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Best manufacturing practices

What do the best-performing companies do?

Best
manufacturing
practices

Bjrge Timenes Laugen

Stavanger University College, Department of Business Administration,
Stavanger, Norway

131

Nuran Acur and Harry Boer

Aalborg University, Centre for Industrial Production, Aalborg, Denmark, and

Jan Frick
Stavanger University College, Department of Business Administration,
Stavanger, Norway
Abstract
Purpose Research on best practices suffers from some fundamental problems. The problem
addressed in the article is that authors tend to postulate, rather than show, the practices they address
to be best whether these practices do indeed produce best performance is often not investigated.
Design/methodology/approach This article assumes that the best performing companies must
be the ones deploying the best practices. In order to find out what are those practices, the highest
performing companies in the 2002 International Manufacturing Strategy Survey database were
identified, and the role 14 practices play in these companies was investigated.
Findings Process focus, pull production, equipment productivity and environmental compatibility
appear to qualify as best practices. Quality management and ICT may have been best practice
previously, but lost that status. E-business, new product development (NPD), supplier strategy and
outsourcing are relatively new, cannot yet be qualified as, but may develop into, best practice. Four
other practices do not produce any significant performance effects.
Research limitations/implications There are four limitations to the research: Incompleteness of
the set of practices tested: lack of insight into the effects of interaction between practices and the way
in and extent to which they were implemented; good explanatory but poor predictive power; and lack
of contextuality.
Originality/value Taking the position that best practice must be what best performing companies
do, the paper is useful for managers using benchmarking to review the design and performance of
their manufacturing system, and for scholars engaged or interested in best practice studies.
Keywords Operations and production management, Performance management, Working practices,
Strategic manufacturing
Paper type Research paper

Introduction
Todays market and competitive pressures require companies to develop and maintain
a high level of coherence between their strategy (objectives), action programmes
(implementation), practices (instantiation) and performance (realisation). A lot of effort
has been put into identifying best practices to support companies achieve superior
performance. However, most research has failed to investigate the effect of these
practices on performance, whilst perhaps even less is known about the extent to which
they are indeed generic. Therefore, this paper will take a different perspective.
Focusing on manufacturing practices and performance and defining best practices as
the practices used by, and having significant effect on the performance of, the best

International Journal of Operations &

Production Management
Vol. 25 No. 2, 2005
pp. 131-150
q Emerald Group Publishing Limited
0144-3577
DOI 10.1108/01443570510577001

IJOPM
25,2

132

performing companies, the research question is: Which manufacturing practices are
used by the best performing organisations?.
The article is structured as follows. First, we present the background of the
research. Next we describe the research design (question, operationalisation,
methodology). Subsequently we present and then discuss the results of an analysis
of data from the Third International Manufacturing Strategy Survey. Finally, we
present the main contributions of the research, identify the main weaknesses and
propose directions for further research.

Background
In the early 1970s the MRP crusade was an attempt to spread MRP to as many
companies as possible. Although the word best practice had not been invented yet,
the underpinning assumption was that MRP is good, i.e. good in terms of practice and
performance effects, for all companies. Today we know better.
In the late 1970s and early 1980s, the best practice approach to manufacturing
strategy seriously entered the industrial and academic agenda with the recognition of
the extraordinary process and product improvement success of Japan Inc. Western
industries and academics alike began to look at Japanese companies achievements in
order to understand the principles behind that. Best practice achievement has since
become a driving force amongst industry. The best practice approach to
manufacturing strategy encapsulates the world class manufacturing (WCM)
philosophy and benchmarking, and is based on the assumption that The
continuous improvement of best practice in all areas of the organisation will lead to
superior performance capability leading to increased competitiveness (Voss, 1995a).
The following analysis of the WCM and best practice literature, summarised in
Table I, uncovers what we think are the key weaknesses of the field.
Hayes and Wheelwright (1984) introduced the term WCM, and described this as a
set of practices, including quality management, continuous improvement, training and
investment in technology. The implementation of these best practices would lead to
superior performance (Flynn et al., 1999, p. 250).
Schonberger (1986) argued that many lessons could be learned from the Japanese
manufacturing industry. He regarded improving the material flow in the production as
one of the most important issues, and the flow could be improved through
implementing just-in-time (JIT), total quality control and total preventive maintenance
(TPM). In addition, still according to Schonberger, WCM means continual and rapid
improvement in all areas of the company, and training is the catalyst (Schonberger,
1986, p. 207).
The basic principle of the best practice thinking is that operations philosophies,
concepts and techniques should be driven by competitive benchmarks and business
excellence models to improve an organisations competitiveness through the
development of people, processes and technology (Greswell et al., 1998; Voss, 1995b).
In these studies, e.g. JIT, total quality management (TQM) and the European
Foundation of Quality Management (EFQM) model are defined as best practices and
assumed to imply improved performance.
Useful as they may be, the WCM and best practice studies suffer from three
weaknesses.

Researchers

Key concept to best

practice

Swamidass and
Newell (1987)

Cross-functional
co-operation, design for
manufacturability
Voss (1995a)
World-class
manufacturing,
bench-marking, business
process re-engineering,
TQM, learning from the
Japanese, continuous
improvement (CI)
Ahmed et al. (1996) TQM, JIT, FMS, CE,
benchmarking

Bolden et al. (1997) WCM, employee

development
Flynn et al. (1997)

WCM, TQM, JIT

Harrison (1998)

WCM, CI

Flynn et al. (1999)

WCM, CI, JIT, TQM

Kathuria and
Partovi (1999)

Cross-functional
co-operation

Rondeau et al.
(2000)
Davies and
Kochhar (2002)

Work system practices,

time-based competition
Best practices,
performance,
manufacturing planning
and control
Benchmarking, CI

Garver (2003)

Ketokivi and
Schroeder (2004)

TQM, JIT, WCM,

contingency

Results regarding practice-performance

relationships
Corporate performance is positively related to the
role of manufacturing managers in strategic
decisions
Implementation of best (world class) practices leads
to superior performance and capability

Best
manufacturing
practices
133

When practices (operations strategies) are examined

individually, companies using any of seven
practices (FMS, CE, benchmarking, TQM, JIT,
manufacturing cells and computer networking)
have higher performance than those not using them
The classification of manufacturing practices
taxonomies developed provides insight into the role
of individual practices, implementation and
outcomes
The best users of unique TQM practices, combined
with common infrastructure practices, are capable
of solving problems to improve production
processes
WCM appears to facilitate operator commitment to
continuous improvement, but leaders become more
frustrated because they expected to achieve more.
Cellular manufacturing in a UK-based company
acted as a powerful change agent, which has led to
more in terms of manufacturing improvement than
previous initiatives, such as MRP II
The use of WCM, alone and together with other new
practices, leads to improved competitive
performance
Better performing manufacturing managers
strongly demonstrate relationship-oriented
practices, such as team building and support,
participative leadership and delegation, especially
when the emphasis on flexibility is high
Time-based manufacturing practices tend to lead to
standardisation, formalisation as well as integration
A structured approach used to identify direct
qualitative relationship between practice and
performance
Integrating customer performance measures with
internal performance measures (internal quality,
productivity etc.) to identify improvement
opportunities is found to be critical
There are only few best practices contributing to
competitive manufacturing performance in multiple
dimensions

Table I.
Main theoretical
contributions to links
between best practices
and performance

IJOPM
25,2

134

First, the field is rather scattered with many articles focusing on one or a limited set of
new practices, while the reasons why these practices are considered best are often not
accounted for. Flynn et al. (1997), for example, investigated the influence of quality
management practices on quality performance and the interrelationship between JIT
and quality management. Hanson et al. (1994), Hanson and Voss (1995) and Voss
(1995a) focused on TQM, concurrent engineering (CE) and lean production. Ketokivi
and Schroeder (2004) chose to study computer-aided design (CAD), computer-aided
manufacturing (CAM) and statistical quality control (SQC). Why these practices, not
others, and whether the authors regard the set as comprehensive remains unclear.
Related to this, WCM and best practice studies do not take into consideration that other
practices, or configurations of practices, might be even more important for the overall
performance of the companies than the predefined best practices. There may be
companies that do not reach world-class status, due to the definition of best practices in
these studies, which are really world class in terms of performance, but have
implemented another set of practices to reach that level of performance.
Second, best practice studies only rarely link the practices investigated to company
performance. At best, a positive effect of the practices on performance is assumed
(Voss, 1995a), or (implicitly) considered self-evident (Voss et al., 1997, p. 284). Only a
few studies confirm that the use of best practices leads to improved performance (e.g.
Hanson and Voss, 1995; Voss et al., 1997). However, if an explicit link is made, this is
done only for a limited set of performance criteria. An example is Davies and Kochhar
(2002), who showed that the implementation of quality programmes leads to increased
quality performance. The few (Davies and Kochhar, 2002) more holistic publications
linking practices to performance are usually based on one or a few single case studies
(e.g. Peters and Waterman, 1982), which offer limited possibilities for generalisation.
Finally, too little effort is put into analysing the relationship between the different
practices and the relative effect both individual practices and their interaction have on
performance.
Third, best practices are considered generic, that is, best for all companies, always.
The potential influence of factors like type of industry, company size, processes and
products is not considered, nor is the fact that practices, even the best ones, may
become obsolete in the course of time.
In other words, the practices studied are often not accounted for and postulated as,
rather than shown to be, best, always and for all. Consequently, there may be best
practices that have never been studied and also the relative contribution of individual
practices to performance and as well as the interaction between practices is
insufficiently studied. Accordingly, Davies and Kochhar (2002) put forward three main
points for future research on best practices:
(1) Best practices are those that lead to improvement in performance. That is, they
help a low performing company become a medium performer, a medium
performer become a high performing company, and a high performer stay
successful.
(2) Best practices must be investigated within the specific context in which they
operate.
(3) The investigation of best practices should be approached holistically.

Research question
In fact, Davies and Kochhar (2002) suggest that the reasoning behind best practice
studies should be turned around. Focusing on these authors first suggestion (i.e. the
second problem identified above), this article is based on the assumption that the best
performing companies are the ones that (must) have the best practices. The question
we address in this article therefore is: Which practices are used by the best performing
organisations?
The answer to this question will tell us what are best practices. The data we had
available (see below) did not allow us to pay serious attention to the other two
suggestions in the analysis presented here. The work presented here should therefore
be regarded as a first step towards developing a best performance based theory of best
manufacturing practices.
Research design
Sample
This article is based on the 2002 International Manufacturing Strategy Survey
(IMSS-III) database, which contains data from 474 manufacturing companies in 14
countries. IMSS is a co-operative research network of business schools, which aims at
developing, maintaining and analysing using a variety of perspectives and research
questions, a global database for the study of manufacturing strategies, practices and
performances. The respondents are representing five industrial sectors: ISIC 381 (metal
manufacturing), 382 (machinery), 383 (electrical equipment), 384 (automotive) and 385
(professional measurement equipment).
Data analysis
We analysed the data in three steps. First, based on 17 manufacturing performance
criteria investigated, we introduced four variables to measure the improvement in the
categories quality, flexibility, speed and cost (see Table II for details). We divided the
respondents into two groups, high performers and low performers, for each of these
four performance categories and for each of the eleven combinations of these categories
(see Table II). Next, we performed an ANOVA to determine the differences in the
adoption of action programmes between the two groups for each of the (in total) 15
categories (see Table III). Finally, we developed a regression model in order to find
which action programmes have most influence on manufacturing performance (see
Table IV).
Operationalisation of variables and descriptive results
This section explains the data concerning performance improvement and action
programmes indicated by the sample companies.
Performance improvement. Manufacturing companies must continuously adapt to
new performance requirements in terms of quality, flexibility, speed and cost. The IMSS
survey asked the respondents to rank their companys performance improvements
within the last three years on the basis of 17 indicators (see Table II). The questions were
measured on a five-point Likert scale (1 performance has strongly deteriorated over
the last three years, 3 no change, 5 performance has strongly improved). We
defined high performers as companies reporting an average score 4 or higher on all the
performance indicators taken into the analysis. Low performers are respondents

Best
manufacturing
practices
135

IJOPM
25,2

136

Table II.
Average values for the
manufacturing
performance criteria and
number of respondents
for the groups of high and
low performing
companies

Improvement in manufacturing performance

during the last three years

Number of
high performers

Number of
low performers

0.5
0.6
0.7
0.7
0.8
0.8

187

70

3.6
3.6
3.8
3.6
3.5

0.5
0.8
0.8
0.7
0.7

135

76

Speed (S)
Delivery speed
Manufacturing lead time
Procurement lead time

3.6
3.7
3.6
3.3

0.5
0.8
0.7
0.7

145

102

Cost (C)
Procurement cost
Labour productivity
Inventory turnover
Capacity utilisation
Overhead cost

3.4
3.3
3.6
3.4
3.5
3.2

0.5
0.8
0.7
0.7
0.8
0.8

72

110

81
88
48
56
27
46
43
22
34
22
18

19
41
33
25
23
41
12
12
22
16
10

Average

SD

Quality (Q)
Manufacturing conformance
Product quality and reliability
Customer service and support
Delivery reliability
Environmental performance

3.7
3.7
3.8
3.7
3.7
3.5

Flexibility (F)
Product customisation ability
Volume flexibility
Mix flexibility
Time to market

Combination of:
Quality and flexibility (Q-F)
Quality and speed (Q-S)
Quality and cost (Q-C)
Flexibility and speed (F-S)
Flexibility and cost (F-C)
Speed and cost (S-C)
Quality, flexibility and speed (Q-F-S)
Quality, flexibility and cost (Q-F-C)
Quality, speed and cost (Q-S-C)
Flexibility, speed and cost (F-S-C)
Quality, flexibility, speed and cost (Q-F-S-C)

indicating an average score 3 or lower on all the performance criteria, meaning either
deterioration in performance or at best maintaining status quo.
Table II shows that a relatively large percentage of the IMSS companies (187) have
strongly improved their quality performance during the last three years, and can be
categorised as high performers in quality. For 70 respondents, quality performance has
stayed the same or even deteriorated. While 135 of the respondents have strongly
improved their flexibility performance over the last three years, 76 respondents have at
best maintained status quo. A total of 145 companies have strongly improved their
speed performance, while 102 respondents have maintained status quo or not even
that. For cost performance the picture is that 72 of the respondents claim to have
strongly improved on cost performance within the last three years, while 110
respondents failed to achieve that.

Mean high
Mean low
Mean high
Mean low
Mean high
Mean low
Mean high
Mean low
Mean high
Mean low
Mean high
Mean low
Mean high
Mean low
Mean high
Mean low
Mean high
Mean low
Mean high
Mean low
Mean high
Mean low
Mean high
Mean low
Mean high
Mean low
Mean high
Mean low
Mean high
Mean low

3.50
2.86
3.48
2.99
3.42
3.06
3.57
3.16
3.58
2.24
3.54
2.69
3.61
2.67
3.45
2.50
3.57
2.95
3.58
2.84
3.54
1.80
3.56
2.20
3.59
2.32
3.60
2.38
3.56
1.75

A
3.47
3.12
3.38
2.93
3.33
3.30
3.46
3.35
3.49
2.24
3.51
3.03
3.55
2.94
3.35
2.67
3.22
2.80
3.56
3.11
3.39
2.10
3.28
2.10
3.50
2.65
3.35
2.58
3.38
2.00

B
2.76
2.17
2.64
2.28
2.79
2.33
3.19
2.46
2.77
1.82
2.85
2.08
3.07
2.23
2.60
2.05
2.91
2.20
3.21
2.18
2.69
2.00
2.94
2.00
3.00
2.10
2.95
2.25
3.00
2.00

C
3.33
2.89
3.18
3.00
3.36
2.95
3.67
3.14
3.29
2.71
3.42
3.00
3.59
2.45
3.32
2.62
3.42
2.80
3.62
2.65
3.46
2.50
3.47
2.20
3.52
2.55
3.44
2.33
3.54
2.25

D
2.11
1.73
1.99
1.75
2.10
1.78
2.34
1.97
2.08
1.59
2.23
1.73
2.33
1.58
2.07
1.81
2.33
1.80
2.32
1.60
2.11
1.50
2.33
1.70
2.32
1.45
2.33
1.83
2.38
1.63

E
2.97
2.45
3.03
2.64
3.11
2.41
3.23
2.63
3.19
2.35
3.22
2.17
3.29
2.39
3.29
2.10
3.30
2.35
3.26
2.40
3.42
1.90
3.18
2.00
3.20
2.05
3.18
2.17
3.07
1.75
2.80
2.25
2.67
2.45
2.85
2.30
3.19
2.35
2.88
2.19
2.99
2.36
3.24
2.13
2.82
2.25
2.95
2.00
2.90
2.24
3.06
2.33
3.06
2.30
2.93
2.25
2.83
2.00
3.00
2.25

3.33
2.37
3.33
2.33
3.43
2.67
3.41
2.86
3.48
1.47
3.51
2.40
3.49
2.32
3.51
1.81
3.32
1.75
3.44
2.54
3.70
1.40
3.29
1.30
3.50
2.25
3.28
1.75
3.29
1.38

3.08
2.16
3.08
2.02
3.18
2.32
3.31
2.52
3.06
1.47
3.22
2.06
3.28
1.97
3.20
1.48
3.26
1.60
3.40
2.18
3.27
1.30
3.17
1.20
3.19
1.95
3.32
1.67
3.20
1.25

Action programmes last three yearsa

F
G
H
I
3.48
2.56
3.28
2.88
3.51
2.78
3.52
2.91
3.53
2.41
3.60
2.51
3.62
2.48
3.31
2.38
3.40
2.55
3.58
2.68
3.49
2.40
3.55
2.20
3.59
2.45
3.29
2.50
3.47
2.38

J
3.02
2.21
2.97
2.23
2.95
2.31
3.19
2.39
3.19
1.65
3.17
2.14
3.26
2.16
3.08
1.86
3.09
1.80
3.19
2.20
3.31
1.50
3.24
1.40
3.23
2.10
3.16
1.75
3.33
1.50

M
2.96
2.68
3.14
2.29
3.05
2.62
3.26
2.57
3.22
2.24
3.04
2.72
3.29
2.48
3.23
2.33
3.52
2.35
3.20
2.54
3.28
2.50
3.44
2.40
3.16
2.50
3.42
2.42
3.33
2.50

L
3.25
2.53
3.13
2.62
3.28
2.55
3.32
2.81
3.39
2.29
3.36
2.59
3.45
2.48
3.11
2.38
2.91
2.50
3.31
2.51
3.35
2.40
3.11
2.40
3.45
2.60
2.89
2.50
3.13
2.50

3.60
2.88
3.53
3.06
3.60
3.04
3.71
3.11
3.75
2.59
3.69
2.87
3.93
3.03
3.59
2.76
3.71
2.80
3.77
2.89
3.73
2.50
3.84
2.70
3.84
2.80
3.75
2.75
3.81
2.50

Notes: aA process equipment; B manufacturing capacity; C process automation; D ICT; E e-
business; F supplier strategy;
G outsourcing; H process focus; I pull production; J quality management; K equipment productivity; L workplace development;
M NPD; N environmental compatibility. Figures in bold are significant at p # 0:01, figures in italics are significant at p # 0:05

Q-F-S-C

F-S-C

Q-S-C

Q-F-C

Q-F-S

S-C

F-C

F-S

Q-C

Q-S

Q-F

Cost

Speed

Flexibility

Quality

Improvement in
manufacturing
performance during last
three years

Best
manufacturing
practices
137

Table III.
Differences in mean
values between high and
low performing
companies (ANOVA) for
the investigated action
programmes (1 no use,
5 high use)

Table IV.
Regression analysis:
standardised coefficients
20.063
0.284
0.058 20.062
0.301
0.323

0.054
0.325
0.046
0.384
0.038
0.528
20.036
0.513
0.000
0.994

0.033 20.080
0.534
0.178

0.074
0.166

0.070 20.086 2 0.065

0.190
0.157
0.242
20.040 20.020
0.455
0.739

0.057
0.311

0.046
0.388
0.074
0.192

0.068
0.240

2 0.041
0.419
2 0.049
0.339
0.040
0.471
2 0.072
0.172
2 0.047
0.361

0.037
0.486

0.075
0.155

0.075
0.188
2 0.12
0.826
0.035
0.484
0.073
0.183

0.047
0.380
2 0.118
0.029

0.080
0.172
0.197
0.003
0.127 2 0.070
0.041
0.239
0.083
0.101
0.194
0.091
0.094
0.115
0.213 0.129
0.059
0.000 0.036
0.312
0.124
0.089
0.037
0.127
0.102
0.079
0.236 0.143
0.000 0.021
0.134 0.119 2 0.050
0.039 0.069
0.425
0.068 0.107
0.262 0.082
0.188 0.111
0.073
0.002 0.062
0.208
0.153 0.118
0.067
0.010 0.051
0.244
0.067
0.059
0.183
0.287
0.343
0.002
0.153 0.129
0.011 0.035
0.148 0.122
0.063
0.014 0.042
0.275
0.111
0.079
0.202
0.001
0.127
0.052

Action programmes last three yearsa

F
G
H
I

2 0.052 0.093
0.330 0.094
2 0.101 0.059
0.080 0.316

2 0.053
0.365
2 0.039
0.481

0.073
0.211

0.084
0.180

0.064
0.297

0.167
0.007
0.175
0.004
0.189
0.008
0.118
0.044
0.061 0.049
0.342 0.413
0.108
0.095
0.082
0.191
0.145
0.014
0.086 0.057
0.163 0.338

0.148
0.019
0.152
0.022

0.143
0.034

0.043
0.472
0.133
0.015
0.195
0.000
0.171
0.002
2 0.118 0.201
0.038 0.000
0.085 0.105
0.121 0.055
0.172
0.001
0.107
0.073

20.135 0.216
0.019 0.000
0.120
0.034
0.149
0.08
0.069
0.247
0.150
0.007
2 0.108 0.246
0.044 0.000
20.004 0.138
0.952 0.018

Notes: aA process equipment; B manufacturing capacity; C process automation; D ICT; E e-
business; F supplier strategy;
G outsourcing; H process focus; I pull production; J quality management; K equipment productivity; L workplace development;
M NPD; N environmental compatibility. Coefficients in bold are statistically significant at p # 0:1

Beta
Sign
Flexibility Beta
Sign
Speed
Beta
Sign
Cost
Beta
Sign
Q-F
Beta
Sign
Q-S
Beta
Sign
Q-C
Beta
Sign
F-S
Beta
Sign
F-C
Beta
Sign
S-C
Beta
Sign
Q-F-S
Beta
Sign
Q-F-C
Beta
Sign
Q-S-C
Beta
Sign
F-S-C
Beta
Sign
Q-F-S-C
Beta
Sign

138

Quality

Action
programmes last
three years

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This distribution indicates that quality performance is (still) important for the
engineering industry. Cost reduction is the least important goal. This finding is
consistent with recent research by Cagliano et al. (n.d.), which showed that price is
losing ground as a competitive priority. Another explanation may be that cost
reduction programmes have been used in manufacturing companies for so long now,
that possibilities for further reductions are small, leading companies to focus on
improving in other areas.
Action programmes. In the survey questionnaire, the term action programmes is
used instead of (manufacturing) practices, for two reasons. First, the term
programme reflects the implementation of bundles of practices. Pull production, for
example, is an action programme; Kanban and single-minute exchange of dies (SMED)
are practices underpinning pull production. Second, following Davies and Kochhars
(2002) recommendations for best practice studies, we are interested in performance
improvements and, thus, changes in practices (i.e. action programmes), rather than
(bundles of) practices in place.
In the survey we investigated 14 action programmes (i.e. implementation of new
practices), which are listed and defined in Table V. The degree of use during the last
three years, measured on a 1-5 Likert scale (1 no usage, 5 high usage), represents
the independent variable we used in our analysis.

Results
The adoption of action programmes
The ANOVA (Table III) shows that there are many significant differences in the degree
of implementation of action programmes between high and low performing companies.
This indicates that most of the single action programmes have been implemented
differently among the high and low performing companies.
E-business, process automation and outsourcing are the least implemented
programmes among the respondents in all categories of performance. The difference
between the high and low performers is not significant in any of the performance
categories.
High performers in all categories implement programmes directed towards
updating process equipment, process focus, pull production and equipment
productivity to a significantly (p # 0:01) higher degree than the low performers.
The exception to this is the difference in implementation of process equipment for
flexibility-cost (F-C), which is non-significant. These four action programmes are also
used more by the high performers in the single performance categories, although the
significance is lower ( p # 0:05).
Finally, programmes directed towards supplier strategy, quality, workplace
development, new product development and environmental compatibility are in
general also significantly more adopted by the high performers.
The differences between high and low performers suggest that high performers
implement more and gain more from the action programmes they adopt. Another
possible explanation is that high performers continue implementing the programme
until it is finished, instead of stopping the implementation after a short period, for
example if the results are not as expected. So, the difference between high and low
performers seems to be related to implementation width and depth.

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Action programme

Operationalisation

Process equipment

Updating the companys process equipment to industry standard

or better
Expanding manufacturing capacity (e.g. buying new machines,
hiring new people, building new facilities)
Engaging in process automation programmes
Implementing information and communication technologies
and/or enterprise resource planning software
Reorganising the company towards e-commerce and/or
e-business configurations
Rethinking and restructuring the companys supply strategy,
and the organisation and management of the companys
suppliers portfolio
Concentrating on the companys core activities and outsourcing
support processes and activities (e.g. IS management,
maintenance, material handling)
Restructuring the companys manufacturing processes and
layout to obtain process focus and streamlining (e.g. re-organize
to plant-within-a-plant, cellular layout)
Undertaking actions to implement pull production (e.g. reducing
batches, set-up time, using kanban systems, etc.),
Undertaking programmes for quality improvement and control
(e.g. TQM programmes, 6s projects, quality circles)
Undertaking programmes for the improvement of the companys
equipment productivity (e.g. total productive maintenance)
Implementing actions to increase the level of delegation and
knowledge of the companys workforce (e.g. empowerment,
training, improvement or autonomous teams)
Implementing actions to improve or speed-up the companys
process of new product development through, e.g. platform
design, product modularisation, component standardisation,
concurrent engineering (CE), quality function deployment (QFD)
Putting efforts into and commitment to improving the companys
environmental compatibility and workplace safety and healthy

Manufacturing capacity

140

Process automation
ICT
E-business
Supplier strategy
Outsourcing
Process focus
Pull production
Quality management
Equipment productivity
Workplace development
NPD

Table V.
The 14 action
programmes investigated

Environmental compatibility

The performance effects of the action programmes

The ANOVA does not reveal the performance impact of the different action
programmes. In order to investigate that, we performed a regression analysis. The
results are shown in Table IV and discussed next.
Quality performance. Implementing action programmes that aim at improving
manufacturing capacity, improving quality management and environmental
compatibility, and obtaining process focus are positively related to quality
performance improvement.
The effect of quality management and environmental compatibility programmes on
quality performance and its underpinning indicators, especially product quality and
reliability, manufacturing conformance and environmental performance, is not
surprising. Essentially, this finding confirms that these programmes pay off as
intended.

The observation that increased process focus has positive effects on quality is
less trivial. One explanation might be that process focus often is implemented to
improve delivery reliability, one of the quality indicators. Additionally,
process-based production is more transparent than function-based production.
Thus, quality problems are visible and, thus, solved sooner. Finally, process-based
manufacturing requires high and predictable quality in order to become a success.
This may indicate that it is not the action programme alone, but a combination
with other programmes, that explains the impact of increased process focus on
quality performance.
Somewhat surprisingly, actions aimed at improving NPD have a significant
negative effect on quality. The most obvious explanation is that some of the practices
underpinning this action programme, in particular platform design and
modularisation, are relatively new and actually quite complex and difficult to
implement. Involving a review of the companys whole product portfolio, but also a
range of organisational and managerial changes throughout the companys value
chain, the implementation of platform design and modularisation may have an,
initially, negative effect on product quality.
Flexibility performance. Implementing process focus, pull production and
programmes to improve equipment productivity and NPD are all positively related
to improvement in flexibility performance.
Process focus especially has a positive influence on volume and mix flexibility, as
the development and manufacturing of different products are managed separately and
take place on different production lines (plant-within-a-plant). Pull production
(including reduced batch sizes and set-up times) increases the speed and reduces the
cost of changing the mix of existing, and launching new products, thus allowing a
company to produce to order rather than to forecast. This helps the company improve
its mix and volume flexibility as well as its customisation capability. Reduction of
set-up times is also an important element of TPM, which is one programme to improve
equipment productivity.
While negatively associated with quality performance, the findings indicate that
improving NPD is positively associated with improvement in flexibility performance.
The most obvious explanation is that some of the practices underpinning NPD
improvement support customisation (modularisation) and time to market reduction
(CE).
Speed performance. Process focus, quality and environmental programmes all
significantly contribute to better speed performance. Increased process focus helps
reduce manufacturing lead time and delivery speed. In addition, quality programmes
reduce scrap, losses and rework, and through that improve the speed performance.
A little surprising is that improving and speeding up NPD does not have a
significant influence on speed performance. The reason for this is probably that the
measurements for speed performance are related to procurement and manufacturing,
not to the whole process from product development to customer delivery.
Cost performance. For cost performance, programmes that are implemented to
improve equipment productivity appear to have a positive influence, as should be
expected. After all, one of the main purposes with equipment productivity
programmes, e.g. TPM, is to increase the Overall Equipment Efficiency (OEE),
which is closely related to cost reduction and improvement of capacity utilisation.

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There is a positive relationship between pull production and cost performance.

Although, the relationship is not significant, the level of significance is fairly good.
Reduced inventory levels and higher inventory turnover are important goals with pull
production and explain the effect found.
The other action programmes do not affect cost performance. The most obvious
explanation is that actually relatively few respondents go for cost reduction, which
confirms findings reported elsewhere (Cagliano et al., n.d.) that cost seems to have
become a less important performance indicator for ISIC 38 companies.
Combination of quality and flexibility performance. The regression analysis shows
positive relationships between the implementation of process focus, pull production,
equipment productivity and environmental compatibility, and improvement of
quality-flexibility (Q-F) performance. While this is hardly surprising, the finding that
improved quality management practices do not lead to improved Q-F performance is.
The only explanation we can think of is that the product quality/reliability and
manufacturing conformance aspects of quality have long been solved, while the
delivery reliability and environmental aspects have not. The four programmes just
mentioned address these aspects.
Combination of quality and speed performance. Programmes aiming to implement
process focus and increased environmental compatibility are positively related to
improved quality-speed performance, which is not surprising given the influence of
these programmes on quality and speed considered individually. Improving and
speeding up the NPD processes is negatively related to quality-speed improvement. We
could not find a reasonable explanation for that other perhaps than that the negative
impact on quality (see above) is larger than the positive impact on speed.
Combination of quality and cost performance. Pull production, equipment
productivity and environmental compatibility have a positive effect on quality-cost
performance. The most likely quality aspects affected are delivery reliability and
environmental performance. Through reduction of inventory, batch sizes and set-up
times, pull production leads to cost reduction. Apparently, equipment productivity
programmes such as TPM also do what they are supposed to do: contribute to quality
improvement and cost reduction.
Combination of flexibility and speed performance. In line with the improvement
programmes being positively related to flexibility performance, implementing process
focus, pull production and equipment productivity are also positively related to
improving flexibility-speed performance. While implementing a clear supplier strategy
does not have a significant effect on flexibility and speed considered individually, it
does in companies pursuing improvement on the combination of these performance
areas, and that effect is positive. In other words, one of the cornerstones of supply chain
management does indeed have positive effects on the logistical aspects of
manufacturing performance.
Combination of flexibility and cost performance. The pattern of relationships
between action programmes and flexibility-cost performance does not produce any
surprises, except for the negative effect of implementing e-business. The most likely
explanation is not flexibility but cost/benefit related: e-business is a relatively recent
phenomenon and as in many other previous innovations, the initial costs are higher
than expected, while the financial benefits are lower. It will be interesting to see if the
cost effects of e-business are still negative in a couple of years time.

Combination of speed and cost performance. Pull production, equipment

productivity and environmental compatibility are positively associated with
improving speed-cost performance. Interestingly, the relationship between pull
production and speed-cost performance is significant, while not significant for speed
and cost performance analysed separately. This may indicate that pull production
provides a good basis for achieving a good speed performance and, through that, also
has significant impact on cost.
Combination of quality, flexibility and speed. Companies with a high performance
improvement in quality-flexibility-speed appear to be able to achieve that by
implementing process focus, pull production and environmental compatibility. This
confirms the picture starting to emerge, namely that these three action programmes
taken together produce a range of different performance effects. The fourth apparently
rather influential action programme, equipment productivity, does not have significant
influence on Q-F-S improvement, and the question is why. We do not have an answer.
Combination of quality, flexibility and cost performance. Programmes directed
towards process focus, pull production, equipment productivity and environmental
compatibility are positively related to improving quality-flexibility-cost performance.
The essence of the explanation has been given above.
Combination of quality, speed and cost performance. Improving quality
management practices and environmental compatibility affect quality-speed-cost
performance positively. Attempts to improve NPD, however, have a negative effect on
this performance combination. The most obvious explanation is that introducing
standardisation and especially modularisation, though possibly beneficial in the longer
term, involves a major and grossly underestimated change process, in spite of all the
glossy stories currently being told. Some negative effects, especially on conformance
quality, delivery reliability, manufacturing lead time, labour productivity and capacity
utilisation, should therefore be expected, at least initially so.
Combination of flexibility, speed and cost performance. Companies that have
achieved a high degree of performance improvement in flexibility-speed-cost have
implemented process focus, pull production, equipment productivity and
environmental compatibility. Again, these programmes do exactly as they are
supposed to do.
Combination of quality, flexibility, speed and cost performance. Apparently a high
degree of improvement on all four categories of performance is associated with the
implementation of programmes aimed at process focus, pull production and
environmental compatibility. Exactly why equipment productivity is missing in this
list is not clear to us.
Discussion
Action programmes directed towards improving environmental compatibility have a
significant positive effect on all combinations involving quality performance. This is
not surprising considering that environmental performance is one, relatively recent yet
key, aspect of quality performance (see Table II). Similarly, all performance
improvement combinations including quality, except the combination of quality, speed
and cost (Q-S-C), are positively affected by the implementation of either pull
production, increased process focus, or both. Again, this is hardly surprising as both
pull production and process focus will have a positive effect on delivery reliability, one

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of the other aspects of quality (see Table II). We do not have a good explanation for
why these two programmes do not appear to have a significant effect on the Q-S-C
combination.
More surprising is the finding that action programmes aimed at improving quality
management practices are only related to quality, speed and the combination of
quality, speed and cost (Q-S-C), but not to any of the other combinations including
quality. A possible explanation is that most companies today have solved the quality
problem, especially as regards manufacturing conformance and also the mostly
design-determined product quality and reliability. Putting more effort into improving
these aspects of quality is likely to produce only marginal effects.
Flexibility, whether stand-alone or in combination with any other (set of)
performance area(s), is affected positively by the implementation of process focus and
pull production. Attempts to improve equipment productivity have the same effect,
with the exception of the Q-S-F and Q-S-F-C combinations. A possible explanation is
that this action programme is too narrow. That is, especially in order to achieve quality
plus speed in addition to flexibility effects, this programme has to be combined with
other actions. Programmes focused on the improvement of quality management
practices seem to be the most obvious candidate.
All combinations in which cost performance is included, except Q-S-C and Q-S-F-C,
are affected positively by actions aimed at improving equipment productivity. This
corresponds well with the main targets of equipment productivity programmes,
namely reducing waste and increasing OEE. In many of these combinations, pull
production and/or process focus also have a positive effect.
Which action programmes represent best practices?
Process focus, pull production, equipment productivity and environmental compatibility.
The combination of process focus, pull production, equipment productivity and
environmental compatibility has a significant positive effect on three of the fifteen
(combinations of) performance areas. Any combination of three of the four
programmes leads to significant improvement in another seven (combinations of)
performance areas. A combination of two of the four programmes positively affects
three combinations of performance areas. Only in the case of cost, and of cost combined
with speed and quality (Q-S-C), a combination of these programmes does not show any
synergetic effect. This finding suggests that these four programmes should be
qualified as best practice, that is, they support companies achieve significant
improvements in most performance areas and combinations thereof. Furthermore,
these programmes seem to reinforce each other.
E-business, supplier strategy and outsourcing. E-business is the least adopted action
programme among the 14 studied here. The action programme is negatively related to
all combinations of flexibility performance. That pattern indicates that companies
have problems gaining benefit of programmes directed towards e-business. This may
be due to the fact that the concept is rather new, especially in the engineering industry.
Furthermore, it is not likely anyway that e-business will have a great impact on the
performance of manufacturing operations; the opposite effect, that manufacturing is
one of the enablers of successful e-business performance, is much more likely. We
conclude that, from a manufacturing performance perspective, e-business is not
currently a best practice.

The impact of the supply chain management related action programmes supplier
strategy and outsourcing on manufacturing performance is rather limited. To be sure,
especially outsourcing does have positive effects, mainly on cost, but they are not
significant. The effects of supplier strategy on operations performance are much
weaker. As with e-business, the main reason could be that the effects of these action
plans are mostly outside the operations function. Anyway, the conclusion is that
especially supplier strategy, but also outsourcing, do not appear best practices from an
operations performance perspective.
NPD improvement. Attempts to improve the NPD function have mixed effects on
manufacturing performance. The effects on flexibility and the combination of
flexibility and cost are positive; the effects on quality, quality-speed, and
quality-speed-cost are negative. NPD improvement does not have any significant
effect on any of the other performance areas. The mixed role of NPD is probably due to
the way we operationalised this action plan. Concurrent engineering, for example, and
also standardisation of components are likely to have positive effects. Platform
thinking and modularisation, in contrast, may, certainly initially, produce negative
results, due to the fact that these programmes require companies to review their whole
product portfolio, quite likely change at least part of the products, and also implement
a range of organisational and managerial changes in order to make these practices a
success. Learning about new products and practices is not for free. We conclude that,
currently, NPD improvement does not qualify as a best practice.
Quality management. With new quality aspects, especially delivery reliability and
environmental performance, playing an ever-more important role, and traditional
quality problems such as conformance quality and product reliability solved in many
companies, the role of TQM as a best practice in the sense of contributing to
performance improvement is over these aspects of quality have become qualifying
criteria, and their realisation a routine.
Other action programmes. Here the conclusion is straightforward: none of the other
action programmes investigated in the IMSS III survey appears to produce any
significant effect on performance improvement. These programmes are: implementing
new process equipment, increasing production capacity, process automation,
implementing ICT, and work place development.
How valid are our conclusions?
Table VI summarises our conclusions. The question is, how valid and complete they
are.
The analysis does make unambiguously clear that process focus, pull production,
equipment productivity and environmental compatibility have a variety of
performance effects and reinforce each other. Thus, these four action programmes
investigated appear to represent best practice.
ICT and quality management, which may have been best practices in the past, have
lost that status. Both are quite common in industry, and they do not distinguish
anymore between high and low performers. It is routine to be and stay up-to-date in
both areas.
The status of NPD, e-business, supplier strategy and outsourcing is less
straightforward. NPD produces mixed results. CE and standardisation seem to have
positive effects, while platform design and modularisation have a negative impact on

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Table VI.
Practices (14) and best
practices (four)

Action programme

Best practice

Remarks

Process equipment
Manufacturing capacity
Process automation

No
No
No

ICT

No longer

E-business
Supplier strategy
Outsourcing

Possibly
Possibly
Possibly

Process focus

Yes

Pull production

Yes

Quality management

No longer

Equipment productivity
Workplace development

Yes
No

NPD

Possibly

Environmental compatibility

Yes

No manufacturing performance effects

No manufacturing performance effects
No manufacturing performance effects
No manufacturing performance effects. Probably so
widely adopted that the programme does not
distinguish between high and low performers
Hardly any manufacturing performance effects.
E-business success likely to depend on operations
rather than the other way around. May develop into
sales best practice
Hardly any manufacturing performance effects
Hardly any manufacturing performance effects
Strong manufacturing performance effects, often
together with pull production, equipment
productivity and/or environmental compatibility
Strong manufacturing performance effects, often
together with process focus, equipment productivity
and/or environmental compatibility
Hardly any manufacturing performance effects.
Probable cause: the quality aspects covered are
qualifiers. The underpinning practices have become
routines
Strong manufacturing performance effects, often
together with process focus, pull production and/or
environmental compatibility
No manufacturing performance effects
Mixed manufacturing performance effects: CE and
standardisation probably positive, platform design
and modularisation probably negative. Potential best
practice, though, but rather complex and difficult to
implement successfully
Strong manufacturing performance effects, often
together with process focus, pull production and/or
equipment productivity

performance. All practices underpinning NPD improvement programmes are actually

quite complex, involving considerable changes in organisation, management and, quite
often, products and possibly also in processes and technology. Furthermore, various
practices are relatively new. So, our analysis suggests NPD improvement as
operationalised in this article is not a best practice. However, the programme may
actually well develop into a best practice. E-business does not produce significant
manufacturing performance effects. Similar to NPD, though, this action programme
may develop into best practice, however with manufacturing as an enabler. The direct
effects on manufacturing performance will be limited while, conversely, a companys
e-business success will greatly depend on its manufacturing performance. Two supply
chain management practices, a well-developed supplier strategy and outsourcing, will
affect the functioning of operations and may have impact on manufacturing
performance, but such effects are not visible, yet. We conclude that NPD, e-business,

supplier strategy and outsourcing are not currently, but may develop into, best
practices.
The other four practices, aimed at process equipment and manufacturing capacity
improvement, process automation and workplace development, respectively, do not
have any significant manufacturing performance effects and should therefore not be
considered as best practice.
As to the influence of context on the choice of practices and their influence on
manufacturing performance, the study has focused on a limited set of industries (ISIC
38), representing a variety of companies in terms of size and process type. An analysis
not presented in this article suggests that the influence of industry type is very weak,
while size and product type do not play any role whatsoever. This means that the
findings are valid for all ISIC 38 companies, but whether they also hold for other types
of industry is not clear.
Finally, we believe this article presents an improvement in best practice research in
terms of its starting point: the best performing companies are the ones that (must) have
the best practices. Our findings seem valid for the fourteen action programmes
investigated, in ISIC 38 companies, irrespective of process and size, at present.
However, our analysis suffers from four weaknesses, each reducing the validity of the
findings. First, the study is based on, and only allows an evaluation of, pre-listed
practices. We cannot exclude the possibility that the best performers manufacturing
performance is based on additional practices, unknown to us. Second, the data suggest
that the four best practices identified reinforce each other. They do appear together, in
pairs, trios or even as a quartet having a significant positive effect on manufacturing
performance. We are not sure though whether this is coincidence or not. A third
weakness of the study is that it does not allow for an estimation of the potential of
emerging practices. Fourth, it is not clear whether or to what extent the findings also
hold for non-ISIC 38 companies.
Conclusion
The purpose of this article was to investigate what are the differences, in terms of the
adoption of a range of action programmes, between the high and low performers in a
sample of 474 manufacturing companies from the IMSS III database.
High and low performers differ in terms of implementation width and depth of
action programmes. Not only do the high performers implement more of the concepts
compared to the low performers, they also seem to be more committed to continue
implementing the programmes even if the results are not improved on the short term.
An apparently very strong configuration is process focus and pull production,
combined, in many cases, with actions aimed at increasing equipment productivity
and/or environmental compatibility. These action programmes currently represent
best practice. Reinforcing each others effects, they contribute to improvement in
all the four manufacturing performance areas addressed in this article.
NPD, e-business, supplier strategy and outsourcing are emerging practices, do
not currently represent best practices, but may develop into that direction.
Former best practices, in particular quality management and ICT, have lost that
position. They should now be regarded as a routine practice, supporting companies to
qualify for the market place and, thus no longer distinguishing between the best and
the rest.

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Surprisingly many action programmes, notably process equipment and

manufacturing capacity improvement, process automation and workplace
development, do not have a significant influence on manufacturing performance,
either negatively or positively.

148

Weaknesses and further research

The analysis presented in this article suffers from four weaknesses, which are related
to:
(1) Completeness we tested a list of pre-defined practices but cannot exclude the
possibility that there are additional practices explaining the best performers
manufacturing performance. We propose the use of expert panels and open
interviews with manufacturing directors of highly successful companies to
identify such practices, and a survey study to test their role in and impact on
manufacturing performance.
(2) Interaction and implementation although our findings suggests that
implementation width and depth makes the difference, further research is
needed to unravel how companies make various best practices reinforce each
other. We propose in-depth longitudinal case studies of implementation
processes to find out more about this question.
(3) Predictive power new practices are emerging all the time, some of which will
develop into best practices, others will not. Probably the only way to tackle this
problem is identification of, followed by in-depth case studies at,
innovators/early adopters.
(4) Contextuality we checked the influence of industry type, company size and
process type, did not find these factors to exercise major influence, but cannot
exclude the possibility that a wider set of industry sectors and also other
contingencies not included in the present analysis will produce a different
picture. Further survey-based research involving a broader set of industries and
inquiring a wider set of contingencies will contribute to addressing this
problem.

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Voss, C.A. (1995a), Alternative paradigms for manufacturing strategy, International Journal of
Operations & Production Management, Vol. 15 No. 4, pp. 5-16.
Voss, C.A. (1995b), Manufacturing Strategy: Process and Content, Chapman & Hall, London.
hlstrom, P. and Blackmon, K. (1997), Benchmarking and operational performance:
Voss, C.A., A
some empirical results, Benchmarking for Quality Management & Technology, Vol. 4
No. 4, pp. 173-285.

Further reading
Collins, R.S., Cordon, C., Cornaz, J.L., Eugster, H.R., Gemoets, O.G., Jakob, R., Julien, D. and
Stucheli, G. (1996), Made in Switzerland: A Benchmarking Study of Manufacturing Practice
and Performance in Swiss Industry, IBM, Zurich.

Best
manufacturing
practices
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Dixon, J.R., Nanni, A.J. and Vollman, T.E. (1990), The New Performance Challenge: Measuring
Operations for World Class Competition, Dow Jones-Irwin, Homewood, IL.
Miles, R.E. and Snow, C.C. (1978), Organisational Strategy, Structure, and Process, McGraw-Hill,
New York, NY.
Rathuria, R. and Partovi, F.Y. (1999), Work force management practices for manufacturing
flexibility, Journal of Operations Management, Vol. 18, pp. 21-39.

150
(Bjrge Timenes Laugen is a PhD student at the Department of Business Administration at
Stavanger University College, Norway. He received his MSc in engineering from Aalborg
University in 2000. His main research interest is the link between new product development,
production, organisational development and continuous innovation.
Dr Nuran Acur is a graduate of Yildiz Technical University, Turkey, where she gained a BSc
in Statistics. This was followed by a Masters degree in Statistics from Istanbul University. The
following year she came to the University of Strathclyde (UK), where she gained a PhD in
Strategic Management. After graduation, she joined Worldmark as an Engineering Consultant.
During this period she developed a detailed understanding of Strategic Management and Quality
Management. In 2002 she joined Aalborg University. Her current research focuses on
benchmarking, operations management and strategy.
Dr Harry Boer is Professor of Organisational Design and Change at the Center for Industrial
Production at Aalborg University, where he teaches various courses in organisation design and
change, operations and service management and innovation management. He also teaches at the
MBA programmes at TSM Business School, The Netherlands, and Politecnico di Milano, Italy,
the EurOMA Doctoral Consortium and the CINet Doctoral Seminar on Research in Continuous
Innovation. His main research interest is in resourcing, organising and managing the link
between day-to-day operations, continuous improvement/learning and radical innovation, so as
to improve both the short-term and the long-term performance of industrial companies. Harry
Boer has written numerous articles and (co-)authored four books in the fields of organisation
theory, operations management and strategy, innovation management, and continuous
improvement.
Dr Jan Frick is Associate Professor at School of Hotel and Business Management, Stavanger
University College. He holds an MSc in Operations Management and ICT from the Norwegian
Institute of Technology in Trondheim, Norway, and a PhD in Industrial Production from
Aalborg University, Denmark. Jan Frick has previously worked at the research institutes
SINTEF and Rogaland Research Institute and at the industrial collaboration institutions Jrtek
at Bryne, and TESA at Sandnes, all in Norway. He has managed several Norwegian and
international research projects, and published at several international conferences, journals and
book chapters. Jan Frick is member of the IFIP workgroup 5.7 Integration in Production
Management.)