TEXT A Since the late 1970’s, in
the face of a severe loss of market share in dozens of industries, manufacturers
in the United States have been trying to improve productivity and therefore
enhance their international competitiveness through costcutting programs.
(Cost-cutting here is definding the amount of labor constant.) However, from
1978 through 1982, productivity—the value of goods manufactured divided by the
amount of labor input—did not improve; and while the results were better in the
business upturn of the three years following, they ran 25 percent lower than
productivity improvements during earlier, post-1945 upturns. At the same, it
became clear that the harder manufactures worked to implement costcutting, the
more they lost their competitive edge. With this paradox in mind, I recently
visited 25 companies: it became clear to me that the costcutting approach to
increasing productivity is fundamentally flawed, Manufacturing regularly
observes a" 40, 40, 20" rule, roughly 40 percent of any manufacturing-based
competitive advantage derives from long-term changes in manufacturing structure
(decisions about the number, size, location, and capacity of facilities) and in
approaches to materials. Another 40 percent comes from major changes in
equipment and process technology. The final 20 percent rests on implementing
conventional costcutting. This rule does not be tried. The well-known tools of
this approach—including simplifying jobs and retraining employees to work
smarter, not harder-do produce results. But the tools quickly reach the limits
of what they can contribute. Another problem is that the cost-cutting approach
hinders innovation and discourages creative people. As Abernathy’ s study of
automobile manufacturers has shown, an industry can easily become prisoner of
its own investments in costcutting techniques, reducing its ability to develop
new products. And managers under pressure to maximize cost-cutting will resist
innovation because they know that more fundamental changes in processes or
systems will wreak havoc with the results on which they are measured, production
managers have always seen their job as one of minimizing costs and maximizing
output. This dimension of performance has until recently sufficed as a basis of
evaluation, but it has created a penny pinching, mechanistic culture in most
factories that has kept away creative managers. Every company I
know that has freed itself from the paradox has done so, in part, by developing
and implementing a manufacturing strategy. Such a strategy
facturing and implementing a manufacturing strategy. Such a strategy focuses on
the manufacturing structure and on equipment and process technology. In one
company a manufacturing strategy that allowed different areas of the factory to
specialize in different markets replaced the conventional cost-cutting approach,
within three years the company regained its competitive advantage. Together with
such strategies, successful companies are also encouraging managers to focus on
a wider set of objectives besides cutting costs. There is hope for
manufacturing, but it clearly rests on a different way of managing. The author suggests that implementing manufacturing competitiveness is a strategy that is______
A.flawed and ruinous B.shortsighted and difficult to sustain C.popular and easily accomplished D.useful but inadequate