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Integrating continuous improvement and innovation into a corporate culture

Integrating continuous improvement and innovation into a corporate culture

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P ergam on
T e c h n o v a tio n , 1 7 (4 )(1 9 9 7 ) 1 9 9 -2 0 6
\u00a9 1 9 9 7 E ls e v ie r S c ie n c e L td
A ll rig h ts re s e rv e d . P rin te d in G re a t B rita in
0 1 6 6 -4 9 7 2 /9 7 $ 1 7 .0 0 + 0 .0 0
In te g r a tin g c o n tin u o u s
im p r o v e m e n t a n d in n o v a tio n in to a
corporate culture: a case study
Zahir Irani and
J o h n
M . Sharp
R e s e a rc h In s titu te fo r D e s ig n , M a n u fa c tu re a n d M a rk e tin g , U n iv e rs ity o f S a lfo rd , S a lfo rd
M 5
4W T, UK
A b s tra c t
C o n tin u o u s
im p r o v e m e n t,
a s
th e n a m e
im p lie s , a d o p ts
a n
a p p r o a c h
t o
im p r o v in g
o r g a n is a tio n a l p e r fo r m a n c e ,
w ith
sm all increm ental steps, over
tim e. In
th is a p p r o a c h ,
it is not the size
of each
s te p
w h ic h
is im p o r ta n t b u t
th e
lik e lih o o d
th a t th e
im p r o v e m e n ts
w ill b e o n g o in g .
M any
c o m p a n ie s
a re
n o w
c o m p le m e n tin g
c o n tin u o u s
im p r o v e m e n t w ith
in n o v a tio n ,
w h ic h
is s e e n
a s
th e
s u c c e s s fu l e x p lo ita tio n
of new
ideas, and
there appears
t o
be a
c le a r
s y n e r g y
b e tw e e n
th e s e
tw o p h ilo s o p h ie s
w hen
in te g r a te d
under an
a p p r o p r ia te
c o r p o r a te
culture. In
th is p a p e r ,
th e a u th o r s
d e s c r ib e
a
c a s e
s tu d y
of a
s m a ll~ m e d iu m
s u b c o n tr a c t jo b b in g
s h o p
s itu a te d
i n
th e
in d u s tr ia l
heart of N orth
W e s t E n g la n d .
The paper
e x p la in s
h o w , d e s p ite
c o n s id e r a b le
setbacks and
h a r d s h ip ,
th e
com pany
m anaged
t o
k e e p
its c o n tin u o u s
im p r o v e m e n t id e a s a n d
'b e s t p r a c tic e ' b e lie fs
in ta c t th r o u g h o u t
th e
U K
r e c e s s io n
o f th e
e a r ly
1 9 9 0 s .
The paper goes on
to d e s c r ib e
th e c o r p o r a te
c u ltu r e
w ith in
w h ic h
a n
a p p r o a c h
t o
c o n tin u o u s
im provem ent and
in n o v a tio n
h a s a llo w e d
th e e n tir e
w orkforce
t o
c o n tin u e
their quest for
to ta l q u a lity .
\u00a9
1 9 9 7
E ls e v ie r S c ie n c e L td
1 _ IN T R O D U C T IO N
In to d a y 's c o m p e titiv e e n v iro n m e n t q u a lity is s e e n
a s
o n e
o f th e
k e y s
t o
a n
o rg a n is a tio n 's
s u c c e s s
a n d
s u rv iv a l.
I n
o r d e r
t o
c o m p e te
e ffe c tiv e ly , o rg a n is -
a tio n s
m ust
em brace
th e
p rin c ip le s
o f
to ta l
q u a lity
m anagem ent (TQM ) and
in c o rp o ra te th e m
into all o f
their organisational processes. T Q M
c a lls f o r c o n tin u -
o u s
im p ro v e m e n t
- -
a
n e v e r - e n d in g
p h ilo s o p h y
o f
c h a n g e fo r th e b e tte r. M o r e re c e n tly , m a n y p ro a c tiv e
fo rw a rd -th in k in g
c o m p a n ie s
a re
a d d in g
n e w
d i-
m ensions
t o
th e ir
p u rsu it
o f
TQM ,
w h ic h
i s
b e in g
a c h ie v e d th ro u g h
in n o v a tio n .
In n o v a tio n is p ro v in g to b e a n
essential character-
istic of m any m arket leaders, and is not sim ply lim ited
t o
n e w
product or process
developm ent but can

b e a p p lie d to a ll a s p e c ts o f b u s in e s s o p e ra tio n s a n d m a n - a g e m e n t.

M any
in n o v a tiv e
c o m p a n ie s
a p p e a r
t o
b e
f o c u s in g
th e ir
e f f o r t s
o n
d e v e lo p in g
n e w
m arkets,
ra p id
p r o d u c t
d e v e lo p m e n t,
b u s in e s s
p r o c e s s
re -
e n g in e e rin g ,
g ro w th
a n d
p ro fita b ility . T h u s ,
com pa-
n ie s p la n n in g fo r th e ir fu tu re p ro s p e rity m u s t b e fle x -
ib le
a n d
w illin g
t o
accept change
a s
in e v ita b le
a n d
e v e n
d e s ira b le
(M adu
e t
a l.,
1 9 9 6 ). D u rin g
th e
la s t
d e c a d e th e re h a s b e e n g ro w in g in te re s t in th e c o n c e p ts
o f
c o n tin u o u s
im p ro v e m e n t
a n d
in n o v a tio n ,
w ith
m any
c o m p a n ie s
a rriv in g
at these philosophies from
a num ber of different directions. For exam ple, som e
P II: S 0 1 6 6 -4 r /2 (9 6 )0 0 1 .0 3 -4
T e d m o v a U o nV o l.1 7 N o . 4
1 9 9
Z . Ir a n i a n d J .M . S h a rp
o rg a n is a tio n s h a v e in tro d u c e d th e s e p rin c ip le s a s p a rt
of their T Q M
in itia tiv e ; in

o th e rs , it h a s fo llo w e d a n a d o p tio n o f le a n m a n u fa c tu rin g c o n c e p ts ; w h ile s o m e o rg a n is a tio n s

a re
u s in g
th e m
a s
to o ls
t o
in c r e a s e
e m p lo y e e
in v o lv e m e n t
th ro u g h
em pow erm ent
a n d
te a m w o rk .
In th is p a p e r, th e a u th o rs re p o rt o n a c a s e s tu d y o f
a
s u b c o n tra c t jo b b in g
shop, and
d e s c r ib e
th e

e ffo rts m a d e b y th e e n tire w o rk fo rc e in th e ir p u rs u it o f T Q M . The paper goes on to describe how

th e c o m p a n y m a n -
a g e d
t o
em brace
th e
p rin c ip le s
o f
c o n tin u o u s
im p ro v e m e n t
a n d
in n o v a tio n ,
th ro u g h
th e
d e v e lo p -
m ent of
a n
in te g ra te d
c o rp o ra te
c u ltu re
th a t c le a rly
fa c ilita te s c h a n g e .
2 . A D Y N A M IC J O B B IN G S H O P
V e ld e n
E n g in e e rin g
(U K )
L td
i s
a
d y n a m ic ,
a m b itio u s , p riv a te
lim ite d c o m p a n y , w ith

'b e s t p r a c - tic e ' id e a ls a n d w o rld -c la s s a s p ira tio n s . V e ld e n 's c o re b u s in e s s

is precision
s u b c o n tra c t e n g in e e rin g , w h ic h
p rim arily
in v o lv e s
m a n u fa c tu rin g
a
w ide
v a rie ty

o f parts, products and assem blies for a large num ber of custom ers

i n
d iv e r s e
in d u s trie s .
T h is
s e c to r
o f
th e
e n g in e e rin g
in d u s try h a s tra d itio n a lly a d h e re d
t o
th e
s im u lta n e o u s
c h a n g e
i n
n e e d s
o f
th e ir
m any
c u s -
tom ers.
S u b c o n tra c t jo b b in g s h o p s s u c h a s V e ld e n se ll tim e
a n d
e x p e rtis e
o n
a v a rie ty o f c o n v e n tio n a l a n d
com -
p u te r c o n tro lle d
m a c h in e s . T h is p rim a rily

in v o lv e s a 'm a k e to o rd e r' in v e n to ry p o lic y , w ith m o s t p a rts h a v - in g

a very
lo w
le v e l o f s ta n d a rd is a tio n a n d
th e re fo re
fe w
com m on com ponents. H ow ever, to produce these
d iffe rin g
a n d
o fte n
c o m p le x
p a rts
a
h ig h ly
fle x ib le
p ro d u c tio n c a p a b ility is re q u ire d , w h ic h
im plies ver-
s a tile
m a n u fa c tu rin g
e q u ip m e n t,
fle x ib le

e m p lo y e e s a n d a g e n u in e n e e d to c o n tin u o u s ly im p ro v e in o rd e r t o

rem ain
c o m p e titiv e .
T y p ic a l
c o m p o n e n ts

a n d a s s e m b lie s w ith in a jo b b in g s h o p e n v iro n m e n t te n d to be diverse, and

h a v e

u n c o m p lic a te d b ills o f m a te ria l (B O M ) a n d p ro d u c t stru c tu re s. F u rth e rm o re , th e y a re n e a rly a lw a y s m a d e to

s p e c ific a tio n s s u p p lie d
b y th e
o rig in a l
e q u ip m e n t
m anufacturer
(O E M ).
P r o d u c t

v o lu m e s te n d to b e s m a ll a n d e rra tic , s in c e th e y o fte n d e p e n d o n th e n e e d o f c u s to m e rs to o ff-lo a d c a p a c ity o r

t o
p la c e
o rd e rs
fo r
s p e c ia lis t
re q u ire m e n ts ,
e .g .
breakdow ns.
P r o d u c t
c h a n g e
i s
a lw a y s
custom er
d riv e n , a n d c lo s e lin k s b e tw e e n th e m a n u fa c tu re r a n d
c u s to m e r h e lp
t o
r e d u c e
th e c o n s e q u e n c e

of change. M a n u fa c tu rin g le a d tim e s te n d to b e s h o rt a n d p ro d u c t change, if m anaged

p ro p e rly , c a n
be prevented
fro m
s e rio u s ly a ffe c tin g th ro u g h p u t p ro d u c tio n flo w . I f th e
custom er
o r
m a rk e tp la c e
re q u ire m e n ts
c h a n g e ,
th e
a b ility o f a jo b b in g
s h o p
m a n u fa c tu re r to q u ic k ly re -
to o l o r re -e q u ip
its p ro d u c tio n fa c ility e s ta b lis h e s th e
r e s p o n s iv e n e s s
o f
th e
o rg a n is a tio n , a n d
i t s
u ltim ate
survival (Inness,
1 9 9 4 ).
V e ld e n 's
k e y
p r o c e s s e s
a re
s c h e m a tic a lly m a p p e d
i n
flo w c h a rt
fo rm at,
a n d
a re
r e p r e s e n te d
i n

F ig . I. T h is flo w c h a rt re p re s e n ts a ll k e y a c tiv itie s c a rrie d o u t i n

th e
o rg a n is a tio n
a n d
p ro v id e s
a top
le v e l a n a ly s is
o f
p o s s ib le
im p ro v e m e n t
a r e a s .
F u rth e rm o re ,

p ro - cesses are considered by those at V elden to be generic to 'b e s t p ra c tic e ' s u b c o n tra c t e n g in e e rin g , a n d th is h a s a llo w e d V e ld e n to id e n tify n o n -v a lu e a d d in g a c tiv itie s a n d

rem ove
th e m
fro m
th e
in te rn a l/e x te rn a l
s u p p ly
c h a in , th u s re s u ltin g in a n e n v iro n m e n t o f c o n tin u o u s
business process re-engineering
(Burlton, 1995; H ar-
m on,
1 9 9 5 ).
T he
com pany
w as
fo rm ed
i n
1 9 7 3

a n d , a lth o u g h p a rt-tim e , d e v e lo p e d in to a th riv in g e n g in e e rin g c o n - c e r n

s u p p ly in g
m any
lo c a l c o m p a n ie s . B y
1 9 7 6 ,
th e
p a rtn e rs
re a lis e d
th e
o p p o rtu n ity
fo r
e x p a n s io n
a n d
g ro w th
a n d
r e - s i t e d
th e b u s in e s s in to

a s m a ll u n it o n th e c u rre n t site . A fte r a p p ro x im a te ly te n y e a rs o f tra d - in g

as a partnership
V e ld e n b e c a m e
lim ited in
1 9 8 4 ,
a n d
w as
e m p lo y in g
5 0
p e o p le . F iv e
y e a r s
later, the
com pany
a c h ie v e d
a
s ig n ific a n t m ile s to n e
a n d
to o k
o n its 1 0 0 th e m p lo y e e . T h e d ire c to rs h a d th e fo re s ig h t
t o
r e c o g n is e
th a t q u a lity
w o u ld
b e
o n e
o f th e
m a jo r
h a llm a rk s o f th e

1 9 8 0 s, a n d to o k th e o p p o rtu n ity p ro - v id e d b y th e D e p a rtm e n t o f T ra d e a n d In d u s try (D T I) t o

a c h ie v e
c e rtific a tio n
t o
th e
B ritish
S ta n d a rd s
fo r
Q uality (B ritish Standards Institution, 1987). T his w as
approved, and
re s u lte d
i n
V e ld e n
b e c o m in g
th e
f i r s t
U K
s u b c o n tra c t jo b b in g
s h o p to g a in a c c re d ita tio n to
B ritish
S ta n d a rd
5 7 5 0
Part 2, ISO
9 0 0 2 , in
O c to b e r
1 9 8 7
(K itc h e n ,
1 9 8 9 ).
V e ld e n 's e a rly e x p o s u re to

'b e s t p ra c tic e ' p ro v id e d it w ith a s o lid fo u n d a tio n b u ilt o n w o rld -c la s s m a n u - fa c tu rin g

b e lie fs , to g e th e r w ith
a
d e d ic a tio n
t o
m eet
a n d
e x c e e d
custom er
e x p e c ta tio n s .
T he
s y n e r g y
b e tw e e n
'b e s t
p ra c tic e '
a n d
'm o tiv a te d
em ployees'
re s u lte d in a w o rk fo rc e c a p a b le o f g e n e ra tin g n e w
a n d
in n o v a tiv e
id e a s
(K raft,
1 9 9 0 ).
T he
com pany
c o n -
tin u e d to g ro w

and rem ained consistent with business p la n s (s tra te g ic a n d fin a n c ia l) w h ils t a ls o re c o g n is in g th e

n e e d
t o
c o m p le m e n t th e
tra d itio n a l
'fam in e
a n d
feast' of subcontract engineering
w ith its
'o w n ' p ro -
d u c ts
(Ira n i
e t
a l.,
1 9 9 6 ).
T h is
w o u ld
n o t o n ly

h e lp b a la n c e s u b c o n tra c t c a p a c ity flu c tu a tio n s b u t a ls o p re - v e n t

a n
o v e r d e p e n d e n c y
o n
s u b c o n tr a c t
w o rk .
T h is
re s u lte d
in a n e a rly a tte m p t b y V e ld e n to d e v e lo p
i t s
ow n
p r o d u c t
(K itc h e n
a n d
Ira n i,
1 9 9 5 ).
H ow ever,
these early
strategic m oves to reposition
itself in
th e
m arket place w ere
n o t w e lc o m e d
b y th e
firm 's large
2 0 0
T e d ln o v a f~ nV o l.1 7 N o .4
In te g r a U n g c o n lJ n u o u s im p r o v e m e n t a n d in n o v a tio n
. ~
R e4
I
e n q
i
C o n tra c t R e v ie w
s ta g e I - A c c e p t I
r e je c t jo b .
JE n te r o rd e r o n
q u o tln g
I
s a le s o rd e r
~
r
1
~
O n g o in g ~
e n d
rote reason.
i
p ro c e s s in g .
E n te r In M R P II
c o n tra c t
p ro d u c tio n
re v ie w
i R e q u o te e s tim a te e n d p la n
c o n tr o l s y s te m
n e w jo b s o n
p ro d u c tio n
L
p la n n in g s y s te m .
Y e s
i
"
O rd e r m a te r ie l In g o o d
_ ~
R e c e iv e
. /
- -
L a u n c h jo ba t
tlm e o n J R " Im s ls .
~
b e s t tim e fo r
~ ro u g h p u t
F ln 8 1
ro d u c tlo n flo w .
in s p e c tio n
C o m p le te
O p s /P ro c e s s
a s
~
c h e c k s ,
j
\
N e c e s s a r y
j
Pack end
I
p ro te c t.
d e liv e r y/
a d v ic e n o te .
p r o c e s s
a p p ro v e d
i . . - I
,.~ J c o m p le te d jo b s i
I
-I
I
I
I FO LLO W
U P
I
D e liv e r to
I
G e t p a id .
~ J
I
I
C u s to m e r.
(
l
S to p
in e c c o r d a n c e
w lth com pany
B est P ra c tic e .
R e v ie wjo b
O X C U 808
p e r io d ic a lly .
FO LLO W
U P
)
F ig . 1 .
K ey processes
in subcontract
m a n u fa c tu rin g .
O EM
custom ers for fear of reduced priority and poss-
ib le
lo n g -te rm
sh ift in
V elden's core business. These
fa c to rs , to g e th e r
w ith
th e
m arket dem and
fo r
s p a r e
c a p a c ity
at the
tim e, forced
V e ld e n
t o
p u t its
e a rly
a m b itio n s
o f
d e v e lo p in g
i t s
ow n
p r o d u c t
o n
th e
'b a c k
b u r n e r '.
T he
'b o o m '
p e rio d
b e in g
e x p e r ie n c e d
d u rin g
th e
m id
t o
la te
1980s provided
V e ld e n
w ith
a n
e n v iro n -
m ent
fo r
a c h ie v in g
m o n th -o n -m o n th
s u c c e s s .
H ow -
e v e r, th is
p e rio d
of sustained
s ta b ility
w as
s h a tte re d
o v e rn ig h t
b y
th e
r e c e s s io n
o f
th e
e a rly
1 9 9 0 s .
A lth o u g h V e ld e n
h a d
s a ile d
th ro u g h p re v io u s d o w n -
tu rn s,
th e
re s u ltin g
im p a c t
o f
th is
r e c e s s io n
w as
trem endous,
w ith
lo n g -te rm
s c h e d u le
o rd e rs
b e in g
c a n c e lle d o v e rn ig h t, th u s fo rc in g o rd e r-b o o k a n d tu rn -
o v e r le v e ls
t o
p lu m m e t. F u rth e rm o re , V e ld e n 's
p o s -
itio n
a p p e a r e d
e v e n
w o rse
b e c a u s e
o f
i t s

re le n tle s s e ffo rts to m a n a g e a n d m a in ta in a re a lis tic m a s te r p ro - duction schedule (Jeffreys, 1989; K itchen, 1989); i.e.,

T e d u m a d J m V e l.1 7 N o .4
2 0 1

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