BENCHMARKING MANUFACTURING PERFORMANCE IN THE SEMICONDUCTOR INDUSTRY

A methodology for benchmarking manufacturing practices in the worldwide semiconductor industry is presented. Several metrics for measuring semiconductor manufacturing performance are defined and discussed. Interviews conducted during site visits are used to identify the managerial, technical, and organizational practices underlying superior metric performance. Multivariate statistical analyses of the performance metric data indicate that these performance metrics measure independent aspects of performance and expose significant performance differences among fabs.     

MEASURING FACTORY FOCUS: AN EMPIRICAL STUDY

Focus in the manufacturing plant is generally deemed to be an important element of success in manufacturing strategy. Yet, little work has been completed in the measurement of plant focus and a dearth of empirical evidence exists to support the broad popularity of this concept. This paper presents a plant focus measurement approach and reports the results of a field study that uses a site visit research design to apply the focus measure to a multi-industry sample of manufacturing plants. Regression analysis is used to study the relationships between the plant focus variable and the environmental variables of plant size, number of product lines, plant age, number of processes, and type of processes. Although highly intuitive, these relationships have undergone very little empirical study in the literature. Our study provides evidence of a strong logarithmic relationship between our plant focus measure and the number of product lines. Support is also demonstrated in that our measure of plant focus is linked to the number and type of manufacturing processes. However, the variables of plant age and plant size do not appear related to the plant focus measure. The literature-based multicriteria focus measure can be used by managers and researchers as an objective, formal, and generalizable approach for assessing plant focus, for identifying areas in the plant that detract from focus, and for tracking focus improvement efforts over time.     

EXPLORING LINKAGES BETWEEN MANUFACTURING STRATEGY,BUSINESS STRATEGY,AND ORGANIZATIONAL STRATEGY

In recent years there has been an increased emphasis on the development of manufacturing and business strategies. In spite of that high level of emphasis, limited empirical research has been published on the linkage between manufacturing strategy, business strategy, and organizational performance. Our study examines that linkage. Our main contribution lies in (i) building constructs for some important elements of manufacturing strategy and business strategy and (ii) testing the impact of linkage between manufacturing strategy and business strategy on organizational performance. The study is based on 175 responses from senior executives in manufacturing organizations.     

INNOVATION STRATEGY AND FINANCIAL PERFORMANCE IN MANUFACTURING COMPANIES: AN EMPIRICAL STUDY

An innovation strategy for the manufacturing function covers four areas: a firm's desired innovation leadership orientation (i.e., being a leader versus being a follower), its level of emphasis on process and product innovation, its use of internal and external sources of innovations, and its intensity of investment in innovation. We examine two models of the association between manufacturing companies' innovation strategy and their financial performance. The first examines the variations in company financial performance as a function of the simultaneous effect of the dimensions of innovation strategy. The second is a sequential model that suggests a causal sequence among the dimensions of innovation strategy that may lead to higher performance. We used data from a sample of 149 manufacturing companies to test the models. The results (1) support the importance of innovation strategy as a determinant of company financial performance, (2) suggest that both models are appropriate for examining the associations between the dimensions of innovation strategy and company performance, and (3) show that the sequential model provides additional insights into the indirect contribution of the individual dimensions of innovation strategy to company performance. Finally, we discuss the implications of these results for managers.     

REVISITING ALTERNATIVE THEORETICAL PARADIGMS IN MANUFACTURING STRATEGY

Testing and cross‐validation of theories and paradigms are necessary to advance the field of manufacturing strategy. When the findings of one study are also obtained in other studies, using entirely different databases, we become more confident in the results. Replication alleviates concerns about spurious results and is one motivation for this study. We examine aspects of the tradeoffs concept, production competence paradigm, and a manufacturing strategy taxonomy framework. In regard to the tradeoffs concept, we found evidence of tradeoffs between some, but certainly not all, manufacturing capabilities of quality, cost, delivery, and customization. The relationships get sharper when controlling for process choice. For example, the tradeoff between cost and customization is particularly strong between plants that have different process choices. We find that such tradeoffs can change, or even disappear, however, once the process choice is in place. With respect to the production competence paradigm, our analysis shows a statistically significant correlation between production competence and operations performance in batch shops, but not in plants with other process choices. Finally, using variables similar to those of Miller and Roth, our data produced three similar clusters even though their unit of analysis was much more macro than ours. Controlling for process choice is consistent with the current manufacturing strategy literature that emphasizes dynamic development of capabilities within the context of path dependencies. A major argument of this strand of research is that operations decisions not only affect current capabilities, but also set the framework for development of capabilities in the future. That being the case, controlling for process choice (or other factors such as industry or markets) should contribute to the understanding of capability‐development paths adopted by different manufacturing plants. In short, we found at least partial support for each of the theories examined here, even though the theories seem on the surface to be contradictory and mutually exclusive. Controlling for process choice or other measures of dependency goes a long way in uncovering consistency across different theories and empirical studies in operations management.     

BEYOND PRACTICES: A QUALITATIVE INQUIRY INTO HIGH PERFORMANCE ELECTRONICS ASSEMBLY

This paper is based on the cumulative or synergies theory of manufacturing performance, as opposed to the trade‐off perspective. The paper compares the cases of two British contract electronics assemblers, the first one having achieved a high level of performance on productivity, quality, and dependability, and the second one having achieved a lower level of performance on these criteria but higher flexibility. The case material is used to develop a “high school” analogy that helps to understand why companies come to achieve cumulative manufacturing performance in an industrial sector where competitive pressure is particularly high.     

A FRAMEWORK AND MEASUREMENT INSTRUMENT FOR JUST-IN-TIME MANUFACTURING

While Just-in-Time (JIT) manufacturing has emerged as one of the major tools to enhance manufacturing competitiveness, no attempt has been made to develop a reliable and valid measurement instrument for empirical research in JIT. Without such an instrument, generalization beyond the immediate sample is difficult or misleading. We have proposed a JIT framework and developed a valid and reliable instrument with 16 summated scales for dimensions that capture essential aspects of JIT useful in assessing its impact in manufacturing environments. In addition, we discuss in detail the interactive nature of JIT practice. And, we propose a step-by-step approach to reliability and validity testing. Four JIT practices (equipment layout, pull system support, supplier quality level, and Kanban) are identified as major contributing factors to JIT performance.     

LEAN,GREEN, AND THE QUEST FOR SUPERIOR ENVIRONMENTAL PERFORMANCE

We examine the relationship between lean manufacturing practices and environmental performance as measured in terms of air emissions and resource use. We draw on two unique surveys of 31 automobile assembly plants in North America and Japan, which contain information on manufacturing practice and environmental performance, as well as in‐depth interviews with 156 plant level employees at 17 assembly plants. Our survey results and interviews suggest that lean management and reduction of air emissions of volatile organic compounds (vocs) are associated negatively. Lean manufacturing practices contribute to more efficient use of paints and cleaning solvents, but these in‐process changes are not sufficient to meet the most stringent air regulations. We found some evidence to support the link between lean practices and resource efficiency. While our survey results were in hypothesized direction, they were not statistically significant. In‐depth semi‐structured interviews, however, suggest a more robust relationship, and we use them to describe some mechanisms by which all three aspects of lean management (buffer minimization, work systems, and human resource management) may be related to environmental management practices and performance.     

SERVICE-BASED MANUFACTURING: THE SERVICE FACTORY

Evidence suggests that factory-based service will become the next form of competition among manufacturers. If this is true, then manufacturing executives will have to obtain a clear understanding of the service capabilities of their plants and adjust their strategies accordingly. We define a set of factory-based services, information, problem solving, sales, and support, and suggest that they be considered in developing manufacturing strategy. Several propositions provide a framework for future research by linking service performance variables to conventionally accepted manufacturing performance variables.     

COMPUTER INTEGRATION AND CATASTROPHIC PROCESS FAILURE IN FLEXIBLE PRODUCTION: AN EMPIRICAL INVESTIGATION

This paper empirically investigates the effect of advanced manufacturing technology on process stability during flexible production in a process industry. A sample of 61 North American fine paper plants is used to examine the relationship between the level of automation installed for controlling changes between paper grades and the incidence of paper web breaks. These web breaks are catastrophic failures; they require the entire plant to be stopped, reinitialized, and restarted. Because a large fraction of breaks occurs shortly after changeovers, they are an important determinant of the aspect of plant flexibility, called mobility, or the ability to move between products with only small penalties. In an attempt to ensure stable and mobile production, many plants have implemented changeover automation. We find, however, that higher levels of this automation are significantly associated with higher rates of catastrophic failure among the plants studied. We suggest that this finding becomes less paradoxical when considered in light of a recent stream of research on advanced manufacturing technologies, loosely called the usability perspective. According to this perspective, automation designed and implemented with the narrow, technical goal of replacing human operators or removing their discretion over a production process is misguided, especially in environments in which requirements are changing rapidly.     

MADE IN THE WORLD: THE GLOBAL SPREAD OF PRODUCTION

We are moving rapidly into an age of transnational manufacturing, where things made in one country are shipped across national borders for further work, storage, sales, repair, remanufacture, recycle, or disposal; but our laws, policies, and management practices are slow in adjusting to this reality. They are often based on inaccurate premises. This article examines these premises and suggests what they imply for management of manufacturing. First, a common view is that manufacturing investment in the industrialized nations is declining and shifting to the developing countries. This is not true. Investment in manufacturing in both industrialized and developing nations is increasing and, in absolute value, there is a lot more investment in industrialized countries than in developing countries. Second, a related view argued by many is that manufacturing does not have a bright future in the rich countries. I argue that manufacturers can thrive in the industrialized countries if they learn how to add more value for the end users. They must go beyond productivity improvement to producing more technologically advanced and customized products, responding faster to changing customer demands, and appending more services to their products. Doing all this is easier in the industrialized countries because the needed skills and infrastructure are more readily available there. Third, another potentially misleading notion is related to why companies invest in manufacturing abroad. Access to low-cost production is not the main motivation in most cases; rather it is access to market. Superior global manufacturers use their foreign factories for much more: to serve their worldwide customers better, preempt competitors, work with sophisticated suppliers, collect critical marketing, technological, and competitive intelligence, and attract talented individuals into the company. They build integrated global production networks, not collections of disjointed factories that are spread internationally. Thus their investment in manufacturing abroad is not a substitute for investment at home, it is a complement. Building and managing such integrated global factor networks is the next challenge in manufacturing.     

STATE-OF-THE-ART SURVEY: OPEN QUEUEING NETWORKS: OPTIMIZATION AND PERFORMANCE EVALUATION MODELS FOR DISCRETE MANUFACTURING SYSTEMS

In this survey we review methods to analyze open queueing network models for discrete manufacturing systems. We focus on design and planning models for job shops. The survey is divided in two parts: in the first we review exact and approximate decomposition methods for performance evaluation models for single and multiple product class networks. The second part reviews optimization models of three categories of problems: the first minimizes capital investment subject to attaining a performance measure (WIP or lead time), the second seeks to optimize the performance measure subject to resource constraints, and the third explores recent research developments in complexity reduction through shop redesign and products partitioning.     

BUSINESS STRATEGY,MANUFACTURING FLEXIBILITY,AND ORGANIZATIONAL PERFORMANCE RELATIONSHIPS: A PATH ANALYSIS APPROACH

It has been argued in the literature that business strategy and manufacturing flexibility independently affect the performance of an organization. However, no empirical examination of the interrelationship among these three constructs has been performed. In this paper, based on a field study of 269 firms in the manufacturing industry, the identified constructs have been used to test a theoretical model using path analysis techniques. Our results indicate that business strategy contributes both directly and indirectly to organizational performance. The findings provide evidence of direct effects of (i) business strategy on manufacturing flexibility and (ii) manufacturing flexibility on organizational performance.     

MANUFACTURING STRATEGY ON THE “S” CURVE

The concept and techniques of “manufacturing strategy” offer managers the opportunity to use their production function as a strategic weapon in competition, an apparently attractive objective. Yet after about 25 years, the use of manufacturing in corporate strategy (MCS) as a management practice is not widespread. In contrast, however, in academic literature it appears to be flourishing and rapidly growing in popularity. This paper seeks to answer this apparent paradox, beginning with the history of MCS as it was developed as a theory of design to enable a manufacturing system to be focused on a key competitive task. Common criticisms of MCS, such as “tradeoffs,” “focus” and “undynamic,” are examined and refuted as valid reasons for its only modest usage. Instead, three “new” problems in the MCS concept and its techniques are suggested as genuine needs for the completion of the theory and for its becoming more universally understood and used by industrial managers.     

THE CHALLENGE OF MANUFACTURING ADVANTAGE

In spite of the significant progress made by a wide range of manufacturing companies over the past decade, few senior executives in U.S. firms would point to manufacturing as a significant source of competitive advantage. This paper seeks to explore some of the basic reasons for this. It begins by providing a framework for manufacturing competitiveness. It then outlines a handful of characteristics that seem to have been pervasive in a wide range of manufacturing competitiveness programs over the past decade. In contrast to those characteristics, it uses three quite different organizations to illustrate a very different mode for pursuing manufacturing competitiveness. Finally, the paper concludes by outlining three elements that appear to be essential in the successful pursuit of manufacturing advantage.     

COMPUTER-INTEGRATED MANUFACTURING: A TAXONOMY OF INTEGRATION AND RESEARCH ISSUES

The past decade has seen an upsurgence in the number of manufacturing companies that are attempting to transform into computer-integrated enterprises. However, much of the computer-based integration efforts in these manufacturing organizations have been limited in scope and localized within certain areas of the organization (particularly, technology-intensive areas such as the shop floor). Such compartmentalized and myopic approaches to the development of computer-integrated manufacturing (CIM) systems undermine the ability of these systems to reach their fullest potential. CIM is much larger in scope and can impact an organization along various dimensions and at various levels. The fact that no completely integrated manufacturing enterprise has been developed to date can be attributed, in part, to a lack of understanding of the scope and implications of CIM. The purpose of this paper is, therefore, twofold. First, the paper presents a meta-schema (called TRIAD) for multidimensional and multilevel integration of a manufacturing system. Second, on the basis of the proposed meta-schema, the paper develops a taxonomical framework for defining key integration issues in CIM system design and discusses critical research needs that exist in this area. It is hoped that this paper will serve as a road map for research efforts that will enable the emergence of comprehensive CIM systems.     

ON THE RELATIVE PERFORMANCE OF FUNCTIONAL AND CELLULAR LAYOUTS- AN ANALYSIS OF THE MODEL-BASED COMPARATIVE STUDIES LITERATURE

Paralleling the increased interest in cellular manufacturing in recent years, a large number of studies have emerged that focus on the relative performance of cell systems and the functionally organized systems they replace. This paper is an analysis of studies that use model-based, controlled experimentation to seek answers to the questions of if, when, and why cellular layouts outperform their functional counterparts. Twenty-four model-based studies are analyzed with respect to their definitions of cellular versus functional layouts, the experimental factors that have been investigated, the results concerning relative performance, and the findings' relevance to layout choice. We conclude that although the comparative studies have been very valuable in their efforts at identifying the factors that embody the essence of cells and shape performance improvements, most of the basic findings are known from past research. Furthermore, the studies' findings cannot assist practitioners in making specific choices between existing layouts and alternative cell systems. However, the totality of the findings reinforce our knowledge of how work systems in general can be designed and organized to reduce throughput time, and can also be used to identify environments and conditions for which conversions to cells may have more or less potential.     

A Theory of Production Competence Revisited*

A recent article [3] proposed a definable relationship between production competence and business performance and presented empirical evidence to support the relationship. The purpose of this note is four-fold. First, it corrects the authors' numerical measure of production competence. The correction changes the nature of the relationship between competence and performance. Second, this note suggests an improved numerical measure of business performance (the dependent variable in the study). The authors of [3] defined performance in a manner which inadvertently captures elements used to measure production competence (the independent variable). The result is a deceptively close fit of the authors' model with the data. The third purpose of the note is to introduce a more appropriate theoretical framework for the production competence construct. It is shown that production competence is closely related to the formulation and implementation of manufacturing strategy and can best be understood within that context. Last, an alternative conceptual model of the relationship between business strategy, production competence, and business performance is presented. The new model includes a construct which measures the “fit” of a firm's business strategy to its external, competitive environment.     

QUALITY MANAGEMENT: UNIVERSAL OR CONTEXT DEPENDENT?

Quality management has often been advocated as being universally applicable to organizations. This is in contrast with the manufacturing strategy contingency approach of Operations Management that advocates internal and external consistency between manufacturing strategy choices. This article empirically investigates whether quality management practices are contingent on a plant's manufacturing strategy context, by examining the use of process quality management practices—a critical and distinctive subset of the whole set of quality management practices—across plants representative of different manufacturing strategy contexts. The study strongly suggests that process quality management practices are contingent on a plant's manufacturing strategy, and identifies mechanisms by which this takes place.