The fundamental role of manufacturing is to produce the goods its company sells efficiently, reliably, on time, and according to budget, meeting all quality requirements. Generally, the evaluation of how well manufacturing management does its job is measured in terms of quality, cost, schedule adherence, and reliability. That was true in the 1970s when I ran a 1,500-employee, 1,000,000-square-foot manufacturing plant for Samsonite, and it's still true today.
The big picture
Manufacturing's job is to meet market expectations efficiently every time, all the time
The VP of sales likes to say, "Nothing happens until we sell something." True, but manufacturing is the company's nexus, all functions connect to and revolve around the manufacture of the product that is for sale.
How manufacturing management meets market requirements every time may have changed somewhat, but the major changes have to do more with familiarity and facility with software and operating systems than with changes in manufacturing management and management processes.
Manufacturing management's fundamental role and responsibility, in terms of quality, cost, schedule adherence, and reliability -- remains the same. The reason is simple: because people are still involved -- in leadership, management, organization, and compensation -- and in production. The success of manufacturing management is the direct function of the effectiveness of immediate and direct line management which results in organization engagement. If line management is done well, a manufacturing company will win going away. The alternative is the failure to meet market expectations.
Even with the addition of sophisticated staff (HR, product engineering, information systems), and the production and inventory systems developments in software and hardware (MRP II, ERP and extraordinary computing power), and the development of robotic production tools linked to cad-cam design, automated material handling, and scanning inspection methodologies, management's role hasn't changed appreciably. For all the sophisticated technological developments, success in any management role is still all about people -- how they are hired, integrated, organized, measured, rewarded, managed, and led.
Manufacturing people are still doing the same things they've done for decades. They are deciding what to produce, how many to produce, in what colors, with what features, at what cost, by when and getting them to the customer when expected and as ordered as promised at expected quality levels. Manufacturing management is still finding it difficult to manage and execute these functions well, even after all these decades and all the extraordinary technological advancements -- it's difficult to do the important stuff right.
Just as when I was the plant manager for Samsonite's furniture division in the early '70s, manufacturing management must be done well and done consistently. A manufacturing leader then and now must be competent in leadership, management, staffing, plant loading and scheduling, project management, quality assurance, and organization engagement.
Management in two contrasting companies decades apart illustrates my point perfectly. Samsonite's manufacturing was truly "King of the Hill" worldwide. Samsonite got manufacturing right 50 years ago. We'll later contrast and compare Samsonite with the "now" company -- a modern manufacturing plant that seeks a similar kingship as a superior OEM supplier to Tesla Motors, certainly a bit of rare air. This company nearly failed until strong, competent manufacturing leadership and management turned it around. The entrepreneur CEO lost control and had to sell. It's tough to fly at high altitude, as this company learned, without the proper manufacturing management skills.
In the '70s, Samsonite Corporation produced luggage world-wide, and had over a 50 percent market share in hard-side luggage, and the company was well on its way to the same market share of soft-side luggage, a market it had entered only a few years earlier. Most industry watchers were unaware of Samsonite's similar domination of the metal furniture markets in the form of folding card tables and chairs, institutional furniture (stacking chairs), and patio and pool-side furniture -- at the least a very challenging environment for steel furniture.
While Samsonite's CEO, King Shwayder, and the stockholders to whom he was responsible, enjoyed the International growth and profitability of the firm's multi-billion-dollar luggage business, Samsonite's furniture business had a bit of catch-up to do, in terms of new product development, manufacturing capacity, manufacturing efficiency, cost, and schedule adherence. In 1972, the furniture division's revenues approached $500,000,000, about 25 percent of the firm's total revenues but only 10 percent of its total profit.
King wanted to see his furniture business double in size over the next two years to $1 billion and more than double its total firm profitability. With neither facility expansion or major capital expenditure, his strategy was to add six new lines of furniture products while improving the systems and processes of his one-million-square-foot, 1,500-person manufacturing plant in Murfreesboro, Tennessee. I had been working for Samsonite as a consultant for Touche, Ross, the predecessor company of Deloitte, until King hired me to directly work for him. My earlier role had been strategic and organizational. That initial role morphed into production order and inventory control systems development and implementation, and then into product planning and management in the luggage division.
My final luggage assignment was as part of the team that led the development and introduction of Samsonite's soft-side luggage lines which doubled their luggage revenues in five years. Essentially, these were all project planning and project management based efforts, all under the direction and control of Dick Hanselman who had been brought in from RCA to run the entire luggage business.
In concert with Hanselman's marketing and management know-how, Samsonite's amazing distribution system, superior staffing choices, and highly effective project and manufacturing management made the doubling of revenue and income in five years possible. Through these assignments, King had developed a level of trust in what our project management system, when combined with superior project managers and project-dedicated teams, could accomplish. Accordingly, it made sense to him to assign the furniture division's manufacturing growth, expansion, and efficiency responsibilities to me and our approach.
As the newly appointed plant manager of the Murfreesboro operation in 1973, my job was to manage and implement four major strategies:
These changes would have a large and very favorable impact on working capital through substantial inventory reductions in raw materials and work-in-process as well as finished goods. For a company of this size, millions of dollars. The reality was that we had to get all this done while continuing to meet daily production and customer requirements while making these rather sweeping changes.
We needed two separate yet highly related organizations that cooperated and communicated highly effectively. We were flying the plane while tying on the wings. Our eventual success led to a positive residual income impact (net income after tax minus the cost of capital) and orders of magnitude of company value growth, which was King's fundamental objective.
This is the first post by Larry Valant and Gayle Hustad of Valant and Company in a three-part series on manufacturing management. Coming next: "How we got it done."