Manufacturing myopiSUMMARY.

MANUFACTURING MYOPIA.

During the past few decades, many industrial companies have attempted to achieve manufacturing excellence. They have had at their disposal any number of methodologies and theories, quality initiatives, and cost-reducing concepts. Programs intended to improve performance, such as “total quality management,” “lean production,” and “Six Sigma”, seem to ebb away, without producing the desired results. Sometimes it seems as though the harder manufacturers try to improve, the worse they perform. Consider, for example, the case the GmbH, a Europe-based consumer goods manufacturer, in 2003. Household’s market share in hygiene products, one of its flagship divisions, had recently tumbled in such cities as Cairo and Abu Dhabi. When Household’s regional managers investigated, they discovered that a private-label producer based in Egypt had begun to aggressively undercut the shelf price of Household’s products. At first glance, it seemed as if Household could easily win a price war with any local private label. But the private-label manufacturer refused to go away, and its prices remained low while its market share kept rising. Household’s managers had assumed that their competitor was selling under cost. In short, Household’s ostensible manufacturing advantage its distinctive technology had become its biggest disadvantage. To make matters worse, Household had nearly completed a new factory in Ukraine, which had been intended, in part, to add capacity to serve the Mideast, but which now would simply add to Household’s manufacturing costs. As a last resort, companies outsource production, and thus erode their own company’s competence in it. Gradually, manufacturing is treated more and more as an outcast, and plant communities become disenfranchised. We call this condition “manufacturing myopia.” It is