December 1993 |
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Notes from the Gemba The Canon executive couldn't find the English word. He wanted to express the belief of Japanese managers that when something goes wrong, the only solution is to get to the site to see what's happening. "We have a phrase in English," volunteered Sam Wood, assistant professor of manufacturing and technology. "We say you have to 'go to the gemba.'" The Japanese managers roared with laughter. Gemba, the Japanese word for the scene of the action, was precisely the word they had been trying to translate. For eight faculty members from the area of operations, information, and technology who visited Japan and Singapore in late summer, the trip was, in some respects, going to the gemba for a firsthand look at factory floors and assembly lines. It was one of several visits that have taken OIT faculty members to factories in Asia and the United States recently to study issues faced by managers. The purpose of the visits isn't to change the way research is conducted but rather to help identify research topics by bringing faculty in touch with issues that occupy managers every day. Seungjin Whang, associate professor of operations, information, and technology, has broadened his research interests after visiting 15 or 20 companies in the United States and abroad. "I have changed my entire research focus based on these experiences. The field trips are important to my career and intellectual growth." For faculty whose research and course development encompasses manufacturing operations, sometimes nothing can top an afternoon spent poking around a small factory in a blue-collar neighborhood of Tokyo; discussing how workers at a diaper manufacturing plant increase the efficiency of their machinery while maintaining the quality of the product; learning how computer programs "teach" elevators the traffic patterns of buildings; or hearing a manager in Singapore describe a supply chain that runs from Scotland to India. "These trips give us the chance to hear lots of different viewpoints because we often meet with a variety of managers," said Charles Bonini, William R. Timken Professor of Management Science. "Being there also gives us the opportunity to ask about things that draw our attention. For instance, Procter & Gamble had an interesting quality control system in place on the floor of their factory." Along with frequent product sampling and setting goals and objectives for each functional area, the Akashi plant in Japan was adopting a system to have production line workers assume responsibility for maintenance of their equipment. Eventually, management hoped to eliminate maintenance as a separate function. The trip also offered an opportunity to hear executives and plant managers describe some of the unique aspects of doing business in Asia:
Most of the discussions during the two-week trip dealt with subjects that are more universal to manufacturing operations — topics such as cycle time, supply chains, inventory and quality control issues, and efficient factory line operations. In Kobe or Kansas City, quality issues are a major concern of many plant managers. At the Canon peripherals operation in Toride City, outside of Tokyo, company officials said they look for quality at the source. "We don't want a fine screen to get the bugs out. We want ongoing quality to never let them in." At the Compaq factory in Singapore, 80 percent of parts are moved from warehouses straight to the assembly line without testing. One quality measurement is ISO 9000 (definition). At the Compaq plant in Singapore, which was first certified in 1991, Kirk Moul, managing director for labor and materials of Compaq Asia, said the firm first sought certification to strengthen its quality reputation in Europe but found internal benefits too. After being forced to document its internal quality process, Compaq was able to maintain its quality standards during a time of growth. At Canon in Japan, managers also said that being certified by ISO 9002 gives them additional international credibility. At the Nippon Otis Shibayama factory outside of Tokyo, managers described the detective process they followed to reduce trouble calls for one elevator line. In analyzing what was causing repair calls, they found that integrated circuit boards were the largest single cause of malfunctions and then that these failures were usually caused by a corrosion problem on the boards themselves. The firm ultimately added an additional coating process to prevent corrosion and established test facilities in its factories to respond instantly if component problems are identified. Annual callbacks to repair elevators dropped from 2.08 to 0.7 per installation. Suppliers are an important part of the quality chain. Whether the product is diapers, escalators, or computer printers, manufacturers described a process of screening suppliers for quality, then price, and of trying to maintain long-term relationships. Tsuchiya, a small manufacturing firm located in an industrial neighborhood of Tokyo, is a subcontractor for Nippon Otis employing 48 people who produce about 100 varieties of parts, including hand-assembled wiring for motors and metal housings created on a small industrial robot. Owned by the same family for two generations, the firm does about 60 percent of its business each year with Nippon Otis. The relationship between Tsuchiya and Nippon Otis is the type described repeatedly in both Japan and Singapore. When engineering changes are made, the subcontractor may be asked for design suggestions and for recommendations for reducing cost. Ongoing negotiations are needed to maintain the relationship. "Japan is a society built on relationships — much like Britain was early in the century, when it operated on a handshake," said R. S. Harryman, vice president of product supply for Procter & Gamble Far East in Kobe. "Here you start by writing down the terms of the agreement. If all else fails, you develop a contract." One reason for the different approach is the sheer number of suppliers involved with major Japanese manufacturers as compared with, for instance, American plants. Auto giant Toyota has about 300 suppliers, while General Motors has an estimated 35,000. "In my manufacturing strategy class, I've added a module that describes the way producers and suppliers are configured in Japanese industry, and contrast that with the way some U.S. firms use their supply base. We discuss the relative merits of each in developing a competitive advantage," said Charles Holloway, Kleiner, Perkins, Caufield and Byers Professor of Management. Quality issues are of universal concern, but they become particularly competitive when they involve Japanese consumers, who are among the most demanding in the world. Executives at Otis Elevator reported that Swiss customers don't complain if the door and the floor of the elevator are separated by 20 millimeters. In Japan, a misalignment of 5 millimeters requires adjustments. Among the stacks of news clippings, annual reports, and research papers compiled as background for the trip was a paper by David Montgomery, Sebastian S. Kresge Professor of Marketing Strategy, describing how Procter & Gamble lost one of the biggest market shares in history by not paying attention to what its Japanese customers wanted. In the early 1980s, P&G had 90 percent of the Japanese paper diaper market. Japanese competitors set to work manufacturing competing products but went one step further. Since Japanese mothers change their babies' diapers much more often than American mothers, they want thinner, more absorbent diapers. A competitor designed new diapers to meet these customer needs, and P&G saw its share drop to 6 percent. It fought back, eventually designing a new diaper that met the demands of Japanese mothers and sold well in the United States and elsewhere. The company has regained a 30 percent market share in Japan, but the battle was a sobering lesson. Another issue common to many international manufacturing firms is deciding where to locate suppliers and manufacturing facilities. Cost is not the only factor considered. Japanese firms argued that they wanted both suppliers and manufacturers to be close to customers and markets. Singapore no longer has the high unemployment rate and low wages that once made its well-educated workforce attractive to international companies. It continues to attract business with advantages such as modern communications and transportation systems, plus favorable government policies. "If we were to go into Malaysia or Indonesia, the set-up costs would be more than the advantage of cheaper labor," said a manager. One advantage for Singapore is that most of its workforce speaks fluent English, often in addition to an Asian language. The issue of language can be a significant one for international companies that sometimes agonize over whether to hire executives based on their business skills or their language ability. "India alone has 27 languages," said Peter Noon, sales engineering manager for Otis in Singapore. "To supply components to our factory in China, the factory in Bloomington, Ill., has to have someone who speaks Mandarin to field phone calls. The Thailand factory speaks to our factory in Japan in English." Said one Canon executive: "With overseas suppliers, no news may lead to bad surprises." Even when workers in different parts of the world speak the same language, the fax and phone can't replace the face-to-face experience of going to the gemba. Faculty at the Gemba Participants in the 1993 trip to Japan and Singapore were:
Two graduates of the School who are now working in Asia — Kumiko Kajiyama and Chris Norton, both MBA '89 — played major roles in arranging the visits. Smart City Singapore is fond of calling itself an intelligent island — a city-state where, for example, the government's goal is to have fiber optic cables laid to the curb of every home by the year 2000 to allow citizens to attend electronic schools or to file government documents electronically. Singapore today is embracing technology and communications as an important part of its goal to match the per capita gross national product of the United States by the year 2030. The same government that has been criticized abroad for controlling citizens' access to certain kinds of information today is trying to lead the world in making information just a few keystrokes away for every citizen. Singapore is creating systems to put construction and real estate planning on line, to produce a network for health care providers, and generally to make the time-honored government custom of shuffling papers obsolete. One of Singapore's widely recognized success stories is its port, where ships, cargo, and even customs forms flow through a paperless network so effectively that customers are often charged an extra handling fee for submitting information on paper instead of electronically. From nearly any vantage point in the eastern half of Singapore, it is obvious that the port is one of the nation's greatest resources. Giant cargo cranes — costing up to 14 million Singapore dollars each — dot the shoreline, dwarfing cargo containers stacked eight deep beside the port's cargo berths. Dozens of container ships anchor offshore, like a waterborne rush-hour traffic jam. Only in rare cases, however, are the ships waiting to unload or take on cargo. Singapore hasn't become one of the world's most competitive ports by making ships wait in line. Since 1989, the Port of Singapore has cut the average time a ship spends in a berth from 24 to 8 hours through a proprietary computer program called Portnet, which has computerized and networked procedures between shippers and the port, and another called Tradenet, which handles government and customs issues. A vessel may be days away from port when a ship's agent files an electronic request to dock and unload. The Portnet system analyzes the exact location of containers on a ship, the next destination of each container, the availability of berths and cranes at the port, and even the ship's history. Twelve or more hours before it arrives, the port notifies the ship what time the berth will be available and sets up a schedule to unload the cargo under the direction of a key crane, which electronically reads coding on each container. The plan for unloading each ship is fed into the port's overall operating plan and analyzed to reduce bottlenecks. Once the cargo is on the dock, information for customs and other government agencies is processed electronically. Cargo destined for Singapore itself can be picked up by a trucker using an electronic system much like a bank ATM machine to claim and move the containers. For faculty members interested in information science, the port offered an intriguing model that had to be seen to be appreciated. "Our system is really unlike a factory," said one port manager. "Compared with us, a factory environment is really very predictable." Port managers are considering sharing their expertise with other regional ports in Thailand, Indonesia, and Malaysia, where bottlenecks now delay cargo bound for Singapore.
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