The quality movement may spur productive growth

Rural group, M&I bank agree to work together to aid rural areas

David Fettig | Editor

Published April 1, 1995  | April 1995 issue

Jidoka. Kaizen. Kanban. Poka Yoke.

For decades, U.S. manufacturers increased productivity by, for the most part, working harder and using better tools and automation than before. But in the 1980s those Asian terms became familiar to manufacturers in the United States and other countries as firms employed different techniques to improve productivity.

Spurred by lethargic productivity rates among US firms in the last 20 years and the success of their Pacific competitors, many US manufacturers began reevaluating all aspects of their business, including research, engineering, manufacturing flow, delivery and office work.

Roughly translated, the above terms mean "immediate process shutdown for cause," "continuous improvement," "just-in-time" and "mistake-proof engineering." Of those two, continuous improvement (Kaizen) and just-in-time (Kanban) have apparently had the greatest impact on US manufacturers, according to a 1994 survey of 70 large manufacturers by the Manufacturers Alliance for Productivity and Innovation (MAPI), Arlington, Va.

Those Asian terms and philosophies are joined by a host of other "quality" techniques that have impacted much of US business in recent years. Those techniques include quality circles, dual ladder systems, competitive product analysis, cellular manufacturing, total productive maintenance, break-even time and many others.

Of the 50 techniques listed in MAPI's survey, almost three-fifths were considered by the respondent firms to be either "very important to us" or "useful." For Richard McNabb, former senior economist and now a consultant for MAPI, those results are a sign that US manufacturers may be on the path to increased productivity.

"It's sort of a bright picture," McNabb says. "People are looking for the best techniques." Those techniques include improvements "outside the shop," in areas such as engineering and in a firm's offices. Also, McNabb says that manufacturers are now investing more in equipment than in buildings. In 1960, firms evenly split their investment between equipment and plants; today that ratio is about 70 percent for equipment and 30 percent for plants. This suggests a potential for productivity increases, McNabb says.

Robert Jackman, director of product line management for the National Education Training Group in Naperville, Ill., agrees that the '90s may see a rebound from the moribund productivity rates of the last 20 years. He credits a renewed—more realistic—interest in quality techniques. Many firms abandoned the new quality procedures after experimenting in the '80s because they were too difficult or did not apply easily to their firm. Now many companies are returning to those ideas and applying them where they fit the best, Jackman says.

Many US firms, especially the large ones, also face a concern regarding the turnover in their staff, Jackman says. Many long-term employees that grew up with a firm through the boom years of the 1950s and '60s have left or will soon retire—some of them because of corporate downsizing. "It's a tremendous exodus, and I would use that word," Jackman says. "So much of the expertise is walking out the door."

Firms are having trouble hiring the skills they need, or they are hiring workers and then training them, Jackman says. This fall-off in skilled labor has required that firms tighten their quality control measures.

Jackman says that when his firm began selling training packages to business in the 1980s, he had to convince the firms of the benefits. Now firms understand the benefits and they want the training, and they also want to measure the end result. Such informal measurements of the benefits of training may ultimately suggest gains in productivity, Jackman says.