Japanese Forms of Operations Management are Inappropriate to Western Organisations

I would like to start by pointing out that I strongly disagree with the statement above. In this essay, I am going to give evidences to support my view. I will define some major Japanese forms of operations management and discuss their advantages and disadvantages to organisations in order to give a brief idea about the Japanese forms of operations management. I will also examine the main reasons why Japanese operations management is appropriate to Western organisations along with some examples. Moreover, I will talk about drawbacks from applying Japanese operations management to Western organisations.

There are many forms of Japanese operations management, the first one I would like to discuss is lean production. Lean production is an approach to production developed in Japan. Toyota, the Japanese car manufacturer, was the first company to adopt this approach. Its aim is to reduce the quantity of resources used up in production. Lean producers use less of everything, including factory space, materials, stocks, suppliers, labour, capital and time. As a result, lean producers are also able to design new products quicker and can offer customers a wider range of products to choose from. Lean production involves using a range of practices designed to reduce waste and to improve productivity and quality.

Lean Thinking can be applied to any organisation in any sector; although its origins are firmly in an automotive production environment, the principles and techniques are transferable often with little adaptation. There is a wealth of case study evidence that backs up this assertion. Lean Thinking (Womack and Jones, 1996) showed how firms in several industries in North America, Europe and Japan followed this path and has doubled their performance while reducing inventories, throughput times and errors reaching the customer by 90%. These results are found in all kinds of activities, including order processing, product development, manufacturing, warehousing, distribution and retailing. From this point, we can see that lean thinking is appropriate to western organisations, it helps to improve performance effectively and it is accepted by many Western companies.

Kaizen is perhaps the most important concept in Japanese management. It is the Japanese term for “continuous improvement” (CI), simply it means keep on getting better. In continuous improvement, it is not the rate of improvement which is important but the momentum of improvement. It does not matter if successive improvements are small; what does matter is that every month (or week, or quarter) some kind of improvement has actually taken place. Kaizen has been the main difference between the Japanese and the Western approaches to management in the past. The attempts of Western businesses to improve efficiency and quality have tended to be ‘one-offs’. Productivity remains the same for long periods of time and then suddenly rises. The increase is followed by another period of stability, before another rise. Increases in productivity may result from new working practices or new technology. On the Japanese approach, productivity improvements are continuous; it means that the changes in production techniques are introduced gradually. Managers and employees are more likely to accept continuous improvements rather than sudden improvements as they will not rush into the new working practices or new technology.

Just-in-time (JIT) manufacturing is an important part of lean production and the Kaizen approach. It was developed in the Japanese shipbuilding industry in the 1950s and 1960s. It is a manufacturing system which is designed to minimise the costs of holding stocks of raw materials, components, work-in-progress and finished goods by very carefully planned scheduling and flow of resources through the production process. JIT can lead firms to rethink their approach to factory work. The traditional approach of splitting work into repetitive fragments results in an uncooperative workforce. So firms organise the workforce into teams, working together on large units of work instead of working in isolation on the same boring task. While workers are given more responsibility and encouraged to work in teams, the motivation of workers is improved significantly. From its origins in Japan, the JIT approach has spread widely throughout the West. For example, in Britain, Roll Royce has divided its car plant into 16 zones, each acting as a business within a business, responsible for purchasing, cost, quality and delivery. This approach is truly appropriate to Roll Royce as it has halved the break-even level from 2800 cars per year to 1400.

JIT was introduced in other Japanese industries, such as their car industry, and then spreading to other parts of the world such as the USA and Europe. An example to show that JIT is suitable for Western world would be a cooker manufacturer. In the UK, Stoves cooker manufacturer of Liverpool adopted JIT in the early 1990s. Its aim was to ‘produce instantaneously with perfect quality and minimum waste’. The JCB construction vehicle company also uses JIT in its Rochester plant. When JCB excavators are manufactured, every machine on the production line has already been sold. Supplies of components, such as engines from Perkins, and raw materials, such as steel plates, arrive on the day they are needed. JIT helps to reduce the costs of stockholding so more factory space is made available for production use.

Although the implementation of the just-in-time philosophy has been presented as a technique for large manufacturing firms, it has also been very successful in smaller manufacturing firms. In a recent international survey of small manufacturing firms, 75 percent reported that they were successful in implementing the JIT technique. More importantly, 80 percent of these firms were able to report decreases in their materials, 58 percent reported decreases in their work-in-progress inventory, and 56 percent reported a decrease in their finished goods inventory. These results therefore once again prove that JIT works successfully in almost any size of manufacturing firms.

There are, however, some drawbacks of JIT. A lot of faith is placed in the reliability and flexibility of suppliers. In fact, not every firm has enough faith with its suppliers. Also, it is very difficult to cope with sharp increases in demand as all stocks arrive just in time. An assumption of JIT is that the rate of production on the assembly line is fairly steady so that inventory may be ordered and delivered on fairly predictable schedules. Certainly this assumption does not fit all manufacturing firms. Therefore, firms must consider all aspects very carefully before deciding whether to use JIT.

Cellular manufacturing (CM) and workcells are the heart of lean manufacturing. Their benefits are plentiful and varied. Cellular manufacturing is the grouping of similar products for manufacture in discrete multi-machine cells. It has been proven to yield faster production cycles, lower in-process inventory levels, and enhanced product quality. Pioneered on a large scale by Russian, British, and German manufacturers, interest in CM methods has grown steadily over the past decade.

Amitco, the Coventry based manufacturer of vinyl floor coverings is an example of successful cellular manufacturing in the UK. Amitco were the winners of the Best Small Company award in 1996. Amitco excels at the production of base vinyl, many of which closely resembles natural materials such as wood and marble. These are cleverly incorporated into complex designs to produce mosaic-effect floors, complete with borders and motifs. Because of the high quality of their designs and the flexibility which they offer to their customers, they are able to charge a 30 percent price premium.

A large part of Amitco’s success in gaining a competitive edge in the market has been the result of changes made in factory. One of these changes involved a switch from flow production to cellular manufacturing. The production of one product called Arden was reorganised along classic JIT lines and the use of cells was employed. Instead of being produced in stages in a flow of materials, beginning in a separate store area and then embracing manufacturing resources in both of their factories, all the materials and resources required to produce Arden were located in a single cell. Once processing begins, workers move directly from process to process (or sit in mini-queues). The result is very fast throughput. Besides, communication is easier since every operator is close to the others leading to improved quality and coordination. Proximity and a common mission enhance teamwork. However, organisations should be aware of the limitations of cellular manufacturing, for instance, processes can be less flexible and it might result in lower utilisation of equipments.

Due to the fact that errors are costly for businesses, the next essential concept I will look at is total quality management (TQM). TQM is another Japanese idea, it is a managerial approach which focuses on quality and aims to improve the effectiveness, flexibility, and competitiveness of the business. It is estimated that about one-third of all the effort of British business is wasted in correcting errors. TQM is a ‘medicine’ for curing errors. TQM is often associated with the phase “Doing the right things right, first time”. It describes a way of managing people and business processes to ensure complete customer satisfaction at every stage. The features of TQM include quality chains, company policies and accountability, control, monitoring the process, teamwork, consumer views and zero defects.

TQM is accepted by international organisations. In the 80’s and 90’s, it was promoted in the USA through the “Baldridge Award” and in Europe through the European Quality Award. There are a number of examples to prove that TQM is appropriate to all types of organisations. The first example would be British Steel, after bring the idea of TQM into the company, it achieved many good results such as lost time from injuries reduced by 23 percent, market share recovered from serious dip in 1980 and significant increase in employee suggestions. More importantly, British Steel won the British Quality Award. Secondly, I would like to introduce the achievement of Federal Express, after using TQM, its revenue from just under $4 billion in 1988 rose to over $7 billion in 1990. As a result at least 91 percent of employees said they were ‘proud to work for Federal Express’. All these achievements prove that TQM helps companies to find improvements and develop measures of performance and focus clearly on the needs of customers and relationships between suppliers and customers. TQM works well in most of the organisations with many successful cases showing that it is an appropriate method to Western organisations.

Unfortunately, there are some problems of using TQM. For example, there will be training and development costs of the new system, it will only work if there is commitment from the entire business and stress is placed on the process and not the product. A study undertaken by A.T. Kearney of over 100 British companies came to the conclusion that 80 percent of quality programmes fail to produce any tangible benefits and the programmes tended to fail because senior managers tend to set unrealistic goals at the outset. Therefore, the conclusion was that the TQM approach is not appropriate to British organisations.

Quality circles are definitely a Japanese idea, but the concept and techniques of quality control for the Japanese are imported from the United States. TQM stresses the importance of teamwork in a business. Many businesses which are using TQM have introduced quality circles into their operations. Quality circles are small groups of staff, usually from the same work area, who meet on a regular and voluntary basis. They meet in the employer’s time and attempt to solve problems and make suggestions about how to improve various aspects of the business.

Quality circles are becoming popular in Britain. The idea gained in popularity in Japan and was taken up by Western businesses. More and more large corporations agree that quality circles are very useful and appropriate operations method to their organisations. Many Western corporations have begun to implement quality circles, including American Airlines, McDonnell Douglas, General Electric and Ford Motor Company. An example of successful achievement in quality circles is Westinghouse Electric Corporation Defense and Electronics Systems Centre in Baltimore. In a brief article entitled “Quality Circles Become Contagious” in Industry Week, Joani Nelson reported that an estimated $636,000 per year is being saved by the purchasing department because over shipments by vendors are being returned at the vendor’s expense. The suggestion for these savings was suggested by a quality circle. The same article reported that General Electric’s room-air-conditioner plant in Columbia, Tennessee launched a quality-circle program. One of the quality circles achieved annual savings of $15,000 by solving a weld-leak problem.

All of these scenarios can provide an overview of what Western firms are achieving with quality circles. The success stories on implemented quality circles are telling us that the quality circles approach is becoming popular and it is truly appropriate to Western organisations as it can bring further achievements. However, quality circles are only likely to work if they have the support of both management and employees. Businesses have to encourage worker participation and involvement in decision making, and set up a structure that supports this. Employees must feel that their views within the circle are valued and must take a contribution to decisions. If most of the employees are passive and do not support quality circles, then it would be inappropriate to use quality circles in the organisations. Unfortunately, a recent survey on the opinions of European workers’ motivation factors shows that a considerable minority do not react well to quality circles. Therefore, quality circles might not be appropriated to all Europe organisations.

Before making a conclusion, I would like to explain the reasons for why Japanese forms of operations management might not be appropriate to Western organisations. The reason is that Japan and Western countries have different management cultures and they are not completely applying the same style of operations management. Many factors can affect the methods they use on operations management, such as, size and nature of organisations, consumer confident and changing in technology. One of the very important differences between Western and Japanese firms is the unofficial hierarchy of the functional divisions in the corporation. In the West, and especially in the United States, the production engineering and manufacturing divisions have a relatively low status in relation to the marketing and finance divisions. In Japan, on the other hand, the production engineering and manufacturing divisions are usually very important, and, in the corporate hierarchy, these two divisions are near the top of the corporate status ladder. This unofficial corporate status phenomenon explains to a considerable extent why Japan and Western organisations have to use different operations management, it is because they are focusing on different divisions. Therefore, some of the Japanese forms of operations management might not be appropriated to Western organisations.

To make my conclusion of the essay, I would say that I strongly disagree that Japanese forms of operations management are inappropriate to Western organisatiosn. Many of the Japanese forms of operations management are developed in a relation to Western organisations. For example, quality circles originated in Japan, although they can be traced to the influences of Drs. Deming and Juran, two American quality control and management experts who lectured extensively in Japan in the 1950s. Today, quality circles are increasingly accepted in Western world and have lost most of their Japanese flavor.

The most important point I would like to bring up is that many Western industrial firms are faced with increased problems in terms of manufacturing control. Just-in-time approach can help firms to solve these problems, JIT is a manufacturing system designed to minimise the costs of holding stocks of raw materials, components, work-in-progress and finished goods by very carefully planned scheduling and flow of resources through the production process. Therefore, JIT is definitely an appropriate system to Western organisations.

Overall in this essay, I use lots of examples of successful achievements in Japanese forms of operations management. This is because I believe that successful examples are the most powerful evidence to support my view. Some failures of applying Japanese forms of operations management to Western world are also included. However, compared with the number of successful cases in using Japanese forms of operations management, those failed cases were only a fraction of the successful ones. Taken as a whole, there are lots of positive evidence proving that Western organisations would be able to gain substantial potential benefits by applying Japanese forms of operations management. Therefore, I strongly disagree that Japanese forms of operation management are inappropriate to Western organisations.

References:

Slack N, S Chambers, C Harland, A Harrison and R Johnson Operations Management, Pitman, London, 1995.

Hill T J, Manufacturing Strategy: The Strategic Management of the Manufacturing Function (2nd Ed.), MacMillan, London, 1993.

Womack, J. P. and D. T. Jones. 1996. Beyond Toyota: How to root out waste and pursue perfection. Harvard Business Review

Management Today’s Guide to Britain’s Best Factories, DTI, 1997

http://www.1000ventures.com/business_guide/crosscuttings/sca_us_vs_japan.html

http://www.skyenet.net/~leg/tqm.htm