National Academies Press: OpenBook
Suggested Citation:"FRONT MATTER." National Research Council. 1993. Learning to Change: Opportunities to Improve the Performance of Smaller Manufacturers. Washington, DC: The National Academies Press. doi: 10.17226/2239.
×

LEARNING TO CHANGE

OPPORTUNITIES TO IMPROVE THE PERFORMANCE OF SMALLER MANUFACTURERS

COMMITTEE TO ASSESS BARRIERS AND OPPORTUNITIES TO IMPROVE MANUFACTURING AT SMALL AND MEDIUM-SIZED COMPANIES

Manufacturing Studies Board

Commission on Engineering and Technical Systems

National Research Council

NATIONAL ACADEMY PRESS
Washington, D.C.
1993

Suggested Citation:"FRONT MATTER." National Research Council. 1993. Learning to Change: Opportunities to Improve the Performance of Smaller Manufacturers. Washington, DC: The National Academies Press. doi: 10.17226/2239.
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NOTICE: The project that is the subject of this report was approved by the Governing Board of the National Research Council, whose members are drawn from the councils of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The members of the committee responsible for the report were chosen for their special competencies and with regard for appropriate balance.

This report has been reviewed by a group other than the authors according to procedures approved by a Report Review Committee consisting of members of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine.

The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished scholars engaged in scientific and engineering research, dedicated to the furtherance of science and technology and to their use for the general welfare. Upon the authority of the charter granted to it by the Congress in 1863, the Academy has a mandate that requires it to advise the federal government on scientific and technical matters. Dr. Bruce M. Alberts is president of the National Academy of Sciences.

The National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a parallel organization of outstanding engineers. It is autonomous in its administration and in the selection of its members, sharing with the National Academy of Sciences the responsibility for advising the federal government. The National Academy of Engineering also sponsors engineering programs aimed at meeting national needs, encourages education and research, and recognizes the superior achievements of engineers. Dr. Robert M. White is president of the National Academy of Engineering.

The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent members of appropriate professions in the examination of policy matters pertaining to the health of the public. The Institute acts under the responsibility given to the National Academy of Sciences by its congressional charter to be an adviser to the federal government and, upon its own initiative, to identify issues of medical care, research, and education. Dr. Kenneth I. Shine is president of the Institute of Medicine.

The National Research Council was organized by the National Academy of Sciences in 1916 to associate the broad community of science and technology with the Academy’s purposes of furthering knowledge and advising the federal government. Functioning in accordance with general policies determined by the Academy, the Council has become the principal operating agency of both the National Academy of Sciences and the National Academy of Engineering in providing services to the government, the public, and the scientific and engineering communities. The Council is administered jointly by both Academies and the Institute of Medicine. Dr. Bruce M. Alberts and Dr. Robert M. White are chairman and vice-chairman, respectively, of the National Research Council.

This study was supported by Contract No. 50SBNB2C7187 between the National Institute of Standards and Technology and the National Academy of Sciences.

Library of Congress Catalog Card Number 93-86600

International Standard Book Number 0-309-04982-2

A limited number of copies are available from:

Manufacturing Studies Board

National Research Council

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Washington, D.C. 20418

Additional copies are available for sale from:
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Copyright 1993 by the National Academy of Sciences. All rights reserved.

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Suggested Citation:"FRONT MATTER." National Research Council. 1993. Learning to Change: Opportunities to Improve the Performance of Smaller Manufacturers. Washington, DC: The National Academies Press. doi: 10.17226/2239.
×

COMMITTEE TO ASSESS BARRIERS AND OPPORTUNITIES TO IMPROVE MANUFACTURING AT SMALL AND MEDIUM-SIZED COMPANIES

GARY MARKOVITS, Chairman, President,

Gary Markovits & Associates, Inc., Wappingers Falls, New York

WINSTON J. BRILL, President,

Winston J. Brill & Associates, Madison, Wisconsin

JAY P. COOPER, Director (Retired),

Materiel Policy and Socio-Economic Business Program, Northrop Corporation, Hawthorne, California

IRWIN FELLER, Director,

Graduate School of Public Policy and Administration and Professor of Economics, Pennsylvania State University, University Park

BARBARA M. FOSSUM, Associate Director,

Manufacturing Systems Center, University of Texas, Austin

SARA P. GARRETSON, Director,

NYC Industrial Technical Assistance Corporation, New York, New York

HAROLD G. HALL, President,

Hall Industries, Inc., Pittsburgh, Pennsylvania

BRUCE E. HAMILTON, Vice President,

Operations, United Electric Controls Company, Watertown, Massachusetts

ANNE L. HEALD, Executive Director,

Center for Learning and Competitiveness, School of Public Affairs, University of Maryland, College Park

DUNDAR F. KOCAOGLU, Professor and Director,

Engineering Management Program, Portland State University, Oregon

JOE H. MIZE, Regents Professor,

School of Industrial Engineering and Management, Oklahoma State University, Stillwater

R. DAVID NELSON, Vice President,

Purchasing, Honda of America Manufacturing, Inc., Marysville, Ohio

ROBERT A. PRITZKER, President and CEO,

The Marmon Group, Inc., Chicago, Illinois

PAUL D. RIMINGTON, President,

Diemasters Manufacturing, Inc., Elmhurst, Illinois

WILLIAM B. ROUSE, Chief Executive Officer,

Search Technology, Inc., Norcross, Georgia

WILLIAM E. RUXTON, Vice President,

National Tooling & Machining Association, Fort Washington, Maryland

Suggested Citation:"FRONT MATTER." National Research Council. 1993. Learning to Change: Opportunities to Improve the Performance of Smaller Manufacturers. Washington, DC: The National Academies Press. doi: 10.17226/2239.
×

CHARLES F. SABEL, Ford International Professor of Social Science,

Massachusetts Institute of Technology, Cambridge, Massachusetts

PHILIP P. SHAPIRA, Assistant Professor,

School of Public Policy, Georgia Institute of Technology, Atlanta, Georgia

JOHN B. WOODARD, President,

Institute of Advanced Manufacturing Sciences, Inc., Cincinnati, Ohio

Staff

THOMAS C. MAHONEY, Director,

Manufacturing Studies Board

JOSEPH A. HEIM, Senior Program Officer and Study Director

LUCY V. FUSCO, Staff Assistant

Suggested Citation:"FRONT MATTER." National Research Council. 1993. Learning to Change: Opportunities to Improve the Performance of Smaller Manufacturers. Washington, DC: The National Academies Press. doi: 10.17226/2239.
×

MANUFACTURING STUDIES BOARD

CHARLES P. FLETCHER, Chairman, Vice-President (Retired),

Engineering, Aluminum Company of America

SARA L. BECKMAN, Co-Director,

Management of Technology Program, University of California, Berkeley

LESLIE A. BENMARK, Manager,

Global Supply Chain Systems, E.I. DuPont de Nemours & Co., Inc.

STEVEN J. BOMBA, Vice President,

Technology, Johnson Controls, Inc.

BRIAN E. BOYER, Vice President and Deputy Department Manager,

Business Management, Northrop Aircraft Division

GARY L. COWGER, Executive Director,

Advanced Manufacturing Engineering, General Motors Corporation

PETER S. DiCICCO, Secretary/Treasurer,

Industrial Union Department, AFL-CIO

HAROLD E. EDMONDSON, Vice President (Retired),

Manufacturing, Hewlett-Packard

THOMAS G. GUNN, President,

Gunn Associates, Inc.

ALISTAIR M. HANNA,

Director, Mckinsey & Co., Inc.

GEORGE J. HESS, Vice President, Systems & planning,

The Ingersoll Milling Machine Company

CHARLES W. HOOVER, JR., Professor,

Department of Industrial and Mechanical Engineering, Polytechnic University

STEPHEN C. JACOBSON, Professor,

Center for Engineering Design, University of Utah

RAMCHANDRAN JAIKUMAR, Professor,

Graduate School of Bussiness Administration, Harvard University

J. B. JONES, Randolph Professor Emiritus,

Virginia Polytechnic Institute and State University

DONALD KENNEDY, Educational Representative,

International Association of Machinist and Aerospace Workers

THOMOS L. MAGNANTI, George Eastman Profeesor of management Services

Sloan School of Bussiness Administration, Massachusetts Institute of Technology

JOE H. MIZE, Regents Professor

School of Industrial Engineering and Management, Oklahoma State University

Suggested Citation:"FRONT MATTER." National Research Council. 1993. Learning to Change: Opportunities to Improve the Performance of Smaller Manufacturers. Washington, DC: The National Academies Press. doi: 10.17226/2239.
×

JACOB T. SCHWARTZ,

Department of Computer Science, Courant Institute of Mathematical Sciences, New York University

PAUL K. WRIGHT, Professor,

Department of Mechanical Engineering, University of California, Berkeley

Staff

THOMAS C. MAHONEY, Director

JOSEPH A. HEIM, Senior Program Officer

MICHAEL A. McDERMOTT, Program Officer

VERNA J. BOWEN, Staff Assistant

LUCY V. FUSCO, Staff Assistant

Suggested Citation:"FRONT MATTER." National Research Council. 1993. Learning to Change: Opportunities to Improve the Performance of Smaller Manufacturers. Washington, DC: The National Academies Press. doi: 10.17226/2239.
×

Preface

In July 1992, at the request of the Director of the Manufacturing Technology Centers Program of the National Institute of Standards and Technology (NIST), the Commission on Engineering and Technical Systems' Manufacturing Studies Board (MSB), in cooperation with the Commission on Physical Sciences, Mathematics, and Applications' Board on Assessment of NIST Programs, established a committee to: 1) identify the major barriers to manufacturing improvement in cost, quality, and timeliness at small and medium-sized companies in a number of discrete component manufacturing industries; 2) determine what means are available to overcome those barriers and which, if any, can be most effectively and efficiently addressed by the NIST Manufacturing Technology Centers (MTC) program; and 3) determine how the activities of the MTCs should be focused to address those barriers to best leverage the resources available.

This charge was developed in the political context in summer 1992. During the course of the study, the national election resulted in a change of administration. The Clinton administration has proposed a substantial increase in federal funding for industrial assistance activities. For this study to be meaningful in the new political context, the proposed plans by the new administration were incorporated into the study and the potentially expanded role of the federal government in providing technical assistance to industry was subjected to critical analysis.

The Congress directed NIST to create the Manufacturing Technology Centers program in the Omnibus Trade and Competitiveness Act of 1988 (U.S. Congress, 1988). The purpose of the program is to speed the transfer of advanced manufacturing technologies to U.S. industry,

Page viii Cite
Suggested Citation:"FRONT MATTER." National Research Council. 1993. Learning to Change: Opportunities to Improve the Performance of Smaller Manufacturers. Washington, DC: The National Academies Press. doi: 10.17226/2239.
×

particularly small and medium-sized manufacturers, by establishing regional technology transfer centers. Proposals are solicited from qualified institutions and awards made on a competitive basis.

NIST awarded approximately $1.5 million in matching funds to each of three nonprofit organizations in 1988: the Cleveland Advanced Manufacturing Program, the University of South Carolina (later managed by Enterprise Development, Inc.), and Rensselaer Polytechnic Institute (later transferred to the New York State Science and Technology Foundation). Two more centers, the Industrial Technology Institute in Ann Arbor, Michigan, and the Kansas Technology Enterprise Corporation in Topeka, Kansas, were awarded in 1990. In 1992 funds for the latest of the seven centers were awarded to Minnesota Technology, Inc., in Minneapolis/St. Paul and California Community Colleges in Los Angeles.

The Clinton administration has published plans to raise significantly the contribution of the federal government in industrial extension efforts, in part by greatly expanding the MTC program. President Clinton has proposed the creation of a national network of manufacturing extension centers. Federal funds, matched by state and local funding, would go to support and build on existing state, local, and university programs to expand assistance services "to give all firms access to the technologies, testing facilities, and training programs they need" (Clinton and Gore, 1993). Initial efforts to implement this national network have been included in the Technology Reinvestment Project, the multiagency federal program for defense technology conversion, reinvestment, and transition assistance (U.S. Department of Defense, 1993).

The committee has taken these plans into consideration in responding to the NIST request. The committee has assessed barriers and opportunities to improve manufacturing performance in small and medium-sized firms and has determined the most effective role for the MTC program. The committee has also discussed these new plans and initiatives for a national manufacturing extension network and provides some recommendations in that context.

STUDY METHODOLOGY

The process adopted by the committee in response to the NIST request had three primary components: 1) discussions with groups of small and mid-size manufacturing firm managers, owners, and executives during public meetings and workshops held throughout the United States;

Suggested Citation:"FRONT MATTER." National Research Council. 1993. Learning to Change: Opportunities to Improve the Performance of Smaller Manufacturers. Washington, DC: The National Academies Press. doi: 10.17226/2239.
×

2) soliciting the testimony of service providers at full committee meetings and during visits by subcommittees to various assistance facilities; and 3) reviewing appropriate written materials and background information, academic literature, and industry publications.

The committee membership visited, as subcommittees of three to five persons, six of the seven Manufacturing Technology Centers and met with MTC and other industrial assistance program staffs. They also met with more than 75 owners, managers, and executives of small and medium-sized manufacturing companies in eight day-long workshops to discuss the problems and challenges confronting smaller firms and opportunities for helping them improve their competitiveness. Although a majority of the owners, managers, and executives had been involved, to some extent, in state and federally funded programs, the workshop participants were not invited because of their experience with the services of local and regional manufacturing assistance organizations, but rather for their interest and willingness to contribute to the information gathering efforts of the committee. The workshops were held in Minnesota, South Carolina, Kansas, Michigan, Ohio, California, Georgia, and New York between September 1992 and January 1993.

A practical objective of the MTC program is to offer services that facilitate improved manufacturing performance at small and medium-sized manufacturers. The underlying assumption is that small and medium-sized manufacturers would benefit from greater awareness and understanding of advanced manufacturing technologies and practices. However, there has been no comprehensive assessment of the existing technological capabilities of small manufacturers, including the broad variation across companies, or their sources of information on advanced technology. Similarly, there is little comprehensive understanding of the sources of competitive advantage and disadvantage of small and medium-sized manufacturers, so it is difficult to assess the relative effects of programs designed to upgrade their technological capabilities compared to alternative assistance mechanisms. The committee has striven to address these analytical shortcomings by discussing conditions in small and medium-sized firms with owners and managers and those working to provide assistance to the firms; surveys and other literature were also used extensively.

The work of the committee led to several conclusions concerning the modernization needs of small and medium-sized manufacturers and the circumstances they face, the community of service providers that presently assist manufacturing companies, and, in particular, the role of the MTC program. The committee suggests goals for improving the

Suggested Citation:"FRONT MATTER." National Research Council. 1993. Learning to Change: Opportunities to Improve the Performance of Smaller Manufacturers. Washington, DC: The National Academies Press. doi: 10.17226/2239.
×

overall system of assistance to smaller companies and recommends steps for increasing the effectiveness of the MTC program in the context of the needs of small and medium-sized manufacturers, the existing network of public and private industrial assistance providers, and the Clinton administration's plans to create a national network of manufacturing extension centers.

REPORT STRUCTURE

The committee's report is divided into five parts. Chapter 1 examines the importance of manufacturing to the American economy, considers the regional diversity of small and medium-sized manufacturing companies, and describes their crucial influence on the global competitiveness of American products. It also describes the changing requirements for successful manufacturing in the context of increasing global competition, rapid technological change, and new forms of intra and intercompany relationships.

In Chapter 2 the committee describes the barriers to improving manufacturing performance in small and medium-sized companies and opportunities to help the companies overcome those barriers.

There is a broad spectrum of state, local, and federal government programs and various kinds of initiatives that have been undertaken to improve American manufacturing. Within the private sector is a rich source of assistance from consultants, educational institutions, and local programs. These efforts, and the resources that have been deployed to help firms improve their performance in terms of quality, cost, and responsiveness, are summarized in Chapter 3.

The committee was asked to examine the MTC program and evaluate the degree to which MTCs were meeting the needs of small and medium-sized companies. The committee did not rate the performance or success of individual MTCs, but rather looked at them in a programmatic context and evaluated the alignment of smaller manufacturers' needs and services provided by the MTCs. A summary of committee observations and conclusions about the effectiveness of the MTC program is presented in Chapter 4.

Chapter 5 presents the conclusions and recommendations of the committee majority regarding the barriers and opportunities to improve the cost, quality, and timeliness of production in small and medium-sized manufacturers, and appropriate mechanisms and roles for MTCs and other assistance providers. In order to be relevant to current conditions

Suggested Citation:"FRONT MATTER." National Research Council. 1993. Learning to Change: Opportunities to Improve the Performance of Smaller Manufacturers. Washington, DC: The National Academies Press. doi: 10.17226/2239.
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facing NIST, the committee majority had made these recommendations in the context of plans for an expanded role for the federal government and NIST in creating a national network of manufacturing extension centers.

Chapter 6 presents the conclusions of two committee members concerning the inappropriateness of federal funding of organizations to assist manufacturers.

Suggested Citation:"FRONT MATTER." National Research Council. 1993. Learning to Change: Opportunities to Improve the Performance of Smaller Manufacturers. Washington, DC: The National Academies Press. doi: 10.17226/2239.
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Suggested Citation:"FRONT MATTER." National Research Council. 1993. Learning to Change: Opportunities to Improve the Performance of Smaller Manufacturers. Washington, DC: The National Academies Press. doi: 10.17226/2239.
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LEARNING TO CHANGE OPPORTUNITIES TO IMPROVE THE PERFORMANCE OF SMALLER MANUFACTURERS

Suggested Citation:"FRONT MATTER." National Research Council. 1993. Learning to Change: Opportunities to Improve the Performance of Smaller Manufacturers. Washington, DC: The National Academies Press. doi: 10.17226/2239.
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Manufacturing firms—large and small—face massive change and adjustment as they move from a stable, fault-tolerant environment of long production runs to a volatile world in which production runs are short; product characteristics are changing constantly; and defect-free, on-time production at decreasing prices is a condition for survival. The necessary changes in the production organization include everything from the layout of the shop floor to the distribution of authority between managers and workers. The magnitude of these changes threatens to overwhelm the managerial capacities of firms, regardless of their size.

This study examines the particularly vulnerable situation of small and mid-size manufacturers and considers ways in which to help them undertake the many changes and adjustments necessary. These include assimilating the new tools, disciplines, and philosophy of lean manufacturing; embracing new ways of delegating responsibilities; and developing new kinds of partnerships among customers, suppliers, and employees.

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