Today’s manufacturing community seems to be fixating more on subjects like innovation and creativity, almost to the exclusion of management topics.
The U.S. Census Bureau recently conducted a survey of management practices in over 30,000 plants across the country. Management in America is the first large-scale survey of manufacturing management practices in the United States. As indicated in the report, an analysis of the data reveals several striking results.
First, more structured management practices are tightly linked to better performance. Establishments adopting more structured practices for performance monitoring, target setting, and incentives enjoy greater productivity and profitability, higher rates of innovation, and faster employment growth.
Second, there is a substantial dispersion of management practices across establishments. The study found that 18% of establishments have adopted at least 75% of these more structural management practices, while 27% of establishments adopted less than 50% of these.
Third, more structured management practices are more likely to be found in establishments that export, that are larger (or are part of bigger firms), and have more educated employees.
Management Practices Lead to Growth
Other findings include that establishments in the Northeast had the least amount of structured management practices employed compared to other parts of the country. Overall, adoption of management practices has increased between 2005 and 2010, particularly for those practices involving data collection and analysis.
The findings of the Department of Census study are supported by a McKinsey and Company study, Management Matters, which found that a company’s preference in manufacturing is strongly linked to the "quality of management practices." McKinsey and the Center for Economic Performance at the London School of Economies surveyed over 700 medium-sized manufacturing companies in the United States and Europe. They found a statically significant, positive correlation on several measures of company success, including "sales per employee, sales growth, market share growth, and capital market evaluation."
Commitment to Quality
There are numerous other studies that also support the benefits of employer management systems, especially in the area of ISO, which is a widespread management practice. The ISO handbook specifies that top management must provide "evidence of its commitment to the development and implementation of the quality management system." MassMEP shows small manufacturing enterprises how to use ISO best management practices through its Quality Management Collaboratives. Each collaborative is a group of four or more companies and associates (or in any combination of these entities) forming a collaborative group of diverse businesses and individuals that can accomplish more together than they could do on their own.
The benefits to collaborative members include:
Improving the capacity and expertise of the members by providing professional development programs.
Encouraging the sharing of resources among members (including content, technology, expertise, networking, and more).
Undertaking special initiatives of importance to the group such as information sharing, ideas, etc.
Enabling members to lower financial barriers and increase access to information; enhancing the professional growth of member managers; increasing the capacity of members to incorporate international standards, management systems, and best practices effectively; expanding member knowledge about emerging trends with international standards; accelerating the ability of members to achieve a competitive edge with quality standards and other disciplines like Lean Manufacturing and Workforce Training.
The MassMEP ISO Collaborative allows organizations to share the cost of training through the power of collaboration and to improve the development of programs leading to overall economic benefits for the company.
A recent survey of 20 previous collaborative members bears this out. In the year following their participation in the collaborative, these member companies saw new and retained sales increase 13%.
As to the management proficiency aspect of the collaborative, participation can be summed up in the comments of this company who stated, "I would like to reiterate that the most significant benefits realized by achieving ISO certification has been the strengthening of our management system through the improvement in communication and internalizing continuous improvement."
The survey report includes that "the ability to add new markets to grow our customer base is certainly a great benefit of ISO certification, but improving the processes by which we conduct all of our business is the most significant benefit of all."
A manufacturing base that isn’t committed to excellence and value is not an asset that the various publics would think worth saving as nothing turns the public off so quickly and effectively as poor quality, regardless of the quality of management. It is because of results such as these that we at MassMEP believe that ISO provides the foundation management system for all manufacturing enterprises (both large and small) that are competing in the global marketplace.
For more information on the MassMEP ISO Collaborative, contact John Killam at
508-831-7020 or [email protected].
