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The Evolution of Manufacturing Processes and Business Philosophies

Manufacturing has a long and varied history spanning three centuries. It has evolved from skilled individuals crafting goods entirely by hand during the Victorian era, to complex systems that incorporate supply chains, energy management and distribution governed by smart computing systems. Curiously, there are key historical periods of upheaval and rapid transitions as processes and procedures were overhauled and modernised.

 

Manufacturing and industry as-a-whole is now evolving again as the increased automation of practices, commonly referred to as Industry 4.0, takes hold within industries. Manufacturing processes are interfacing with industrial applications and management processes through hardware sensors, software applications and user interfaces to establish advanced “smart” production, often referred to as the Industrial Internet of Things (IIoT).

 

Framing Industry 4.0 within the backdrop of previous industrial revolutions

Adopting a new manufacturing process is highly attractive for increased production output and profit. However, adopting a new outlook across an entire organisation can be challenging. Looking back at the history of manufacturing offers up insights into how companies have handled change in the past. This valuable knowledge can help to navigate manufacturing transitions today.

 

Professor Ramchandran Jaikumar investigated historical manufacturing processes and he contributed to framing present day techniques within their historical backdrops. Most importantly, he made significant contributions to understanding the relationship between manufacturing and underlying business philosophies.

 

Ramchandran Jaikumar, also known as Jai Jaikumar, was a decision scientist and an expert in computer-aided manufacturing, robotics and factory “operating systems.” He was the Daewoo Professor of Business Administration at the Harvard Business School. During his early work, he examined the history of manufacturing across the globe.

 

Prof Jaikumar focused on how production processes were evolving over time. He paid attention to the characteristics and differences that arose between industries and world regions. He successfully mapped out the evolution of manufacturing systems and processes from the handmade era of the 19th century to modern smart manufacturing systems that integrate supply chains and the services sector.

 

Identifying the relationship between manufacturing and business philosophies

Stephen Howard, Chief Executive Officer at data services and business modelling company kMatrix and Executive Director at MarketAI, was a professional colleague and a close friend to Prof Jaikumar. He avidly recounts their experiences as they examined industries and ultimately established their system to analyse organisations and assess their suitability to adopt new processes.

 

Mr Howard explains that: “during the phase of examination and discovery, he [Prof Jaikumar] found that manufacturing across the globe and in virtually all industries heavily relied on a philosophy that underpinned decision making and management strategies. For instance, Manufacturing Resource Planning (MRP II) employed by organisations in the 1980s evolved from the earlier Materials Requirement Planning (MRP) of the 40s and 50s to encompass all the resources of a manufacturing company and to explore “what-if” scenarios. The modern Enterprise Resource Planning (ERP) grew from MRP II in the 90s.

 

“By contrast, the Just-in-Time (JIT) inventory system was developed and used in Japan in the 60s and 70s. JIT aligns raw materials with production schedules to increase system efficiency and minimise waste through supply-production mismatch. Fundamentally, JIT enhances the value of processes, whereas MRP II focuses on control. Switching from MRP to JIT may sound straightforward, but a manufacturer would first have to carefully scrutinise their operations to assess the suitability of each department.

 

“As we examined processes across industries and around the world, we counted just over 480 philosophies. The most striking discovery was that businesses frequently adopted a new management strategy with a different philosophy to their current approach in the hope that the move would improve business processes and profitability. However, we encountered several businesses that were poorly prepared to adopt and implement their new philosophy.

 

“In many instances, certain aspects of the businesses were capable of making the switch—such as procurement and personnel—but other areas were poorly prepared or struggled during the transition, such as accounting and management. We uncovered many examples of poorly prepared businesses struggling and stalling during the strategic stage of a process change. Most worrying was that these poor assumptions made before entering the transition risked the integrity and survival of the entire business.

 

Informal, flexible manufacturing in Victorian Britain

To better understand this trend of shifting manufacturing processes, Prof Jaikumar examined manufacturing epochs and matched them with their underpinning philosophies. For example, the Victorian manufacturing system in the UK saw everything made by hand. A distinct trait of handmade production lines 150 years ago was that the workforce were extremely flexible on a day-to-day basis and workers switched tasks to suit the supply of materials and the requirements of specific orders. By contrast, consumers pay a small fortune for items manufactured in a similar manner today.

 

Victorian workers became highly skilled in producing several items within a specific industry, such as woodwork where production lines could be switched from manufacturing dining chairs to kitchen tables from one day to the next. Furthermore, supervision of work was minimal and informal by today’s standards with staff being appraised mainly on the outcome of their labour. 

 

Reintroducing flexible manufacturing

Intrigued by these flexible manufacturing techniques and how they sharply contrasted with present-day methods, Prof Jaikumar focused his research on developing manufacturing systems with greater in-built elasticity. In the 1980s, he compared the factory floor systems in the then two largest manufacturing economies in the world: Japan and the United States. He found that a Japanese manufacturer produced, on average, 93 parts whereas an American manufacturer only produced ten. 

 

Dubbing American factories “deserts of mediocrity,” Prof Jaikumar examined how to effectively improve flexibility within manufacturing without evolving the process of the entire organisation. As companies began adopting robotics into production lines, he found that American factories were heavily investing in programmable robotics and systems that were also characterised by inflexibility.

 

As a result of his investigations, Prof Jaikumar developed a flexible manufacturing system which used robotics that could be adapted for a variety of tasks. Looking at the “operating system” of how factories are organised, he promoted his concept of the “minimalist” factory to help minimise the disruptions that account for 90 per cent of production costs. Most importantly, he stressed that factories needed to gather data about the “things that go wrong” during production in order to improve efficiency. This was based on the assumption that the things that go right are already well understood.

 

Examining organisational fit with adopting new processes

Mr Howard explains how Prof Kumar’s research led to the development of a modular system to examine the suitability and the ability of organisations to adopt new processes. He explains that: “the first task was to establish evidential data points and measure them. Prof Jaikumar approached 98 manufacturing organisations—including Ford Motor Group and Hitachi Seiki—and assessed their internal processes. These case studies formed the basis for our system of analysing organisations, which we later called ‘the grids.’

 

“We often found that if management wanted to open a new production line, or launch a new product, the assumption was often that the company was aligned and capable of adapting, whereas the reality was far from this in most situations. Developing the grids enabled us to inspect and assess each part of an organisation individually and as an interconnected part of the whole. From here, we could identify the sectors of an organisation that were lagging behind and quickly bring them up to speed.

 

“Most importantly, is that this analytical and evidence-based process provides scope for prioritisation and consistency across an organisation, which is highly beneficial whether you’re adopting a new process or not. We have found that it helps companies to identify costly areas that can be better integrated and aligned with the wider business for optimal cohesion and performance. 

 

“Finally,” Mr Howard concludes, “applying our investigative, evidential approach helps organisations to better align their processes with sales and their customers. The provenance of products and services, as well as more transparent practices, are becoming increasingly sought after by users. We have found that these two features are taking a far more prominent role in the overall customer experience as well.”

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