Think the Rising Sun is Setting? The Japanese Manufacturing Model Still Works
Written by: James K. Allred

Some American executives have pointed to recent articles about Japanese manufacturing firms, faced with shrinking profits and layoffs, as a justification for maintaining the status quo on their factory floors. But the insular smugness of an "I told you so" attitude about Japanese manufacturing models will only result in putting us further behind the production power curve. Instead, we ought to take off our blinders and look around.

In fact, most Japanese factories remain much more efficient and productive than their American counterparts. This advantage is a result of Japanese managements' underlying approach to production. Recognizing that the primary function of a factory is to receive, move, and ship material as efficiently as possible--while adding value along the way--they first design the material flow and control system, then the value-adding processes, then the supporting organization, and finally, the factory building itself. The logistics drive every aspect of the plan.

In American factories, meanwhile, too often the tail wags the dog. Planners accommodate the existing organization by allocating square footage to independent departments, then they build the building and finally they turn their attention to moving and controlling the material flow. When this method fails to yield sufficient productivity, management turns to piecemeal automation and computerization of the system, as though tinkering with faulty methodology would magically result in a production breakthrough.

But such tinkering does not generate the significant productivity and quality improvements we need. Only a radical shift in our manufacturing mentality--a complete transformation of the way we think about the factory logistics process--will lead us to important progress.

Japanese industrial leaders, convinced that achieving significant productivity gains was more complex than merely speeding up the assembly line, dissected every aspect of their production logistics--from material receipt and staging to finished goods distribution. They developed advanced manufacturing control systems like Just-In-Time and "kanban," and they worked to perfect continuous flow manufacturing. But, they also understood that these systems would be nearly useless if the logistics pipeline got clogged. Manufacturing viewed as a series of processes gave way to manufacturing seen as one continuous process.

The focus on smoothing the material and work flow let them squeeze the maximum gain from their control systems. Their success led to a comprehensive logistics model based on small inventories, strategically placed material buffers, rapid throughput, and real-time information about work in the production pipeline. Using this model, workers could manage the material flow into and out of their work stations, always knowing what was available and pulling material only when needed. Travel distance, whether for material or people, was sharply reduced. Total cycle time was compressed and compressed again, until make-to-order rather than make-to-inventory became a practical reality.

Are these logistics models somehow inherently Japanese? Or can we learn something useful here?

Intel Corp. is an example of the startling improvements that can occur when executives are willing to undertake a paradigm shift. In the 1980s, U. S. semi-conductor producers were losing market share to more efficient Japanese competitors. Intel's executives, tired of trying to solve the problem by running faster in place, completely redesigned their manufacturing process, adapting the Japanese small inventory, point of use buffers, rapid pipeline model.

With simplified factory layouts and automated material flow, they radically shortened the distances between material staging and processing operations. Using real-time work and inventory information, they took control of the material flow at every step in the process.

The improvement was dramatic. Employee productivity tripled in five years. Defects per million dropped from more than 200 to fewer than 50. Response time to customer orders was cut and inventory costs went down. Intel became the world's number one chip maker, both in market share and profitability.

Intel succeeded because its leaders were not afraid to strike a new benchmark and then shape a system to meet their needs. Such vigorous leadership is critical, since fundamental changes in the manufacturing model must be championed from the top in order to be embraced by the rest of the work force.

If there is one reality that far-thinking American manufacturing executives must embrace, it is that insularity is no virtue in a global economy. Let's recognize useful systems when we see them, take our lessons where we can, and use that knowledge to create our own competitive edge.

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