Issue n. 3 - April 2005Download pdf - BLM GROUP

Opinion
At the beginning of the 1900’s, FORD rose to be
the market leader in vehicle production because it
became the most efficient and the quickest in its
methods, thanks to an organisation based on a rigid
hierarchy, specialised working functions and sub
division of its manufacturing operations. Its success
is not only demonstrated in its sales figures but also
by the fact that, today, it is still the dominant operational
model for everyone else. Ask anyone in the
automotive industry who worked then and they
would say: the most important elements
of manufacturing are production
capability and purchasing.
This response indicated contemporary
feelings about functionality and
hierarchy.
This organisational model worked
well in the climate of little change and
little complexity that existed in the
Twenties: FORD produced 2 million
Model T’s a year, almost all of them
identical. Today that’s not possible
– supply, in general, is geared to demand
and has had to satisfy nearly
every specific requirement in a much
more concise fashion than before
and with a considerable growth in the variety of options.
In the United States today, with production
volumes many times greater than those of the Twenties,
the most-sold model does not sell more than
300,000 per annum in tens of different versions.
The spread of international market competition into
very different and large geographical regions has
brought considerable change and diffusion of technologies
unthinkable only 50 years ago. Television
has taken 40 years to spread across the eastern
world, the cellular phone less than ten.
In this context, the only companies that survive
are those who rapidly adapt to their customers
needs and can react to the changes necessary the
quickest. It is extremely important for the successful
manufacturer to understand fully their clients’ objectives
and businesses in order to generate the
maximum value for their clients products. This is
horizontal value flow, from purchasing to production
to delivery; a traditional company, on the other
hand, has a vertical structure with a clear separation
between its diverse operations.
For example, the creation of a product like the wireless
telephone occurs when someone realises their
own specific task, often for a fee, and then passes
the idea on to the next stage. No-one is responsible
overall from beginning to end of the process;
no-one can guarantee the coherence of the prior
choices made during this process and no-one has
the complexity of vision necessary
to properly realise the value of the
product.
Process management revolutionises
this approach and gives
more initial consideration to the
process of value generation and to
the final result for the client, not to the
performance of an isolated operation.
This generation becomes the
company fulcrum; because it adds
value while the individual operations
support one or more of the processes,
it means that the resources and
competency necessary to improve
the product still further can be made
available. Quality certification such as Vision 2000
has adopted this approach but many companies
have simply changed some parameters without
changing their organisation thus limiting their performance.
True process management requires
the institution of new roles for production responsibility
and the modification of others such as operation
responsibility. These changes will take time
and will be exhausting as operational changes
knock down barriers and create improvement. The
elimination of these barriers to progress, a more integrated
functional dependence and attention
to the value added process for their clients will
be the winning model for our companies in their
fight to be truly competitive.
Alberto Portioli Staudacher
Department of Engineering Management
Milan Polytechnic
INSPIRED FOR TUBE
Alberto Portioli Staudacher is Professor of Operational
Management, Logistics and Production Systems at Milan
Polytechnic. From 1995 to 2002 he was President of the Association
of Production Management Graduates, and from
2000 he has also been a Member of the Board of Engineering
Management.
From 2001 he has been Director of the SMART Laboratory
in Operations and Supply Chain Management and from 2003
a Member of the teaching staff for the Doctorate in Production
Management. He is the author of three books and over
60 scientific articles for conferences and national and international
magazines. He has given advice and been involved
in training and consultative activities for many Italian
and European companies in organisation and process
allocation techniques. He has been involved and assisted
BLM GROUP for many years.
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