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AGILE ENTERPRISE STRATEGY:
A NEXT GENERATION MANUFACTURING CONCEPT
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;
web site: http://www.cheshirehenbury.com
Introduction
The Iacocca Institute (1991)
report "21st Century Manufacturing Enterprise Strategy"
introduced the term agility in an effort to define a new paradigm
which the authors called agile manufacturing. This report attempted
to look beyond current best (lean production) practices towards
the enterprise of the future - examining likely business practices
and enterprise structures in the year 2006.
Unfortunately it became apparent
very quickly that the report had failed to make a clear distinction
between "1991 best practices" and issues relevant to
a longer term focus on developing a new and radically different
manufacturing business model. The net result was great confusion,
which still continues to this day, with agility being used as
a catch-all-phrase to describe all the various changes and ideas
being promoted such as lean production, business process re-engineering,
time compression, extended (or virtual) enterprises, and so on.
This problem with mixing up
current and future best practices is also evident in other publications
such as the Next Generation Manufacturing Project reports (US
Agility Forum 1997) and UK's Technology Foresight report Manufacturing,
Production and Business Processes (Office of Science and Technology
1995). The Iacocca Institute report and these other two publications
all claim to look ahead fifteen to twenty years and to examine
drivers and future needs and likely developments. However, all
these reports in actual fact tend to focus on near term issues
within the five year time frame, often describing developments
and ideas that many companies have already implemented. In other
words they tend to be based on current practices and understandings
and shorter term matters, not on long term strategic drivers
and future issues.
Clearly, looking out over a
longer time frame of fifteen to twenty years is a challenging
task. It is however one that is becoming increasingly important.
Agility in the Context of
Next Generation Manufacturing
As the second millennium draws
to a close an interest is developing in looking towards the enterprise
of the future. Of special note is the concept known as agile
manufacturing, not as a synonym for lean production, but as a
new concept which challenges lean production and leads to the
modification or even abandonment of lean concepts.
Such a view of agility is firmly
set in the context of the longer term time scale, looking ahead
15 to 20 years at next generation manufacturing. This view involves
defining agility as a focused concept and not some vague catch-all
idea that conveniently embraces everything.
Such a focused understanding
does however, build on the past, for it has been evident since
the 1970s that mass production economies have been in crisis.
Since 1970 observers and thinkers have been describing the emergence
of a post-mass production economy and the associated characteristics
of a post-mass production enterprise (e.g. see Davis 1987; Dertouzos
et al. 1989; Toffler 1970, 1980, 1985; Poire & Sable 1984).
With the collapse of mass/lean production oriented competitive
conditions a need has arisen to develop new types of enterprises
capable of dealing with and thriving in a complex and ever changing
business environment ? enterprises that can continually reinvent
themselves. The strategic vision is therefore the development
of enterprises totally committed to embracing the emerging business
environment. This involves creating a strategy that moves enterprises
forward in three interrelated areas:
The niche enterprise: develop
and exploit capabilities to thrive and prosper in the face of
increasing diversity arising from individual customers, markets
and to deal with wider issues of a fragmenting and diverse world;
The knowledge-based enterprise:
develop and exploit capabilities to use knowledge and information
for sustainable competitive advantage (in effect acknowledging
information and knowledge as a source of wealth);
The agile (or adaptive) enterprise:
develop and exploit capabilities to thrive and prosper in a changing,
nonlinear, uncertain and unpredictable business environment.
Agile manufacturing takes its
name from the last of these three interrelated areas. However,
agility is just one component of a 21st century manufacturing
enterprise strategy ? the issues of knowledge-based and niche
enterprise need also to be considered and most importantly, the
interrelationships between the three elements addressed.
The key points to understand
are:
- Agile manufacturing is a strategy
aimed at developing capabilities (the enterprise platform) to
prosper in the 21st century. In this respect it is similar to
a manufacturing strategy in that it should support business and
marketing strategies. However, these strategies also need to
be modified to take advantage of agile manufacturing capabilities.
- As a strategy, agile manufacturing
is concerned with objectives, structures, processes and resources
and not with individual point solutions, particular technologies,
methods, etc. considered in isolation.
- The emphasis is on designing
the enterprise as a whole so that certain characteristics are
achieved and not on the piecemeal adoption of quick fixes, prescriptions
and panaceas.
- Agile manufacturing may require
some current best practices, lean production concepts, technologies
and taken-for-granted assumptions to be re-evaluated, modified
or even abandoned.
- In the same way that mass-production
marginalised many craft-based firms, agile manufacturing is likely
to marginalise many mass production firms, even those with lean
production enhancements.
- One of the biggest problems
to overcome is the misunderstandings that lean and agile are
synonymous. They are not, although most of what is portrayed
as agile is in fact lean.
Agility viewed as change
competency
Underlying agility is a capability
to adapt (Kidd 1995), which implies change proficiency (Dove
1996, Dove et al. 1996) or change competency (Kidd 1997b). Change
competency is an ability to thrive in a continuously changing
business environment. It is achieved by developing processes
and structures that enable change to be handled more like routine
events that are welcomed, rather than as upheavals to be feared.
At the heart of this concept of change competency is the notion
of developing capabilities to deal with change, uncertainty and
unpredictability ? characteristics that are becoming major features
of the business environment.
However, developing change
competency is not easy. The difficulty is illustrated by the
following five questions:
- How quickly could business
strategies and products be modified and the required changes
to technologies, organisation, people, etc. be implemented?
- What would be the cost of
such changes?
- How well would the reconfigured
enterprise work in the immediate post-implementation period?
- What is the scope of the changes
that could be realistically accommodated?
- How soon after the reconfiguration
could a similar major change exercise be mounted?
Few companies today would score
well on any one of these questions. Probably none would score
well on all. Yet it is precisely this sort of capability that
is implied by change competency.
Example - Rapid Prototyping
Technologies in the Context of Next Generation Manufacturing
Increasing diversity in markets
is forcing companies to address a greater number of market segments.
Furthermore, in some industries, tailoring of products to individual
customer needs, that is, customization, is increasingly what
manufacturing companies need to deliver if they want to stay
in business.
A consequence of this increase
in product variety and customization has been the development
of techniques for controlling the costs traditionally associated
with customization and a large number of different product options.
These methods include: late configuration centres; assembly-based
variety; and product configurators.
These techniques are now well-known
ways of accommodating increased variety without resulting cost
penalties. However, they essentially all exploit the basic principle
of achieving variety through assembly-based operations. Achieving
fabrication-based variety is usually much more difficult and
costly.
Computer-aided design and computer-aided
manufacturing systems can make a significant contribution towards
achieving fabrication-based variety. However, rapid prototyping
and tooling technologies, and especially the capability that
they provide to generate cost-effective one-off tooling, offer
an important means of moving forward the frontiers of product
variety, enabling possibilities for increased product differentiation
and more customization.
The above is essentially an
aspect of a niche production strategy. It is however, not enough
just to consider this issue. Rapid prototyping technologies are
in a state of flux, which means that new developments are continuously
appearing. This in turn means that enterprises need to continually
search for these new developments, assess them, and if appropriate
apply them. Implied in this is an ability to continuously adjust
and reconfigure strategies, technologies, organisation, etc.
(Kidd 1997b).
In affect therefore two additional
requirements are placed on the enterprise. One is the need to
develop agile or adaptive capabilities (change competency) so
that new developments in these technologies can be applied quickly
and at low cost. The other relates to knowledge management. In
this case knowledge of customers, technology and processes need
to be continually acquired and applied so that these new developments
in technology are identified and used to produce customization
that customers value.
None of this however happens
by accident. It takes a strategic plan which addresses niche
production, agile enterprise and knowledge-based enterprise issues
to create the processes and structure that will allow firms to
move quickly and effectively to exploit and to create opportunities.
These strategic issues are
discussed in greater detail in Kidd (1997b).
Concluding Remarks
Agility as a subject is still
a developing area. Companies are starting to move towards agile
behaviour, often not in a planned way, more usually they "fall
into it" and as a result it tends to be operational and
lacks strategic direction.
As a first step, companies
need to understand the basic ideas and become intelligent respondents
to the concepts. Agility is a long term issue for businesses
? achieving agility is a journey, not an objective to be attained
before moving on to something else.
Although embryonic examples
of agility can now be found in industry (e.g. see Dove et al.
1996), the implementation of agility is still very much a frontier
activity, involving radically new concepts concerning strategies,
organisation, people and technologies. It takes businesses into
a domain where fundamental and taken for granted assumptions
are challenged. Agility is a paradigm shift and before one can
move forwards one has to understand the existing paradigm and
to face up to the often painful task of accepting that current
practices and beliefs are no longer appropriate or relevant.
This in itself, is a major change exercise, but one that is vital
to the successful development of agile capabilities.
Much has been written about
agility. Most of the literature, however, is concerned with defining
and discussing agility in terms of current best practices, which
is not entirely correct. Most understandings of agility look
at what companies have been doing, in some cases over the past
10 to 20 years and assume that this is a new paradigm which defines
what companies will be doing in the future. This is the fundamental
and fatal flaw in the bulk of the definitions of agility. The
central point behind agility is to develop capabilities that
today are not very well developed in firms and this is why it
is important to challenge taken for granted assumptions (Kidd
1994).
Change, uncertainty and unpredictability
in the business environment is rendering invalid many of these
assumptions as well as elements of current practices. A new and
different sort of enterprise is needed for agility, but such
enterprises will not begin to emerge until people really understand
what agility is actually about.
In 20 years time people will
look back and see all this as obvious and will be puzzled why
so many people today could not see the obvious. Agility is a
paradigm shift which implies that old ideas, including some lean
production concepts, need to be re-evaluated, modified and in
some cases abandoned.
References
Davis, S., 1987, Future Perfect
(Addison-Wesley, Reading, MA)
Dertouzos, M.L., Lester, R.K.,
Solow R.M. and the MIT Commission on Industrial Productivity,
1989, Made in America: Regaining the Productive Edge (MIT Press
Cambridge, MA)
Dove, R.K., 1996, Tools for
Analysing and Constructing Agile Capabilities (US Agility Forum,
Bethlehem, PA)
Dove, R.K., Hartman S. and
Benson, S., 1996, An Agile Enterprise Reference Model (US Agility
Forum, Bethlehem, PA)
Iacocca Institute, 1991, 21st
Century Manufacturing Enterprise Strategy. An Industry-Led View.
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Kidd, P.T., 1994, Agile Manufacturing:
Forging New Frontiers (Addison-Wesley, Wokingham)
Kidd, P.T., 1995, Agile Corporations:
Business Enterprises in the 21st Century - An Executive Guide
(Cheshire Henbury, Macclesfield)
Kidd, P.T., 1997a, Revolutionising
New Product Development: A Blueprint for Success in the Global
Automotive Industry (Financial Times Automotive Publishing, London)
Kidd, P.T., 1997b, Rapid Prototyping
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for Market Success (Cheshire Henbury, Macclesfield)
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(Basic Books, New York)
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Generation Manufacturing Project Reports (US Agility Forum, Bethlehem,
PA)
Toffler, A., 1970, Future Shock
(Random House, New York)
Toffler, A., 1980, The Third
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Corporation (Gower Publishing, Aldershot) |
