FOCUSED FACTORY



The term focused factory, was introduced in a 1974 Harvard Business Review article authored by Wickham Skinner. Responding to what the popular press called a "productivity crisis," Skinner introduced his solution to the problem. Skinner conducted a study of approximately fifty companies and found that the problem was not only productivity, but also the ability to compete. Manufacturing policies had not been designed, tuned, and focused (as a whole) on that one, key, strategic, manufacturing task essential to the company's success. Skinner urged manufacturers to learn to focus each plant on a limited, concise, manageable set of products, technologies, volumes, and markets. He also encouraged firms to learn to structure basic manufacturing policies and supporting services so that they focus on one, specific, manufacturing task instead of upon many inconsistent, conflicting, or implicit tasks.

Often, a conventional factory produces many products for many customers in many markets. This requires a multitude of simultaneous tasks from one group of resources. Managers in these plants may be striving for economies of scale and lower capital investment. Instead, they may end up with a hodgepodge of compromises, according to the focused-factory notion. Rather than designing the manufacturing policy around one, specific task, many possibly-contradictory objectives may coexist. The wage system may be established with an emphasis on high productivity, while production control may favor short lead times. Meanwhile, inventory control may want to minimize inventory levels, which means low order quantities. Production wants minimum setup time, which means large order quantities; all the while, plant engineers may want a plant layout that minimizes material handling and process design, which maximizes quality.

One way to compete effectively is to focus the entire manufacturing system on a limited task that is precisely defined by the company's strategy and its technological and economic limitations. A common objective can produce synergistic effects while minimizing power struggles between the departments. In his article, Skinner recommended that firms:

A factory focused on a narrow product mix for a particular market niche will outperform a conventional plant with a broad mission.

Because its equipment, supporting systems, and procedures can concentrate on a limited task for one set of customers, its overhead and other costs are likely to be lower than those of a conventional factory. A focused plant can become a competitive weapon because all its resources are focused on accomplishing the limited manufacturing task dictated by the company's overall strategy and marketing objectives. Simplicity, repetition, experience, and homogeneity of tasks breed competence. Remember, each key function area in manufacturing must have the same objective, one that is derived from corporate strategy. This task congruence can produce a manufacturing system that performs a limited number of tasks very well, thus creating a formidable competitive weapon.

If a firm wants to produce a number of entirely-different products with different technologies, markets, or volumes, it should do so in a number of separate plants. The implication here is the need for investment in new plants, new equipment, new tooling, training, and so forth—not the most practical idea for most firms. A more practical approach is Skinner's concept of a "plant within a plant," or PWP. Factories utilizing PWPs divide an existing facility, both physically and organizationally, into a number of PWPs. Each PWP has its own facilities within which to concentrate on its particular manufacturing task, use its own workforce approaches, production control, organizational structure, and so on.

The predicted results are as follows:

In an Industry Week Census of Manufacturers, a survey of the manufacturing practices currently most in favor among U.S. manufacturers, George Taninecz cross-tabulated plant practices against plant performance to determine practices most likely to produce the best performance. Of the plants, 61 percent surveyed had adopted a focused-factory approach that grouped employees, equipment, and support staff (engineering and marketing) into self-sustained operations. Focused factories reported major cuts in cycle time and better on-time delivery rates. Of the focused factories, 18.5 percent reduced cycle time by more than 50 percent over the previous five years, while 46 percent improved cycle time by more than 20 percent. A small number of practices showed strong correlation with productivity and cost reductions—among these was the focused factory approach.

The focused-factory concept is not limited to manufacturing only, but can be applied in service environments such as health care. From an inpatient perspective, witness the increase in specialty hospitals where staff, equipment and management attention is dedicated to one, particular type of disease or ailment. The current increase of ambulatory surgery centers (ASC) validates the use of a focused factory for outpatient care. Within the ASC, surgical equipment, staff, and scheduling are dedicated to a relatively-narrow range of procedures rather than being multi-purpose. Fewer emergency interruptions and less down time between procedures allow physicians to perform more procedures within a given time frame. One example of focused-factory adoption is the Shouldice Hospital in Toronto, which performs only abdominal hernia operations. Eventually, we may observe facilities no longer organized by medical specialty but for the total needs of the patient. Focused factories are also cropping up in rehabilitation, long-term acute care, neonatal intensive care, cancer, AIDS, and orthopedic facilities.

Little empirical support has been offered to support the claims made by advocates of the focused factory. However, a recent study by Robert Vokurka and Robert Davis found that focused plants have fewer final products with more standardization, and fewer variations, resulting in fewer required setups. They also found focused factories to have better flow, more automation, and less variation in customer delivery. The combination of these benefits then results in the need for fewer supporting staff. Vokurka and Davis also found focused factories to be superior to unfocused plants on such performance indicators as cost, quality, dependability, and speed. Of more significance was their finding that focused factories were superior in all financial measures—including profitability levels, returns, and growth. From a service perspective, a recent survey by Casalino, Devers, and Brewster found that specialized health care facilities experienced increased productivity and quality and decreased costs.

SEE ALSO: Product-Process Matrix ; Strategy Formulation

R. Anthony Inman

FURTHER READING:

Casalino, Lawrence P., Kelly J. Devers, and Linda R. Brewster. "Focused Factories? Physician-Owned Specialty Facilities." Health Affairs 22, no. 6 (2003): 56.

Skinner, Wickham. "The Focused Factory." Harvard Business Review 52 (1974): 113–121.

Taninecz, George. "Best Practices & Performances." Industry Week 246, no. 22 (1997): 28–43.

Vokurka, Robert J., and Robert A. Davis. "Focused Factories: Empirical Study of Structural and Performance Differences." Production and Inventory Management Journal 41, no. 1 (2000): 44–55.



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