedings of the 37th International Conference, American Production and Inventory Control Society, San Diego;

9. Hugo I. (1991) Practical Open Systems - A Guide for Managers, Data General Ltd.; 10. ISR (1995) What Virtual Manufacturing is, in Virtual Manufacturing User Workshop

Report, Lawrence Associates Inc., URL: http://www.isr.umd.edu/Labs/CIM/vm/vmdesc.html;

11. Kidd P. T. (1994) Agile Manufacturing- Forging New Frontiers, Addison-Wesley; 12. Kim S. H. (1990) Designing Intelligence, Oxford University Press; 13. Mesarovic M. D., Macko D., Takahara Y. (1970) Theory of Hierarchical Multilevel

Systems, Academic Press; 14. NIIIP (1996) The NIIIP Reference Architecture, http:/www.niiip.org; 15. Onosata M., Iwata K. (1993) Development of a Virtual Manufacturing System by

Integrating Product Models and Factory Models, Annals of the CIRP, Vol.42/1/1993, pp 475-478;

16. Orfali R., Harkey D., Edwards J. (1997) Instant CORBA, John Wiley & Sons; 17. Petrie C. (Ed.) (1992) Enterprise Integration Modeling, The MIT Press; 18. Putnik G. D., Sousa R. M., Moreira J. F., Carvalho J. D., Spasic Z., Babic B. (1998)

Distributed/Virtual Manufacturing Cell: An Experimental Installation, in Proceedings of 4th International Seminar on Intelligent Manufacturing Systems, Belgrade;

19. Tirole J. (1986) Hierarchies and bureaucracies: On the role of collusion in organization, in Journal of Law, Economics and Organization, 2 (2), Autumn, 181-214;

20. Twidle K., Sloman M., Magee J., Kramer J., Dulay N., Crane S., Cheung S. C. (1992) Configuring Heterogeneous Open systems, in Petrie C. (E,d.) Enterprise Integration Modeling, The MIT Press;

21. Vernadat F. (1996) Enterprise Modeling and Integration, Chapman & Hall. 22. Wu J. (1999) Distributed System Design, CRC Press.

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

This Page Intentionally Left Blank

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

I n t e g r a t e d P r o d u c t ~ r o c e s s D e v e l o p m e n t ( I P P D ) T h r o u g h R o b u s t D e s i g n

S i m u l a t i o n ( R D S )

Daniel P. Schrage and Dimitri N. Mavris School of Aerospace Engineering, Georgia Institute of Technology, USA

1. I N T R O D U C T I O N

The accepted systems approach for complex manufacturing systems for most of the world during the 1970s and 1980s was based on the systems engineering methodology that was initiated and developed for U.S. defense and space systems during the early 1960's. It provided a top down, system decomposition approach so that complex systems could be broken down into subsystems, components, and parts that could be developed and manufactured by subcontractors, suppliers, and vendors around the U.S., as well as the world. While this systems engineering approach has been successful in the U.S., as indicated by the high performance weapons systems developed and by putting the first man on the Moon, it is not sufficient by itself, for development of both complex defense and commercial systems in today's competitive marketplace.

On-line manufacturing was an important downstream element in the hierarchical and sequential systems engineering methodology; however, it was the recipient of a design that had to be transitioned into manufacturing processes, often with substantial, costly re-design changes. While the systems engineering approach recognized the need to address "design for's", e.g. manufacturing, supportability, etc., the configuration design was usually synthesized by a small advanced design team responsible for conceptual design. This team usually emphasized performance based on their experiences and the design tools that were available. The impact of this approach was to lock-in the Life Cycle Cost (LCC) of the complex system early in the life cycle process, as illustrated in the "now famous curve", Figure 1 (Ref.1). Two figures are included in Figure 1. The small one in the upper half is the generic curve often referenced. The larger one illustrates the actual data, from a Boeing ballistic missile system, upon which the generic curve is based.

100

CUMULATIVE ! PERCENT UFE CYCLE COST OF LCC EFFECTIVELY RENDERED

UNCHANGEABLE FOR A GIVEN DESIGN J / "

MS I MS II MS ill

r UFE CYCLE COST ACTUALLY EXPENDED

IOC OUT OF SERVICE

Figure 1. cont'd .... /

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

96 D.P. Schrage, D.N. Mavris

(Ballistic missile system) 100 ' ' ~ - j

Determined cost/~,, 85% i . . . .

Pe'Lr~'~;nt 50 ~" / 50~

/ / i i I n c u r r e d c : ~ i " ~ I - / ! i ~ i / ~ ~ / . ~ : 7~ _~ .... .... i Time --------~//J

/Concept /Advanced /Ful! scale /Production/Operations and / " / " / support

Source: Boeing Company

Figure 1. Life Cycle Cost Gets Locked in Early for Complex Systems Using Only a Top Down Systems Engineering Approach

"i .E i 1= r,d

t .

i Z

Japanese Company

Japanese/U.S. Engineering Change Comparison I

U.S. Company

90% Total Japanese

Changes Complete

Figure 2. Japanese/U.S. Automotive Engineering Change Comparison

Around 1980 a manufacturing enterprise flexibility was sought in the U.S., particularly in the automotive and electronics sectors, in order to insure U.S. products would remain competitive with foreign equivalents. This was particularly true of Japan, which was

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

Integrated Product~Process Development Through Robust Design Simulation 97

redefining what was meant by a quality product. As an example, a timeline comparison of where design changes were taking place during the development of a Japanese automobile compared with those for a U.S. automobile is illustrated in Figure 2 (Ref.2). As can be seen, the Japanese automobile company made design changes earlier; thus, they could produce a car with higher quality in a shorter period of time. Direct comparisons, such as this, served as a "wake-up call" for the U.S. automotive and electronics industry and the race for improved quality and reduced cycle times continues today. Subsequently, it served to wake-up other manufacturing sectors, such as aerospace, as well as the U.S. government which embraced Total Quality management (TQM) and Concurrent Engineering as its preferred modes of operation. (Ref. 3)

The quality revolution, which has been ongoing for approximately the last twenty years, has determined where competition is today, and is illustrated in Figure 3 (Ref.4). The manufacturing Cost Advantage in the 1960s was Cheap Labor, High Volume, and Low Mix Production, i.e. mass production. The emphasis on Quality in the 1970's, initiated in Japan and emulated elsewhere, contained the three essential elements of Statistical Process Control Variability Reduction, and Customer Satisfaction. The main emphasis with Manufacturing Enterprise Flexibility was to move on-line, quality methods such as Statistical Process Control (SPC), off-line for a more robust design. This change, in essence, constituted a quality engineering recomposition effort to complement the traditional systems engineering decomposition effort. Robust design approaches, such as Taguchi's Robust Design and Six Sigma process capability, were introduced. The quality revolution in the late 1980's moved to a Time-to-Market strategy with the emphasis on Cycle Time Comparison, such as Just-In- Time (JIT) manufacturing, Integrated Product~Process Development (IPPD), Product~Process Simulation, and High Skill Adaptable Workforce. This has been followed in the 1990's by Product Variety and an emphasis on Cost Independent of Volume, Agility, Commercial/Military Integration, and Virtual Companies. For the next millenium the progression is to Company Goodness with an emphasis on Enterprise Integration (EI).

Ideally, EI connects and combines people, processes, systems, and technologies to ensure that the fight people and the fight processes have the fight information and the fight resources at the fight time. EI should enable successful operation, in a w o r d of continuous and largely unpredictable change, of a single manufacturing company or an ever-changing set of extended (or "virtual") enterprises - by enabling quick and accurate decisions and adaptation of operations to respond to emerging threats and opportunities. However, in the most advanced manufacturing enterprises today, many technologies exist to integrate elements of the product realization and business systems. Enterprise Resource Planning (ERP) systems integrate a number of the business functions, but lack the detail and fidelity needed for the product realization side of the house. CAD systems have expanded to include product and process simulation and planning capabilities, but typically lack the horsepower and tools to perform specialized analyses and integrate the information into the business and manufacturing execution functions. (Ref. 5)

Company goodness can imply a number of things, including how the employees view the company, as well as external perceptions of the company, such as its customers, suppliers, and shareholders. Organizational structures based on "Communities of Practice" (Ref.6), self- organization and complexity science principles (Ref.7), rather than trying to emulate other successful company organizational models seem to be the new norm that is emerging. By the same token, the Environment also has several perspectives, including both internal and external. This could include advanced engineering environments (AEE' s) (Ref. 8), as well as societal constraints and concerns, such as noise, pollution, emissions, safety, and disposal.

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

98 D.P. Schrage, D.N. Maoris

[ Cost Advantage [ Cheap Labor Hi Volume, Lo Mix Production

[ Quality I Statistical Process Control Variability reduction Customer Satisfaction

t Manufacturing

Enterprise Flexibility

I I I 1960 1970 1980

I Time't~ ] Cycle time Comparison (JIT) Integrated Product/Process Development Product/Process Simulation Hi Skill adaptable Workforce

I Product Variety ] Cost Independent of Volume Agility Commercial/Military Integration

Virtual Companies I Company Goodness I

Environment t I

1990 2000

Figure 3. Quality Revolution- Where Competition is Today

Over the past five years there has been an industry driven collaboration effort to define the Next Generation Manufacturing (NGM) environment (Ref.9). The NGM project, completed in 1997, was a groundbreaking effort to examine long-term trends in U.S. manufacturing in light of unprecedented changes taking place in the global business environment, and to identify actions required to respond to these new challenges. More than 500 technologists and business leaders from industry, government, and academia participated in the project. Following the NGM project an Integrated Manufacturing Technology Roadmapping (IMTR) initiative (Ref.5) was undertaken to provide a comprehensive plan to:

�9 Define key technology goals that cut across all manufacturing sectors �9 Provide focus for concentrated effort to achieve the goals �9 Promote collaborative R&D in support of critical needs �9 Move these developments from the l'aboratory to industrial use

IMTR has been a focused effort, sponsored by the National Institute of Standards and Technology (NIST), U.S. Department of Energy (DOE), National Science Foundation (NSF), and Defense Advanced Research Projects Agency (DARPA), to develop a manufacturing R&D agenda that cross-cuts the diverse needs of government and industry across all major manufacturing sectors. Leveraging the work done by NGM, IMTR conducted a structured process to define future manufacturing enterprise technology requirements and outline solution paths to meet these requirements in four interrelated areas:

�9 Information Systems for Manufacturing �9 Modeling & Simulation �9 Manufacturing Processes & Equipment �9 Enterprise Integration

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

Integrated Product~Process Development Through Robust Design Simulation 99

The Technologies for Enterprise Integration (TEI) roadmap (Ref.10) has been approached from five different perspectives, or levels:

�9 Sub-enterprise level: the functionally of the integrated application or system is limited to a relatively homogeneous area, typically at a single local site under a single ownership, e.g. flexible manufacturing systems at the integrated sub-enterprise level.

�9 Single-site enterprise: complete functional integration assures that business processes, manufacturing processes and product realization are united using a common architecture to fulfill a common goal. This is most likely found at a single plant under a single owner, such as an automated factory.

�9 Multi-site, extended, and virtual: these three levels occur over multiple geographic settings. Multi-Site enterprise integration is generally an issue faced by large enterprises (e.g., Boeing, Lockheed Martin, IBM, General Motors, Ford, and Caterpillar) in integrating heterogeneous systems through out their enterprises. An extended enterprise, which generally involves complex supply chains, concerns the integration of all members of the supplier and distribution chain to the common goal of market share capture through product realization. Virtual enterprises are very similar to extended enterprise, but they have the feature of being created and dissolved dynamically on an as-needed basis, and integration of member entities is largely electronic.

All levels, to varying degrees, influence and are influenced by integrated product realization, integrated business systems, and tools enabling integration. While the objective is to support creation and operation of extremely efficient, flexible, and responsive extended manufacturing enterprises, the path to reach this will require capturing the wisdom achieved at each of the enterprise integration levels. As stated in the IMTR TEI roadmap (Ref.10) the path to EI has already started. Several sub-enterprise elements have already been integrated, as illustrated in Figure 4 from Ref. 10, with powerful new tools in different domains. The goals of Integrated Product Realization are being supported with integration of CAD, CAM, and computer-aided manufacturing planning systems, coupled with the use of integrated product teams (IPTs), leveraging the emerging disciplines of Integrated Product/Process Development (IPPD). Similarly, ERP systems have integrated the business functions of finance, accounting, human resources, and material requirements planning. Electronic data interchange is a beginning toward integration of the extended enterprise. Finally, inter-, intra- and extranets are starting to provide the infrastructure required for integrated distributed enterprise operations. (Ref.10)

The remaining portions of this chapter will consecrate on the IPPD and Product/Process Simulation effort that has been initiated and developed at Georgia Tech in the 1990s (Ref.11). This is done for several reasons. First, as can be seen in Figure 3 these are two of the key 1990's elements in the quality revolution and where competition is occurring today. Second, the IMTR TEI plan identified some 70 top-level goals and more than 265 supporting requirements and tasks to achieve the IMTR vision. However, out of these goals and requirements there were 10 "nuggets" - critical capabilities or attributes - that underpin the IMTR vision and which offer the greatest return on investment by virtue of their broad applicability to industry. Under the Manufacturing as an Integrated System (Integrated Product Realization) "nugget" it is assumed that the concepts o f Concurrent Engineering and

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

1 O0 D.P. Schrage, D.N. Mavris

e~t)

Distributed Enterprise Integration Flexible Instant Partnering, Seamless Distributed Virtual Collocation,

/ t Virtual Electronic Alliance .....

~ Multi-Site Integration

~"/.,-- E l e c t r o n i c / " - Data Interchange, Technologies ( . " " Enabling Agile Manufacturing (TEAM), Extranets .....

Single-Site Integration Integrated Product/Process Development (IPPD) teams, Enterprise Resource Planning (ERP), Flexible Manufacturing Systems .......

Sub-Enterprise Integration Design Integration (CAD/CAM), Material Resource Planning (MRP), Process Integration (NC, CNC) ........

Time

Figure 4. Technology Paths to Integrated Enterprises

IPPD will mature with creation of enabling tools that support complete integration of all functions and disciplines involved in converting product from initial concept to completed units ready for delivery. Finally, for IPPD to be properly implemented a "new systems methodology", that couples systems engineering decomposition methods/tools (mostly deterministic) with quality engineering recomposition methods/tools (mostly probabilistic) must be formulated. It must then be demonstrated for early system level design tradeoffs in a realistic, robust design simulation environment. This chapter will discuss how a genetic IPPD methodology (a new systems methodology) has evolved into a Robust Design Simulation (RDS) environment.(Ref.ll) This environment is now being transferred to industry and government to provide more affordable complex systems for today and tomorrow.

2. EVOLUTION OF IPPD THROUGH RDS

The cultural change-taking place in industry and government due to the quality revolution, Figure 3, has also identified the need for education, research and training as well as new systems approach methodologies and computer integrated advanced engineering environments. These elements are necessary to capture the essence of IPPD and Product/Process Simulation. What is needed is much like the Systems Engineering methodology that was developed in the late 1950s and early 1960s for designing and building large scale complex systems, such as ballistic missiles and manned space flight systems.

The generic IPPD Methodology that has been taught formally, and used as .the education and training approach for the Navy's Acquisition Reform effort is illustrated in Figure 5 (Ref.ll). This "new systems approach methodology" consists of four key elements, illustrated at the top in "umbrella" form. These four elements are Systems Engineering (SE) methods~tools, Quality Engineering (QE) methods~tools, a Top Down Design Decision Support (TD3S) process, and a Computer Integrated Environment (CIE). Below the

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

Integrated Product~Process Development Through Robust Design Simulation 101

"umbrella" are the sub-elements of each key element. As illustrated by the downward arrow, the SE methods/tools flow are product design and decomposition driven, while the QE methods and tools flow are process design and recomposition driven. The arrows from the SE and QE methods/tools feeding into the TD3S process, the heart of the methodology for tradeoff assessment, represent the information flow, which for timely integration, cycle time reduction and decision making requires a CIE. The primary design~synthesis iteration is illustrated in gray boxes in Figure 5, i.e. between the SE method: System Synthesis through Multidisciplinary Design Optimization (MDO), to "Generate Feasible Alternatives" and the QE method, Robust Design Assessment & Optimization, to "Evaluate Alternatives" and finally to update and provide a robust System Synthesis. It will be shown later how the iterative process is exercised in a RDS environment

Figure 5. Georgia Tech Generic IPPD Methodology

The Methodology illustrated in Figure 5 is considered as a procedural approach to design, but also encompasses an analytical approach in the SE method, "Systems Synthesis through MDO", and an experimental approach in the QE method, "Robust Design Assessment and Optimization" (Ref. 12). The procedural approach is a trade-off process where the objective is modified as the design proceeds. The solution that results is the solution that satisfies all the design objectives in the best manner. The analytical approach is a function of the problem attributes that are precisely defined - much of engineering optimization, especially in academia, has followed an analytical approach. The experimental approach to design relies on a matching of design attributes to the objective of the design process - use of Design of Experiment methods characterize the experimental approach. The procedural approach illustrated in Figure 5 has also been called a Design Justification approach. Design Justification is a term used to describe a design process where the economic ramifications of design decisions are considered concurrently with design development and are used to guide

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

102 D.P. Schrage, D.N. Mavris

the design process so as to result in the most economical criteria satisfying design (Ref. 12). This is the basis for the IPPD through RDS that will be discussed later.

For large-scale integration of complex systems, the IPPD methodology provides the centerpiece in the hierarchical tradeoff process flow illustrated in Figure 6. The right half of the figure represents the SE decomposition from system (conceptual design) to component (preliminary design) to part (detail design) to the on-line manufacturing process; while the left half represents the QE recomposition from the manufacturing process back to the system design, i.e. to tolerance, to parameter, to system design. Inside the circle are parallel trades at the system, component, and part levels. An IPPD methodology (the center box), such as that in Figure 5, is necessary if true IPPD is to be exercised. The hierarchical process flow in Figure 6 is also useful in understanding why the Japanese were able to make design changes earlier (Figure 2) and shorten the development cycle time. This is further illustrated, in a more generic way, in Figure 7, which illustrates a traditional serial approach versus a CE approach. As can be seen, the IPPD focus should be at the front end, i.e. in design and development. The traditional serial approach is illustrated in Figure 7 and is based on SE decomposition. Also shown is the wall that has often separated design and manufacturing in many companies. While SE decomposition has served its purpose in producing high performance large-scale systems, such as aerospace, it has also served to lock in life cycle cost early as was illustrated in Figure 1. Therefore, for IPPD SE methods/tools are considered necessary, but not sufficient.

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

Integrated Product~Process Development Through Robust Design Simulation 103

high Design & Test & Development Production Support

Cost of Change

IPPD

0[ --I / Serial ~ | Concurrent [ iZ ~ l Engineering !

low ~..

Time

Figure 7. Traditional Serial Approach versus CE Approach

Quality Engineering methods/tools have evolved mostly from Japan and have become part of the quality revolution. They provide the means of bringing downstream manufacturing process information back into the design process, thus emphasizing a recomposition rather than a decomposition approach (Ref. 13). They basically consist of the flow illustrated in Figure 9. The Seven Management and Planning Tools and Quality Function Deployment (QFD) are used to transform the "Voice of the Customer" and prioritize where improvements are needed. Robust Design Assessment and Optimization methods, such as Taguchi, then provide the mechanism for identifying the process improvements. Statistical Process Control (SPC), an on-line manufacturing process, provides the means to hold these gains as well as to insure continuing quality improvement, through variability reduction. In the U.S., the emphasis on achieving a "Six Sigma" process capability has been evident in the electronics and propulsion sectors for at least the past five years and is now being emphasized for large scale complex systems, such as aerospace. (Ref. 14)

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

104 D.P. Schrage, D.N. Mavris

Figure 9. Quality Engineering Flow

To better understand the Hierarchical IPPD Process Flow illustrated in Figure 6, the identification of product/process metrics for design trade-offs at various levels of decomposition andrecomposition is provided in Figure 10. The right half product metrics, such as speed, power, weight, range, volume, productivity are familiar to most engineers, while the left half process metrics, such as life cycle cost, return on investment, etc. are not as familiar.

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

Integrated Product~Process Development Through Robust Design Simulation 105

Figure 10. Product/Process Metrics for Design Trade-Offs using an Overall Evaluation Criterion (OEC)

All of the process metrics involve cost/time relationships, as illustrated in Figure 11 for theoretical production (Ref.15). The relationships in Figure 11 can be used to discuss some of the recent manufacturing initiatives, such as lean manufacturing and just-in-time (JIT) manufacturing. As can be seen there is a split in the cost/time relationship depending on whether it is the "largest" or "smallest" production run. The intersection with the Cost/Time curve, in essence the learning Curve from Theoretical First Unit Cost (TFUC or T1), shows that the "largest run" takes more time but has the lowest cost/unit while the "smallest run" takes an opposite path. Reducing the TFUC and flattening out the learning curve are the essence of "lean manufacturing". By the same token the relationship between "Setup time" and "Setup cost" is what Toyota Production Systems attacked with JIT (Ref.16). In many manufacturing industries "Setup time" has been considered relatively fixed to handle cyclic variations in orders and to achieve Economic Batch Quantities (EBQs). Along with this assumption is that inventory is considered an asset, in order to be able to ramp up when necessary. Under the Toyota system, with its suppliers as an integral part of the production process, "Setup times" and the related "Setup costs" are driven toward zero and inventory becomes a liability, rather than an asset. Finally, Figure 12 illustrates how the Cost/Time curve can become a constraint curve for candidate manufacturing processes for use in design tradeoffs. As can be seen Process E lies outside the constraint curve, while Processes A - D fall within the constraint curve. Thus, if the product technology warrants the benefits in reduced weight, volume, etc. and can only be used with Process E, then a parallel manufacturing technology development program must be initiated to bring the manufacturing process into the feasible design space.

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

106 D.P. Schrage, D.N. Mavris

Figure 12. Cost/Time Constraint Curve

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

Integrated Product~Process Development Through Robust Design Simulation 107

An approach to modeling the Hierarchical IPPD Process Flow in Figure 6 and to evaluate the metrics and the Overall Evaluation Criterion (OEC) shown in Figure 10 is depicted in Figure 13 for an aircraft system. Illustrated are typical decomposition models, i.e. Aircraft Synthesis (Sizing), Finite Element Analysis (FEA), and recomposition process models, i.e. knowledge based system (KBS), component cost models, and a Top-Down Aircraft LCC model. These models were developed and exercised in a Ph.D. thesis, Integration of Design and Manufacturing for a HSCT, and highlighted in several journal papers and conference proceedings (References 17, 18, 19, and 20). A key element of this research was to convert the NASA/Georgia Tech Aircraft Life Cycle Cost Analysis (ALCCA), Figure 14, into a more process-based cost model, as illustrated in Figure 15. As can be seen in Figure 15 the weight- based Aircraft Manufacturing Costs module was replaced with a New Wing Production Module which included the capability to establish the cost/time relationships illustrated in Figure 11, using the NASA Knowledge Based System (KBS), CLIPS, to generate manufacturing heuristic input.

MULTI-LEVEL LCC MODEL Process Recomposition

ENGINEERING MODELS Product Decomposition

. . . . .

, ,, re-design ,, I declslon

c~176 1 T~176 ~ c e ~ Aircraft ~ cost performan req'd Inputs LCC Model �9

bottom-up wing cost estimate

labor rates Component learning curves Cost Modeling

t weights

labor hours 1 material costs KBS

I '" Process -r Modeling

Aircraft Synthesis (Sizing)

I wing

planform geometry

Finite Element Analysis

structural concepts alternative processes

cust. requirements perf. requirements

materials loads

Figure 13. Typical Models Used for Decomposition and Recomposition

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

108 D.P Schrage, D.N. Mauris

Figure 15. New ALCCA Wing Manufacturing Cost Module

It is noted that the ALCCA model in Figure 14 is more than a LCC model, i.e. an economic analysis model, as it includes the capability to assess cash flow analysis and the ability to assess price, as well as cost.

Before beginning further discussion on IPPD through RDS, the terms "affordability" and "robust design" should be defined. A f f o r d a b i l i t y , as used here, is associated with a benefit- c o s t ratio (BCR), which is used in economic analysis when economic resources are constrained and relates the desired benefits to the capital investment required to produce the benefits. This method of selecting alternatives is most commonly used by governmental

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

Integrated Product~Process Development Through Robust Design Simulation 109

agencies for determining the desirability of public works projects (Ref.1). A project is considered viable when the net benefits associated with its implementation exceed its associated costs. For the assessment and the selection of new aircraft or technologies for insertion into existing aircraft, the ratio may be more appropriately considered the system effectiveness to the system cost ratio or operational effectiveness to operational cost ratio, which has often been used in the military for Cost & Operational Effectiveness Analyses (COEA's). The term system effectiveness can be considered a function of the capability, dependability, and availability of the system; while the system cost should be the life cycle cost of the system (Ref.21). Robust design is defined in Reference 1, as the systematic approach to finding optimum values of design factors which result in economical designs with low variability. A slightly modified version of this definition is being used for the Office Naval Research (ONR) Affordability Science research program and has been defined as the systematic approach to finding optimum values of design factors which results in economical designs which maximize the probability of success. (Ref. 22)

As a result of this research effort a "Roadmap for Affordability" has been defined and is being implemented through the use of Robust Design Simulation (RDS), as illustrated in Figure 16. In the center box is the linkage between Synthesis & Sizing and Economic Life- Cycle Analysis, which has evolved from the primary iteration in the genetic IPPD Methodology illustrated in Figure 5 and discussed earlier. This approach thus provides the IPPD through Robust Design Simulation described in this chapter.

Figure 16. Roadmap to Affordability through RDS

As this linkage between Synthesis & Sizing and Economic Life-Cycle Analysis has been developed, Simulation of the Operational Environment has been included to address additional life cycle issues and constraints in the affordability assessment, as well as operational effectiveness. Inputs into this center RDS box come from three areas that will now be addressed.

From the left side comes Technology Infusion which must be handled through the use of improved modeling since most current Synthesis & Sizing models and Economic Life-Cycle Cost Analysis models are based on historical data and linear regression of this data, i.e. weight equations, drag polars, cost estimating relationships, etc. If the new aircraft or system is to be similar to the existing database then the current models are sufficient for synthesis and

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

110 D.P. Schrage, D.N. Mavris

economic analysis. However, if new technologies, either product or process are required for innovative or out-of-the-box designs then these historical databases must be replaced with more relevant data. Physics-Based Modeling is a way of bringing higher fidelity analysis (CFD, FEA, etc.), or experimental results, into the synthesis & sizing models and directly links disciplinary analysis and the science and technology (S&T) program into advanced design. Physics-Based Modeling is more applicable to product technologies in today's environment than it is to process technologies. Therefore, Activity and Process-Based Modeling based on heuristic type models, such as knowledge based systems (KBSs), must be developed to establish and provide the cost/time analysis discussed earlier and depicted in Figure 11.

There are two inputs from the bottom into the center box in Figure 16. The left one is Economic and Discipline Uncertainties, which indicate the need for probabilistic approaches. The fight input illustrates how the RDS can be used to address the Impact of New Technologies, to include Performance and Schedule Risk. Finally, the top inputs to the center box in Figure 16 illustrate that Design and Environmental Constraints must be addressed. The output from the use of RDS are Robust Solutions that result in attainment of multiple objectives to achieve Customer Satisfaction. A more detailed description of RDS is provided in Reference 23.

3. S U M M A R Y A N D C O N C L U S I O N S

Integrated Product/Process Development (IPPD) has been identified as a key element in future manufacturing systems. While some use of IPPD is being applied in industry and government; in reality, it can not be fully executed without a "new systems approach" methodology and the creation of a robust design environment for its implementation. This "new systems approach" methodology must capture, especially for complex systems, the key elements of the quality revolution, as well as the traditional systems engineering methods/tools. It must reflect the complex system design trade-offs that have to be addressed early in the design process, as well as take advantage of the information technologies that are creating the necessary computer integrated environment. This computer-integrated environment must provide for robust design simulation, where probabilistic approaches are used for both product and process design. Development of the "new systems approach" methodology, along with the creation of the accompanying robust design environment, is being prototyped as IPPD through RDS. A number of companies and government agencies are beginning to use and evaluate this prototype, which should help it mature and provide a foundation for the next generation agile manufacturing systems.

R E F E R E N C E S

1. Dieter, G.E., Engineering Design - A Materials and Processing Approach, Third Edition, McGraw Hill, Boston, MA (2000).

2. Hauser, J.R., and Clausing, D, "The House of Quality", The Product Development Challenge, A Harvard Business Review Book (1994).

3. Schrage, D.P., "Concurrent Design: A Case Study," Chapter 21, Concurrent Engineering - Automation, Tools, and Techniques, Edited by Kusiak, A., John Wiley & Sons I n c . , New York (1993).

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

Integrated Product~Process Development Through Robust Design Simulation 111

4. Technology for Affordability: A Report on the Activities of the Working Groups - Integrated Product~Process Development (IPPD), Simplified Contracting, and Dual-Use Manufacturing, The National Center for Advanced Technologies (NCAT), January (1994).

5. Integrated Manufacturing Technology Roadmapping (IMTR) Project, IMTR Project Office, URL: http://imtr.om!..gov (1999)

6. Wenger, E.C., and Snyder, W.M., "Communities of Practice: The Organizational Frontier," Harvard Business Review, January-February (2000).

7. Complexity Science, Santa Fe Institute (1999). 8. Advanced Engineering Environment- Achieving the Vision, Phase I Report, National

Research Council Committee on Advanced Engineering Environments, June (1999). 9. .Next Generation Manufacturinz (NGM): An Industry Driven Coalition, Appendix A,

Technologies for Enterprise Integration Roadmap, URL: http://imtr.ornl.gov (1999) 10. IMTR Technologies for Enterprise Integration Roadmap, URL: http://imtr.ornl.gov

(1999) 11. Schrage, D.P., "Technology for Rotorcraft Affordability Through IPPD," Nikolsky

Lecture, 1999 American Helicopter Society (AHS) Forum Proceedings, Montreal, CA, May 25 (1999).

12. Noble, J.S., and Tanchoco, J.M.A., "Design for Economics", Chapter 16, Concurrent Engineering: Automation, Tools, and Techniques, Edited by A. Kusiak, John Wiley & Sons, Inc. (1993).

13. Schrage, D.P., and Mavris, D.N., "Recomposition: The Other Half of the MDO Equation," Multidisciplinary Design Optimization- The State Of The Art, Edited by N.M. Alexandrov and M.Y. Hussaini, Society for Industial and Applied Mathematics (SIAM), (1997).

14. Aviation Week and Space Technology, January 1, 1999. 15. MIL-HDBK -727, Military Handbook: Design Guidance for Producibility, April 1984. 16. Harrison, A., Just-In-Time Manufacturing In perspective, The Manufacturing Practitioner

Series, Prentice Hall, 1992. 17. Marx, W.J., "Integrating Design and Manufacturing for the High Speed Civil Transport,"

Ph.D. Dissertation, Georgia Institute of Technology, Atlanta, GA, 1996. 18. Marx, W.J., Mavris, D.N., and Schrage, D.P., "Cost/Time Analysis for Theoretical

Aircraft Production", AIAA Journal of Aircraft, Vol 35, No.4, July-August, 1998. 19. Marx, W.J., Mavris, D.N., and Schrage, D.P., "A Hierarchical Aircraft Life Cycle Cost

Analysis Model," AIAA Paper 95-3861, Sept. 1995. 20. Marx., W.J., Schrage, D.P., and Mavris, D.N., "A knowledge-based system integrated

with numerical analysis tools for aircraft life-cycle design", Journal for Artificial Intelligence for Engineering Design, Analysis and Manufacturing, I2, 211-229, Cambridge University Press (1998).

21. Defense Systems Management College (DSMC) System Effectiveness Definition. 22. A Comprehensive Robust Design Simulation (RDS) Approach to the Integrated

Product/Process Development (IPPD) of Affordable Systems, Grant from the Office of Naval Research, Georgia Institute of Technology (1997-1999).

23. Mavris, D.N., Ban&e, O., and DeLaurentis, D.A., "Robust Design Simulation: A Probabilistic Approach To Multidisciplinary Design," Journal of Aircraft, Volume 36, No. 1, pp. 298-307 (1999).

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

This Page Intentionally Left Blank

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

113

D e v e l o p i n g t h e A g i l e E n t e r p r i s e

John Bessant, David Knowles, David Francis and Sandra Meredith

Centre for Research in Innovation Management, University of Brighton, Falmer, Brighton, BN!9PH, United Kingdom

The problem facing enterprises in the late twentieth century can be seen as the latest version of two long-standing puzzles to do with responding to demanding internal and external environments. Searching for solutions to these puzzles leads to investment in innovation - via R&D, technology transfer, etc. But evidence suggests that the key requirement is not solving the puzzle for one set of circumstances but in continually solving the problems as the puzzles mutate. This places emphasis on organisational capability - it is not what you know or what you can buy but how well you learn and adapt which is the key. We term this ' agility' - and this chapter explores the definition in terms of the 'dynamic capability' view of strategic management. It draws on case study research being carded out as part of a major UK programme of work looking at the development of agility in small and medium-sized manufacturing enterprises. It presents a reference model which seeks to explain and guide the development of agility within organisations.

1. I N T R O D U C T I O N

In the turbulent conditions characterising the new century it is clear that successful manufacturing firms will need to innovate. This is neither a new nor a surprising observation; the history of manufacturing is about creating new ways of producing and new things to produce. But much of the emphasis has been on seeing innovation as an occasional response - e i t h e r deploying new technology in a way which confers competitive advantage as a 'first- mover' or by responding quickly and effectively to demand signals - for lower prices, higher quality, greater choice, etc. Arguably the challenge of the current environment is one in which the nature of innovation needs re-examining; firms need not just to innovate but to do so continuously.

Dealing with turbulent and shifting environments requires a combination of strategic assessment of the nature and direction of change required and the ability to deploy innovative capacities to deal with it. Innovation in this sense does not have to be dramatic and radical in n a t u r e - although sometimes this is necessary. Most innovation is more concerned with incremental problem-solving- continuously improving things within an existing framework rather than rewriting the rules of the game. But the capacity for both is needed to survive; the key skill is one of constant re-configuration of internal knowledge resources to seize and defend competitive a quality which several writers call 'dynamic capability' .[ 1 ]

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

114 J. Bessant et al.

For this reason we see agility as the core strategic capability within the manufacturing organisation associated with being able to configure innovation (in product and process) on a continuing and pro-active basis. Such capability is increasingly needed in an environment w h e r e - as de Geus points out, the survival rate of firms which fail to learn and develop is worryingly low. [2] Much of the thinking about manufacturing strategy in the late 20 th century was dominated by assumptions about relatively stable conditions in which the main challenge was identifying clear market segments and focusing the manufacturing operations on meeting the needs of those segments as well as possible [3, 4]. But an emergent theme - highlighted by the regular 'Manufacturing Futures' survey amongst others - has been the shifting parameters and the decline in the ability of firms to 'trade-off' different competitive priorities [5]. Today's markets require responsiveness across a range of dimensions, and their requirements are likely to change again with increasing frequency. Consequently the challenge is less about maintaining or returning to equilibrium conditions than about managing in what is an essentially chaotic and unpredictable environment. This places considerable emphasis on learning and innovating capabilities within the organisation - what Hayes et al call 'dynamic manufacturing' [6].

2. T H E N A T U R E O F A G I L I T Y

Although used with increasing frequency, agility is a difficult concept to operationalise because it admits of many interpretations. The dictionary defines it as: '... having the facility o f moving quickly; quick, nimble, active...' (New Elizabethan Reference Dictionary, Newnes, London.) Agility is a theme much discussed in a variety of literature sources; examples include: �9 operations strategy and management where it appears in the context of organisations

trying to cope with uncertain and turbulent [7]. Here it is associated with flexibility in responding to market conditions and with the ability to change (or not) the manufacturing systems involved. This brings back into focus the discussion associated with the concept of 'flexible manufacturing systems'. These typically offer some combination of different kinds of f l e x i b i l i t y - in offering choice to customers, in seasonality, in speed of response, etc. Studies of FMS from the 1980s highlight two themes which are still relevant; first is the recognition of the multiple nature of solutions to the 'flexibility problem'. Different kinds of flexibility can be delivered via many configurations of equipment and organisation [8-10]. Second, solutions which are relevant at a particular time may become inappropriate at a later stage. (The example here of 'economic batch quantity theory is relevant here; although originally an appropriate response to the problems of flexibility in batch production it gave way in the face of new developments in set-up time reduction which openedup the possibility of significant batch size reduction). [ 11, 12]

�9 a theme of interest is that of 'mass customisation' - a concept which argues that firms should exploit new technologies and organisational forms to move towards a much more customer-specific offering [13, 14]. There are clear cases where this kind of solution is relevant, but we need to be careful to match the application of this approach with operating contingencies. Mass customisation represents one solution for a particular kind of firm, but others - for example, prototype producers or subcontractors - have always operated with a low volume/high customisation orientation and have developed alternative and appropriate solutions for their needs. Different firms operate at different points on the 'volume/variety' spectrum originally outlined by Hayes and Wheelwright [15].

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

Developing the Agile Enterprise 115

�9 a different perspective comes from the literature associated with small firms and clustering into sectoral or regional groupings which convey some form of collective efficiency, the argument here suggests that being quick on ones organisational feet may represent an alternative strategy to traditional views of scale economy [16, 1 7 ] . New forms of inter-firm co-operation are critical to this view and there is an emerging line of argument which sees agility as an emergent property of networks and clusters - rather than necessarily being a property of individual firms [18, 19]. This has particular significance for smaller firms; as one commentator put it, 'the problem for small firms is not that they are small, but that they are isolated'. Agile networks may represent a viable alternative model for dealing with this weakness; certainly the experience of clusters in highly competitive sectors like textiles, furniture and ceramics gives some support to this view [20, 21].

�9 much of the current discussion of agility centres on technological developments, especially those concerned with information and communications technologies. Here the strong influence of programmes like the DARPA and related US military projects in creating the concept of 'agility' can be seen; a good review of the 'technology enabled' route to agility can be found in the work of the US Agility Forum [22].

�9 another strand of relevant literature concerns organisational arrangements which support greater agility to help cope with uncertain and unpredictable environments. Discussion here ranges from strongly structural - for example, the work on 'fractals' and cellular organisation - to behavioural, where the role of teamworking, of learning and of employee involvement is particularly stressed [23-26]. In particular there is considerable discussion of the ways in which high involvement in 'kaizen' and similar programmes can increase flexibility and innovation in response [27-29].

�9 it is also important to mention the growing literature on 'lean thinking' in both enterprises and value streams [30]. A criticism of much of this is that the focus is often on the constant search for ways of eliminating waste from operations - in other words, 'doing what we always do but better'. The difficulty with this is that it neglects the proactive aspect of agility. It is not just a matter of getting lean and fit to respond to a challenging environment but also the ability to configure new and unexpected offerings for that environment.

Viewed in this way agile manufacturing is not a single solution to a particular set of problems associated with current conditions, but a capability to adapt and innovate on a continuing basis. Whilst advanced information and communications technologies can radically extend the range of innovative opt!ons open to firms, they are not in themselves agile. Similarly whilst lean production and its associated organisational arrangements representpowerful aids to improving performance, they too do not represent manufacturing agility. Rather it is the ability to configure and select from these and other options which offers potential strategic advantage.

3. D E V E L O P I N G M A N U F A C T U R I N G A G I L I T Y

If manufacturing agility is essentially an example of what Pisano and others call 'dynamic capability' then a keyquestion becomes that of how such capability can be developed within the firm [31]. The approach taken within our research has been to try and identify key behavioural r o u t i n e s - 'practices' - associated with agility and to develop an organisational development approach to auditing and extending capabilities in these [32].

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

116 J. B e s s a n t e t al.

One approach of value in this connection is that of reference models. In similar fashion to benchmarking, this approach involves providing a framework against which firms can position themselves and from this comparison identify directions and options for future development work. Examples of reference models include the Capability Maturity model of software development or the European Business Excellence Model [33, 34].

An important component of reference models is the use of two distinct dimensions - one concerning performance references and the other concerning what are sometimes called 'practice' references [35]. The former are concerned with result outputs - how does the organization perform (in terms of responsiveness, flexibility, high quality, etc.) with reference to an absolute or to industry/sector 'best standard'? This is often the focus of benchmarking research and provides external indicators of the extent to which agile behaviour is meeting the strategic challenges of the enterprise.

The second dimension, of practice, is essentially concerned with how that performance is arrived at. What are the particular organisational behaviours (and their supporting structures, systems and procedures) which contribute to good performance? Agility, as we have defined it above, involves various aspects of organisational behaviour and these can be scored with reference to real 'best in class' examples or to a notional 'best practice' model. Using reference models to enable organisational development is essentially a process of audit and review against the structured framework, followed by introduction of relevant changes and review of their impact. (We can take the analogy of an athlete in training as an illustration of this process. The strategic targets have to do with the highly specific objective of, say, a distance of 30m in the long jump - and by definition, not aiming for the high jump or the marathon - by 2000. The performance dimension assesses current performance - distance a c h i e v e d - and the gap to be closed. The practice dimension looks at the particular abilities contributing to overall fitness for long jumping (acceleration, aerodynamics, co- ordination, muscle tone, mental ability, e t c . ) - and the gap to be closed. From analysis of the gaps a development p r o g r a m m e - for example, working on diet, weight training, positive visualisation, e t c . ) - can be created).

4. T H E R E S E A R C H A P P R O A C H

The model described here has emerged from an 'action research' programme of work with a network of 10 small/medium-sized enterprises (SMEs) with an interest in developing agility. Extensive interaction with these firms has led to the development of a set of longitudinal case studies, the design and implementation of several interventions and the establishment of an experience-sharing 'learning network' which meets on a monthly basis.

The model 'best practice' framework has gone through several phases of development over the past two years and is still being tested and refined. In particular the validity of the model is at present based on 'face validity' - does it make sense of their experiences to the companies i n v o l v e d - and, via secondary sources, does it contain relevant insights from other research? Its use as an OD tool is not compromised by this WIP status but we recognise that further work needs to be done in the area of testing and validation. Table 1 indicates the key stages of development:

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

Developing the Agile Enterprise 117

T a b l e 1" K e y s t a g e s in t h e d e v e l o p m e n t o f the a g i l e r e f e r e n c e m o d e l Stage Version 1 - summer 1998

Version 2 - autumn 1998

Version 3 - spring 1999

Version 4 - the 'Manufacturing Agility Quotient' tool

Key elements Emphasis on agile 'practice' - what are the key behavioural routines and accompanying structures/processes which are associated with agility? First version based on 18 core factors, grouped roughly into 4 quadrants

- strategy, processes, people and linkages Based on feedback with companies the model was refined to 16 basic clusters of behaviours. Some attempt made to add performance dimensions, particularly those associated with 'agile' behaviour- for example, frequency of product innovation, speed of response, etc. Model further refined following pilot testing with 6 new companies as part of a London- based manufacturing improvement programme ('Made in London'). This involved using the tool as an OD resource and enabled the development of scaling system to facilitate scoring on the 16 core factors Based on further review of literature on relevant agility performance measures and on the pilot company responses. This version includes a 5 point scale on each of the 16 key areas, together with (for OD purposes) a self-assessment section identifying current and desired scores and priority rating for change.

Commentary Initial model used to capture insights from literature and begin testing ideas with companies in network.

Development was assisted by comparison with an existing benchmarking tool (Microscope) and identifying where changes would be required to reflect agility issues

This version is still targeted primarily as an OD aid but contains an attempt at a scaling framework on the 16 key dimensions. This scale is derived from literature and case examples and provides more extensive reference framework for thinking about agility within a particular organisation.

5. ' T H E A G I L E W H E E L '

D e v e l o p m e n t o f t h e m o d e l i n v o l v e d i d e n t i f y i n g g r o u p s or c l u s t e r s o f b e h a v i o u r a l r o u t i n e s - t h e s e m i - a u t o m a t i c set o f b e h a v i o u r p a t t e r n s w h i c h d e f i n e ' t h e w a y w e do t h i n g s a r o u n d h e r e ' - a s s o c i a t e d w i t h agility T h e s e r o u t i n e s c a n b e o b s e r v e d d i r e c t l y , a n d c a n b e i n f e r r e d f r o m t h e s t r u c t u r e s a n d p r o c e d u r e s o p e r a t i n g in the o r g a n i s a t i o n . F o u r k e y g r o u p s o f r o u t i n e s e m e r g e d as r e l e v a n t in t h e literature a n d in the e x p e r i e n c e o f t h e c a s e s t u d y f i n n s ; t h e s e are

c o n c e r n e d w i t h T h e f o u r m a j o r d i m e n s i o n s o f the r e f e r e n c e m o d e l are:

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

118 J. B e s s a n t et al.

Agile Indue M~e~ Facilities

\ I I = . . . . . . "

I X

l : ~ o p l e ~

Able IJl~:ision 1 2 u s ~

Insil~ht

S ~

Hid

�9 Agile Strategy - involving the processes for understanding the firm's situation within its sector, committing to agile strategy, aligning it to a fast moving market, and communicating and deploying it effectively.

�9 Agile Processes - the provision of the actual facilities and processes to allow agile functioning of the organization

�9 Agile Linkages - intensively working with and learning from others outside the company, especially customers and suppliers.

�9 Agile People - developing a flexible and multi-skilled workforce, creating a culture which allows initiative, creativity and supportiveness to thrive throughout the organization.

Each has four constituent routines associated with it, and for ease of presentation they are grouped as segments in a wheel.

In outline the 16 key routines identified in the model are given in table 2, together with relevant supporting references to literature in the field.

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

Developing the Agile Enterprise 119

Table 2: Dimensions of the 'Agile wheel' Key ability Supporting

references Underlying questions

la. Wide/deep scanning- active search behaviour

I I

[2, 36-39] Do you extensively study and evaluate state-of-the- m technologies / processes that could be useful to you? Do you track market and competitor developments and consider their possible impact on your manufacturing facilities?

lb. Strategic thinking- agility built into the planning process and content

[2, 3, 40-42] Is there a strategic planning process? Are manufacturing managers dedicated to agile strategies? Do decisions that affect the development of manufacturing increase agility (and reduce rigidity)?

lc. Strategy deployment- communication, commitment-building and alignment

[43-46] Are all teams and individuals in the manufacturing facility striving to adopt agile principles?

l d. Measuring- monitoring and measurement of relevant parameters (performance and practice) to drive improvement in agility

2a. Configuring flexibly - using technologies and practices which allow rapid and frequent reconfiguring

[33, 47-49]

[9, 30, 50- 53]

Do you understand what measurable goals you need to achieve in order to be a truly agile manufacturing organisation? Are you monitoring all relevant critical factors (for example, do you accurately measure the time taken to complete all key processes) for achieving agility? Are the results of these measures instantly available?

Are your production facilities (assets, equipment, systems etc.) inherently flexible and capable of rapid reconfiguration so that you can always complete any production task that may be required? Do you rapidly adopt technologies that help you to become more agile.

2b. Creating/acquiring and implementing new products - renewing rapidly and frequently the

. product/service offer .

[38, 54-58] Is your speed of implementation of new product development / improvement clearly superior to your rivals?

2c. Problem-solving- continuously and systematically and rapidly finding and solving problems

[59-63] Do problems get solved in hours not weeks?

2d. Informing and communicating- building awareness and sharing of key knowledge content in the organisation through information and communication management

3a. Benchmarking- constant and creative comparison with others across a range of relevant measures

3b. Understanding customers- behaviours which bring deep insight of customer needs and reactions

[ 13, 22, 24, 64]

[33, 35, 65, 66]

[67-71 ] [72].

Do your information systems allow all staff to know immediately the status of processes and work flows?

Do you extensively benchmark your production products, processes, and services against those of rivals in terms of speed, flexibility and capacity to meet customers' needs?

Do key production staff have direct contact with customers? Do all production staff know exactly what their customer wants?

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

120 J. B e s s a n t e t al.

3c. Aligning and developing suppliers- replicating and enabling learning around relevant agi!e capability throughout the value stream

3d. Networking - building and sustaining relevant complementary alliances outside the firm

4a. StructUring - creatng/recreafing appropriate organisational structures to enable agility

4b. Developing flexible human resources - multi-skilling and competence developing the people within the organisation 4c. Rapid decision-making

4d. Continuous learning - managing the knowledge creation, capture and sharing process at all levels

[22, 63, 72- 74]

[75-80]

[25, 81-861

[26, 87, 88]

[28, 84, 89, 90] [6, 63,90- 95]

Are your suppliers capable of delivering exactly what you want when you need it?

Do you have strong partnerships with other firms and organisations that provide support, opportunities and additional capabilities at all levels of the company as and when you need it?

Does the way you structure your production organisation enable things to get done quickly and flexibly, as well as supporting people taking initiatives to seize opportunities?

Do you have extremely extensive and flexible competencies in all staff in the production function?

Are decisions taken quickly but carefully?

Is everyone,' both individually and in teams, actively developing skills and learning continuously?

Since we are c o n c e r n e d with behavioural routines, each of these is expressed as a verb, i m p l y i n g a set o f active behaviours which t o g e t h e r create the capability to be agile in an uncertain environment. T h e s e define the 'practices' o f agility and are the things which an organisation can change - through training, structural interventions, capital investment, etc. T h e m o d e l has a n u m b e r of levels and each of the 16 m a j o r abilities can be subdivided further - for e x a m p l e , 'structuring' contains t h e m e s like t e a m w o r k i n g which represent particular ways o f achieving agility. (In the interview schedules and questionnaire instruments b a s e d on the m o d e l which we use in c o m p a n i e s we have increasingly tried to reflect this kind o f sub- division). A brief description o f each area is given below.

5.1 Agile Strategy

l a W i d e - D e e p S c a n n i n g - T r a c k i n g the external e n v i r o n m e n t A k e y principle in agility is the d e v e l o p m e n t o f awareness of external signals requiring a

response, and this places e m p h a s i s on m e c h a n i s m s for tracking the external environment. It involves not only market and c o m p e t i t o r analysis but also t e c h n o l o g y scanning and d e v e l o p m e n t o f an understanding of relevant social and political trends. A n o t h e r key e l e m e n t is the ability to explore the future d i m e n s i o n o f these variables through various forecasting and planning techniques.

R e s e a r c h has consistently shown that innovative firms are those which have a strong external orientation and which m a k e use of multiple m e t h o d s for scanning their e n v i r o n m e n t and p i c k i n g up even w e a k signals about relevant changes. [2, 36-39]

Ib Strategic C o m m i t m e n t Agility is not simply reactivity, n o r is it blind technological push. It is a strategic posture,

an approach which sees continuous innovation as a w a y of securing and maintaining

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

Developing the Agile Enterprise 121

competitive advantage. It involves processing the signals available from its scanning activities (what could we do?) and analyzing appropriate courses of action (what will we do?) based on the commitment of limited resources. Making this happen requires a clear understanding of the core resource base which can be deployed, and a deep understanding of the dynamics of the marketplace in which the firm is operating. It also requires a flexible approach to planning, such that possible futures can be translated into specific actions and resource commitments - but in such a way that these plans can be adapted or revised in the face of new information - what de Geus calls 'planning as learning'. [2, 3, 40-42]

lc. Full Deployment Having a clear (and flexible) manufacturing strategy is critical but it will only succeed if it

is communicated and understood deep within the organization. Central to the development of agility is the ability to deploy strategy quickly and effectively, breaking down key strategic goals into manageable and focused projects around which the resources of the firm can be aligned. In part this is a planning activity setting clear and shared objectives - but in part it is also a learning process, building an understanding within the firm and generating commitment to its strategic objectives. It is of particular relevance in underpinning high involvement of the workforce in innovative behaviour. [43-46]

Id. Agile Metrics Closely associated with the above is the ability to measure and direct activities through the

use of suitable metrics. Whilst many finns have strong financial measurement tools and systems, fewer have the necessary capabilities to monitor and manage other elements. Performance metrics are about measuring the operation of the whole system, which includes people, machinery, technology, logistics, marketing and financial and market environments - not in isolation, but in the way that each area interacts and which explores ways to maximize the synergy that occurs between the different elements. The underlying philosophy is one of measurement not for control but as an input to a process of continuous learning and organisational development. [33, 47-49]

5.2. Agile Processes

lla. Flexible Facilities Agility is concerned with the capability for rapid configuration and reconfiguration to suit

changing environmental conditions. For this reason there can be no single 'best' way for organizing manufacturing or for laying out the factory or for any other aspect of operations. Instead the aim is to develop flexibility and rapid changeover. At the physical level this is likely to involve an equipment philosophy which suits rapid rearrangement - either through physical relocation (e.g. putting machines on wheels) or reprogrammability- an option which current information technologies makes available.

But a more fundamental challenge lies in ensuring that ways of t h i n k i n g - mental models - about manufacturing operations are equally flexible. The principles of lean manufacturing are powerful and have had a major impact - yet in many ways they are simple. The nature of the 'revolution' in manufacturing which their application has brought about in recent years is more concerned with challenging and 'unlearning' principles laid down in the early days of mass production than with radically new concepts. Firms need to develop the capacity to

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

122 J. B e s s a n t et aL

challenge and adjust their mental models and the physical and operational systems which follow from them on a continuing basis. [9, 30, 50-53]

llb. Fast New Product Acquisition Shorter life cycles, demand for greater product variety and narrowing windows of market

opportunity, mean that fast new product development or acquisition, is an important element of competitive advantage. Within the agile organization emphasis is not placed on internal new product development alone, but includes the skill of recognizing what new products externally developed, are important and acquiring them as appropriate to the organization's needs. (This issue is particularly important for SMEs, who may not have the resources for in- house product development and may have to rely upon external acquisition to develop their product line or services).

Inevitably this poses challenges for the behavioural routines, systems and structures within the firm. Agility in this area needs characteristics like empowered cross-functional teams, devolved responsibility, parallel working, early involvement of multiple functions, clear project management structures, systems and responsibilities, phased risk management systems and the capacity to review and learn from projects. [38, 54-58]

llc. Rapid Problem Solving In relatively stable environments manufacturing becomes something which can be

standardized and managed by procedures - 'doing it by the book'. This was a strong feature of the original mass production philosophy characterized by Ford's early factories and in the ideas of Frederick Taylor. But in uncertain and turbulent environments the requirement shifts from being able to predict or forecast to being able to respond quickly and to solve problems rapidly and creatively. This ability requires an embedded approach to finding and solving problems systematically and the capacity to learn and capture knowledge such that the same problems are not repeatedly solved. [59-63]

lid. Rich Information Systems Free flows of information throughout the organization allow for more effective devolution

of decision-making- essentially passing control to 'the sharp end' and enabling fiat and responsive organisational structures. Within an agile organization the role of middle managers becomes more important in line with the increasing number of decisions they are required to make. But a reliable decision can only be made when the context within which the decision is being taken is known to the manager/decision maker. This places considerable emphasis on the design of information systems which enable rapid communication (within and increasingly between firms) but which also allow for effective knowledge capture and sharing; it is why information technology remains one of the key enabling resources in developing agility. [ 13, 22, 24, 64]

5.3. Agile Linkages

Ilia Extensive Benchmarking By its nature agility is about being in a constant state of preparedness for change - but to

enable this requires a continuing flow of information about positioning and about the availability of potential external linkages. Being aware of competitors, or markets, of technological developments, etc. is critical to recognizing opportunities for change (see l a)

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

Developing the Agile Enterprise 123

and being able to identify potentially fruitful linkages and alliances is an important complement to this. Agile organisations make extensive use of external linkages but this implies the capability to recognise with whom such linkages can be built and from whom learning can take place. For this reason a continuing search and monitoring process is needed to build and maintain such environmental maps. [33, 35, 65, 66]

Illb. Full Customer Insight Innovation research consistently shows the importance of getting close to the customer and

identifying and understanding their needs. At the limit this may involve active participation of users in the design and development process. Agile organisations make extensive use of multiple approaches to get close to key customers, work with lead users and also to pick up emerging but not yet critical trends - something to which Christenson's work has drawn attention. US research views as a genetic agility issue the developing and sustaining of loyal relationship with customers to a deep level [71]. This relationship transcends product technology cycles, ascertaining unarticulated needs, using emerging electronic commerce effectively, integrating intra-enterprise information systems, developing and employing a customer knowledge base and developing more responsive and more robust logistic and distribution system.

Importantly agility is not simply about response however fast and effective that is. It is also about proactive deployment of innovative c a p a b i l i t i e s - at the limit providing customers with solutions even before the customers know what their needs are [67-71 ] [72].

lllc. Aligned Suppliers One of the key areas of development over the past twenty years has been in the area of

supply chain management. Originally born out of a recognition that traditional models were often confrontational and based on 'win-lose' outcomes, the emerging literature began to argue for closer and more co-operative relationships. Experience with supply chain management and development suggests that much more can be gained through working towards integrated development of agility within the entire value stream and through developing a learning and continuous improvement capability at the inter-firm level. The principles of the 'extended', 'virtual' or 'boundaryless' enterprise depend critically on making the transition towards such new relationships. [22, 63, 72-74]

llld. Performing Partnerships Perhaps the most distinctive characteristic of the 'new' model for manufacturing is the

recognition of the importance of seeing the firm as part of a system rather than in isolation. Networking and co-operation offer even small firms significant opportunities for improving competitive performance, and the experience of a number of industrial clusters supports this view. Italian furniture makers, for example, have dominated the export league table for many years, yet the average firm size is less than 20 employees. Their success - which is mirrored in many other examples - c o m e s through developing co-operative relationships into what economists have come to term 'collective efficiency'. Agile organisations make extensive use of external linkages of this k i n d - in resource sharing, in access to technology or markets, in shared risk ventures, etc. [75-80]

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

124 J B e s s a n t e t al.

5.4. Agile People

IVa. Adaptable Structures In keeping with the emphasis on reconfigurability (2a) it follows that there is unlikely to be

a single 'best' organization design for firms pursuing this approach. Instead there is a need to develop flexibility in the ways in which manufacturing can be organized and co-ordinated. Whilst there may be underlying archetypes around which such configuration can take place there is growing recognition of the need to explore new forms. In particular some of the principles of what Morgan calls 'holographic design' (in which the functions of the whole organization are replicated in its parts) are becoming a key focus for e x p e r i m e n t - giving rise to concepts like 'fractal' organisations. Ideally the agile organization will have the "organisational flexibility to adopt for each project the managerial vehicle that will yield the great competitive advantage." [75]. The form this takes will be contingent on the circumstances in a moment in time. For example, a specific project may well require the participation of an internal cross-functional project team supported by both suppliers and customers. For new product development, it may require a collaborative venture engaging with other interested companies, or even the formation of virtual enterprises in order to pool people skills and competencies. [25, 81-86]

IVb. Multi-skilled People- agile workforce Pfeffer and others have argued persuasively for the importance of human resource

practices in contributing competitive edge. High involvement and commitment on the part of the people within an organization coupled with the development of their skills and capabilities offers a powerful problem-finding and solving 'engine' with which to tackle the challenges of an uncertain environment and through which to secure rapid and effective implementation. There is increasing recognition that new forms of organization at both intra- and inter-firm level and new technologies have shifted the emphasis from capital intensity to knowledge intensity as a source of competitive advantage. But implicit in this is a new role for human resources as important assets - not as pairs of hands within the factory but as creative and flexible knowledge-workers. This places considerable emphasis on developing and retaining such resources. [26, 87, 88]

IVc. Able Decision Making The integrated organization where rich information systems allow information to flow

throughout the company, enables employees to be able and willing to take decisions. Continuous workforce education and continuous growth in the quality of the workforce must be considered as a long-term investment as part of developing a decision support system. It is becoming a p p a r e n t from research that able and frequent decision making is a core characteristic of the agile organization in line with a rapidly changing business environment. Sharing knowledge across a broader base of employees will facilitate better decision making. [28, 84, 89, 90]

IVd. Continuous Learning With the increasing emphasis on knowledge as the basis for competitiveness comes a

recognition that learning is probably one of the core processes which a firm has to manage. According to Senge [69] "the rate at which organisations learn may become the only sustainable source of competitive advantage". Development of learning capability is not

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

Developing the Agile Enterprise 125

s i m p l e - it requires a combination of training and development at the level of individuals (developing learning skills), supporting structures and processes (for example, for problem finding and solving, for strategic direction of learning activities through policy deployment and for knowledge management) and the ability to maintain this pattern of behaviour across and between organisations. [6, 63, 90-95]

6. USING T H E M O D E L

Each of the above elements represents behaviours which the organisation must carry out if it is to be agile; the question is the extent to which they are well or weakly developed. Agile capability is not so much a function of being good at any one of these as an all-round capability. For example, an organisation which has weak capability in terms of deploying its strategy throughout the organisation is unlikely to be able to achieve its objectives, even if it can define them clearly. Equally one which has rapid product development capabilities will only succeed if it can link these to deep understanding of customer needs - otherwise it will rapidly develop the wrong products.

As we have shown it is possible to map the dominant themes in the literature on to this model, and to show how their relative emphasis is linked to one or more quadrants. For example, the W-driven views of agility relate strongly to quadrant 2 and 4 but less to the organisational quadrant 3. By contrast the socio-technical literature emphasizes quadrant 3 behaviours whilst the networks/clusters dominates in quadrant 4.

In order to use such a model to help enable the development of agility we need to have some dimensions along each of these characteristics related to strong or weak performance. Our research work at present is focused on trying to introduce such measures - and also to identify enablers of progress along each dimension. For example, in the case of 'continuous improvement' the ideal is clearly one in which every member of the organisation is involved in actively seeking out problems, solving them and sharing the resulting learning with others. The r e a l i t y - for most firms - is much patchier, with varying levels of development and performance. Research has enabled the development of a detailed 'road-map;' for the evolution of CI capability and identified a range of specific resources which can enable progress in particular stages of the journey [Bessant, 1997 #570]. Similar approaches have been used in the development of project management capabilities around the difficult theme of software development [34].

7. PERFORMANCE DIMENSIONS

So far the discussion has been around those practices which are associated with agility. But we also need to consider the performance dimension in our reference model. The extent to which agile practices actually contribute to competitive advantage will depend on how well they re aligned to strategic objectives. For example, efforts to develop agile practice which particularly emphasize speed of response may not be helpful if the particular environment is one in which quality or variety are the key 'order-winning' factors. For this reason it is difficult to specify a genetic set of performance indicators but instead to identify a set of relevant measures which are configured in the light of strategic factors. These include: �9 Speed of response/time compression �9 Volume flexibility �9 Variety

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

126 J. Bessant et al.

�9 Frequency of product innovation �9 Time to market for new products - concept to cash cycle

8. S U M M A R Y

Agility is not a new i d e a - but it is essential for survival in the emerging global competitive environment. Possession of resources will matter far less in determining strategic advantage than the ability to configure and reconfigure resources rapidly. As we move towards more network-based models so ownership of resources becomes less important than knowing where to access them and how to manage the relationships within the network.

There is no doubt that new tools and techniques have much to offer in helping firms develop a g i l i t y - for example, the potential of information and communication technologies for facilitating global networking and 'virtual companies' has only begun to be exploited. But such tools, no matter how sophisticated, will not be sufficient to create agility; experience with earlier generations of flexible technologies teaches us that they only work when integrated into the rest of the business and used within a clear strategic framework [Voss, 1986 #66; Bessant, 1993 #284].

Agility does offer a route to strategic competitive advantage, but this comes from not only reacting quickly and appropriately to demands from the environment but also in pro-active behaviour, trying to change and shape the rules of the game. Capturing strategic advantage depends on having a particular firm-specific 'edge' which others find hard to emulate - rather than simply following the fashion. The big advantage in agility lies not so much in any particular solution at any time (since these can always be licensed, copied or stolen) but rather in the internal capabilities which make the creation of such solutions possible. This dynamic capability will be at the heart of the 'knowledge-based' learning organisations of the future.

One last point concerns firm size. Whilst much of the twentieth century has been dominated by the experience of large organisations, and the models which they used to achieve strategic advantage the pattern is changing. Agility depends less on size or resources than on the ability to move and change quickly and continuously. For these requirements big may not be b e a u t i f u l - and it may even represent a positive barrier. In a world where networking enables access to knowledge and resources, the potential for agile smaller firms is considerable.

But developing such capability is not a simple process, as the above model suggests. There are multiple dimensions to agile capability and all need to be addressed through a process of sustained organisational learning. Whilst frameworks and reference models can help, the internal commitment to and management of the learning process should be high on the strategic agenda for any organisation concerned with becoming more agile. This is challenging since one of the lessons about the agile approach is that it involves considerable 'unlearning' - letting go many of the old ways in which the organisation worked in the past.

R E F E R E N C E S

Teece, D., G. Pisano, and A. Shuen, Dynamic capabilities and strategic management, 1992, University of Berkeley. de Geus, A., The living company. 1996, Boston, Mass: Harvard Business School Press. Hill, T., Manufacturing strategy. 2nd ed. 1993, London: Macmillan. 230.

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

Developing the Agile Enterprise 127

9. 10.

11. 12.

13.

14.

15.

16. 17. 18.

19.

20.

21.

22.

23.

4 .

25. 26.

27. 28.

29.

30.

Skinner, W., Manufacturing in the corporate strategy. 1978, New York: John Wiley. De Meyer, A., Report on the Global manufacturing Futures survey,. 1998, INSEAD: Fontainbleu. Hayes, R., S. Wheelwright, and K. Clark, Dynamic manufacturing: Creating the learning organisation. 1988, New York: Free Press. Slack, N., The manufacturing advantage: Achieving competitive manufacturing operations. 1992, London: Mercury. Ettlie, J., Taking charge of manufacturing. 1988, San Francisco: Jossey-Bass. Tidd, J., Flexible automation. 1989, London: Frances Pinter. Bessant, J., Managing advanced manufacturing technology: The challenge of the fifth wave. 1991, Oxford/Manchester: NCC-Blackwell. Suzaki, K., The new manufacturing challenge. 1988, New York: Free Press. Monden, Y., The Toyota Production System. 1983, Cambridge, Mass.: Productivity Press. Boynton, A., B. Victor, and B. Pine, New competitive strategies: Challenges to organisations and information technology. IBM Systems Journal, 1993.32(1): p. 40- 64. Pine, B.J., Mass customisation: The new frontier in business competition. 1993, Cambridge, Mass.: Harvard University Press. 333. Hayes, R. and S. Wheelwright, Restoring our competitive edge: Competing through manufacturing. 1984, New York: John Wiley. Best, M., The new competition. 1990, Oxford: Polity Press. Piore, M. and C. Sabel, The second industrial divide. 1982, New York: Basic Books. Grandori, A. and G. Soda, Inter-firm networks: Antecedents, mechanisms and forms. Organization Studies, 1995.16(2): p. 183-214. Nohria, N. and R. Eccles, Networks and organisations:Structure, form and action. 1992, Boston: Harvard Business School Press. Nadvi, K., The cutting edge: Collective efficiency and international competitiveness in Pakistan,. 1997, Institute of Development Studies. Martinussen, J., Elements of success in cluster policies : from a practitioner's point of view. 1995, Worcester: Business Net Ltd. Preiss, K., S. Goldman, and R. Nagel, Co-operate to compete: Building agile business relationships. 1996, New York: Van Nostrand Rheinhold. Holti, R., J. Neumann, and H. Standing, Change everything at once: The Tavistock Institute's guide to developing teamwork in manufcaturing. 1 9 9 5 , London: Management Books 2000. Tranfield, D. and e. al., Teamworked organisational engineering: Getting the most out of teamworking. Management Decision, 1998.36(6). Warnecke, H.-J., The fractal company. 1992, Berlin: Springer-Verlag. Pfeffer, J. and J. Veiga, Putting people first for organizational success. Academy of Management Executive, 1999. 13(2): p. 37-48. Imai, K., Kaizen. 1987, New York: Random House. Boer, H., et al., CI changes: From suggestion box to the learning organisation. 1999, Aldershot: Ashgate. Bessant, J., Developing continuous improvement capability. International Journal of Innovation Management, 1999.2(4): p. 409-429. Womack, J. and D. Jones, Lean thinking. 1997, New York: Simon and Schuster.

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

128 J Bessant et al.

31.

32.

33.

34.

35. 36.

37. 38.

39.

40.

41. 42. 43.

45. 46.

47.

48.

49. 50.

51. 52.

53.

54.

55.

56.

Teece, D. and G. Pisano, The dynamic capabilities of firms: an introduction. Industrial and Corporate Change, 1994.3(3): p. 537-555. Pentland, B. and H. Rueter, Organisational routines as grammars of action. Administrative Science Quarterly, 1994. 39: p. 484-510. Chiesa, V., P. Coughlan, and C. Voss, Development of a technical innovation audit. Journal of Product Innovation Management, 1996. 13(2): p. 105-136. Paulk, M., et al., Capability maturity model for software, . 1993, Software Engineering Institute, Carnegie-Mellon University. Voss, C., Made in Britain,. 1994, London Business School. Carter, C. and B. Williams, Industry and technical Progress. 1957, Oxford: Oxford University Press. Jantsch, E., Technological forecasting in perspective. 1980, Paris: OECD. Thomas, R., New product development: Managing and forecasting for strategis success. 1993, New York: John Wiley. Van de Ven, A. and G. Raghu, Innovation and industry development: The case of cochlear implants, in Research on technological innovation, management and policy, R. Burgelman and R. Rosenbloom, Editors. 1993, Jai Press: Greenwich, Conn. Prahalad, C. and G. Hamel, Competing for the future. 1994, Boston, Mass.: Harvard University Press. Francis, D., Step by step competitive strategy. 1994, London: Routledge. Voss, C., Manufacturing strategy. 1992, London: Chapman and Hall. Shiba, S., A. Graham, and D. Walden, A new American TQM; Four practical revolutions in management. 1993, Portland, Oregon: Productivity Press. 565. Akao, Y., ed. Quality function deployment- Integrating customer requirements into product design.. 1990, Productivity Press: Cambridge, Mass. Smith, S. and D. Tranfield, Managing change. 1990, Kempston: IFS Publications. Bessant, J. and D. Francis, Developing strategic continuous improvement capability. International Journal of Operations and Production Management, 1999. 19(11). Garvin, D., How the Baldrige award really works. Harvard Business Review, 1991 (November/December): p. 80-93. Kaplan, R. and D. Norton, Using the balanced scorecard as a strategic management system. Harvard Business Review, 1996. January-February. Deming, W.E., Out of the crisis. 1986, Cambridge, Mass.: MIT Press. Shingo, S., A revolution in manufacturing: the SMED system. 1983, Cambridge, Mass.: Productivity Press. Senge, P., The fifth discipline. 1990, New York: Doubleday. Bessant, J. and J. Buckingham. Beyond substitution: organisational implications for successful use of integrated technologies, in A flexible future? Prospoects for employment and organisation in the 1990s. 1989. Cardiff Business School. Wickens, P., The road to Nissan: Flexibility, quality, teamwork. 1987, London: Macmillan. Wheelwright, S. and K. Clark, Revolutionising product development. 1992, New York: Free Press. Cooper, R., Third-generation new product processes. Journal of Product Innovation Management, 1994. 11(1): p. 3-14. Bessant, J. and D. Francis, Implementing the new product development process. Technovation, 1997.17(4): p. 189-197.

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

Developing the Agile Enterprise 129

57.

58.

59. 60.

61.

62.

63.

64.

65. 66. 67.

68. 69.

70.

71.

72. 73.

74.

75.

76.

77.

78.

79. 80.

81.

82.

Smith, P. and D. Reinertsen, Developing products in half the time. 1991, New York: Van Nostrand Reinhold. Stalk, G. and T. Hout, Competing against time: How time-based competition is reshaping global markets. 1990, New York: Free Press. Francis, D., Effective problem solving. 1990, London: Routledge. Sirkin, H. and G. Stalk, Fix the process, not the problem. Harvard Business Review, 1990. July/August: p. 26-33. Taylor, F., The principles of scientific management. 1947: Harper and Row (original published in 1911). Duguay, C., S. Landry, and F. Pasin, From mass production to flexible~agile production. International Journal of Operations and Production Management, 1997. 17(12): p. 1183-1195. Leonard-Barton, D., Wellsprings of knowledge: Building and sustaining the sources of innovation. 1995, Boston, Mass." Harvard Business School Press. 335. Goldman, S. and R. Nagel, Management technology and agility; the emergence of a new era in manufacturing. International Journal of Technology Management, 1993. 8(1/2). Miller, J. and et.al., Benchmarking global operations. 1992, Homewood, Ill.: Irwin. Oliver, N., Benchmarking product development,. 1996, University of Cambridge. Shillito, M., Advanced QFD: Linking technology to market and company needs. 1994, New York: John Wiley. Von Hippel, E., The sources o f innovation. 1988, Carnbrdige, mass.: MIT Press. Rothwell, R., Successful industrial innovation: Critical success factors f o r the 1990s. R&D Management, 1992. 22(3): p. 221-239. Van de Ven, A., H. Angle, and M. Poole, Research on the management o f innovation. 1989, New York: Harper and Row. Christenson, C., The innovator's dilemma. 1997, Cambridge, Mass.: Harvard Business School Press. Lamming, R., Beyond partnership. 1993, London: Prentice-Hall. Kaplinsky, R., J. Bessant, and R. Lamming, Using supply chains to diffuse 'best practice',. 1999, Centre for Research in Innovation Management: Brighton. Harland, C., Supply chain management: Relationships, chains and networks. British Journal of management, 1996.7(March): p. 863-880. Schmitz, H., Collective efficiency:Growth path for small-scale industry. Journal of Development Studies, 1995.31(4): p. 529-566. Schmitz, H., Collective efficiency and increasing returns, . 1997, Institute of Development Studies, University of Sussex. Humphrey, J. and H. Schmitz, The Triple C approach to local industrial policy. World Development, 1996.24(12): p. 1859-1877. Meade, L., D. Liles, and J. Sarkis , Justifying strategic alliances and partnering: a prerequsite for virtual enterprising. Omega, 1997.25(1). Baden-Fuller, C. and M. Pitt, Strategic innovation. 1996, London: Routledge. Arnold, E., et al., Strategic planning in Research and Technology Institutes. R&D Management, 1998.28(2): p. 89-100. Mintzberg, H., The structuring of organisations. 1979, Englewood Cliffs, N.J.: Prentice-Hall. Morgan, G., Images oforganisation. 1986, London: Sage.

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

130 J. Bessant et al.

83.

84.

85.

86.

87.

88.

89.

90.

91.

92.

93.

94.

95.

Coyne, W. Building the innovative organisation, in The UK Innovation Lecture. 1996. London: Innovation Unit, Department of Trade and Industry. Leonard-Barton, D., The organisation as learning laboratory. Sloan Management Review, 1992. 34(1): p. 23-38. McCloughlin, I. and M. Harris, Innovation, organisational change and technology. Management of Technology and Innovation, ed. J. Bessant and D. Preece. 1997, London: International Thomson Business Press. Smith, S., et al., Factory 2000: Organization design for the factory of the future. International Studies of Management and Organisation, 1992.22(4): p. 61-68. DTI, Competitiveness through partnerships with people,. 1997, Department of Trade and Industry: London. Teece, D., Capturing value from knowledge assets: The new economy, markets for know-how, and intangible assets. California Management Review, 1998.40(3): p. 55- 79. Berger, A., Continuous improvement and kaizen: standardisation and organisational designs. Integrated Manufacturing Systems, 1997.8(2): p. 110-117. Garvin, D., Building a learning organisation. Harvard Business Review, 1993. July/August: p. 78-91. Bessant, J. and S. Caffyn, Continuous improvement and organisational learning, in Knowledge, Technology and Innovative Organisations, J. Butler and A. Piccaluga, Editors. 1997, Edizione Angelo Guerini i Associati SpA: Milan. Bessant, J. Developing learning networks, in 2nd IPSERA conference on strategic purchasing and supply. 1998. London. Pedler, M., T. Boydell, and J. Burgoyne, The learning company: A strategy for sustainable development. 1991, Maidenhead: McGraw-Hill. Pisano, G., Knowledge, integration and the locus o f learning: An empirical analysis of process development. Strategic Management Journal, 1994. 15: p. 85. Prokesch, S., Unleashing the power o f learning. Harvard Business Review, 1997. September/October: p. 147-168.

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

131

T o w a r d s B u i l d i n g o f K n o w l e d g e - B a s e in I n d i a n C o r p o r a t i o n s : S o m e S t r a t e g i c D i r e c t i o n s

R. P. Mohanty

Vice President, Human Resources Division The Associated Cement Companies Ltd., Mumbai-400020 FAX: 0091-22-2080076; E-mail: [email protected]

1. I N T R O D U C T I O N

India as a sovereign democratic republic during the last half-century has made very significant progress in political front. Democracy has matured. Economic development/progress has taken place, but the progression curve is not similar to any other developed democratic nation. There are myriad of reasons for slow economic progression. Indian corporate sector has already entered into the process of large-scale liberalization and globalization. This process is in inexorable and irreversible. It is not the purpose of this paper to discuss the historical background of Indian slow growth. The intention here is primarily to elaborate only "why, what and how" of building the knowledge-based corporate sectors in the ever expanding competitive landscape in a boundaryless world. The growing prominence of economic liberalization and accelerating change in the environment of Indian organizations are compelling to renew the existing knowledge base and acquire new knowledge to greatest strategic effect of profound growth; because the knowledge as well as the knowledge systems are important in shaping social outcomes. The new millenium demands the coexistence of creativity and productivity i.e. value creation as well as maintenance. In post capitalistic economy, which is termed as knowledge based economy, wealth flows to those who can develop, direct and acquire knowledge. Adams [1] pointed out that India needs to redirect its attentions towards education-knowledge building i.e. enhancing intellectual capital. Such a view according to this author is very critical, since, the pursuit of knowledge building requires that corporations allocate adequate financial resources and faceup to the relevant changes. The truth of organizational knowledge building and thereby formation of intellectual capital depends on a very complex proposition that how do we envision the 21 st century corporations and the organic changes in the associated work systems and co-evolving participative style of human resource development and management. Given the current socio-economic-political climate, many corporations have expressed the view that the existing knowledge base is entirely inadequate for innovation and improvement in sustaining their competitive potential [2]. Since innovation and improvement require sustained investment in human resources [3], corporations and educational institutions are

required to play a central role in the process of knowledge building. Our intentions in this paper is three-fold:

�9 To understand the universal background and prepare the Indian foreground for knowledge building

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

132 R.P. Mohanty

�9 To discuss the various institutional modalities of knowledge building, and

�9 To show how one can develop a strategic perspective to critical role profiling, which may lead to better and more practical insights into human capital formation and upgradation.

2. E N V I S I O N I N G T H E F U T U R E O F O R G A N I Z A T I O N S

The most exciting view in any day is the view of tomorrow - the view o f the future. What will it be like? Will it be a return to the stability of earlier years? The author has put these questions to a very large number of Indian corporate executives in the recent past, while interacting with them in several management development programs. The answer is definitely no. Each one of us, who are engaged in the affairs of the world has realized that tomorrow will be a world of greater complexity, fiercer competition, rapidly accelerating change. We Will encounter dramatic changes in our work place and work force as well as in the demands we will place on them. There will be radical changes: in the number o f changes, the content o f changes, and the speed o f changes. As we move into the next century, all organizations will confront a completely new set of changes that will represent major discontinuities. These discontinuities will not be autonomous. They will take place both in human and organizational contexts. Through them we can anticipate improvements to our quality of life and further advances to the level of modem civilization. They will manifest as cultural artifacts.

Organizations of the future will make a quantum paradigm shift:

from manual work to knowledge work

from the efficient motion of work to value innovation

from closed system to more permeable and flexible boundaries

from fat to lean: the new staffing principle

from vertical command to horizontal processes: the new organization

from homogeneity to diversity: the new work force

from status and command rights to competencies and relationships: the new power source

from authoritarianism to empowerment: the new pattern o f decision making

from ritualistic performance assessment to relativistic benchmarking

from organizational capital to reputation capital: the career asset

from single career path to multiple career path

from single loop reactive learning to double loop proactive and interactive learning

from experience based mundane actions to knowledge based innovations and contributions

from compliance to commitment, vulnerability, and accountability

from stand-alone competing to simultaneous strategic collaborating and competing

from the relatively stable hegemony of financial factor-ruled to the dominance o f knowledge as the driving force

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

Some Strategic Directions 133

These shifts will be all permeating in a new competitive landscape configured by technological, economic, managerial, political, social, and ecological sectors etc. The new organizations will be more complex places than they have been. They will certainly be less predictable, less measurable, less amenable to the traditional disciplines of knowledge. According to Handy [4], we cannot reject the future because it is uncomfortable. The world competitiveness report [5] establishes that: C o m p e t i t i v e n e s s = ( c o m p e t i t i v e a s s e t s ) x ( c o m p e t i t i v e p r o c e s s e s ) . . . . (1) From such an identity, we derive some propositions:

Competitive success can only be harnessed from exceptional human capital, possession o f excludable knowledge assets, and the creation o f a generative environment f o r innovation. The competitiveness o f an organization rests on human resource as the most important asset (both tangible and intangible). The market economy will die in its infancy, i f it is not grounded in strong human resource development processes~systems.

~" Those organizations, which will recognize the need f o r investment in human resource and gaining access to and absorbing new knowledge and simultaneously act with a fast pace, will be the winners in the corporate business Olympic

>" Those organizations, which can rethink fundamentally their human resources management models to meet the new requirements, will establish early breakpoints in business parameters.

According to Sternberg et al [6], there are basically six resources required for the total development of human resource. They are:

Knowledge Intellectual abilities Thinking styles Motivation Personality Environment

The organizations of the future will require renewed investment in human resources and formulating new policies, new modalities of learning, and innovative motivational tools. Bill Gates, head of the 21 st century organization-Microsoft, has said that the only security his employees have is their knowledge and he supports their education to maintain and improve the knowledge base. President Bill Clinton has also expressed a similar view for the American people. The increasingly dynamic nature of competition during the last two decades has made the improvements of organizational learning and the developments of more effective methods for managing knowledge a crucial but predominant issue of contemporary organizations. Mascitelli [7] mentions that traditional competitiveness factors cannot provide a sustainable advantage in a highly dynamic, knowledge-driven global marketplace. The scarcest resources in any organization are the performing people endowed with knowledge. Knowledge within the organization is living, developmental, and synergistic, if it is applied and internalized in organizational activities. Barney [8] is of the opinion that the most fundamental criterion for sustainable competitive advantage is the building of economically valuable knowledge base of a company: both tacit and explicit. Morgan [9] stated that in the new economy-knowledge based economy managers should 'find ways of developing and mobilizing the intelligence, knowledge and creative potentials of human beings at every level of the organization." Knowledge is the only resource, which can only guarantee long-term sustainable advantage. Knowledge is at the heart of an organization for creating value. Knowledge originates in human beings. It is insight, judgment, and innovation, based on

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

134 R.P. Mohanty

experiences, heuristics, passions, and neural connections. It provides the intellectual frameworks, conceptual models, governing ideas and ideals that allow a company's human resources to identify opportunities, to make strategic and tactical decisions and generate values for the stakeholders. According to Handy [4], knowledge is the principal assets that reside in the heads and hands of the people in the organizations. Knowledge comprises strategy, practice, method, or approach. It has become the most important factor of production in contemporary social and economic life. The knowledge-based view of the firm "can yield insights beyond the production function and resource-based theories of the firm by creating a new view of the firm as dynamic, evolving, quasi-autonomous system of knowledge production and application"[10]. Today, knowledge per se is not the power but the ability to deploy and use knowledge for the welfare of the human system is recognized as power [11]. Bontis [12] is of the similar opinion that knowledge and power are correlated very strongly in a modem and change-embracing organization. The scarcest resources in any organization are performing people endowed with knowledge. Knowledge within the organization is living, developmental and synergistic, if it is applied and internalized in organizational activity [11]. Knowledge management caters to the critical issues of organizational adaptation, survival and competence in face of increasingly discontinuous environmental change. Essentially, it embodies organizational processes that seek synergistic combination of data and information processing capacity of information technologies, and the creative and innovative capacity of human beings. Sarvary [13] is of the opinion that knowledge management is a business process through which firms create and use their institutional or collective knowledge. Knowledge has its greatest value when it is transparent and transferable: powerful assets to amplify our very latent capacity to learn, create, and innovate.

3 R E V I E W I N G T H E W O R K SYSTEMS

Work systems are the bedrock of any human endeavor. As the essence of a corporation's philosophy for achieving success they provide a sense of unifying direction for all employees and common guidelines for their day-to-day behavior. They are the building blocks exist for the sake of the results and have to organize resources to attain the results. They are the primary organs capable of producing results outside of themselves. The emergence of this new form of work organization is fully displaying humanity in our work as an important requisite for achieving the mission of work. This new form is displaying a set of new dimensions which are basically be interpreted as activators of human energy (physical, mental, spiritual) and collective momentum. Ettorre [14] with an interview with Charles Handy has elaborated on the future of work and an end to the century of the organization. Along with the form of work systems, there is also a shift in the thinking process of the workers [ 15]. Nishibori [16] mentioned that human work should always include the following three elements:

Creativity SociaU~ Physical activity

More fundamentally, a few companies across the globe have reviewed the basics of work. Thus, following its experiment at its Kalmar, Sweden plant in the early 1970s, Volvo now is returning automobile production to the handicraft age at its plant in Uddevalla-much to the skepticism of other Swedish enterprises. A few examples of the fundamental revisionism; Work is in teams which instead of working under foremen, choose rotating coordinators. Teams are a microcosm of local society, with respect to both age and sex. Team workers

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

Some Strategic Directions 135

participate in an initial 16-week training course, the first stage in a 16-months program. Special hand tools, ergonomically designed for women, have been introduced, and each worker has his/her own personal set of tools. There is a very low decibel noise, sophisticated ventilation, lack of dirt and smells, use of natural light and stress-free color designs on the walls. The Norwegian industrial democracy experiments of the 1960s and the Volvo Kalmar plant of the 1970s indicated the limitations of using unique experiments as a means of generally disseminating new concepts or organizational development. The Germans also started humanization of work program and were unable to replicate "kalmar" in Volkswagen, Moreover, sifting out the key features of best performance or, more generally, of excellence, inevitably causes at least mild derision when the mighty stumble or fall. On the other hand, building up discrete clubs of companies with similar concerns and motivations to change appears to be an effective means for disseminating such experimental innovations. Examples are many, such as the Belgian "Laboratoire" and the Klubs of the Danish Management Center. Furthermore, the importance of stable sub-contracting relationships (i.e. not just based on the cheapest short-term prices) has become more important under pressure of Japanese examples.

As we approach the beginning of the new millennium, we need to make a very fundamental review of our contemporary work systems and to pay as much attention to the means o f work as to its end. This calls for a shift in emphasis from: ~" Outer resources to inner resources i.e. knowledge and intuitive wisdom.

Maximizing profit to maximizing organizational and human capital Traditionally, many companies take their business conditions and their associated work

systems as given and set their strategies accordingly. Over the last few years, companies around the world are looking for phenomenal growth in performance through redesign of work systems and strategic value innovation. Competitiveness of an economy today rests on its business premises such as; geographical spread, scope o f operations, ownership and control factor conditions and demand conditions etc., which can be shaped by restructuring and reorganization. Industrial age principles artieulated by Karl Max-resting on the control of the means of production and scientific management principles developed by Taylor-centering on industrial efficiency are now undergoing drastic revisions. Business today is a social practice calls for collective concerns and undertaking. Factor conditions around the work systems are being shaped in pursuit of multiple objectives aiming at transforming environmental circumstances in which the human system is engaged not only in the production of goods and services but also in the search for new knowledge and design and development of knowledge based work systems [17]. Traditional concepts of ownership and control, which creates managerial hegemony are moving towards social cohesion-creating corporate community; a new form of corporate governance. Ecological interface of business is shifting from unbounded growth to intelligent growth that is both productive and ecologically benign.

4. C O - E V O L V I N G S T Y L E S O F M A N A G I N G H U M A N R E S O U R C E

Industrial society has traditionally drawn a distinction between the workers-on the one hand, and first craftsmen and artisans, and then the professionals, on the other. The work system/enterprise is the key unit of industrial society. Within enterprises, the "doing" masses- the unskilled workers implementing orders-were separated from the "thinking" decision- takers; managers and professionals and their surrogates, foremen, and supervisors. However, since the middle of this century this binary division and distinction between thinkers and

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

136 R.P. Mohanty

doers have shown signs of wear. Now it has shown the trend of disappearance under social pressures (for example, greater education, a more democratic society, and higher quality of life) and economic realities-knowledge-intensive industry with the pressure of the shortening life cycles of goods and services compounded by the process of corporate globalization. And one of the most significant aspects of this internationalization is the arrival and absorption of information technology and system. Summarily, the era of managing by dictate is being replaced by an emerging era of managing by knowledge and inspirational learning and the work system is now a space filled by many ideas generic from the pluralistic stakeholders.

The conflict of the binary "thinkers-doers" has also been expressed in the past. Organizations have attempted to resolve such historic conflicts through "participative" approaches to management. But participative approaches have been severely objected because of [18]: ~, Control will be lost

Decision making will take too long Group-think will reduce quality and efficiency Individuality will be lost Rights and responsibilities will not be in balance Focus on performance will be lost Managerial authority will be lost

However, participative approaches are differing from those of paternalistic companies in the past in that they will be based essentially on economic and technological necessities, and the scale of their introduction will be larger and more rapid in the 21 ~ century. Only time will tell if the current participative approaches are really the manifestation of changing attitudes or only of adaptive behaviors, which, under different circumstances, could revert to previous patterns. But it is an imperative to understand that participation to become successful requires the coordinated development and deployment of knowledge base within and between enterprises. Participation is a cognitive process by which, individuals form, structure, and articulate their ideas and cooperate to inscribe those ideas into a body of knowledge. It has a richer social and psychological dimension. It is an organic transformational (value adding) process, wherein the knowledge as a sustainable resource is shared between individuals and collective minds and evolves over time. Participation in the context of knowledge building has three sub-processes: organizational learning, knowledge production, and distribution. Nonaka [19] termed this as people-embodied knowledge. Participation is a human construct that dictates the design, direction and outcome of a worksystem.Lane [20] mentioned that the strengths of German manufacturing enterprises are widely seen to emanate from two core institutional complexes- the system of education and training and the system of participative human relations style of co-determination. Miyai [21] expressed that innovative ability is the sole natural wealth of Japanese human resources developed through group consciousness. Donegan [22] in his study reported that, British Petroleum realized an incredible $260 million benefit by focusing on the building of a climate of learning and participation- taught people how to bring difficulties to the table and ask for collaboration. The organization supported people by helping them to move across the boundaries, but helping them to talk to anybody they felt comfortable with. Lowendahl and Haanes [23] presented the case of Alcatel Telecom Norway, which is a very relevant example for competence leveraging through the unit o f activity framework; wherein people participate in problem solving and continuous progression in knowledge building. Bernstein [24] mentions that to create an environment propitious for change and learning requires actionable information. This process requires visibility, transparency, and universal access to information to bind corporate resources together. He terms this type of company as Visual Organization. Maccoby [25] refers to AT&T's

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

Some Strategic Directions 137

workplace of the future. Here, the doers and the operational leaders together attend courses where they learn about stakeholder needs and values. In 1998, Novamad used multi business unit team concept of knowledge sharing to build the critical mass of doctors and patients to increase the health care business [26]. Price Waterhouse Cooper has created knowledge centers that act as focal point for knowledge exchange and provide a repository of best practices for different business processes.

Every company is vitally concerned with its performance; this implies that to improve performance, participation should be inherent in its corporate culture. In the competitive era, performance improvement means creation of value. The process of creating value from resources is based on the interactions of people and depends upon the level and kind of knowledge base. This is because participation in bringing together the existing competence and creating new knowledge provides a strategic focus so that everyone associated with the company understands and works towards the same objective. Norman and Ramirez [27] are of the opinion that one of the chief strategic challenges of the new economy is to integrate knowledge and relationships. Participation in reality is a value creating chain within and between organizations, which connects collective knowledge to deployable actions and finally to collective value creation [28]. Thus, participation is the foundation of best practices in knowledge building. This must surely be the real challenge to all organizations in the new millenium. Wenger and Snyder [29] reemphasize that a new organizational form is emerging in companies that run on knowledge and term it as the communities of practice. They are groups of people such as; cross-functional teams customer-or product focused business units, and work groups - which capture and spread ideas and know-how, galvanize learning to develop members' capabilities; to build and exchange knowledge and change. They emphasize that communities of practice add value to organization in several important ways:

They help drive strategy They start new lines of business They solve problems quickly They transfer best practices They develop professional skills They help companies recruit and retain talents,

For example, Storck and Hill [30] have elaborated on knowledge diffusion though startegic communities in case of Xerox. Tiessen [31 ] has narrated an epistemic community perspective for developing intellectual capital globally. What is observed is that clusters of organizations of all kinds are building knowledge base through strategic collaboration and communities of practice on global and national fronts, but the modalities of knowledge building are differing from organization to organization and from nation to nation.

In the following section, we intend to discuss the larger perspective relating to institutional vehicles for knowledge building.

5. I N S T I T U T I O N A L MODALITIES OF BUILDING K N O W L E D G E BASE

Corporation all over the globe are becoming increasingly explicit and conscious of the process and modalities by which knowledge is created, identified developed, accumulated, shared and above all, applied. However, management is aware of the fact that the knowledge building is inextricably linked to the organizations internal context characterized by core competency, skills inventory, training and development practices, learning curve etc. Knowledge building in a corporation is driven by the strategic aspirations. A first step to that end involves creating a deeply and widely shared knowledge vision within and throughout the extended corporation. Knowledge building i.e. creation, development, maintenance, and

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

138 R.P. Mohanty

deployment is a systemic process. It involves three kinds of understanding i.e. know-how (the state of knowledge), know-why (the process of knowledge), know-what (the purpose of knowledge). Know-how is learning by doing. Know-why is theoretically directed learning by doing. Know-what is strategic understanding i.e. learning both top down and bottom up. Buckler [32] explains these three kinds of understanding in the context of a learning organization. Knowledge building is the foundation of the concepts of skills, capabilities, and competence [33], Knowledge base has 3 dimension:

Residing knowledge either in individualistic terms or collective social terms Knowledge sourcing either internally focussed or externally focussed Knowledge dissemination either through informal encounters or in more structures ways.

According to Nonaka and Takeuchi [34] the five phases of knowledge creation process include:

Sharing o f tacit knowledge - correlated closely to the socialization mode of knowledge conversion Creating c o n c e p t s - involves the conversion of the shared tacit knowledge into explicit knowledge Justifying concepts- is an internal verification mechanism Building an archetype- is a form of rapid prototyping, this can either be a 'hard" product development or a 'soft' organizational entity; various forms o f explicit knowledge are combined in this phase Cross-leveling knowledge- ensures a wide exchange of knowledge both within the organization and in the exchange with its external environment.

Knowledge transformation process has four distinct phases [34]: Socialization Externalization Internalization Combination

To launch and bolster the drive for more knowledge, dynamic enterprises do engage in the process of learning, which changes the state of knowledge of individuals or organizations (the knowledge base); and do adopt one of the following three modalities, which we may term here as participative styles of knowledge building:

5.1 Training Chronologically, the first strategy for developing skills, competence and capability has

been to train. Training is envisaged as the primary approach for competence progression and takes place at three distinct levels: (1) individual; (2) groups; and (3) organizations. Training is a process of transferring skills and enabling trainees to act, of building on their strengths. It is reinforcing on other people to make easy the way of carrying out tasks by giving them enough time and room to practice. Developed countries have perpetually accorded top priority to this strategy and have developed national training systems and institutes of national importance. These countries have all the times worked on a single mission to make the succeeding generations more competent than the present generation. The focus of training is- not just knowing the analytical idiosycrancies of the trade or vocation or profession, but also involves strategic understanding of processes and values. Training helps in acquiring explicit knowledge, codified knowledge, and experiential knowledge. Because of the limitations of Indian training systems, and lack of concern by the Governments-both national and states, companies are often constrained first, to develop their own training systems at all levels of corporate competence and, second, to develop joint ventures with parts of the national

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

Some Strategic Directions 139

educational system. Even if some educational institutes exist at the national and state levels, the competence of such institutes needs to be audited and evaluated whether they are really capable of competence progression in the corporations of the 21 ~' century.

In the case of Indian companies developing their own training systems, one can possibly follow the German, "dual system", which provides the classical approach. This system is being adapted for "apprenticeship" training by other community countries, for it combines off-the job teaching with on-the-job practice and learning. Pre-requisites for its successful implementation are; industrial attitudes must be positive, and the training must be relevant for future employment. (In contrast, the British Youth Training Scheme has been criticized for being a "make-training" scheme along the lines of "make-work" schemes).

Training within enterprises needs to be both economical as well as knowledge driven. Belgian government provides a checklist of aspects, which have to be carefully studied to ascertain the economic return on investment in training in the short, medium and long term. Included on the list; the costs of the training service (personnel, overhead, development); production of off-the-job training; participation in external courses; production of on-the-job training; and cost of the time of trainees.

To be really effective, top management must demonstrate that it truly considers training is important for the future of the company. For example, GE's Crontonville institute is a staging ground for corporate revolution [35]. Particularly companies such as international airlines, which have mounted broad "quality campaigns", have showed this intended for the whole of the work force. A few companies in situations of having to restructure rapidly because of changing markets and technologies also have undertaken very large-scale retraining activities. Recognition of the importance of training has increased over the recent years too, because it is included in the educational baggage of top management, particularly of business school graduates. Some corporations in USA have initiated corporate universities. Corporate university differs from a training department in several ways. A training department tends to be decentralized, reactive, and targeted primarily to instructing internal employees in job skills. A corporate university is the centralized strategic umbrella for the education and development of employees and value chain members such as customers, suppliers, and dealers. Most importantly, a corporate university is the chief vehicle for disseminating an organization's culture and fostering the development of not only job skills, but also such core workplace skills as learning-to-learn, leadership, creative thinking, and problem solving. Outside the individual enterprise, mass training can also be an effective tool for raising the general level of competence. In Ireland and Sweden, for example, the trade unions and employers' organization have broad-based "economic and financial awareness" programs. These are typically 40-hours packages designed jointly, but usually implemented separately by trade unions; they are intended to give the entire work force an understanding of the balance sheet, profit and loss accounts, etc. Once run, such programs can only show positive results if enterprises really do adopt participative styles and disclose figures and trends honestly and before news is leaked to the media.

A third aspect of broad based training program as a means of raising corporate competence concerns distance learning. Several countries have launched Open University training in management. Though intended for persons and geographical areas outside the normal university catchment areas, it is used to a very large extent by the better-educated in metropolitan areas. Indira Gandhi National Open University is an example in India making an attempt to provide developmental opportunities to many professionals. Professional societies and associations have also entered into imparting such training. The issue is again the quality of training and intensiveness of the scope and dimensions of training above all the means

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

140 R.P. Mohanty

adopted to impart meaningful training to cope up with the changing demands of the competitive landscape of the new millenium.

The development of a set of new competencies through training must explicitly recognize the holistic role of individuals, groups, and the organizations and above all the processes adopted by which, scientific knowledge, creative and innovative behaviors of individuals are transformed into collective learning and shared across organizational boundaries. It should be noted here that according to a recent survey conducted by the University of Pennsylvania, companies that invest 10% more in education see an 8% increase in productivity. However, 10% increase in capital expenditures boosts productivity only by 3% [36]. A similar view has been expressed earlier by Stewart [37] with reference to a study carried out by National Center on the Educational Quality of the Workforce. Therefore, there is a greater need for influencing the broader system.

5.2 Influencing the broader system Training only within the corporate system as a means of raising corporate competence as

well as human resource capability is indeed insufficient; wider systems are necessary. But enterprises have become increasingly ill at ease with national educational systems overall and the general schooling system in particular. There are three manifestations of this trend:

Industry and enterprise representatives are assuming key governing positions in an increasingly privatized vocational training system.

Enterprises in developed countries are entering into new working relationships with schools, particularly Secondary schools. Under specified circumstances, they guarantee future jobs. Although they usually focus on the average and more gifted students, because o f demographic trends they also are starting to pay attention to under-privileged school children. Thus in the UK, the Foundation for Educational Business Partnerships was set up in mid-1989 to stimulate change in enterprise-schools relationships. It particularly aims to instill more drive in the lower achievers by supplanting traditional teaching approaches of traditional subjects by more active learning around more directly relevant themes. Although, Indian political parties speak o f social justice, our social justice is confined to job reservations for backward communities' only-not for developing their competencies and capabilities and thus empowering through knowledge base. Political-administrative systems in India are fundamentally responsible f o r the current chaotic situations.

An enterprises learns to prize the formally taught competence o f their professionals and managers by providing time-off and financial incentives for studies, managers in turn have increasingly demanded academic recognition o f their new knowledge. This has led to a spate o f enterprise-university links in many countries. Do we have such plans ? Our enterprises are short-term oriented, purely commercial and inward looking. Our universities and other institutions both at state level and national level do not have futuristic planning rather have already diluted the quality o f education. Today, many institutions have lost their credible status and are just sustaining by mere government subsidies and some sponsorship. There exist no remarkable or profound knowledge base in the real sense. Research is negligible and almost absent to create knowledge base f o r the future generation. Many institutions even do not have infrastructure and faculty competence. In the final analysis, it is the quality of institutions that determine the future o f the nation. In the age o f competition, the present and future will belong to those who can shape broader educational systems.

5.3 Corporate h u m a n resource m a n a g e m e n t Human resources management of late has become an "in" concept in some Indian

organizations. Its use is totally cosmetic and merely change of name in the structure. Vary

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

Some Strategic Directions 141

rarely, the strategy follows the structure. Alignment is a very long cherished intent. But where HRM is seriously practiced it consists of bundles of critical elements, in particular:

Human resource planning Human resource development Human resource relationship enhancement Alignment o f vision and values Human resource performance feedback

At the total enterprise level, HRM has to become an integral part of corporate strategy. It should identify all strategic pathways for the optimal use of human resources. Of particular significance in such integration into corporate strategy is the real and visible involvement of top and middle management. Information and communication are becoming indispensable for motivation and commitment. To this end, many progressive companies, for instance, have adopted a multi-pronged policy of limiting the size of manufacturing plants to 250-300 persons; reducing the number of supervisory levels and staff functions; rotating managers and limiting their stays in particular jobs to five years; encouraging all managers to spend part of their career abroad; and making foreign experience mandatory for all vice presidents. Developing competence throughout the total enterprise is particularly fruitful for multi- national corporations. Honeywell Europe, for example, has set up, under its Single Market Coordination Council, international task forces in 11 potential areas of activity important for human resource planning and development. Philips, too, has established international policy councils for planning and development within its product divisions. McKinsey & Co., which provides management consulting services to companies, has a unique process for training its management consultants. Procter and Gamble has a reputation as an academy producing high quality brand managers. These companies have recognized that their profitability critically depends on their internal human resource management processes that have been difficult for the competitors to imitate. All over the globe, maximizing human capital formation is the real time strategic intent. For example, World Bank in the year 1999 made significant investments in retooling the Bank's knowledge base and revamping institutional capabilities through human resource management. HRM in the 21st century will be engaged in creating an energizing culture through continuous investment in:

Human resource planning and development, Recognizing contributions with fairness and equity, and Providing high performers both dignity and security. The author believes that the human resource function in India has a very specific mandate

in order to build the knowledge-based corporations of the future. Therefore, HRM function must gain in stature and significance, move from presently undertaking transactional role to a more value-adding business partner and as the necessary catalyst.

The impression should not be gained that these three modalities of knowledge building are mutually exclusive. Rather, they represent continuums, with certain ones being preferable in some types of enterprises and industries. What is important everywhere is that there is a dynamics in each enterprise, which requires critically reviewing, and seeking to improve its own system. But, the basics of work must be related to people's knowledge and skills. There are differences in basic skills, in motivation, in expected reward systems, in culture, and in experiences, which must be taken into account. Reskilling the corporations is to be undertaken for chasing dreams and to be driven by the energy of aspirations and therefore must be proactive. The alternative to reskilling is regression, obsolescence and finally decay and extinction. Corporations of the new millenium will become self-defeating inhibiting their

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

142 R.P. Mohanty

performance-which will be the most dangerous consequence, if they destroy the system of knowledge base that gives the power to compete and excel.

6. SOME S T R A T E G I C DIRECTIONS F O R INDIAN C O R P O R A T I O N S

The importance of 21st century for Indian corporations is necessarily to be over-stated here. Generally, the pressures of and for globalization have been apparent for a decade. Meeting the challenges of globalization automatically requires meeting the demands of the next millenium, which might be more demanding because the major competitive pressures are from those multinationals with headquarters outside India. On the other hand, it is of major significance to the vast majority of enterprise, which will be experiencing more competition in their traditional markets. These firms are primarily small-to-medium size enterprises typically serving local markets with local (often-family) management without specific management training and development. Indian organizations are currently faced with a paradox: that the knowledge developed is the genetic source of competitive advantage, but according to Covey [38], the value of knowledge is susceptible to decline over time. Furthermore, although the maintenance and the enhancement of knowledge base are a condition to success in the short term, but the continuation is a real threat in the long term. The capability of Indian corporations to integrate knowledge will play a fundamental role in the transformation of work systems into competitive advantages. However, this integrative capability must also play a role in a changing environment by improving the knowledge base, which is vital for the development and growth. In view of this, it is necessary here to make a strategic role profiling for Indian corporations.

6.1 Implications for human resource management The implications for HRM are both profound and far-reaching. For instance, although

there will continue to be places for all types of career models, in most industries only those career systems emphasizing continuous development and adaptation will survive the dawn of the flexible, process-orientated organization. Moreover, in a turbulent and ever-changing business world, replacing the recruitment and training systems that have provided organizations with qualified people for many decades is quickly becoming a necessity, not an option. As we have realized that more than ever the world is in a flux. And therefore, organizations and their managers must recognize the necessity of developing the mindsets, skills and abilities that will allow them to cope with the flux.

It is essential to note here that the success of an organization is a multiplicative function o f human resources' competence and commitment. Competence is manifested in our abilities to do work and commitment is our intrinsic willingness to do work. Increasingly, organizations will need to find systems and practices that promote entrepreneurship and learning. Managers and professionals, in turn, will have to learn how to use the vast amounts of data which have come available with the information technology revolution, and learn to live with the complexity and ambiguity created by the competitive forces buffeting organizations today. So how can Indian organizations help people prepare for the future? What are the implications for the management of human talent and resources? Once, again, we may not have all the answers, but a number of suggestions can be made to accelerate some of the changes needed in organizations. Therefore, we suggest some contemporary imperatives for HRM, They are:

)~ enriching people )~ cooperating to enhance competitiveness )~ organizing to master change and uncertainty

leveraging the impact of people and information in the business processes

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

Some Strategic Directions 143

All these call for a new theory incorporating developmental principles.

6.2 Initiating mentorship development and making it effective Mentoring is an important role for organizations for professional development in many

countries. Its underlying principle is that a more knowledgeable colleague can facilitate the professional development of a new employee. Bush and Coleman [39] describe mentorship is a relationship building mechanism and has the potential to enhance the knowledge base of both individuals. Mentoring has always been present in the business environment, usually to help all employees to learn new skills [40,41]. This is especially true in the new millenium, because one can expect the skills one has to be obsolete in three to five years [42]. These programs are even more necessary when our contemporary work systems are undergoing organic transformation. Many research studies [43,44,45&46] in the recent years have revealed the following benefits of mentorship development programs:

Helping newly hired employees or promoted employees become fully productive and understand the organization's future in a compressed time frame Creation of future entrepreneurial leaders Low cost transfer of skills Increased ability to manage participative relationship Increased learning potentials Positive affirmative action results Strengthened link between business strategy and developmental needs

The author has designed and intervened in some mentorship development programs for a number of Indian companies. Of particular significance here to mention about The Associated Cement Companies Ltd., which is the largest cement producer and the market leader in India. The company believes that human resource development is a key to building knowledge base. Mentoring is the creation of a formal relationship between two people of different business processes and status in the company's cement manufacturing units. Some of the advantages that the program may claim are as follows:

Better adoption of the organizational values (this company is most respected in the society for it's high corporate ethics and values)

~" Effective transfer and absorption of circumstantial and experiential knowledge Low cost but highly relevant learning and better cross-functional knowledge

~, Cooperative development of knowledge Increased job satisfaction

)~ Low turnover of employees ~ Meaning~l career guidance The above findings are not subjective. The author has monitored the performance

objectively for the last three years. It is worth mentioning here that the company's approach is in line 'with both the scientific evidence and with recent proponents of achieving competitive advantage through people [47]. However, it may be noted here that there are a number of difficulties faced in starting of a mentorship program, but its benefits are many provided that the focus is made on the areas of learning -informally.

6.3 Building competencies through innovative 'Practice Fields' Many progressive organizations have emphasized on the need to give managers and

employees more opportunities to practice the skills that are needed to perform well in the emerging business environment. It has been argued by many that classroom teaching and role- playing are necessary but not sufficient. Therefore, many researchers and practicing managers

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

144 R.P. Mohanty

suggest that organizations create 'practice fields; that let managers and employees hone their skills and gain experience under realistic but risk-free conditions. The Productivity Enhancement Program at Bell Labs is a useful example. According to Cannon, the company asked a number of its star engineers to develop an expert model. The result was a set of nine prioritized work strategies the engineers believed other employees could master. Training sessions to pass on these strategies occur in the normal workday. Productivity increases in both star and average performers have been striking, from a 10 percent increase immediately after the sessions to 25 percent after a full year. A number of companies across the globe have adopted this approach. However, the most important 'product' of this approach is managers who understand how to create a learning environment for those around them. Action learning has been a very successful approach in U.K. British Petroleum [22] calls it as Learning Engine-an elegant system that meant:

People and systems demonstrate learning before, during and after tasks. Communities of practice access, apply, validate and renew existing knowledge through performance histories and real time observation, both within and without their own organization.

This author has been a pioneer in initiating action research and exploratory projects in some Indian companies. The experiences are very encouraging in terms of knowledge acquisition, deployment, and utilization for different companies. These projects have helped the attainment of mastery of some knowledge, and building a better and better fit between relationships and skills transferring by reconfiguring roles and structures. An organization's processes for articulating, codifying, and transferring knowledge within are important determinants of its ability to leverage its existing knowledge effectively- and thus of its ability to leverage its competence to greatest strategic effect. The ability of some companies to survive and thrive in the future hinges more on an optimal management of skills through participation than on the implementation of new technologies and manufacturing processes. Moreover, these companies saw that the new technological breakthroughs could not be integrated unless their staffs were able to adapt to ever-quicker cycles of change and their organizations able to cut the cost brought about by this unceasing need for human resource adaptation.

Companies that have enjoyed enduring success during the last several years have created learning organizations around people who have transformed business strategies and practices endlessly adapting to a changing world. If the core purpose of an organization is to remain in business in a competitive world, the organizational members collectively accomplish certain tasks, which ultimately should result in making a product, or service, which is of value to the human system. The basic dynamics of successful companies in the recent years has been in terms of decisions to build the strength of the organization and its people or in other words creating and nurturing a learning organization where people are capable and competent enough to make effective decisions perpetually. Without knowledgeable workers, a corporation will be at a competitive disadvantage.

6.4 Strengthening the articulation mechanisms In any learning pl;ocess, the following three phases can be identified [11]:

~ A priori articulations: These articulations may be based on prior experience, historic data base and prior knowledge of the processes, as well as future projections about environmental and business trends. These articulations are oriented towards proposing conjectures about diversity.

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

Some Strategic Directions 145

oIo Articulations during the process: These are the articulations expressed during the process and they are the reflections mirrored to enhance interactions and promote interdependence. ~176 Posteriori articulations: These articulations are expressed based on additional knowledge gained and on performance feedback and intrinsic desire of an individual to discover potentialities and limitations. At each phase, the individual or group may attempt to learn more and more. The process of

learning is iterative and evolves dynamically. Commitment to learning may manifest in many ways: change in behavior, change in attitude, adapting to new values etc. The postulation here is that there are basically six generic and interactive forces that influence any business corporation to evolve into a learning organization. These are:

Customer power Information power Global investors power Global market power Power o f simplicity Power o f the organization

The customer power, the predominant one stems from the fact that an organization has to perpetually learn/unlearn and relearns as dictated by the customer's choice, and his/her requirement. This power will compel an organization to move from bureaucratic mode to responsive mode and will necessitate it to be flexible, lean and yet be able to meet the customer demand to stay in the market.

The information power, (with advances in Communication and Information Technology) will help an organization to continuously update and upgrade on technology, information systems and be thus able to learn at a faster pace. Now it is possible to transfer volumes of data globally from one organization to another. The information power will enable to promote knowledge networking.

The power of global investors will affect the learning mode of the organization. Because of liberalization that is globally evident, an organization is stimulated to learn because now there are no boundaries for investments. The organization will continue to invest in its development by fostering global search for all resources.

The power of market place will generate fierce time based competition which will motivate an organization to learn faster to provide quality and value.

By power of simplicity, we mean streamlining of systems and procedures within the organization and moving away from bureaucratic culture to more towards autonomous structure. Because of this, the organization can quickly undertake reengineering/redesign of business processes and has to forge organic partnership with the multiple stakeholders to eliminate delays and bottlenecks.

The power of organization itself will rest in its ability to quickly transforming market opportunities into tangible bottom line results. Such a force will lead to recreate lean and agile organization structure and high performance teams. The power of organization will be manifested in making profits and growth.

In summary, these forces will compel an organization in the 21 s' century to transform through reskilling. Reskilling the corporations are not possible by irrational and adhoc principles; rather, very systematic and concerted efforts are necessary. In this connection, we would like to stress the importance of identifying different types of out side - i n forces for the development of knowledge base and competence progression of the organization. The entire world class organizations are strengthening their knowledge articulation mechanisms by adhering to double 'loop learning [48]. Double-loop learning refers to the theories of action

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

146 R.P. Mohanty

that are to be governed by a set of imperative generic from the outside-in forces. Knowledge building in the organizations becomes successful when double-loop learning involves the individuals/groups to articulate and reconsider and revise their governing values to find out an improved solution to the situation being faced. Therefore, to strengthen the articulation mechanisms making the realities visible and visibility o f information are most vital. We suggest here some propositions:

The organization is to be viewed as a human community capable o f providing diverse meanings to information outputs generated by the various business processes, instead o f the traditional emphasis on command and control. Business as usual approach is to be de-emphasized, so that such prevailing practices may be continuously assessed from multiple perspectives f o r their alignment with the dynamically changing generic and interactive forces. Diverse viewpoints have to be encouraged by avoiding premature consensus on issues that need deeper analysis o f underlying assumptions. Often, viewpoints o f persons with differing backgrounds and expertise can provide a much broader focus that is essential f o r completely grasping the essence o f the core issues, particularly when the changing context demands a fresh look at what was yesterday defined as a "benchmark" or a "best practice." Greater proactive involvement of human imagination and creativity be encouraged to facilitate greater internal diversity to match the variety and complexity o f the forces. More explicit recognition to tacit knowledge and related human aspects be given such as ideals, values, or emotions, f o r developing a richer conceptualization o f knowledge articulation. Attempt should be made to implement new, flexible technologies and systems that support and enable communities of practice, informal and semi-informal networks o f internal employees and external individuals based on shared concerns and interests. Organizational information base be made accessible to organization members who are closer to the action, while simultaneously ensuring that they have the skills and authority to execute decisive responses to changing conditions.

The author has been able to derive these propositions from his close observations and learning from the best practices of many successful global consulting firms. These firms view the implementation of these issues in terms of the shift from the traditional emphasis on transaction processing, integrated logistics, and work flows to systems that support competencies for communication building, people networks, and on-the-job learning. For example, McKinsey &Co adopts a three level architecture needed for enabling such competencies:

A new information architecture that includes new languages, categories, and metaphors f o r identifying and accounting f o r skills and competencies. A new technical architecture that is more social, transparent, open, flexible, and respectful o f the individual users. A new application architecture oriented toward problem-solving and representation, rather than output and transactions.

On a similar note, Bob Hiebeler, Arthur Andersen's managing director of Knowledge pace intranet observed at a recent panel discussion of knowledge management experts: "To me, this is the essence of knowledge sharing. It's all about contribution, it's all about the respect for others' opinions and views, it's all about a good facilitation and synthesis process, it's all about the distribution of lessons learned from this knowledge process, and it's all about access to packaged knowledge and key insights that become the starting points for individual learning."

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

Some Strategic Directions 147

Managers need to develop a greater appreciation for their intangible human assets, captive in the minds and experiences of their knowledge workers. Without these assets, companies are simply not equipped with a vision to foresee or to imagine the future and able to articulate strategic directions.

6.5 Identifying and activating the ageing workforce With the projection of middle-aged employees comprising a larger part of the workforce in

most industrialized countries, and with work becoming more unstable and demanding, organizations have good reason to be interested in preparing people for the future. Indian organizations should prepare now for the inevitable frustrations of career stagnation in the middle years. Already there are signs that the number of individuals who experience career entrenchment is increasing dramatically. The author conducted a survey of over one thousand middle-aged men in managerial and professional positions and found that five out of every six respondents endured a period of severe frustration and trauma that began in their early 40s. Work performance, emotional stability and physical health were seriously affected. Some people would like to change careers, but wanting to change, of course is not the same as doing it. Many organizations are burdened with workers who do not want to learn and at the same time aspire to jump ship, but who stay firmly on board grasping for long-term security in the face of widespread job cuts. Out of desperation, many employees stay with the organizations in which their careers have unfolded, but do not stay committed to them in the way management would like. Candidates for second careers tend to be in their mid 40s and report a perceived discrepancy between personal aspirations and current opportunities for achievement and promotion. This grou p is likely to become larger as the opportunity for advancement decreases, resulting in more career frustration and entrenchment among middle managers. There is a need for a serious dialogue and resolution on this critical issue. More we globalize, this issue will be more predominant. There is as such a vast number of unemployed youths.

6.6 Facilitating career mobility and change Some MNCs are already attempting innovative solutions to increase job mobility between

and within their organizations. Cable and Wireless, for example, has set up what it calls career action centers to help people make inter-company moves and to encourage a 'contract mentality', where employees think of their work in terms of a series of projects rather than as a life-long career. Furthermore, to minimize some of the potentially adverse consequences of career entrenchment, organizations can take a number of approaches, including the following:

Providing on-going career counseling, mentoring and outplacement assistance to all employees, not just those who are made redundant. Offering training, time-off and financial help to those who want to attend to improve their skills and competence, even i f these skills are not highly organizational or career specific. Allowing employees to make career changes within the organization, rather than forcing them to stay within their (functional) career ladder. Encouraging employees to think about career planning issues and not making them feel guilty or disloyal as they explore new career options. Allowing employees who wish to change careers to leave in good standing and to return if they do not succeed. Providing portability o f benefits such as pension plans, health plans and other accumulated forms o f compensation.

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

148 R.P. Mohanty

Each of these methods is aimed at reducing the progression of career entrenchment and at encouraging people to take more responsibility for their self - development and career planning. They may result in some turnover, as some individuals may recognize the need to abandon their current occupational paths and explore new ones. However, as we enter into the 21st century, the cost of turnover is likely to be less concerning than the issues of career stagnation and entrenchment. The author has designed multiple careers profiling system for some companies, and the results are yet to be seen.

6.7 Promoting individual growth and enabling development through real participative teamwork Increasingly, managers and professionals face complex situations in which they must rely

on others to get the work done. Organizational restructuring and delayering has also produced ill-defined roles requiring people to seek the support of others in the hope of attaining enhanced levels of productivity and performance. Further workplaces may require managers to rely on their peers and subordinates for their rewards, recognition, appraisal and training. Moreover, employees in the 21st century may periodically have to backtrack their own careers, moving from expert back to novice, as they required developing new competencies. Many researchers suggest that adaptation to these changes and movement into unfamiliar roles may take place more smoothly within a supportive team environment. To summarize some of the research findings: 'in a team model, the responsibility for career development is shared among the individual employees, the team and the organization. Individuals continue to assume primary responsibility for career planning, career goal setting, education and training. Organizations provide job-related training, an environment in which growth and development are valued, and human resource systems supportive of career development. Teams acquire the roles of supervisors, and help individuals by providing feedback on skills, identifying opportunities for growth and development, coaching and mentoring, and serving as training grounds for the acquisition of new skills and knowledge areas'. Hence, as organizations evolve to become more flexible, a compelling case can be made for team- oriented career development systems. In any case, the challenges of the 21 ~ century call for innovative solutions that can complement the existing methods of performance evaluation, compensation, trai.ning, and life long learning.

6.8 Role of I-IRM in implementing the new mandates Preparing people for the future requires systems and procedures to align individual and

organizational objectives, communicate and consult with managers and professionals, develop them effectively, assess their potential and performance, give them feedback and help them plan and manage their careers. Each of these activities has traditionally not been the responsibility of the HR department in most companies in India. Despite all the talk about strategic human resource management, however, most HR managers remain stuck in their administrative roles processing complaints and paperwork. Indeed, one of the most worrying findings in studies of HRM is how few HR managers put themselves at the forefront of developing human talent in their companies. For instance, this author has asked many HR managers about their priorities in the 21 ~ century, only a very small number of such managers, gave top priority to improving the quality of their company's workforce or rated employee training and management development as central thrusts of their function. What is more, 50per cent of the HR managers reported that either they have no major responsibility for meeting their company strategic objectives or they simply are not sure where they fit in. Conclusively, therefore, that very few human resource departments are true partners with line managers in running the business. In other words, there is no alignment between corporate

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

Some Strategic Directions 149

mission and human resource development objectives. The author's experience as a top management professional is that top managers in some good professionally managed corporations are becoming more seriously interested and attentive to the issues and challenges of HRM. At the same time, current economic conditions, along with downsizing, restructuring, globalization and international competition mean that most organizations are preoccupied with cost reductions and increasing the financial performance of the organization. It remains to be seen, therefore, what form the increased interest in human resource development will take in the coming years. From where do we start ?

Developing both the understanding of the need for change and the willingness to do Acquiring the minimum capability required to learn new skills, behaviors and relationships Preparing some action plans however rudimentary they may be Taking action Responding to the reinforcement that follows action All these efforts require much dedication and a strong motivating force. HRM

Professionals can perform an important role by becoming more aware of opportunities for common action, taking initiatives to bring that action about, and developing the critical skills to do so effectively. We may call these professionals as the critical mass o f collective interest and an institutional representation.

6.9 Role of higher education and research institutions It is a known proposition that the experience and scope of approaches to linking the

broader learning systems with enterprises are rich indeed, particularly since so much real mutual learning can be developed. Necessity rather than fashion have brought about the emerging pattern of closer cooperation between the worlds of "action" and "reflection". Universities and independent research establishments had their budgets pruned throughout the 1990s and are constantly searching for other sources of income, notably from enterprises. But increasingly universities' staff are finding that not only can they sell their knowledge to the outside world but, in so doing, they have to increase their knowledge; and increasingly at a faster pace such that enterprises will be finding it profitable to utilize them. This is true in case of most developed countries. For example, Jouan S.A.A small hi-tech enterprise in the west of France has achieved 80% of its market niche of blood centrifuges by tapping the local technological institute's local, national and European networks. Two recent examples of such cooperative initiatives are, at the undergraduate level, the four-year courses of the Middlesex Business School and Cesem-Mediterranee at MarseiUe and, at post-experience level, the joint venture of Ashridge Management College (UK), CPA (France) USW (Germany). Jointness can also be in the form of a single institution with trunks (not branches from a main trunk) in several countries: For example, EAP, the European Business School, has its establishments in France, Germany, and the UK. T h a i l a n d ' s Asian Institute of Technology (where the author has worked as a visiting Professor) has provided collaborative research and continuing education support to all South East Asian countries. The "shared learning" approach (pioneered by the Irish Productivity Center) in essence twins similar types of enterprises in dissimilar industries in different countries. Participants generate cross-sectional teams to present issues from their own enterprise and try to help solve those of the twinned enterprise.

It may be pointed out here with an emphasis that role of the institutes of higher learnings should not be merely the knowledge communication, rather the knowledge building involves giving people the chance to explore their subjective positions i.e. creating a trajectory for continuous cultural change. What change-makers need to do is to increase their awareness

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

150 R.P. Mohanty

about the six generic forces identified earlier in respect of their own institutions, to find out more elaborately where they position themselves and search for ideas, meanings, standards, practices structures and above all resources.

We suggest here a much broader role for institutes of higher learning and the vital responsibility towards undertaking "innovation capability audit" for organizations. And based on such continual audits the academic curricula should be restructured and faculty resources be developed. The philosophy of such an audit is not manipulation but education for progress. Powerful global forces for change- such as liberalization of markets, communication technology, and the integration of the world's economies- have inescapable implications for business as well as academia, and demand rapid and innovative responses. The new imperatives of business world compel managerial/academic practices to shift from business- as-usual to value innovations [2]. It must be mentioned here that value is subject to constant pressure for change. It is no longer sufficient to fix it once and expect the value dimensions to remain stable over time. The challenge in the real time is to create performance break points in the value metrics geared to expecting the u n e x p e c t e d - one that can take speedy advantage of new patterns of demand, new markets, and new ways of service while s011 coping with the expectations of various stakeholders. The intent and purpose of an educational institute must be to provide a cultural leadership i.e. to upgrade the whole intellectual potentials of society, and to pattern socially active individuals in order to create, express and communicate new ideas and ideals and undertake design, operation and maintenance of systems of value innovations, which can help corporations to deploy such innovations and recreate new demands. The tasks before the institutions are designing curricula that can allow participants to utilize their intellectual abilities, expertise and experience more effectively. But, do our institutes need rejuvenation? We propose here the following:

Educational Institutions require a coaliational, multiple stakeholder change model. Institutions must adopt the new philosophy of competence building and create a missionary approach to implement the new philosophy with urgency.

6.10 Role of top management Unions are striving for legislation prescribing how participation in enterprises should be

organized. But the top management has to become the driving force in corporate social innovation. For instance, in The Netherlands, a "management-labor new style" grouping of half a dozen leading companies was founded in 1983 on the participative management �9 concepts of Juran and Deming. In northern Europe; labor-management agreements are putting equal stress on "participation" and "productivity". Their ultimate purpose is to make better use of "'person-power" by encouraging local level developments, rather then designing national models. The success of such private agreements contrasts with the relative failure of national agreements in the early 1980s on the introduction of new technologies. The lack of impact of the latter can be explained by their striving to lay down general rules rather than broad guidelines, which are adaptable to local situations. Olivetti management has introduced a plethora of approaches to HRM, particularly in the tapping of corporate person-power. Requalification and acquisition of talent and expertise have become essential. The new demands under which Olivetti's "competence drive" is conducted are:

)" Rigorous selectiveness o f investment in both new personnel and existing staff. Introduction o f sophisticated techniques, such as matrix management and multi- dimensional career plans. Radical transformation o f management style with delegation, participation, intrapreneurship, etc.

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

Some Strategic Directions 151

Changes in the structures and organization, particularly in the reduction in the number of hierarchies.

In itself, this change in the shape of organizations from tall pyramids to interconnected processes vastly enhances learning, particularly when it is coupled with a constrained proliferation of responsible and responsive units-small businesses within large businesses. The example of Asea Brown Boveri (ABB) is very significant. To ensure that the benefits of constructively working together in smallness are combined with the advantages of scale, most management have paid particular attention of the development of "identity", expressed in terms of corporate culture and discipline. Though its association with the development of identity and use of competence might seem somewhat difficult, it is an imperative for Indian organization to developing the team spirit that encourages the individual to do his/her all for the enterprise and thereby for the national development [49].

With the advent of Japanese practice of management, India has become fascinated with JaPanese styles of management. The first such approaches borrowed were "quality circles" - workplace groups set up to determine and resolve workplace problems. Quality circles set the way for other developments because they combined the knowledge and insights of workers of a specific task for a specific product with training, basic problem analysis and follow-up. Quality circles have not prospered in India as a set of moral and material incentives have developed around them. Subsequently, there has been a strong drive to complete the quality circles technique with broader approaches focusing on "total quality management." For quality as a concept needs to stretch from the boardroom to the broom cupboard, without missing any single corporate function or member. So far, TQM lacks any comprehensive guide or description [50]. Yet, this does not stop some companies from demonstrating and promoting its significance. For instance, top companies have to launch a national campaign to publicize what they are doing to enhance their quality and what they would like to do better. To have meaning and to be successful, top management needs a sense of purpose-long term dominant logic and a culture of reskilling the corporations' [51 ]. For that quality has to be a permeating ethic. What are needed are the Corporate Joint Ventures. With the movement from training and teaching to "learning and particularly "action learning", enterprises have to become more interested in participating in reskilling by setting up joint learning ventures. Such joint ventures can be on the national levels. For example, in 1988, 14 major European multinational enterprises jointly created the "European Federation of Quality Management". Its objective is to create conditions to enhance the position of European products and services in the world market by strengthening the role of management in quality strategies. These strategies are characterized by, excellence in all managerial, operational and administrative processes; an understanding that quality improvement results in cost advantages and better profit potential; creation of more intensive relationships with customers and suppliers; involvement of all personnel; and market-oriented organizational practices. EuroPACE is an enterprise-supported satellite distribution system providing top-quality, high level; pre- recorded courses to support the continuing educational needs of technology based enterprises, universities, and research centers. In early 1989, programs covered six fields; microelectronics; software engineering; Tele-communications; artificial intelligence; advanced manufacturing technologies; and technology management. Students are provided feedback, especially through electronic mail.

These types of approaches have led to increasing talk of the "learning organization" [48]- one in which there is some sort of harmony between the growing competence of the individual and the smooth adaptation of the enterprise to other internal and external change. What this author has observed and realized in Indian corporate sectors that there is no

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

152 R.P. Mohanty

"performance support" provided by top management to HRD functions, and many are unfamiliar to such a role. Even, many business leaders express that they do not have the time to devote for slow and tedious tasks of teaching and coaching people and helping to grow in the high-pressure economy. However, it is this role of the leaders, which is essential for making sure that corporations have the training, skills, information, systems, tools, resources and support to execute knowledge building process and undertake continuous improvement in the knowledge base. This role has a remarkable positive impact on building a high performance climate in the organization. A very significant attempt has been made during the past few years by a large public limited company - Crompton Greaves Ltd., to adapt and diffuse Japanese manufacturing practices across the company. This has been possible by the high level of commitment and extra-ordinary personal involvement of the CEO. The CEO has been instrumental to create a techno-managerial infrastructure, whose role has been to facilitate engagement, collaboration, exploration and experimentation of Japanese best practice [52]. The CEO is willing to put up with short-term failure if it furthers long-term learning for individuals and building knowledge base for the company. This is what may be viewed as the "expanded leadership" role in creating a learning organization. Further to this development, the CEO has established a corporate university. The intentions are three folds:

Learning f o c u s - challenging and testing the assumptions what is being done Experimentation - encouraging and supporting exploration o f innovative ideas and concepts Leadership- seeking to engage and integrate leadership at every level.

The role of the trop management in enhancing intellectual capital formation in Indian corporate sector is fundamentally to recognize that all knowledge has the equal importance to the corporation's core competencies. Knowledge must be prioritized for socio-economic relevance. We suggest here that the modalities of knowledge building discussed earlier must be supported by an infrastructure within the corporation. This infrastructure is required to have two basic elements:

Appropriate information systems, which can provide widely, distributed access to the knowledge base o f the corporation Fostering knowledge - sharing culture to encourage employee to disseminate their tacit individual knowledge throughout the organization.

We may not be totally able to predict/plan/control the future accurately, but certainly we can influence the future by building quality in/of people through learning organizations across the nation. In order to make the construct of a learning organization usable, an articulation of reskilling the corporations has to emerge. If India and other south Asian countries have to enjoy the status of developed nations in the 21 st century; it becomes mandatory that they prudently collaborate to build learning organizations, which will accelerate knowledge building. But, it is submitted here that the attempt must be with urgency, because whether we like it or not time waits for none and competition is relativistic, but not absolutistic. It will require not simply changing our action priorities, but changing our management pattern and more importantly our relationship within and between corporations. Top management, being the strategic apex has the profound responsibility towards building learning organizations and the exclusive accountability towards competence progression. Therefore, there is a need for a strategic mindset and evolving a road map. Swami Vivekananda [52] propounded a century ago: " i f we could get rid of the belief in our limitations, it would be possible f o r us to d o everything just now. It is only a question o f time. I f that is so, add power, and so diminish time ".

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

Some Strategic Directions 153

7. C O N C L U S I O N S

The process of globalization consists of much more than simply seeing an organization integrated in the economic environment. Looking to the emerging competitive landscape in the new millenium, Indian corporate sectors are viewing transfrontier operations as a logical and even unavoidable step in developing their own competitive potential. Managing the complexity associated with such a move require not only a sound corporate strategy, but also the knowledge base of people and organizations that can implement it. This paper is an attempt towards understanding the consequences of rapid globalization process for building knowledge-intensive Indian corporations. Summarily, to build knowledge base and enhance intellectual capital, Indian corporations are required to build momentum for:

Corporate vitality Strategic organizational connectivity within and between organizations.

Therefore, it is argued here that we the management professionals, as the custodian of 21st century organizations must provide the real time strategic leadership to build learning organizations with a mission to meet the aspirations of our future generation i.e. to make them more competent than the present generation. This shift in organizational philosophy has profound implications for management practice. Change is where the action is.

Do we have that commitment ? We are p a i d to create wealth in the enterprises, but what is the f o r m and content o f this wealth?

The author suggests serious research on these fundamental issues both at theoretical and empirical level. These underlying issues, as well as the strategic context of change dynamics are seldom explicit. They can be brought into focus by viewing the participative process of knowledge building as the most fundamental concern. The process of knowledge building is the most daring and difficult for corporation to attempt, articulate and codify. This process is essentially an educational and empowering task, which requires ongoing instruction, motivation and regulation to assure continuance in the corporate environment. Traditionally, knowledge building occurs in crisis situations when the lack of knowledge threatens survival. Global competition and the change dynamics are evolving toward the capturing of the vast cognitive, experiential, and creative potentials of human system. Accepting corporations as exclusive economic entity is an oversimplification and according to the author is unethical. The common good is that structure of relationships in which the life of all is enhanced by the actions of each one of us. Its common name is knowledge building. The knowledge building process will represent the glue that can bind individuals/groups/clusters/organizations /institutions, enabling the creation and rapid diffusion of new knowledge. The cumulative and continuous directing of an organization's efforts towards reviewing the basics of work and strengthening of those processes in the enterprise-wide participation framework, which are most vital to its perpetual well being. To effectively implement the organizational changes, including changes in the modalities of knowledge building, the participation process has to be understood, engineered, and configured to be change-embracing, strategy-enabling and value- enhancing. The feudal emphasis with hierarchical structure and non-people systems and above all apathy towards human development of Indian corporations as the leverage points for eventuating change in the competitive landscape must be heavily supplemented with an intense focus on ensuring that enterprise-wide participation supports the change and invests in an ever-broadening range of knowledge resources. Increasingly, all of us belong to complex configurations of groups and organizations in the competitive landscape of many aspects of our lives. We can perform and fulfil an important role by becoming more conscious of

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

154 R.P. Mohanty

opportunities for common action, taking initiatives to transform those actions into fruition, and developing the knowledge base to do so effectively. It is hoped that this will be a critical success factor in attaining our competitive advantages.

REFERENCES

1. Adams, J. (1996) Current History, April, Current History Inc. USA. 2. Mohanty, R.P (1999) 'Value innovation perspective in Indian organizations',

Participation & Empowerment - An International Journal, Vol. 7, No.4. 3. Porter, M.E. (1990) The competitive advantages of nations, Basingstoke, McMillan. 4. Handy, C. (1997), 'Unimagined futures: The organization of the future, edited by

Frances Hesselbein et al, Jossey-Bass Publishers, SanFransisco. 5. "The World Competitiveness Report" (1993) M D and World Economic Forum. 6. Steinberg, R. J., Linda, A., Hara, O. and Lubert, T.I. (1997) 'Creativity as investment',

California Management Review, Vol.40, No. 1. 7. Mascitelli, R. (1999) 'A framework for sustainable advantage in Global high-tech

markets', International journal of technology management, Vol. 17, No. 3. 8. Barney, J.B. (1997) Gaining and sustaining competitive advantage, Addison-Wesley

Pub. Co. 9. Morgan, G. (1998) tiding the waves of change: developing managerial competencies

for a turbulent world', San Fransisco: Jossey-Bass, Vol.7. 10. Grant, R.M. (1996) 'Prospecting in dynamically competitive environments:

organizational capability as knowledge integration', Organization Science, Vol. 7, No.4.

11. Mohanty, R.P. and Deshmukh, S.G. (1999) 'Evaluating manufacturing strategy for a learning organization: A case' International Journal of Operations and Production Management, Vol. 19, No.3.

12. Bontis, N. (1999), 'Managing organization knowledge by diagnosing intellectual capital: framing and advancing the state', International Journal of Technology management, Vol. 18, Nos. 5/6/7/8.

13. Savary, M.(1999) 'Knowledge management and competition in the consulting industry", California Management Review ,Vol. 41, No.2, Winter

14. Ettorre, B. (1996) 'A conversation with Charles Handy on the future of work and an end to the century of the organization', Organizational Dynamics, summer.

15. Hammer, M. and Stanton, S. (1999) 'How process enterprises really work', Harvard Business Review, November- December 1999.

16. Nishibori, E.E. (1971) The development of humanity and creativity, Japan Productivity Center, Tokyo.

17. Mohanty, R.P. and Deshmukh, S.G. (2000), 'BPR: the value innovations in IE practices', International Journal of Technology Management (Forthcoming).

18. McLagan, P. and Nel, C. (1997) The age of participation in executive guide to everyday management, World Executive Digest Ltd.

19. Nonaka, I. (1994) 'A dynamic theory of organizational knowledge creation, Organizational Science, Vol. 5, No. 1.

20. Lane, C. (1989) Management and labor in Europe: the industrial enterprise in Germany, Britain and France, Aldershot, Grower.

21. Miyai, J. (1990) 'Human resources: Japan sole natural wealth', International productivity journal, Spring.

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

Some Strategic Directions 155

22. Doregan, J. (1993) The Learning Organization: Lessons from British Petroleum in Enterprise School of Management. MCB University Press.

23. Lowendahl, B.R. and Haames, K. (1997) 'The Unit of Activity: A new way to understand competence building and leveraging; in strategic learning and knowledge management', Edited by Sanchez, R. and Heene, A., John Wiley & Sons Ltd., England.

24. Bernstein, P.L. (1998), 'Are networks driving the new economy', Harvard Business Review, November-December.

25. Maccoby, M. (1996), 'The Human side: Knowledge workers need new structures', Industrial research institute.

26. Eisenhardt, M. and Galunic, D.C., [2000] 'Co-evolving at last, a way to make synergies work', Harvard Business Review, Jan-Feb.

27. Normann, R. and Ramfrez, R. (1993) 'From value chain to value constellation: Designing interactive strategy', Harvard Business Review, July -August.

28. Mohanty, R.P. and Deshmulda, S.G. (1999) 'Advanced manufacturing technology selection: A strategic model for learning and evaluation', International Journal of Production economics, Vol.55.

29. Wenger, E.C. and Snyder, W.M. (2000) 'Communities of Practice: The organizational frontier' Harvard Business Review, January-February.

30. Sanchez, R., Heene, A. and Thomas, H. (1996) Dynamics of competencies and competition: Theory and practice in the new strategic management, Oxford, Elsevier.

31. Tiessen, J.H. (1999), 'Developing intellectual capital globally: an epistemic community perspective', International Journal of Technology Management, Vol. 18, No. 5161718.

32. Buckler, B. (1998) 'Practical steps towards a learning organization: applying academic knowledge to improvement and innovation in business processes', The learning organization, Vol.5, No.1.

33. Sanchez, R., Heene, A. and Thomas, H. (1996), Dynamics of competencies and competition: Theory and practice in the new strategic management, Oxford, Elsevier.

34. Nonaka, I. And Takeuchi H. (1994) The Knowledge Creating Company, Oxford University Press, New York.

35. Tichy, N.M. (1993) GE's CrontonviUe: A staging ground for corporate revolution in enterprise school of management, MCB University Press.

36. Bennis, W. (1998) Rethinking leadership, Executive Excellence, April. 37. Stewart, T.A (1995)., How a little company won big by betting on brainpower,

Fortune, September 4. 38. Covey, S.R., (1998) Constant renewal Executive excellence, April 39. Bush, T. and Coleman, M. (1995) 'Professional development for heads: the role of

mentoring', Journal of Educational Administration, Vol.33, No.5. 40. Gunn, E. (1995) 'Mentoring: The democratic version'. Training, Vol.32, No.6. 41. Smith, M. L. (1994) 'Creating business development talent through mentoring',

Journal of management engineering, Vol. 10, No.2. 42. Davenport, S., Grimes, C. and Davies, J. (1999) 'Collaboration and organizational

learning: a study of a New Zealand collaborative research program', International Journal of technology management, Vol.18, Nos.3/4.

43. Whiteley, W., Dougherty, T.W. and Dreher, G.F. (1992), 'Correlates of career mentoring for early career managers and professionals', Journal of organizational behaviour, Vol. 10.

44. Loeb, M. (1995) 'The new mentoring', Fortune, Vol.X, No. 11.

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

156 R.P. Mohanty

45. Orpen, C. (1997) 'The effects of formal mentoring on employee work motivation, organizational commitment and job performance', The learning organization, Vol.4, No.2.

46. Tabbron, A., Macaulay, S. and Cook, S. (1997) 'Making mentoring work', Training for quality, Vol.5, No.1.

47. Pfeffer, J. (1994) Competitive advantage through people: Unleashing the power of the work force, Harvard Business School Press, Boston.

48. Senge, P.M. (1990), The fifth discipline - the art and practice of the learning organization, Century business, New York.

49. Mohanty, R.P. (1998) 'Understanding the interconnection between productivity and quality', Journal of TQM, Vol.9, No8.

50. Mohanty, R.P. (1997) 'TQM: some issues for deliberation', Production Planning and Control, Vol. 8, No. 1.

51. Mohanty, R.P. and Lakhe, R.R (1998) 'Factors affecting TQM Implementation: an Empirical study in Indian industry', Production Planning and Control, Vol.9, No.5.

52. Iyer, K . and Mohanty, R . P . (1995), 'Adaptation of Japanese manufacturing management practices: A case study of an Indian organization', Proceeding of the 13 th International conference in production research, Israel, August.

53. Swami Vivekananda (1900), 'Work and its secret', The lectures delivered at Los Angeles, California, 4 th January (Ref. Advaita Ashrama, Publication department, Calcutta).

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

157

E n h a n c i n g a g i l i t y in m a n u f a c t u r i n g : T h e r o l e o f Q F D

David Ginn, Mohamed Zairi and P.K. Ahmed

European Centre for TQM, University of Bradford, Management Centre, UK

1. T H E C O M P O N E N T S O F T H E QFD S Y S T E M

A Roadmap to Understanding QFD To begin this roadmap it is necessary start with at least one fundamental definition of

QFD, that can be understood and accepted by all levels. To choose just one author or definition as a baseline for understanding is courting a prejudgement, or bias to the discussion. However, the definition given here is sufficiently broad enough to allow latitude as discussion proceeds and specific enough to retain focus on what will become key elements of the research that follows. In a simple sentence, Karabatsos (1988) quotes Larry Sullivan (chairman of the American Suppliers Institute), as stating in 1986 that QFD is the 'mechanism to deploy customer desires vertically and horizontally throughout the company'. At a fundamental quality process level QFD can also be seen as a 'positive' quality improvement approach as opposed to a (traditional) 'negative' quality improvement approach to deliver customer satisfaction (Ford Motor Co. 1983). For a more detailed baseline definition, Sullivan (1986) proposes that there are six key terms associated with QFD, which are as follows; i) 'Quality Function Deployment' (an overall concept that translates customer

requirements into appropriate technical requirements for each stage of product development and production).

ii) 'Voice of the Customer' (the customers' requirements as expressed in their own terms). iii) 'Counterpart Characteristics' (the voice of the customer expressed in technical

language). iv) 'Product Quality Deployment' (the activity required to translate the voice of the

customer into technical requirements). v) 'Deployment of the Quality Function' (the activity required to assure that customer

required quality is achieved). vi) 'Quality Tables' (the series of matrices used to translate the voice of the customer into

final product characteristics) The above six key terms of QFD described by Sullivan (1986) can be further simplified as

follows; i) a 'concept' for translating customer wants into the product, ii) a requirement to understand 'what' the customer 'wants', iii) the requirement to identify 'how' to technically deliver the 'what' the customer wants, iv) the requirement for a 'team' to carry out the 'translation' of 'whats' into 'hows', v) the requirement for a 'team' required to 'deliver' the hows into the product, vi) the requirement for 'charts' that facilitate the translation of whats and hows into the product. In even simpler terms, this can be distilled down to just one 'concept' of QFD with four key 'requirements' of; customer 'whats' (or wants), technical 'hows', 'team(s)' and 'matrices'. This can be taken a step further by proposing that the first requirement of 'customer whats' needs the second requirement of 'technical hows' to translate

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

158 D. Ginn et al.

itself into the product, this second requirement in turn needs the third requirement of 'teams' to translate itself into the product, and finally this third requirement needs 'matrices' to translate its decisions into the product. This systematic trace from customer subjectiveness, to technical objectiveness, to team decision making with the aid of matrices into product characteristics is a fundamental basis for QFD.

This fundamental step by step process of QFD also lays down the foundation of the concept of the customer to customer process through teamwork. Furthermore, this step by step process is a fundamental description to the mechanics of the matrices and how they are used within a QFD process to translate 'customer whats' into 'technical hows' throughout the product development cycle. It is important to understand the mechanics of the QFD matrix charts early in the discussions, but before this is done, it is necessary to broaden the baseline definition as stated by Sullivan (1986) to include the term 'quality tools'. As a next step, it is beneficial to understand the two terms of; quality tool, and matrix diagram, as this adds the dimension of 'why' use QFD in the first place, and they are important signposts to understanding the QFD system.

The Quality Tool of QFD QFD is often referred to as a 'tool' in broad terms (Reynolds 1992), and in more specific

terms; a 'competitive tool' (Kathawala & Motwani 1994), a 'communication tool' (Fowler 1991), a 'marketing tool' (Potter 1994), a 'design tool' (Slinger 1992), a 'planning tool' (Sullivan 1988, McElroy 1989, Ford Motor Co. 1989, 1992, 1983, 1983), and a 'quality tool' (Ealey 1987, Barlow 1995, American Supplier Inst. Inc. 1992). This last reference of, 'quality tool', perhaps best summarises all the tool references, and needs a definition in itself to better understand the basic roots of QFD. Straker (1995) describes quality tools as 'structured activities that contribute towards increasing or maintaining business quality'.

By 'structured activities', Straker (1995) means repeatable and using a defined set of rules, by 'contribute', he means add value, by 'increasing or maintaining' it is meant for use in all areas of quality improvement, and for 'business quality' it means that the company benefits from the quality tool use. In simple terms, Straker (1995) suggests that quality tools are both serious and valuable ways of doing business. Straker (1995) also proposes that tools can be used at either the organisational level or (structuring the way people work together), or at an individual level (helping people and groups solve problems and tasks in their everyday business). Straker (1995) finally suggests three areas where tools can be used, which are; i) 'collecting various levels of numeric and non-numeric information.' ii) 'structuring the information in order to understand aspects o f process and problems.' iii) 'using the information to identify and select information and plan f o r specific actions.'

The definition of quality tools and the three areas of use as described above by Straker (1995) helps outline the fundamental basis of any quality tool including QFD as defined already by Sullivan (1988), Barlow (1995) and Clausing (1994). However, according to Straker (1995), who lists some 33 individual tools in a relationship diagram with their information uses, it is apparent that not all tools are suitable for all three areas of use, or are of equal use. Asaka and Ozeki (1990) list some 15 individual quality tool types, while Nickols (1996) lists just three suites of tool types. It is clear then that the interpretation of what constitutes an tool, a tool type, or a suite of tools is largely dependent on the perspective the various authors and the application of the tool(s) in question. Nickols (1996) considers the question of tools in terms of its 'problem solving' capability, and proposes his three tool types in terms of;

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

Enhancing Agility in Manufacturing: The Role of QFD 159

'Repair Tools' for technical trouble shooting 'Improvement Tools' such as Kaizen, continuous improvement, TQM and re-engineering 'Engineering Tools' for design or solution engineering from scratch

This approach by Nickols (1996) is based on the premise that tasks are best performed using the proper tool. Although Nickols (1996) does go into more detail as to what tools fit into the above groups, it is clearly based on findings later on in the thesis that QFD could fit into either of the second two groups and a tool such as FMEA would fit into the first of these groups.

The Matrix Diagram of QFD Asaka and Ozeki (1990) describe matrix diagrams as a method to 'show the relationships

between results and causes, or between objectives and methods, when each of these consists of two or more elements or factors'. Asaka and Ozeki (1990) continue by stating that 'various symbols are used to indicate the presence and degree of strength of a relationship between two sets o f essential items'. Asaka and Ozeki (1990) propose some four key benefits of using matrix diagrams with symbols as follows; i) The use of symbols makes it visually clear whether or not a problem is localised

(symbols appear isolated) or more broad ranging (symbols in rows or columns). ii) It possible to show the problem as a whole, and view all the various relationships

between the various at once iii) By testing and evaluating each relationship intersection of the essential factors it

becomes easier to discuss the problem at finer levels of detail. iv) A matrix makes it possible to look at specific combinations, determine essential

factors and develop an effective strategy for solving the problem.

Some Basic Mechanics of the QFI) Process It may benefit the reader, at whatever level of understanding of the topic of QFD, to begin

with a baseline assumption of the way a QFD matrix chart or 'house o f quality' is constructed. It is also essential to explain the way in which the 'customer whats' and 'technical hows' that make up the basis of any QFD project are incorporated into the matrix and analysed.

The House of Quality Mechanics Within QFD To begin explaining the mechanics, Kim and Ooi (1991) remind the reader that 'QFD is a

set o f planning and scheduling routines that has proven effective in producing high quality as well as low cost products' Kim and Ooi (1991). Burton (1995) proposes that the QFD chart, often referred to as a 'house o f quality' due to its' so called construction of 'rooms' and a 'roof" is essentially a chart comprising nothing more complicated then a series of 'lists' and 'relationship matrices' Clausing (1994) agrees with the term rooms, but adds they can also be referred to as 'cells' and adds that the QFD matrix diagram comprises of 8 such rooms (or cells) which in turn contains 20 steps in completing the 'Basic QFD' matrix. The American Suppliers Institute (ASI) (1992) also refer to 10 'analytical steps" f o r studying the completed house of quality at the product planning level. ASI (1992) suggest the same principles apply to all of the QFD matrix charts used at each phase of the process, and add that these steps can take anywhere from a few minutes to several days to complete. In Burton's (1995) description of lists and relationship matrices he is also referring to any of the QFD phases. However, in Clausing's (1994) description of 8 rooms and 20 steps for the Basic QFD he is referring specifically to the first phase of the QFD process. Clausing (1994) proposes, however, that to complete an 'Enhanced QFD' matrix a total of 43 steps (another 23 steps beyond the first 20) are required for a successful concept phase. The initial 20 steps described by Clausing (1994)

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

160 D. Ginn et al.

are divided among the eight rooms of the QFD planning matrix, while steps 21 to 43 are product planning enhancements that include selecting a 'winning concept' (Clausing 1994) via Pugh's concept selection chart which in turn leads to the subsequent deployment to a sub- system level.

The eight rooms Clausing (1994) describes are effectively the same basic rooms Ford Motor Company use for their House of Quality charts at a planning level, but Ford (1994) go further by adding a ninth' 'Quality Plan' room', (excluding the Relationship Matrix) which is a key strategic aspect of the QFD process within the Company.

Burton (1995) adds to his description of the House of Quality chart comprised of lists and relationships matrices by stating that they are aligned along two axes, where the x-axis is called the customer axis, and the y-axis is called the technical axis. This twin axis description is supported by Asaka and Ozeki (1990), who suggests QFD is generally charted using a 'two dimensional diagram', with customer quality requirements on the vertical axis and the quality requirements needed to satisfy the customer requirements on the horizontal axis. The sum of these two axis of customer and quality requirements Asaka and Ozeki (1990) refer to as quality information that consists of the problems and desires of the market and workplace. Sullivan (1988) emphasises that the use of matrix charts is key to this process as the correspondence or interaction between heterogeneous elements cannot be viewed in one dimensional space. Sullivan (1988) adds that this process requires two or three dimensional space to evaluate interactive relationships effectively, and confirms what most authors suggest, that symbols (in whatever shape or form) are the ideal way to identify strong, medium or weak relationships between the vertical and horizontal axis of communication. The symbols are also usually assigned numeric values, often weighted in favour of the strongest relationships, 9 = strong, 3 = medium, and weak = 1 as used by ASI (1992) and ITI Burton (1995) or in a linear fashion 3 = strong, 2 = medium and 1 = weak as described by Aska and Ozeki (1990). In most cases however, the company standard default for the strengths can be altered and customised as required, depending on whether the process is carried out on paper as traditionally done by Japanese companies (Akao 1988), or with specifically designed in-house QFD software which is typical of companies such as Lucas Engineering. In all cases however, if no relationship (or correlation) is apparent then the 'cell' or 'value' in the relationships matrix remains blank (or zero). Akao (1988) refers to these symbols within the quality charts used for QFD as indicators of correlation between the customers 'demanded qualities' and the technical 'quality elements'. Akao (1988) also refers to the traditionally used symbols depicting; strong, medium and weak as the; double circle, circle and triangle respectively, which is corroborated by Asaka and Ozeki (1990). These traditional QFD relationship symbols originally came from the Kobe shipyard employees who first used QFD, as they represented the horse racing symbols of win, place or show (strong medium or weak) (Ford Motor Co. 1989).

Akao (1988) also differentiates between two types of quality charts within QFD. the first is called the 'Demanded Quality Deployment Chart' and the 'Quality Elements Deployment Chart'. The first of these, the demanded quality chart includes information provided by the customers about the qualities they want from the product. These demanded qualities can also be arranged in first, second and third level order Akao (1988), ie first level is 'easy to manoeuvre', second level is 'easy to hold' and third level is 'easy to hold because it is light'. However it must be noted here that what Akao (1988) refers to as a demanded quality chart is what Clausing (1988), (1994), Burton (1995), The ASI (1992) have collectively referred to as; customer requirements, customer wants, customer attributes and whats, and invariably as a room, list, cell, field or list, and not as a chart. This mismatch between what Akao (1988) refers to as a chart, and many Western practitioners refer to as a room continues with Akao's

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

Enhancing Agility in Manufacturing: The Role of QFD 161

(1988) quality elements deployment chart. The Akao (1988) quality element deployment chart is the technical translation of the customers' demanded qualities. An example of a quality element for the customer demanded quality of 'easy to hold because it is small' would be 'weight'. These quality elements, have been referred to over time by the various Western QFD practitioners Clausing (1988) (1994), Burton (1995), ASI (1992) as engineering characteristics, substitute quality characteristics, product expectations, design characteristics, how's and technical system expectations. Also within the West, this quality element chart Akao (1988) tends to be referred to as a room. What is clear, however, is that the first building blocks to any QFD chart are these two components of the initial customer requirements (regardless whether its called a want, requirement, demanded quality) and their subsequent interpretation into the product or service technical measurable (regardless of whether they are called (quality elements, engineering requirements, hows, substitute quality characteristics, or technical systems expectations) is the starting point for any QFD chart (regardless of whether it is called quality deployment, quality tool, house of quality or quality matrix).

Cascading Phase to Phase Mechanics of QFD Sullivan defines four levels of QFD matrices that reflect different stages of application in

the product development cycle. The first of these is the 'Planning Matrix' that culminates with selected control characteristics (based on customer importance, selling points and competitive evaluations). The second is the 'Component Deployment Matrix' which culminates in defining the finished component characteristics (based the planning matrix targets). The third stage is the 'Process Plan Chart', which culminates in the production process monitoring plan required by the operators. Finally the fourth stage is the 'Control Plan' which culminates in defining quality controls that would typically include control points, control methods, sampling size frequency and checking methods. In each case Sullivan outlines that the previous charts' key outputs feed into the next chart as key inputs, and represent the transition from the development phase to the execution of the production phase within the product development cycle. This four phase process is consistent with most authors. This four stage, step or phase approach is also typically taught by the American Suppliers Institute (Verduyn & Wu 1995) even though flexibility, customisation and overlap with other quality tools (such as FMEA, Taguchi Methods and TIPS (theory of inventive problem solving) is becoming more typical. In common with Ford Motor Company reference to the 'process clock', IBM reference to 'dynamic QFD' (Claxton 1995, Hochman & O'Connell 1993) support the argument for a flexible approach to the QFD process with an emphasis to the cyclical nature to the customer input and feedback loop.

Phase 1 Prioritisation Mechanics of QFD Four key areas of this prioritisation process will now be discussed. These four areas are

crucial components to the Phase 1 'House of Quality' (HOQ). The first is benchmarking, and the second is, in Ford Motor Company language 'Customer Desirability Index' (or CDI) (Ford 1994). The CDI has also been typically been referred to as Customer Importance Rating (CIR) (Ford 1987, 1989, 1992, 1983). The third prioritisation process is ultimately an end product of the first two, and relates to the technical importance rating of the technical systems expectations (TSE's) which represent the company measurables. These measureables typically take the form of a test or metric that can be assigned a target with technical data to support an actionable follow up by the system or component engineer who are the next 'internal' customers of this data. The fourth, and often least used form of prioritisation within the QFD House of Quality is the 'Roof Correlation matrix' (Ford 1987, 1989, 1992, 1983, 1994). This

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

162 D. Ginn et al.

room is effectively where conflicting technical system expectations (or company measureables) can be identified. It is least used partly due to the extra time it takes to complete, and partly because it is often difficult to resolve the technical conflicts that ensue from setting optimised targets for all of the key technical measureables. The term 'roof" is due the triangular nature of this technical relationship matrix on top of the main wants and hows relationship matrix. As a result of the roof is rarely completed or viewed with fear and suspicion.

The Mechanics of the Benchmarking Process Within Prioritisation Benchmarking within the Phase 1 HOQ comes in two forms, the first is the Customer

Competitive Assessment (or Evaluation), (CCA or CCE) (Ford 1994). As the title suggests this is the qualitative benchmarking that the customer participates in within the horizontal customer axis Ford (1994). Customers evaluate the products by comparing the relative 'perceived' performance according to the key customer requirements (using customer language) as identified by prior market research with the support of the QFD team. This exercise will involve the company product (or service) amongst its key competitive products (or services). The second benchmarking activity is the quantitative Engineering Competitive Assessment (or Evaluation) (ECA or ECE) (Ford 1994). This technical benchmarking exercise will compare the same products (or services) through conducting tests that are 'global and measurable' (Ford 1983, 1994) and have been correlated objectively or subjectively to best represent the technical function of the subjective customer wants. These tests have been typically referred to as Substitute Quality Characteristics (Akao 1988), or Design Requirements (Ford 1987, 1989), Technical System Expectations (Ford 1994), or Hows (ASI 1996). These are the technical Company Measures (Verduyn & Wu 1995). These make up the key element to the technical axis (Ford 1994). The benefit of conducting both benchmarking exercises within the same HOQ matrix is that it is then possible to compare subjective customer ratings to objective engineering ratings. The first benefit is to show the company where improvements are required the most, and where there is already high satisfaction relative to competition. The second key benefit is that it is possible to compare discrepancies between customer perception and technical reality. Where discrepancy occurs it is either due to the wrong technical measure being in place, there are more 'hidden' customer wants that require further research, or quite simply as occurred with a Ford Driveability QFD benchmarking exercise in Germany and Britain in July and September 1990 (Ginn 1995), a complexity of 'brand image' (despite efforts to 'debadge') and other complex secondary factors play a part in customer perception. The specific example involved the performance feel of two vehicles, the first was a BMW, and the second was a Citroen. The customer perception was that the BMW was faster, while the technical reality was that the Citroen was faster. The findings showed a complex web of secondary factors that included; brand image, sound quality, interior and exterior styling, the accelerator pedal ergonomics and throttle progression and torque curve rise. The basic element of vehicle acceleration, peak power and velocity over time where in the Citroen's favour on paper. However it proved to be a powerful lesson to the Driveability QFD. This prompted a later Performance Feel QFD research with outside suppliers such as Lotus, Braunschweig University in Germany and Loughborough University to study these secondary factors, that were outside of the time resources of the powertrain engineering community supporting the QFD exercise. These lessons learnt are both a feature and the power of benchmarking within QFD.

Competitive benchmarking to set goals is a powerful tool and is supported by Vaziri (1992), who adds that it assists companies to anticipate customer needs. This ability to anticipate customer wants is a critical measure of success within any QFD exercise, and in the

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

Enhancing Agility in Manufacturing: The Role of QFD 163

absence of any other form of futuring provides the engineer a key tool in setting so called 'stretch' targets (Ginn 1995). Vaziri (1992) adds that it is important to obtain this benchmarking data in a timely fashion to be effective. Vaziri (1992) also argues that QFD derived customer requirements are a precursor to benchmarking, but not a pre-requisite, although he does reinforce the argument that the combination of QFD and benchmarking culminates in feeding information to quality improvement teams. Ohinata (1994) supports the idea that benchmarking was originally a Japanese invention (rather then an American invention, typically attributed to Xerox) used by small companies who used this tool for modelling best practice from other larger Japanese and American companies. Ohinata (1994) cites some five areas for benchmarking of; product, function, process, management and strategy. Ohinata (1994) adds to this the five steps for successful benchmarking as; clarifying goals, organising a team, selecting target organisations (products or services), collecting and analysing information and devising an action plan. These five areas and steps are arguably a mirror image of the basic key areas and steps required to set up and run a QFD exercise. It is therefore perhaps no coincidence that the synergy of the QFD process with benchmarking is complete when it is recognised that the two key axis of QFD include a benchmarking exercise to support the target setting and prioritisation of both axis. Finally when considering benchmarking, as with all tools, De Toro (1995) warns of 10 pitfalls that confront the benchmarking team which De Tom (1995) refers to as 'miscues'. These ten miscues, or pitfalls, support the argument that QFD and benchmarking are from the same mould of teamwork and process.

The Mechanics of the Quality Strategy Plan Within Prioritisation The quality strategy or plan is the area or room within the QFD HOQ where consideration

of the customer importance rating (CIR) or customer delight index (CDI) Bergeon (1996) for the key customer wants is effectively weighted using a combination of techniques. First it is important to emphasise the subtle difference between CIR and CDI. Typically CIR's were individually rated by the customer during drive surveys (within Ford Motor Company) (Ginn 1995), although this practice still exists a more recent practice initiated by the Quick QFD process is based on the Thurstone methodology (Ford 1994, Guilford 1954, Bergeon 1996) of triplicate comparisons. The CDI method as based on Thurstone is only one of many methods that can be used to compare customer wants. In simple terms the CDI is a customer-assigned rating of desirability for each customer want relative to every other want. From this process a pareto list of customer wants is developed, where typically only the top 25% of wants are taken and put into the QFD House of Quality matrix (Ford 1994). Effectively this is a form of prioritisation before the QFD HOQ is constructed in an effort to keep the total matrix size containable. The more traditional form of QFD also still practised within Ford Motor Company will take all of t h e identified customer wants, and rely on the prioritisation of resources and the end of Phase 1 by taking only the top 25% of Technical Importance Ratings of the Technical System Expectations (How's, or Company Measureables) into Phase 2, the Component Design level (or Phase 1A the System or Phase 1B sub-System level as appropriate) (1994). With either route the basic mechanics for the Quality Plan (or Strategy) remains the same. The CIR or CDI will then be weighted by a combination of strategic pointers such as Sales Points, Product Attribute, Leadership Strategy, Customer Satisfaction Data, Marketing Brand Strategies and, as already described benchmarking. Sales points are directly influenced by benchmarking results and support weightings to customer wants CIR's or CDI's by assigning pre agreed weighting factors such as 1.5 for strong sales point or 1.2 for moderate sales point.

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

164 D. Ginn et al.

The Mechanics of Technical Importance Ratings Within Prioritisation Although the software algorithms and strategies for determining weightings of customer

wants CIR's and CDI's are often a closely guarded secret with most companies using QFD, the basic QFD HOQ maths for determining the final technical axis TIR's remains universal. Each TIR is the sum of the 'final' weighted CIR multiplied with each respective relationship value (typically 9, 3 or 1) across the horizontal axis, and then the summed down the vertical axis. Typically the CIR's are also normalised between 1 to 5, although the Strategic CDI (which is the weighted CDI as a result of the Quality Strategy maths and algorithms to produce a futuring effect) may vary, and even include decimal points (Ford 1994, Bergeon 1996).

The Mechanics of the Roof Correlation Matrix Within Prioritisation The mechanics of QFD is perhaps the least utilised part of many QFD teams. The full

function of the roof correlation is to assign weak and strong positive and negative relationship symbols between the technical measureables of the QFD HOQ. As a result it has become the practice to just assign strong negatives that highlight the critical conflicts between optimised technical measureables. A common set of attribute level conflicts within an automobile are; sound quality (or noise vibration and harshness), vehicle weight, safety packaging, emissions packaging, performance and fuel economy. The list could easily be expanded to include sub level conflicts such as idle quality, air conditioning, smoothness and styling. The key issue here is that to resolve these conflicts in a rational approach, a structured data driven process is required. Such a process already exists with QFD, with the support of other quality tools to assign optimised target values. There is also a formula for weighting the key TSE's from different QFD Attribute or Systems. This customised 'extended' version of the QFD HOQ 'roof correlation matrix is known within Ford Motor Company as the 'Super Roof. Where companies suffer the most, particularly when developing a complex product over a protracted product development cycle, is that conflicting targets set early in the process become increasingly more difficult to rectify by the time the final product leaves the factory floor. It is these conflicts that can be identified and resolved early in the product development process through the use of QFD, particularly within the least used 'room', the roof correlation matrix.

2. T H E PHILOSOPHY, COMPONENTS AND D E V E L O P M E N T S THAT HAVE LED TO CURRENT QFD USE

It is now appropriate to understand the basic philosophy that led to the development of QFD and the key components that make up the House of Quality that is typically associated with QFD. A critical part of this understanding will be a series of discussions that considers the development of QFD, initially in Japan, and later how it was translated and applied in USA, Europe and the 'Western' world in general. This discussion on the developments will highlight both the cultural difference on interpretation and application. It will also identify why QFD usage today is still in a state of development within the West in particular. First, however, it is essential to identify from a broad base of literature, East and West, what are the formal definitions of QFD, and what are the fundamental agreements or disagreements within the worldwide QFD as a whole.

Some Working Definitions and Descriptions of Quality Function Deployment Kathawala & Motwani (1994) simply state 'QFD can reduce the risk o f misinterpreting

customer requirements'. Kathawala & Motwani (1994) further quote from the work of Maddux, Amos & Wyskis (1991), that 'QFD's objectives are to: identify the customer,

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

Enhancing Agility in Manufacturing: The Role of QFD 165

determine what the customer wants, and provide a way to meet the customer's "desires'. Asaka and Ozeki (1990) place great emphasis on the word 'planning' in their descriptions of QFD as do Sullivan (1988), McElroy (1989) and Ford Motor Company (1983, 1989, 1992). Asaka and Ozeki (1990), however, prefer to shorten the term 'quality function deployment' to just 'quality deployment', and state that quality deployment (or QFD) 'defines the functions of planning, development, design and manufacturing o f a product to satisfy the quality requirements o f customers'. This shortening of QFD to just quality deployment is consistent with Akao (1988). Quality deployment refers to the charts, tables and descriptive matrices used to design in the quality (or 'goodness3 required by the customer in the product Akao (1988). Akao (1988) has two definitions for QFD, one narrow, and one broad; i) narrow QFD definition: 'The business or task functions responsible f o r quality

(design, manufacturing, production).' ii) broad QFD definition: 'A combination of these business or task functions

responsible for quality (design, manufacturing, production etc.) and the quality deployment charts.'

Akao (1988) adds that 'function deployment is often a later step in QFD where the basic functions of the product or service are identified by experienced people at the production company.' Akao (1988) likens function deployment to the 'voice o f the engineer' who has the task of identifying the 'must be' attributes of the product, where Akao (1988) gives the example of 'must be' as an unspoken customer requirement, an attribute that must be there, otherwise it is a source of dissatisfaction to the customer (such as a bed, and bathroom in a hotel, that the customer must have). However Akao (1988) asserts that to have these 'must be' attributes, or functions, does not guarantee customer satisfaction, it only ensures no strong dissatisfaction. Akao (1988) summarises this argument by stating that when customer's spoken quality demand opposes these 'must be' attributes or functions, then the producer of the product or service must balance the spoken demands with practical functional requirements of the product or service. Akao (1988) ties in the purpose of the quality charts or quality tables (which have already been referred to as houses of quality or QFD matrices by the previously referenced authors) as a 'means to..'not 'an end in themselves', that is to say they are there to provide insight into the nature of the product or service and what is necessary to improve it with relation to the spoken quality demands of the customer.

Asaka and Ozeki (1990) further develop what they mean by quality requirements of the customer by stating the product or service must meet or fulfil customer standards, needs, expectations and future unanticipated needs and aspirations, 100% of the time. This total product development cycle definition of QFD driven by an extreme level of customer expectation by Asaka and Ozeki (1990) proposes a very stringent test for QFD success.

Slinger (1992) neatly proposes that 'Quality Function Deployment is a design tool which is a powerful support to 'encouraging' engineering design teams to take a structured, thorough approach to product design'. Slinger (1992) and Metherell (1991) further describe a four stage (phase) QFD process as part of an integrated engineering process, which they illustrate as linked into Simultaneous Engineering using teamwork, training and planning. Metherell (1991) adds to the setting of QFD and Simultaneous Engineering in context with Integrated Engineering by emphasising the focus for team effort. Metherell (1991) also intimates that QFD as part of this Integrated Engineering process, is consistent with the highest 'opportunity for change' at the concept levels, and offers traceability throughout the product cycle.

Consistent with the previous two authors (Metherell 1991 and Slinger 1992), Hauser and Clausing (1988) propose a definition of QFD through reference to its classic House of Quality matrix that reads 'the house of quality is a kind of conceptual map that provides the means for inter-functional planning and communications'. They further suggest that people with

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

166 D. Ginn et al.

different problems and responsibilities can thrash out design priorities by referring to patterns of evidence from the house of quality. This interpretation adds to argument for QFD being more than just a planning tool scenario, but also a tool for interdisciplinary communications within any company. Hauser and Clausing's (1988) definition proposes that QFD is both a planning and communications tool that helps focus and coordinate skills within an organisation from design to manufacture into a product customers want and will continue to buy. This definition is concurred by McElroy McElroy (1989) who refers to QFD as a 'powerful planning tool', and quotes Dana Cound (a VP within GenCorp Automotive) as saying it is 'a typical Japanese take-nothing for granted procedure that makes you write everything down' (as opposed to the traditional approach that leaves too much to chance). McElroy (1989) also quotes Bill Eureka (ASI president) who states that 'QFD is a process that will bring out the 'hidden knowledge' in your organization'. Bob Porter (Texas Instruments) also suggests that the QFD process is an 'exercise in culture change' and that anytime a group a group of people sit a room discussing the customer there will be conflict but from this conflict comes creativity (McElroy 1989). Fowler (1991) states that the QFD 'matrix is a communication tool for members of a broad based, cross-functional design team that serves three key functions; i) develops within the team members and the organization a better understanding of how the customer needs relate to design requirements, ii) focuses design effort on areas where effort is justified, and iii) identifies problems during the design phase to minimise later redesign effort. From all the quotes in the above section it is clear that QFD is more then a customer satisfaction delivery tool but is also; an improver of communications, a prompter for creativity, a discoverer of latent knowledge, a documentation of process, an identifier of problems, and perhaps most importantly a changer of culture.

Sullivan (1988) corroborates th view that QFD is a both a planning tool and aid to communication, and observes that several U.S. companies are being very successful in applying the QFD matrix charts, which in turn has helped integrate the various diverse activities within that company. Sullivan develops this argument, however, by suggesting that QFD can be used as the 'hardware' through which 'policy management' which he refers to as the , 'software' can be integrated. The difference with policy management to 'objective management', the more typical style of management, is that the latter is based on measuring performance by results, while the former focuses on developing the means of achieving results through methods, systems, or resources. The foundation of policy management (Sullivan 1988) suggests is 'business planning'. Business planning in turn is based on employee ownership or entrepreneurship to set goals through a comprehensive planning process across the whole organization, by reducing the void between departments. The results from this level of detail then become the results of the policy means and a measure of policy management success. In summary, Sullivan (1988) proposes that 'soft technologies' such as policy management are important to achieve the business plan, and that this must be integrated through congruent objectives with the use of 'hard technologies' such as QFD, Taguchi Methods, SPC, to deploy product requirements. All these elements combined deliver the key goal of meeting customer expectations. This argument for QFD being an integral part of business planning is corroborated by Barlow (1995). He refers to 'policy deployment' in the same context. Greenall (1995) describes policy deployment as process focused, rather then management by objectives, which is reiterated by Barlow (1995) who uses Kawneer UK Ltd as an example of policy deployment in action. Barlow's (1995) description of policy deployment mirrors the key elements of a QFD in that both ensure a clear understanding of the company objectives, goals and direction, both are diagnostic tools that set targets through focusing on the 'vital f e w o b j e c t i v e s ' , both place emphasis on team building and good communications, and both focus on the interaction of all tools (including QFD) to achieve an

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .

Enhancing Agility in Manufacturing: The Role of QFD 167

integrated business plan. Greenall (1995) adds to this by suggesting that the policy deployment process is formalised and measurable, with goals and targets and negotiated and set by the employees which often tend to be stiffer, than had they been set by management. Benefit of policy deployment is that improvements are continuous and everyone ends up pulling in the same direction (1995). These three arguments by Sullivan (1988), Greenall (1995) and Barlow (1995) strongly suggest that a suite of quality tools including QFD must be used as part of a process oriented business plan and that the full benefits of any one tool cannot be realised without such an approach. Ealey (1987) adds to this line of argument for using quality tools in support of one another by suggesting that QFD can be used to identify where a company should use such powerful tools as Taguchi Methods without waste, which is an example he concludes of QFD's often unmentioned benefit of being able to tell manufacturers where NOT to invest time and money.

The idea of using QFD within an organization as an aid to business planning becomes clear when placed in the context of its numerous and varied benefits which will now be discussed. Zairi (1993) summaries four key benefits as being; higher quality, lower cost, shorter timing and marketing advantage. Akao's (1988) survey of QFD benefits within Japanese industry quotes five key process benefits of; decreased start-up problems, competitive analysis became possible, control points clarified, effective communications between divisions, design intent carried through to manufacturing. Hideaki Aoki, Yukio Kawasaki and Takao Taniguchi (1990) relate the benefits of QFD as being in conjunction with 'quality charts, related procedures of new product development and quality assurance activities' and summarises these into two broad benefits that lead to; i) the development of new products that both meets the customers' demands and wins

their trust as well as being developed in a timely manner to lead the market. ii) the improvement of interdepartmental communication on product development, by

identifying problems from early predesign stage to ensure development and process time reductions.

Finally Aoki, Kawasaki and Taniguchi (1990) add that from planning to preproduction QFD enables the relationships between systems to be clearly understood thus benefiting the development of more diversified projects. This argument implies that QFD although complicated in itself can help clarify complex inter-system relationships. This line of thought is captured by Sullivan (1986) who describes the overall QFD system based on four key documents that trace a continuous flow of information from customer requirements to plant operating instructions. This Sullivan (1986) considers is in line with what W.Edwards Deming calls a 'clear operational definition'.

The argument from Aoki, Kawasaki and Taniguchi (1990) regarding the ability of QFD to assist more diversified projects from planning to pre-production to is seen by Hiroshi Takamura and Tadayoshi Ohoka (1990) as a key aim of QFD. They add to this by stating that the goal of QFD is to 'achieve mass production of a product with assured quality, with ease of manufacturing, and at minimum cost'. They then go onto develop the argument for production participation at the product development stage to allow for greatest efficiency. A key process within QFD, Takamura and Ohoka (1990) continue, particularly in today's competitive market, is more focused prioritisation. Methods that can assist with prioritisation is reviewed by Nabuo Takezawa and Masyuki Takahashi (1990) who suggest using 'fault tree analysis (analysing the system)' to accurately deploy high priority quality items, as relationships alone cannot do this. Later they also suggest using a 'concept deployment chart' based on the component feature values that are to be deployed to establish the best design policy. The details of these component feature values identified within the QFD are also examined and refined using such tools as FMEA (failure mode and effects analysis). Takezawa and

C op

yr ig

ht ©

2 00

1. E

ls ev

ie r.

A ll

rig ht

s re

se rv

ed .