Agile Manufacturing: A Strategy for the 21st Century


Cheshire Henbury

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AGILE MANUFACTURING: A STRATEGY FOR THE 21st CENTURY

Paul T. Kidd

Cheshire Henbury, Tamworth House, PO Box 103, Macclesfield, SK11 8UW, United Kingdom. Phone: +44 (0)1625 619313; Fax: +44 (0)1625 619060; Email: paulkidd@cheshirehenbury.com; WebSite: http:///www.cheshirehenbury.com

Introduction

Manufacturing industry in the United States may well be on the verge of a major paradigm shift. This shift is likely to take US industry away from mass production, way beyond lean production, into a world of Agile Manufacturing. Agile Manufacturing, however, is a relatively new term, one which was first introduced with the publication in the USA of a report entitled 21st Century Manufacturing Enterprise Strategy (Iacocca Institute 1991).

At this point in time, Agile Manufacturing is not fully understood in the industrial and academic worlds, and the conceptual aspects are still being defined. However, one thing is certain - Agile Manufacturing represents a significant attempt on the part of US industry to respond to the threat posed by the newly industrialised nations around the Pacific Rim. The aim is not to close the competitive gap that has been allowed to develop, but to outperform overseas competition by achieving quantum leaps forward in performance and capabilities. Agile Manufacturing is not about small scale continuous improvements! US manufacturing industry is seeking to regain the pre-eminence that it once enjoyed prior to the emergence of Japan as a major industrial nation.

European manufacturing companies need to respond, both to the threat from the so-called Asian Tigers, but also to this major movement to revitalise US manufacturing industry. There is always a tendency to view new ideas from the USA such as Agile Manufacturing as fads - another programme of the month. Such a response would be foolish. Agile Manufacturing is not like total quality management or business process reengineering. Agility is fundamentally about a different way of doing business, and put quite simply:

if you don't do business the Agile way, then ultimately you won't do any business at all!

What is This Thing Called Agility?

Concern about the decline of US manufacturing industry and loss of competitiveness was well reported and documented during the late 1980s (eg Cohen and Zysman 1987, Hayes, Wheelwright and Clark 1988, Dertouzos, Lester and Solow 1989). In 1990 the US Congress decided that some action was required and consequently the Congress instructed the Department of Defense (DoD) to create an inter-agency task force to look at US manufacturing with the objective of making it more competitive. Academics at Lehigh University in Bethlehem, PA, were asked by the DoD to work with industry to develop a vision of what a successful industrial base would look like and to develop a framework and recommendations to make that vision a reality.

Industry personnel worked on this vision and the recommendations, and in the fall of 1991 a two volume report of their conclusions, entitled 21st Century Manufacturing Enterprise Strategy (1991), was published by the Iacocca Institute at Lehigh University. It was during this time that the term "Agile" was coined.

Agility has been defined in several ways. Here are four examples:

"Agility is dynamic, context specific, aggressively change embracing, and growth oriented. It is not about improving efficiency, cutting costs, or battening down the business hatches to ride out fearsome competitive storms. It is about succeeding and about winning profits, market share and customers in the very centre of competitive storms that many companies now fear."

(Goldman, Nagel and Preiss, 1995)

"Agility is the ability to thrive and prosper in a competitive environment of continuous and unanticipated change, to respond quickly to rapidly changing markets driven by customer-based valuing of products and services. It is the coming business system that will replace the mass production businesses of today."

(US Agility Forum Literature)

"Agility is a capability; it is an organization's capacity to respond rapidly and effectively to unanticipated opportunities and to proactively develop solutions for potential needs. It is the result of an organization and the people who comprise it working together in ways which benefit the individual, the organization, and their customers."

(Nelson and Harvey 1995)

"Being Agile means being proficient at change - and allows an organization to do anything it wants to do whenever it wants to."

(Dove 1994)

These four definitions define Agility in terms of outcomes and thus they are not too specific about what Agility is or how it can be operationalized. Lets get more specific!

"The concept of Agile Manufacturing is built around the synthesis of a number of enterprises that each have some core skills or competencies which they bring to a joint venturing operation, which is based on using each partners facilities and resources. For this reason, these joint venture enterprises are called virtual corporations, because they do not own significant capital resources of their own. This helps to make them Agile, as they can be formed and changed very rapidly."

(Kidd 1994)

"An Agile corporation is a fast moving, adaptable and robust business enterprise capable of rapid reconfiguration in response to market opportunities. Such a corporation is founded on appropriate processes and structures and the integration of technology, organization and people into a coordinated system in order to achieve a quantum leap forward in competitive performance by delivering capabilities that surpass those obtained from current enterprise practices."

(Kidd 1995)

"The Agility that arises can be used for competitive advantage, by being able to respond rapidly to changes occurring in the market environment and through the ability to use and exploit a fundamental resource - knowledge. People need to be brought together, in dynamic teams formed around clearly defined market opportunities, so that it becomes possible to lever one another's knowledge. Through this process is sought the transformation of knowledge into new products and services."

(Kidd 1994)

Some of the key words and phrases linked with the agile paradigm are:

Fast - a very high speed of response, for example, to new market opportunities.
Adaptable - the capability to change direction with ease, for example, to enter completely new markets or product areas.
Robust - avoiding and withstanding variations and disturbances, for example, products that lose market appeal owing to changes in customer preferences.
Virtual corporations - the combining of talents between companies through (short term) joint ventures.
Reconfiguration - the ability to very quickly reconfigure corporate structures, facilities, people, organization and technology to meet (often) unexpected and (probably) short lived market opportunities.
Dynamic teaming - actively looking for and building off the creative and innovative talents of other team members.
Transformation of knowledge - explicitly transforming raw ideas into a range of capabilities which are then embodied in both products and services.

The main points about Agility are:

Agility is about the basis of competition, business practices, and corporate structures in the 21st century.
Agility is not about developing more technology, although technology will play an important role.
Agility is not another way of referring to leanness, flexibility, computer integrated enterprises, or other current buzzwords.
Agility is a strategic response, not tactical, and involves building defense against primary competitive forces through cooperation.
Agility is a holistic concept.
Agility is primarily about adaptability which is achieved through reconfiguration capability.
Processes, structures, organization, people, implementation capabilities, etc are the key issues.
Agility is a paradigm shift.
Agility is a step change innovation not an incremental innovation.
Agility holds the promise of a world based on cooperation.

Current Situation

In the USA, Agility has been a topical subject for the past few years. Of course, because it is so topical everything gets labelled or relabelled as Agile, and confusion results - so figuring out what Agility really means is no easy task, but it is getting easier as the concepts are worked through and the language develops.

Agility has high level support in the US - it is backed by the President and the National Centre for Manufacturing Sciences is actively engaged in supporting the development of concepts, methods, tools and their transfer to US industry.

Agility is also no longer viewed as a topic solely for manufacturing industry - Agility is now perceived as a way of competing and is therefore relevant to all types of businesses. Agility is also now accepted by more and more corporations as the way forward. It is not clear how many firms really understand the implications of Agility, but this is what makes for winners and losers - the winners will be the ones that can figure out what the implications are, successfully implement changes and make Agility an everyday business reality.

Easily accessed information about Agility is still restricted to a few publications. The main sources of information are the following: 21st Century Manufacturing Enterprise Strategy (Iacocca Institute 1991); Agile Manufacturing: Forging New Frontiers (Kidd 1994); Agile Corporations: Business Enterprises in the 21st Century - An Executive Guide (Kidd 1995); and Agile Competition and Virtual Organizations: Strategies for Enriching Customers (Goldman, Nagel and Preiss 1995).

In Europe Agility is still a relatively new concept and detailed knowledge still resides in the minds of a small handful of individuals. There is also an inclination in Europe to mix up Agile and lean manufacturing and to use the terms as though they were synonymous (which of course they are not). Europeans also tend to view Agility as a reactive requirement derived from a need to respond to external changes (Department of Trade and Industry 1995), rather than a proactive strategy based on changing the rules of competition.

Germany is probably the European country that is most aware of Agility and which has taken the greatest interest. Elsewhere, typical responses have been negative (another American fad!), which partly reflects the difficulty of getting new ideas accepted, partly indicates a low level of awareness of the serious threat to European industry, and perhaps partly also indicates a degree of anti-Americanism.

In Europe at the present time the major need is to provide industry with:

information to increase and deepen awareness of concepts and the threats and opportunities possed by the emergence of Agile competition, and
support to operationalize concepts and to mold these concepts into change strategies.

To meet this need a European Agility Forum has been launched as an information dissemination activity focused primarily on helping organizations make Agility a business success. The European Agility Forum will undertake to:

track international developments in the field and transfer this information to European industry;
translate abstract concepts in the Agility field into terms that industrial executives and managers can easily understand;
provide introductory awareness courses to enable industry to develop and deepen understanding and to rapidly move through the leaning curve towards operationalization and implementation;
document methods and tools that will help industry implement Agility.

Concluding Remark

To conclude, Agility offers great potential for business growth. However, firms cannot afford to wait around to see if Agility takes off or wait to learn from others' mistakes. Furthermore, there is no room here for scepticism and negative attitudes. A positive response is called for - attitude is a little thing that makes a big difference! No doubt, some aspects of the Agility vision may not come to fruition - who can tell? Better to put aside reservations and to actively and positively engage in shaping the future, than to sit on the side lines watching what is happening, or even worse, wondering what is happening.

References

Cohen, S.S. and Zysman, J. (1987). Manufacturing Matters: The Myth of the Post-Industrial Economy. Basic Books.

Department of Trade and Industry (1995). Factory for the Future - Synopsis of Final Report (Eureka Project - Factory EU 1005). Department of Trade and Industry.

Dertouzos, M.L., Lester, R.K. and Solow, R.M. (1989). Made in America: Regaining the Productive Edge. MIT Press.

Dove, R. (1994). The Meaning of Life and the Meaning of Agile. Production Magazine, November.

Goldman, S.L., Nagel, R.N. and Preiss K. (1995). Agile Competitors and Virtual Organizations: Strategies for Enriching the Customer. Van Nostrand Reinhold.

Hayes, R.H., Wheelwright, S.C. and Clark, K.B. (1988). Dynamic Manufacturing: Creating the Learning Organization. Free Press.

Iacocca Institute (1991). 21st Century Manufacturing Enterprise Strategy. An Industry-Led View. Volumes 1 & 2. Iacocca Institute, Bethlehem, PA.

Kidd, P.T. (1994). Agile Manufacturing: Forging New Frontiers. Addison-Wesley.

Kidd, P.T. (1995). Agile Corporations: Business Enterprises in the 21st Century - An Executive Guide. Cheshire Henbury.

Nelson, A. and Harvey, F.A. (1995). Technologies for Training and Supporting Your Agile Workforce. In: Creating the Agile Organization: Models, Metrics and Pilots. Proceedings 4th Agility Forum Annual Conference. Agility Forum, Bethlehem, PA.

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