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The focusedfactory

New approach to managingmanufacturing sees ourproductivity crisis as the problemof 'how to compete'

Wickham Skinner

The conventional factoryattempts to do too manyconflicting productiontasks within one incon-sistent set of manufac-turing policies. The chiefresult is that the plantis likely to be non-competitive because itspolicies are not focusedon the one key manu-facturing task essentialto successfully competingin its industry. In thisarticle, the author dis-cusses the concept offocused manufacturing,which offers the op-portunity hoth to stopcompromising each ele-ment of the productionsystem and to build oncompetitive strength.

Mr. Skinner is the James E.Robison Professor of Busi-ness Administration at tbeHarvard Business School.His research and teachinghave centered on theprohlems and opportunitiesof U.S. manufacturingcompanies, particularly inregard to the relation-ship hetween productionoperations and totalcorporate results. He is afive-time HBR author,including "TheAnachronistic Factory"(January-February 1971).

The threat posed by foreign competition, the prob-lem of industries suffering from "blue-collar blues,"and the increasing complexity and frustration of Ufein the factory have forced public attention backto the industrial sector of the economy. Many yearsof taking our industrial health and leadership forgranted abruptly ended in the 1970s when our de-clining position in world markets weakened thedollar and became a national issue.

In the popular press and at the policy level in gov-ernment, the issue has been seen as a "productivitycrisis." The National Commission on Productivitywas established in 1971. The concern with produc-tivity has appealed to many managers who havefirsthand experience with our problems of higheosts and low efficiency.

So pessimism now pervades the outlook of manymanagers and analysts of the U.S. manufacturingscene. The recurring theme of this gloomy view isthat (a) U.S. labor is the most expensive in theworld, (b) its productivity has been growing at aslower rate than that of most of its competitors, andtherefore (c) our industries sicken one by one as im-ports mushroom and unemployment becomes chron-ic in our industrial population centers.

In this article, I shall offer a more optimistic viewof the productivity dilemma, suggesting that we neednot feel powerless in competing against cheaper for-eign labor. Rather, we have the opportunity to effectbasic changes in the management of manufacturing,

AucboT's noie: This article is an analy.-iis based on my cases written inthe electronics, plastics, texdie, steel, and industrial equipment industries,supplemented by tccent pmjcct teaeatch in the furniture industry. Financialsupport for this woik provided by ihc Harvard Business School Divisionof Research and course development funds is gratefully acknowledged.

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which could shift the competitive balance in ourfavor in many industries. What are these basicchanges? I can identify four:

1Seeing the problem not as "How can we increaseproductivity?" but as "How can we compete?"2Seeing the problem as encompassing the efficiencyof the entire manufacturing organization, not onlythe efficiency of the direct labor and the work force.[In most plants, direct labor and the work forcerepresent only a small percentage of total costs.)3Learning to focus each plant on a limited, concise,manageable set of products, technologies, volumes,and markets.4Learning to structure basic manufacturing policiesand supporting services so that they focus on oneexplicit manufacturing task instead of on many in-consistent, conflicting, implicit tasks.

A factory that focuses on a narrow product mix fora particular market niche will outperform the con-ventional plant, which attempts a broader mission.Because its equipment, supporting systems, and pro-cedures can concentrate on a limited task for oneset of customers, its costs and especially its over-head are likely to be lower than those of the con-ventional plant. But, more important, such a plantcan become a competitive weapon because its entireapparatus is focused to accomplish the particularmanufacturing task demanded by the company'soverall strategy and marketing objective.

In spite of their advantages, my research indicatesthat focused manufacturing plants are surprisinglyrare. Instead, the eonventional factory producesmany products for numerous customers in a varietyof markets, thereby demanding the performance ofa multiplicity ot manufacturing tasks all at oncefrom one set of assets and people. Its rationale is"economy of scale" and lower capital investment.

However, the result more often than not is a hodge-podge of compromises, a high overhead, and amanufacturing organization that is constantly in hotwater with top management, marketing manage-ment, the controller, and customers.

A simple but telling example of a failure to focus isuncovered in this case study of a manufacturer, theAmerican Printed Circuit Company [APC):

APC was a small company which had been growingrapidly and successfully. Its printed circuits werecustom-built in lots of i to ioo for about 20principal customers and were used for engineeringtests and development work. APC's process consistedof about 15 operations using simple equipment, suchas hand-dipping tanks, drill presses, and manualtouch-ups. There was considerable variation in thesequence and processes for different products. De-hvery was a major element for success, and price wasnot a key factor.

APC's president aecepted an order from a large eom-puter company to manufacture 20,000 printed cir-cuit boards—a new product for the company—at aprice equivalent to about one third of its averagemix of products. APC made the decision to producethese circuit boards in order to build volume,broaden the company's range of markets, and di-versify the line. The new produet was producedin the existing plant.

The result was disastrous. The old products wereno longer delivered on time. The costs of the newprinted circuit boards were substantially in excessof the bid price. The quality on all items sufferedas the organization frenetically attempted to meetdeliveries. Old customers grew bitter over misseddeliveries, and the new customer returned one thirdof the merchandise for below-spec quality. Suchheavy losses ensued that the APC company had toreeapitalize. Subsequently, the ownership of theeompany changed hands.

The purpose of this article is to set forth the ad-vantages of focused manufacturing. I shall beginwith the basic concepts of the focused factory, thenfollow with an analysis of the productivity phenom-enon, which tends to prevent the adoption of thefocused plant concept. Finally, I shall offer somespecific steps for managing manufacturing to ac-complish and take advantage of focus.

Basic concepts

From my study of approximately 50 plants in sixindustries, I can pinpoint three basic concepts under-lying focused manufacturing. Consider:

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1There are many ways to compete besides by pio-ducing at low cost. This statement may be self-evi-dent to the reader (particularly, to one in an industrywhich has been badly hit by low-priced foreign im-ports and has been attempting to compete withbetter products, quality, or customer service anddelivery). Nevertheless, it still needs saying for tworeasons.

One is simply the persistent attitude that ways ofcompeting other than on the basis of price aresecond best. The other is that a company whichstarts out with higher manufacturing costs than itscompetitors is in trouble regardless of whateverelse it does.

While these assumptions may be true of industrieswith mature products and technologies, they are notat all true of products in earlier stages of their lifecycles. In fact, in many U.S. industries, companiesare being forced to shift to products in which tech-nological innovation in the form of advanced fea-tures is a more critical element of competitive ad-vantage than cost.

A factory cannot peiform well on every yardstick.There are a number of common standards for mea-suring manufacturing performance. Among theseare short delivery cycles, superior product qualityand reliability, dependable delivery promises, abilityto produce new products quickly, fiexibiUty in ad-justing to volume changes, low investment andhence higher return on investment, and low costs.

These measures of manufacturing performance ne-cessitate trade-offs—certain tasks must be compro-mised to meet others. They cannot all be accom-plished equally well because of the inevitable limita-tions of equipment and process technology. Suchtrade-offs as costs versus quality or short deliverycycles versus low inventory investment are fairlyobvious. Other trade offs, while less obvious, areequally real. They involve implicit choices in estab-lishing manufacturing policies.

Within the factory, managers can make the manu-facturing function a competitive weapon by out-standing accomplishment of one or more of themeasures of manufacturing performance. But man-agers need to know: "What must we be especiallygood at? Cost, quality, lead times, reliability, chang-ing schedules, new-product introduction, or low in-vestment?"

Focused manufacturing must be derived from an ex-plicitly defined corporate strategy which has its rootsin a corporate marketing plan. Therefore, the choiceof focus cannot be made independently by produc-tion people. Instead, it has to be a result of a com-prehensive analysis of the company's resources,strengths and weaknesses, position in the industry,assessment of competitors' moves, and forecast offuture customer motives and behavior.

Conversely, the choice of focus cannot be madewithout considering the existing factory, becausea given set of facilities, systems, and people skillscan do only certain things well within a given timeperiod.

Simplicity and repetition breed competence. Focusedmanufacturing is based on the concept that sim-plicity, repetition, experience, and homogeneity oftasks breed competence. Furthermore, each keyfunctional area in manufacturing must have thesame objective, derived from corporate strategy.Such congruence of tasks can produce a manufac-turing system that does limited things very well,thus creating a formidable competitive weapon.

Major characteristics

Five key characteristics of the focused factory are:

1Process technologies: Typically, unproven and un-certain technologies are limited to one per factory.

116 Harvard Business Review May-June 1974

Proven, mature technologies are limited to whattheir managers ean easily handle, typically two orthree (e.g., a foundry, metal working, and metalfinishing).2Market demands: These consist of a set of demandsincluding quality, price, lead times, and reliabilityspecifications. A given plant can usually only do asuperb job on one or two demands at any givenperiod of time.3Product volumes: Generally, these are of compara-ble levels, such that toohng, order quantities, ma-terials handling techniques, and job contents canbe approached with a consistent philosophy. Butwhat about the inevitable short runs, eustomer spe-cials, and one-of-a-kind orders that every factorymust handle? The answer is usually to segregatethem. This is discussed later.4Quality levels: These employ a common attitudeand set of approaches so as to neither overspecifynor overcontrol quality and specifications. Oneframe of mind and set of mental assumptions sufficefor equipment, tooling, inspection, training, super-vision, job content, materials handling.5Manufacturing tools: These are limited to only one[or two at the most} at any given time. The task atwhich the plant must excel in order to be eompeti-tive focuses on one set of internally consistent,doable, noncompromised criteria for success.

My research evidence makes it clear that the focusedfactory will outproduce, undersell, and quickly gaineompetitive advantage over the eomplex factory.The focused factory does a better job because repeti-tion and concentration in one area allow its workforce and managers to become effective and ex-perienced in the task required for success. The fo-cused factory is manageable and controllable. Itsproblems are demanding, but limited in scope.

hands down by overseas competitors with lowerunit costs, we mistakenly cling to the old notionthat "a good plant is a low-cost plant." This is sim-ply not so. A low-cost plant may be a disaster if theeompany has sacrifieed too much in the way of qual-ity, delivery, flexibility, and so forth, in order to getits costs down.

Too many companies attempt to do too many thingswith one plant and one organization. In the nameof low investment in facilities and spreading theiroverheads, they add products, markets, technologies,processes, quality levels, and supporting serviceswhich confiict and compete with each other andcompound expense. They then hire more staff toregulate and control the unmanageable mixture ofproblems.

In desperation, many companies are now "bangingaway" at anything to reduce the resulting high eosts.But we can only regain competitive strength bystopping this process of increasing complexity andoverstaffing.

This behavior is so illogical that the phenomenonneeds further explanation. Our plants are generallymanaged by extremely able people,- yet the failureto focus manufacturing on a limited objective is acommon managerial blind spot. What happens toproduce this defeet in competent managers? En-gineers know what can and cannot be designed intoplanes, boats, and building structures. Engineers ac-cept design objectives that will accomplish a speeifieset of tasks which are possible, although difficult.

In contrast, most of the manufacturing plants in mystudy attempted a complex, heterogeneous mixtureof general and special-purpose equipment, long- andshort-run operations, high and low tolerances, newand old products, off-the-shelf items and customerspecials, stable and changing designs, markets withreliable forecasts and unpredictable ones, seasonaland nonscasonal sales, short and long lead times,and high and low skills.

Productivity phenomenon

The conventional wisdom of manufacturing man-agement has been and eontinues to be that themeasure of success is productivity. Now that U.S.companies in many industries are getting beaten

Lack of consistent policies

It is not understood, I think, that each of the con-trasting features just noted generally demands con-flicting manufacturing tasks and hence differentmanufaeturing policies. The particular mix of thesefeatures should determine the elements of manu-facturing policy. Some of these elements are thefollowing:

The focused factory 117

OSize of plant and its capacity.OLocation of plant.OChoice of equipment.OPlant layout.OSelection of production process.OProduction scheduling system.OUse of inventories.OWage system.OTraining and supervisory approaches.OControl systems.OOrganizational structure.

Instead of designing elements of manufaeturingpolicy around one manufacturing task, what usuallyhappens? Consider, for example, that the wage sys-tem may be set up to emphasize high productivity,production control to maximize short lead times,inventory to minimize stock levels, order quantitiesto minimize setup times, plant layout to minimizematerials handling costs, and process design to max-imize quality.

While each of these decisions probably looks sen-sible to the professional specialist in his field, theconventional factory consists of six or more incon-sistent elements of manufacturing structure, each ofwhieh is designed to achieve a different implicit ob-jective.

Such inconsistency usually results in high eosts.One or another element may be excessively staffedor operated inefficiently because its task is beingexaggerated or misdirected. Or several functionsmay require excess staff in order to control or man-age a plant which is unduly complex.

But often the result is even more serious. My studyshows that the chief negative effect is not on pro-ductivity but on ability to compete. The plant'smanufacturing policies are not designed, tuned, andfocused as a whole on that one key strategic manu-facturing task essential to the company's success inits industry.

Reasons for inconsistency

Noncongruent manufacturing structures appear tobe common in U.S. industry. In fact, my researchrevealed that a fully consistent set of manufaeturingpolicies resulting in a congruent system is highlyrare. Why does this situation occur so often? In theeases I studied, it seemed to come about essentiallyfor one or more of these reasons:

OProfessionals in each fleld attempted to achieve goalswhich, although valid and traditional in their fields,were not congruent with goals of other areas.OThe manufacturing task for the plant subtly changedwhile most operating and service departments kepton the same course as before.OThe manufacturing task was never made explicit.OThe inconsistencies were never recognized.OMore and more products were piled into existingplants, resulting in an often futile attempt to meetthe manufacturing tasks of a variety of markets,technologies, and competitive strategies.

Let me elaborate on the first and last set of causeswe have just noted.

'Professionalism' in the plantProduction system elements are now set up or man-aged by professionals in their respective fields, sueh

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as quality control, personnel, labor relations, en-gineering, inventory management, materials han-dling, systems design, and so forth.

These professionals, quite naturally, seek to max-imize their contributions and justify their positions.They have conventional views of success in eachof their partieular fields. Of eourse, these objectivesare generally in conflict.

I say "of course" not to be cynical. These fields ofspecialty have come into existence for many differ-ent reasons—some to reduce costs, others to savetime, others to minimize capital investments, stillothers to promote human cooperation and happi-ness, and so on. So it is perfectly normal for themto pull in different directions, which is exaetly whathappens in many plants.

This problem is not totally new. But it is changingbecause professionalism is increasing; we have moreand more experts at work in different parts of thefaetory. So it is a growing problem.

Product proliferationThe combination of increasing foreign and domestiecompetition plus an accelerating rate of technolog-ical innovation has resulted in product proliferationin many factories. Shorter product life, more newproducts, shorter runs, lower unit volumes, and morecustomer specials are becoming increasingly com-mon. The same factory which five years ago pro-duced 25 products may today be producing 50 to 100.

The inconsistent production system grows up, notsimply because there are more products to make—which is of course hkely to increase direet and in-direct costs and add complexity and confusion—butalso because new products often call for differentmanufacturing tasks. To succeed in some tasks mayrequire superb technological competence and focus;others may demand extremely short delivery; andstill others, extremely low costs.

Yet, almost always, new products are added into theexisting mix in the same plant, even though somenew equipment may be neeessary. The rationale forthis decision is usually that the plant is operatingat less than full capaeity. Thus the logic is, "If weput the new produets into the present plant, we cansave capital investment and avoid duplicating over-heads."

The result is complexity, confusion, and worst of alla production organization which, beeause it is spun

out in all directions by a kind of centrifugal force,lacks focus and a doable manufacturing task. Thefactory is asked to perform a mission for Product Awhich conflicts with that of Product B. Thus theresult is a hodgepodge of compromises.

When we may have, in fact, four tasks and fourmarkets, we make the mistake of trying to forcethem into one plant, one set of equipment, onefactory organization, one set of manufacturing pol-icies, and so on. We try to cram into one operatingsystem the ability to compete in an impossible mixof demands. Eaeh element of the system attemptsto adjust to these demands with variation, specialsections, complex procedures, more people, andadded paperwork.

In my opinion this syndrome, starting with addedmarket demands and ending with incongruent in-ternal structures, to a large extent accounts for thehuman frustrations, high costs, and low competitiveabilities we see so much of in U.S. industry today.

Who gets the blame? The manufacturing executive,of course, gets it from corporate headquarters forhigh costs, poor productivity, low quality and reli-ability, and missed deliveries. In turn he tends toblame the situation on anything which makes sense,such as poor market forecasts, subpar labor, uncon-cern over quality, inept engineering designs, faultyequipment, and so forth.

Probably all such factors contribute and, undoubted-ly, they all add to the pressure on production people.But what is not perceived is that a given productionorganization, as we noted earlier, ean only do cer-tain things well; trade-offs are inevitable.

Experience accomplishes wonders, but a diffused or-ganization with eonfiicting structural elements andcompeting manufacturing tasks accumulates experi-ence and specialized eompetence very slowly.

Toward manufacturing focus

A new management approach is needed in industrieswhere diverse products and markets require com-panies to manufaeture a broad mix of items, vol-umes, specifications, and customer demand pat-terns. Its emphasis must be on building competitive

The focused factory 119

strength. One way to compete is to focus the entiremanufacturing system on a limited task preciselydefined by the company's competitive strategy andthe realities of its technology and economics. A com-mon objective produces synergistic effects ratherthan internal power struggles between professional-ized departments. This approach can be assisted bythese guiding rules:

OCentralize the factory's focus on relative competi-tive ability.OAvoid the common tendency to add staff and over-head in order to save on direct labor and capitalinvestment.OLet each manufaettiring unit work on a limited taskinstead of the usual complex mix of confiicting ob-jectives, products, and technologies.

This management approach can be thought of asfocused manufacturing, for it is the opposite of theunder-one-roof diffusion process of the conventionalfactory. Instead of permitting the whirling diversityof tasks and ingredients, top management appliesa centripetal force, which constantly pulls inwardtoward one central focus—the one key manufactur-ing task. The result is greater simplicity, lower costs,and a manufacturing and support organization thatis directed toward successful competition.

Achieving the focused plant

In my experience, manufacturing managers are gen-erally astounded at the internal inconsistencies andcompromises they discover once they put the con-cept of focused manufacturing to work in analyzingtheir own plants.

Then, when they begin to discern what the com-pany strategy and market situation are implicitlydemanding and to compare these implicit demandswith what they have been trying to achieve, manysubmerged conflicts surface.

Finally, when they ask themselves what a certainelement of the structure or of the manufacturingpolicy was designed to maximize, the built-in cross-purposes become apparent.

At the risk of seeming to take a cookbook approachto an inevitably complex set of issues, let me offer

a recipe for the focused factory based on an actualbut disguised example of an industrial manufactur-ing company which attempted to adapt its opera-tions to this concept.

Consider this four-step approach of, say, the WXYCompany, a producer of mechanical equipment:

1Develop an explicit, brief statement of corpoTate ob-jectives and strategy. The statement should cover thenext three to flve years, and it should have the sub-stantial involvement of top management, includingmarketing, finance, and control executives.

In its statement, the top management of the WXYCompany agreed to the following:

"Our corporate objective is directed toward increas-ing market share during the next five years via astrategy of (1) tailoring our product to individualeustomer needs, (21 offering advanced and specialproduct features at a modest price increment, and(3) gaining competitive advantage via rapid productdevelopment and service orientation to eustomersof all sizes."

Translate the objectives-and-strategy statement into"what this means to manufacturing." What mustthe factory do especially well in order to carry outand support this corporate strategy? What is goingto be the most difficult task it will face: If the man-ufacturing function is not sharp and capable, whereis the company most likely to fail? It may fail in anyone of the elements of the production structure, butit will probably do so in a combination of some ofthem.

To carry on with the WXY Company example, sucha manufacturing task might be defined explicitly asfollows:

"Our manufacturing task for the next three yearswill be to introduce specialized, customer-tailorednew products into production, with lead times whichare substantially less than those of our competitors.

"Since the technology in our industry is changingrapidly, and since product reliability can be ex-tremely serious for customers, our most difficultproblems will be to control the new-produet intro-duction process, so as to solve technical problemspromptly and to maintain reliability amid rapidchanges in the product itself."

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Exhrbit IConflicting manufacturing tasks implied by incongruent elements of the present production system

Productionsystem elements

Equipment andprocess policies

Work-forcemanagement policies

Production schedulingand control

Present approach(conventional factory)

One large plant; specialpurpose equipment: high-volumetooling; balanced capacitywith functional layout.

Specialized jobs with narrowjob content; incentive wages;few supervisors; focus onvolume of production per hour.

Detailed, frequent salesforecasts; produce forInventory economic lot sizesof finished goods; smaii,decentralized productionscheduling group.

Implicit manufacturingtasks of present approach

Low manufacturing costson steady runs of a fewlarge products with minimalinvestment.

Low costs and efficiency.

Short delivery lead times.

Changed approach(focused factory)

Separate old, standardizedproducts and new custom-ized products into two plantswithin a plant (PWP). Fornew PWP, provide generalpurpose equipment, tempo-rary tooling, and modestexcess capacity with prod-uct-oriented layout.

Create fewer jobs with moreversatility. Pay for breadth ofskiiJs and ability to performa variety of jobs. Providemore foremen for solvingtechnical probiems atworkplace.

Produce to order specialparts and stock of commonparts based on semi-annualforecast. Staff productioncontrol to closely scheduleand centralize partsmovements.

Quaiity control

Organrzatlonai structure

Controi engineers andlarge inspection groupsin each department.

Functional; productioncontrol under superintendentsof each area; inspectionreports to top.

Extremely reliabie quaiity.

Top performance of theobjectives of each functionaldepartment, i.e., many tasks.

No change.

Organize each PWP by pro-gram and project in order tofocus organizational efforton bringing new productsinto production smoothly andon time.

3Make a careful examination of each element of theproduction system. How is it now set up, organized,focused, and manned? What is it now especially goodat? How must it be changed to implement the keymanufacturing task?

Reorganize the elements of structure to produce acongruent focus. This reorganization focuses on theability to do those limited things well which are ofutmost importance to the accomplishment of themanufacturing task.

To complete the example of the WXY Company,Exhibit I lists each major element of the manufac-turing system of the company, describes its presentfocus in terms of that task for which it was implicit-ly or inadvertently aimed, and lists a new approaeh

designed to bring consistency, focus, and power toits manufacturing arm.

What stands out most in this exhibit is the numberof substantial changes in manufacturing policiesrequired to bring the production system into a totalconsistency. The exhibit also features the implicitconflicts between many manufacturing tasks in thepresent approach, which are the result of the failureto define one task for the whole plant.

The reader may perceive a disturbing implicationof the foeused plant eoncept—namely, that it seemsto call for major investments in new plants, newequipment, and new tooling, in order to break downthe present eomplexity.

For example, if the company is currently involvedin five different products, technologies, markets, orvolumes, does it need five plants, five sets of equip-

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ment, five processes, five technologies, and five or-ganizational structures? The answer is probably yes.But the practical solution need not involve sellingthe big multipurpose facility and decentralizing intofive small facilities.

In fact, the few eompanies that have adopted thefocused plant concept have approached the solutionquite differently. There is no need to build fiveplants, which would involve unnecessary invest-ment and overhead expenses.

The more practical approach is the "plant withina plant" (PWP) notion in which the existing facilityis divided both organizationally and physically into,in this case, five PWPs. Each PWP has its own facil-ities in which it can concentrate on its particularmanufacturing task, using its own work-force man-agement approaches, production control, organiza-tion structure, and so forth. Quality and volumelevels are not mixed; worker training and ineen-tives have a clear focus; and engineering of processes,equipment, and materials handling are specializedas needed.

Each PWP gains experienee readily by focusing andconcentrating every element of its work on thoselimited essential objectives which constitute itsmanufacturing task. Since a manufacturing task isan offspring of a corporate strategy and marketingprogram, it is susceptible to either gradual or sweep-ing change. The PWP approach makes it easier toperform realignment of essential operations and sys-tem elements over time as the task changes.

Conclusion

The prevalent use of "eost" and "efficiency" as theconventional yardsticks for planning, controlling,and evaluating U.S. plants played a large part in theincreasing inability of many of the approximatelyso companies included in my research to competesuecessfully. However, sueh goals are no longer ad-equate because competition is getting rougher and,in particular, because a strictly low-cost, high-ef-ficiency strategy is apparently becoming less viablein many industries.

While the economy has moved toward an era ofmore advanced technologies and shorter produet

lives, we have not readjusted our concepts of produc-tion to keep up with these changes. Instead, we haveeontinued to use "productivity" and "economies ofscale" as guiding objectives. Both feature only oneelement of competition (i.e., costs), and both arenow obsolete as general, all-purpose guides in manu-facturing management.

But I have concluded that the focused plant is ararity. With the mistaken rationale that the keys tosuccess are limited investment, economies of scale,and full utilization of existing plant resources toachieve low costs, we keep adding new products toplants which were once focused, manageable, andcompetitive.

Reversing the process, however, is not impossible.In most of the cases I have studied, capital invest-ment in facilities is not difficult to justify when pay-offs that will result from organizational simplicityare taken into account. Resources for simplifyingthe foeus of a manufacturing complex are not hardto acquire when the expected payoff is the abilityto compete successfully, using manufacturing as acompetitive weapon.

Moreover, better customer service and competitiveposition typically support higher margins to covercapital investments. And when studied carefully,the economies of scale and the effects of less thanfull utilization of plant equipment are seldom foundto be as critical to productivity and efficieney asclassical economic approaches often predict.

The U.S. problem of "productivity" is real indeed.But seeing the problem as one of "how to compete"ean broaden management's horizon. The focusedfactory approach offers the opportunity to stop com-promising each element of the production system inthe typical general-purpose, do-ail plant whieh sat-isfies no strategy, no market, and no task.

Not only does focus provide punch and power, butit also provides clear goals which can be readilyunderstood and assimilated by members of an or-ganization. It provides, too, a mechanism for reap-praising what is needed for success, and for readjust-ing and shaking up old, tired manufacturing organi-zations with welcome change and a clear sense ofdirection.

In many sectors of U.S. industry, such change andsuch a new sense of direction are needed to shiftthe competitive balance in our favor.