In general, the term `flexible manufacturing' has been used to describe new forms of industrial organisation which differ from mass production and are strongly oriented to a rapidly changing market, which means combining the craftsman ability to make customised products with the economy of the assembly line.
Mass production is an attempt to produce a single good at the highest possible volume to reduce costs through economies of scale. Flexible production is the effort to make an ever-changing range of goods to appeal to specialised needs and tastes with tailored designs. The mass producer thus runs its factory through a hierarchical system of management, adopting strategies that deskill the work force, and require dedicated, single-purpose equipment. By contrast, a flexible firm adopts strategies that require a highly skilled work force operating with minimal supervision, general-purpose machinery, and close co-ordination with other producers. Below is the summary comparison between mass production and flexible production.
Agility is the ability to thrive and prosper in an environment of constant and unpredictable change. The term ‘agile manufacturing’ was coined by a US government sponsored research programme at Lehigh University and, Latterly, MIT. It is an enterprise-wide strategy in which the customer is the first priority, change is an opportunity to do things better, and delivering value is paramount. It seeks to cope with demand volatility by allowing changes to be made in an economically viable and timely manner.
As the transition into the twenty-first century occurs there are radical changes taking place that are reshaping the industrial landscape of western economies. Customers want to be treated individually. The marketplace has become truly global and requires low volume, high quality, custom & specific products. These products have both very short life cycles and development & production lead times.
Everything is changing very fast and unpredictably. The swift trend towards a multiplicity of finished products has lead many companies into problems with inventories, overheads, and efficiencies. Mass production does not apply to products where the customers require small quantities of highly customised, design-to-order products, and where additional services and value-added benefits like product upgrades and future reconfigurations are as important as the product itself. This leads to a people intensive, relationship driven operation. Perfect quality and very high levels of service are expected and required.
Agility relates to the interface between the company and the market. Essentially it is a set of abilities for meeting widely varied customer requirements in terms of price, specification, quality, quantity and delivery.
Agility has been expressed as having four underlying principles: delivering value to the customer; being ready for change; valuing human knowledge and skills; forming virtual partnerships.
The company must remove the obstacles that prevent it from manufacturing with high velocity – the set-ups, the excessive material handling, the poor physical flow, and all production interruptions. And the company must streamline the physical flow, integrate the processes and close the distances between supply, production, assembly, distribution, and the end customer. The emphasis must be on quickly satisfying the service chain of events from the time a customer delivers a request until he is satisfied.
Although the word ‘manufacturing is used with this concept, the principles of agility can equally apply to other functions of a business and to service industries. The agility's success has attracted more than 150 Fortune-500 companies.
Lean, flexible and agile in supply chain
A supply chain is the process of moving goods from the customer order through the raw materials stage, supply, production, and distribution of products to the customer. Market demands, customer service, transport considerations, and pricing constraints all must be understood in order to structure the supply chain effectively
Managing the supply chain for competitive advantage is not just to reduce costs. All physical and logical events within the supply chain must be enacted swiftly, accurately, and effectively. Leanness, flexibility and agility have to be utilised proactively at suppliers and their suppliers. These inter-company collaborations created can help to achieve desired economic outcomes that the individual firms can not achieve separately.
Such networks allow firms to combine resources to gain economies of scale, acquire technologies and resources, gain knowledge, and enter markets beyond their individual capability. They also can help to achieve continuing gains in efficiency, labour productivity, and reduction of cycle time and inventory.
Comparison of lean, flexible and agile
Lean production allegedly combines the benefits of craft and mass production, without their disadvantages. It delivers quality and variety without the cost penalty of craft production and the large cost advantage of mass production. Flexibility is a feature of the company’s production system. It is the inherent ability to adjust or modify its resource deployment according to new or changing demands in the market. Agility is the ability to thrive and prosper in an environment of constant and unpredictable change.
Lean manufacturing is being very good at doing the things you can control. Agile manufacturing deals with the things we can NOT control. Agility is built upon the firm foundation of world class or lean manufacturing methods, coupled with an organisation that is physically, technologically, and managerial established for rapid and unpredictable change.
Among the four underlying principles of agility: Delivering value to the customer, being ready for change, valuing human knowledge and skills, forming virtual partnerships, the first three can be found within the operating philosophies of companies generally thought to be "lean" as described in The Machine that Changed the World.
To summarize this comparison, agility, flexibility and leanness are not alternatives, but are mutually supporting concepts. Together they improve competitiveness and the prospects of survival in an increasingly volatile and global business environment. They ensure:
- timely responsiveness to customer requirements,
- cost sensitivity at different levels of demand, and
- resource efficiency and high performance.
Lean, flexible and agile in public sector
Public sector is the part of an economy in which goods and services are produced and/or (re)distributed by government agencies. It corresponds to the private sector that is the part of an economy in which goods and services are produced and distributed by individuals and organisations that are not part of the government or state bureaucracy.
Usually, public sector contains health care, housing, education, local government, personal social services, criminal justice, income maintenance, post, telecommunication and so on. But it is different among countries from capitalism to communism, and from developed to developing ones.
Public sector differentiates with public sector on governance structures and purposes as well as the environments and organisational characteristics. Public sector always uses committee as management group and utilise tender system to place orders. By this system, they invite tenders as formal offers from traders, negotiate, and select the lowest prices, which meet quality, deliver and other concerns. Context operations in a private sector follow an economic-rational process, whereas in the public domain outcomes are transferred into political effects. Legislative decisions are affected by concerns other than just economic/fiscal effect in public sector. The funds of the public sector are taxes, fees, and other incomes. This is different with the market driven business that has to make the maximum profit for their investment. Furthermore, the internal controls are frequently less rigid in private organisations and that they, therefore, may have more opportunities to undertake productivity improvements.
The public sector now faces a changing and sometimes turbulent environment. First, greater competition to attract businesses and home buyers is putting pressure on elected officials to hold the line on taxes. Second, citizens are demanding a higher level of customer service from government than ever before.
Thus, the increasingly volatile and unpredictable changing environment requires the public sector to provide high value and performance services. A good government now means “producing public services that efficiently and effectively respond to the needs of an increasingly complex, increasingly interrelated society” (10)
In the private sector, the primary measure of performance is profit; in the public sector, the outcomes must be measured against program goals. But often there are multiple goals (sometimes by design, in order to get enough support to approve the program), making measurement more difficult. In general, performances of Public sector center around four central issues - 4 Es: economy (financial performance), efficiency, effectiveness, and expectation (user satisfaction).
Efficiency is defined as the ratio of output to input, and effectiveness is defined as the comparison of output to standards, or expectations. The public sector model follows the same basic model of input-throughput-output but differs from the private model in terms of output effectiveness. The purpose established by the state legislature must logically be compared to the output achieved.
Lean administration including eliminate the waste and improve the quality can be applied to optimise the public sector performance especially on efficiency and effectiveness. For example, in local government, cost reduction can be achieved through substitution of paperwork, re-usability of data and procedures, and less benefits fraud. Also concentration on core activities of government; utilization of market economy concepts like consumer choice, pricing, or competition (tendering, outsourcing, benchmarking etc.); or management of "fractal organizations" by delegating authority to fractals as units with self-control and by using contracts as informational interfaces between fractals are various ways to conduct public affairs in addition to laws and hierarchical regulations.
By breaking down the costs to individual activities using financial management initiative or FMI, can make the managers accountable for those costs and then can evaluate and optimise them according to performance measurement. Forming virtual partnerships among public sector or/and private sector, will help the organisation reduce the resources, human effort, space, investment, and work hours they used before.
Keeping the public sector lean and trim as the long-term objectives of government budgetary policy can help to leave more manpower and financial resources for the private sector.
Another application of lean, flexible and agile concepts is to flatten the bureaucracy by reducing the number of management layers between the top and bottom of agencies, and thinning the ranks of the managers who remain.
As the private organisations respond to customers’ demands with more speed and precision, people begin to expect better service from government as well. An example is the housing department of the government. To meet the various and special/ customized requirements, they have to make themselves agile: treating customer individually, delivering value to customer, being ready for variety, and having high velocity for the procurement. The reduction cycle time, timely response have to be archived especially in hospital and police functions.
To make the public sector more efficient and meet more various demands, flexible administration on personnel, facility and structure are essential. Using empowerment, multiunit (or cross-functional) work team, sharing facilities such as office equipment and conference room whenever necessary, applying flexible process such as budget approval in public sector will help the organisation more efficient.
As those interested in pursuing a college education already know, choosing a major is no different. Some will base their decisions on personal interests, while others will head for the money fields. In fact, people often change their majors. Besides this, the set-up of the subject, the course and the department have to consider the requirement of the students, the employers, and the whole public. Thus, agile administration can help the schools and universities fit for the variety and dynamic environment.
However, leanness, flexibility and agility are developed initially from the automation and metalworking industries for manufacturing. Key factors of these concepts such as prompting JIT to reduce inventory, using group technology to make the machinery flexible, developing new products in half time, eliminating the waste in materials, plant capacity cannot be applied in the public sector.
Furthermore, there is no market mechanism in the public sector, which is therefore inherently less efficient in deciding what to produce. Second, since no profits were made in the public sector, there was no reinvestment to produce goods and services for which there is high demand. Hence resources diverted from the private to the public sector are taken out of both the market for goods and services and the market for capital. This leads to a reduction in efficiency and slower growth, which disobey the principles of lean and agile.
Agility helps to treat the customer individually, but it is the government policy to attain full, open and equity competition. Another conflict is the globalisation of the business market while the government has to be limited within the country. Flexible facility is also hard to apply in the public sector. Because the hierarchy of the public sector is always complex and they have mixed attributions.
Implementation of lean, flexible, agile in the public sector
- Market mechanisms should be used wherever possible, even if there cannot be a fully free market for services.
- Competition should be promoted between providers and consumers, which should be allowed more choice, including the choice to opt out of state provision.
- Apply business process redesign (BPR) and continuous process improvements (kaizen) as the faster innovation for people directly engaging in public activities.
- Flatten the bureaucracy by reducing the number of management layers between the top and bottom of agencies and thinning the ranks of the managers who remain.
- Politicians and government leaders personally must be flexible, innovative, knowledgeable, and resourceful. They also need to seek the ability to control system development, information resource management, information technology management, project and risk management and other related fields.
- National information infrastructure must be built up which provides access to information on a broad scale.
Conclusion
Although leanness, flexibility and agility have been successfully applied in the areas of product development, service delivery and business management systems, they cannot be copied mechanically in public sector in regard of specific conditions.
However, the concept of lean, flexible, and agile on administration can be operationally useful for the public sector; such as eliminate the waste, to be cost sensitivity at different levels of demand, improve the quality, flexible on personnel, facility and structure, speed up cycle times, respond timely to customers, and prepare to meet the various/customized/dynamic customer demands.
References
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