Nix the Quick Fix

Tom Peters

Business Week's June 16 cover features a stylized robot. The title asks, "Can Automation Save American Industry?: High Tech to the Rescue."

The article's answer to that question: "CIM (Computer Integrated Manufacturing) reshapes the industrial landscape. ... Thanks to this new manufacturing technology, the factory is reemerging as the focal point of corporate strategy."

On the one hand, I agree that the enhanced role for manufacturing is most welcome. It is imperative if we are to retain our domestic manufacturing base. On the other hand, I am skeptical, if not fearful, of Business Week's high-tech solution, which calls for capital spending to solve our industrial woes.

Much of the article's rosy picture is painted around IBM, which is portrayed as the role model for the new manufacturing competitor. However, IBM's modern-day robots and use of CIM are not the stars of IBM's latest success story. The story, in fact, dates back 73 years, to Thomas J. Watson, Sr.'s rescue of the then-ailing Computing-Tabulating-Recording Company. IBM's factory feats are not a 36-month miracle of automation. They simply are the latest evolution of IBM's longstanding quest for improvement.

Despite an unparalleled success record, just-retired chairman John Opel openly fretted about worldwide competitiveness. So he launched the most sweeping, people-centered quality improvement program in the U.S. Automation has helped it achieve astonishing results, but the main ingredient has been a radically altered frame of mind flowing from management's wholehearted commitment to embrace flawless quality—and attendant cost reduction—as a practical goal and way of life for the 400,000 people on its payroll.

Three superb, recent, data-rich books contradict Business Week's conclusions and are consistent with my view of the IBM story. First is The Chain of Quality by John Groocock, TRW's vice president for quality.

Groocock shows that the one third of TRW divisions whose products rate highest in their markets in quality out-earn (by a three-to-one margin) other divisions that make average and above-average quality products. Groocock makes a persuasive case that quality is the key to any American resurgence. The word "automation" does not appear in the book's extensive index. The pages are filled with stories of passionate champions pursuing quality, top management's commitment to quality, and an array of techniques and devices from competitor quality analysis to outlines of revolutionary producer-supplier partnership programs.

Jim Harrington's The Improvement Process also stresses crucial attitude changes and also does not feature automation. Harrington, a senior IBM quality manager and president of the American Society for Quality Control, argues that an effective process begins with simple attention: "Look at your calendar. Are you spending as much time controlling the quality of your department's output as you are investing in cost and schedules?" Harrington claims that plant managers normally first address schedules, then cost, "and then quality—if there is time. If quality is really the most important factor, then it should be first on every agenda."

Harrington dangles a big carrot, citing, for instance, a Tektronix factory, which -- with little investment—"cut inventory by 75 percent, work in progress by 50 percent, overall manufacturing cycle time from 30–40 days to 12 days, and customer delivery from 14–15 weeks to two!"

In Richard Schonberger's World Class Manufacturing, the key variable affecting quality, cost, and productivity is reduction of manufacturing lead time. Schonberger compiled an "honor roll" of 84 American factories that have reduced lead time by a factor of five, ten, or twenty. Among Schonberger's favorite plants is an Omark chainsaw plant that slashed lead time from 21 days to one.

His view of automation is captured by one chapter's title, "Overstated Role of Capital." He observes, "Spending our way to cost reduction is a flawed solution." One detailed case study concerns the Toyota No. 9 Kamigo Engine Plant, which Automotive Industry magazine considers "the most efficient engine plant in the world." Schonberger points out that it is "equipped with 20-year-old machines from America, retrofitted so they don't miss a beat. ... Quality problems are nipped in the bud, so there is little rework to do, and little need to keep buffer stock. ... Most machines can be set up in one or two minutes, so there is no reason to run large batches." Robots at the Kamigo plant: Zero.

Schonberger is a tough-minded analyst who offers no syrupy pleas for "people first." Hard-nosed management techniques mark his book, as they do Groocock's and Harrington's.

The three books, which square with my experience exactly, present convincing evidence that directly contradicts the point of Business Week's recent glowing cover story. Capital spending is essential, but it is no panacea. Money thrown at automation, like undercooked spaghetti thrown at the wall, is not likely to stick. A revised management attitude and a new view of the workforce as the prime source of improvement opportunities—not one more factor of production to be considered after the automation plan is developed—are the only possible bases for long-term success.

(c)1986 TPG Communications

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