August 1997, Volume 3, No. 8

21st Century Manufacturing: What You'll Need to Know to Survive

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By Michele Schermerhorn

Many business leaders today bemoan the results, or lack of results, achieved from their business initiatives of the 1990s as reported by Harvard Business Review, Business Week and The Wall Street Journal. The silver bullets have tarnished around their casings. Rather than blame the initiatives or the people implementing them, American management should abandon its fascination with simplistic solutions to ever-increasingly complex business and world issues. Today, the need for dramatically different solutions is critical. As Albert Einstein said, problems will never be resolved from the same consciousness which created them.

Business leaders are still clinging to a now-ancient view of business originally formulated early in this century by Frederick Taylor. Very simply described, Taylor's work focused upon breaking work operations down into their smallest components, organizing these activities for mass production and uneducated workers, and setting performance standards against time increments. This process may have been effective when the world moved slower, the workers were less educated, the demand for goods was high and the consumer was undemanding, but it doesn't work now. The world has changed, dramatically.

Today, consumers demand quality, reliability, cost, service and a multitude of other requirements in their products and services. America has lost its competitive edge to Pacific Rim countries. Unlike their American counterpart, the Pacific Rim countries don't approach quality, reengineering or any other strategic initiative as a program but rather as a way of business life. One of the largest Japanese electronics companies evaluates its managers 50% on how well they've maintained the business and 50% on how well they have improved the business.

The successful companies in the 21st Century will provide mass customization at the quality level and cost demanded by ever-changing customer needs. They will reinvent themselves and their processes on the fly. Leaders will forever relinquish their need to control a business and begin to shepherd the interactions which must occur between the people of their organization to meet the increased demands from their customers.

The manufacturing company of the 21st Century will need to possess three critical skills: product and service customization, company memory, and dynamic customer interfaces. Let's look at each component in more depth.


Product & Service Customization
Successful businesses in the 21st Century will customize their products for each and every customer, each and every time. The customer will be able to specify his/her requirements before ordering and be assured the organization can deliver. Steps toward this flexible approach to manufacturing are already a reality in some organizations, such as the Toyota plant in Georgetown, Ky.

At this Toyota plant, a minivan and sedan will be produced on the same line, at the same time; approximately every third vehicle will be a minivan. How can they do this? The new Sienna minivan was designed to be built on a modified Camry platform, and because of the height difference, the engineers designed special risers on the assembly line.

This mass customization approach requires that customers interface regularly with the organization. At Toyota, this is accomplished through the extensive use of surveys, dealer interactions and customer focus groups. In the 21st Century, it will be critical that the customer and the manufacturing organization become partners in the delivery of the product or service, both responsible for its successful delivery. This will result in customer satisfaction and retention &endash; retention being the key issue. Frederick Reichheld, author of The Loyalty Effect, recently surveyed 100 companies in two dozen industries and found that retaining 5% more customers would increase a company's profits by 30%.

However, customized products and services alone won't succeed. Eventually, customization will become the price of admission to the marketplace. More is needed... company memory.


Company Memory
Today, when a customer contacts your business, they probably interface with a number of different people. This causes returning customers to start from scratch with your company and to feel disenfranchised from your organization. In the 21st Century, interactions between every customer and your organization must be seamless, regardless of which employee handles the customer. This will only be accomplished through a system of customer memories available to whichever employee is interfacing with the customer at the time. The best models of this concept in action today are found on the Internet.

Amazon (http://www.amazon.com), a virtual bookstore on the Internet, is one such company. If a customer is looking for a particular book, they can use a search engine which allows access to 5 million book titles, by author, by title, or by subject. Each time the customer finds a selection they wish to purchase, they add it to their shopping basket, a holding area for the order. Once the customer is ready to place the order, company memory takes over.

Amazon maintains the customer's billing information and only asks for a confirmation. They also maintain a list of addresses where the customer has sent books in the past and asks for a verification of the shipping address for this order. At the time of order verification, they give the book availability information and allow the customer to choose to hold the order until all books are available or not. In addition, they will notify the customer when books by their favorite authors or subject areas are released.

This is company memory at its best. The customer feels valued and is not hassled in spending money with the organization. Of course, the Internet is not the only method for accomplishing customer memory.

Within the 21st Century manufacturing firm, all customer information must be available to every customer-interfacing employee at the time of interaction with the customer. Even if this is simply a card system with customer specifications and preferences, it will be critical. Every customer wants to feel valued. Remembering their name, their preferences and personal information, like their birthdays, helps accomplish this and retain them as life-long customers. In addition to this, building a dynamic customer interface is the third critical element.


Dynamic Customer Interface
A dynamic customer interface would allow the customer a choice of contact methods and availability to your company's ordering and design system twenty-four hours a day, seven days a week. This means the manufacturing firm of the 21st Century must have telephone, fax and e-mail access, as well as a physical presence and an Internet presence. The customer must be able to reach your business through whichever route is most convenient for them. They must have access to their account information, order status, your catalog and a product configuration system when they want it.

Many companies today have this very system. Dell Computer (http://www.dell.com), Amazon (http://www.amazon.com) and MidWest Micro (http://www.mwmicro.com) lead the way in this dynamic customer interface system. At any moment, of any day, any customer can verify their order status, peruse the company's catalog of products, play with custom configurations of the company's products for their own specific needs, and order that configuration. With companies like this established in the marketplace, how long will it be before your customers are no longer satisfied with a 24-48 hour turn-around on their questions by your business?


Stay in the Game
Customers are becoming more demanding and less tolerant of unresponsive organizations. In fact, the definition of responsive is rapidly mutating. Where a 24-hour response may have led an industry in the past, a 24-minute response today will probably put you at the end of the pack.

Starting today, even lacking computer technology, find ways to bring your customers together with your design people, build company memory available to all employees about every customer, and build dynamic access routes to your business for your customers convenience. This will keep you in the 21st Century manufacturing game.


bMichele Schermerhorn is president of Syncopation Management Systems (Reno, Nev.; http://www.synco.com), a management consulting firm specializing in quality management, change management and leadership development.


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