What Really Makes Factories Flexible?

by David M. Upton Comments

Manufacturing managers in a broad array of industries agree that achieving low cost and high quality is no longer enough to guarantee success. In the face of fierce, low-cost competition and an army of highquality suppliers, companies are increasingly concentrating on flexibility as a way to achieve new forms of competitive advantage. The flexible factory, they hope, will enable them to respond to customer orders quickly, provide a broad product range, or introduce new products to the range effortlessly. The push to make factories more flexible has been spreading throughout manufacturing and currently is even permeating industries such as chemicals and paper, in which the assumption for decades has been that the plants with the longest production runs are typically the most competitive. Having acknowledged the importance of flexibility, managers in industry after industry are finding it frustratingly difficult to improve. Some have organized cross-functional teams in the hope that new ways of working will generate greater agility. Many have collectively invested tens of billions of dollars in hardware and software in the hope that computer-integrated manufacturing (CIM) will transform their factories into highly flexible operations. Time and time again, managers have been disappointed and frustrated because they have not understood exactly why enhanced flexibility has eluded them. Was it the degree to which they automated their operations? Was it the software, whose complexity and cost they had underestimated? Or was it the inability of employees to take advantage of the new technologies? In a quest to help manufacturing managers understand why the improvement of flexibility has been so elusive, I embarked on a study of 61 factories in North America that manufacture fine paper. At first glance, the paper industry may seem like an unusual starting point for the study of flexibility. It is rarely characterized as flexible and has not, until recently, given high priority to improving flexibility. However, there are some less obvious characteristics that make the paper industry an ideal place to begin. Unlike most industries in which different plants make different products and, indeed, in which the same plant may make different productsthe paper industrys products are comparable across plants and are always manufactured by the same fundamental process. There are only a small number of ways in which one type of paper differs from another typethe most fundamental being the basis weight, or area density, of the paper. These characteristics, or grades (each particular pulp and weight combination is a grade), are straightforward to measure. Those facts enabled me to develop concrete measures of both the range of products that a given plant could produce and the time it took a plant to switch from making one product to making another product. My findings turn much of the conventional wisdom on its head. In the plants I studied, there was little direct correlation between the degree of computer integration and the degree of operational flexibility. I

found that large plants were not inherently less flexible than small plants. Contrary to what many believe, newer, bigger processes were typically better able to perform quick changeovers than older, smaller machines. And although experienced workers provided powerful advantages in some situations, they impeded a plants ability to be flexible in others. The primary revelation of my research concerns the role of people both managers and operators. The flexibility of the plants depended much more on people than on any technical factor. Although high levels of computer integration can provide critically needed advantages in quality and cost competitiveness, all the data in my study point to one conclusion: Operational flexibility is determined primarily by a plants operators and the extent to which managers cultivate, measure, and communicate with them. Equipment and computer integration are secondary. At many of the plants in my study, however, managers embraced computer integration as the solution to the growing need to forge new capabilities. In reality, computer systems were often a quick fix that helped managers avoid the tremendously difficult task of defining precisely what kind of flexibility they required from a plant and then setting goals, revamping measurement and compensation systems, building training programs, and overhauling work practices in order to achieve that flexibility. To state it simply, most managers put too much faith in machines and technology, and too little faith in the day-to-day management of people.