BARRIERS
IN USAGE OF MODERN TOOLS OF PRODUCTION MANAGEMENT IN RESEARCHED SMALL ALD
MEDIUM COMPANIES
Henryk Ziółkowski [1]
1.
Introduction
Three years of
a significant enough period of time to try and investigate the practice of
implementing modern techniques and tools in production management. Another
incentive for the research is a rapid economic growth, forcing managers to face
strong competition of foreign enterprises, which have a much better practical
experience in utilizing modern techniques and tools in management. According to
objectives of the new Lisbon Strategy, the companies – to survive and develop –
must confront the requirements posed for the European economy, which aims at
becoming the most competitive and dynamic economy in the world. An economy
based on knowledge, capable of steady growth, creating constantly increasing
number of workplaces, employing modern technologies, together with modern tools
and techniques in production management.
In
conditions of a market economy and progressing globalization, not only do
enterprises compete with each other, but also the whole regions. Competition
among companies and among countries has undergone radical changes during the
last decade. It entered the markets through increasing the number of
competitors not only on local markets, but also on the world market. Success in
the global marketplace requires the company to compete on a wider scale than
the local one, and what is more, it introduces the challenge of competition
worldwide. Transformations on the international market compel enterprises to
search for new strategic assets. Assets concerning the ability to use in
practice the modern techniques and tools in management, enabling - among others
- better utilization of the organizational,
technological
and technical background. Reasonable use and proper access to these resources
allow the enterprise to strengthen their competitive position in more demanding
market conditions. In order to ensure their survival and growth, companies need
to be prepared for constant development and implementation of modern techniques
and tools in management, adjusted to the changing environment in such a way,
that they could effectively and efficiently achieve the established goals.
Nowadays, every company operates
within a specified market, and faces the constant challenge for gaining and
maintaining the customer. One method to sustain the position on this market is
competitiveness of the manufactured products or offered services, with
reference to their price, quality, as well as time and place of the order
realization. Companies which disregard these changing conditions in their
strategy for development will be defeated by the international competitors.
In this situation, the basic condition for survival of Polish companies
long-term is their multidimensional development, shaped by their ability for
practical implementation of modern techniques and tools in management. These
techniques and tools are characterized by the constant adaptability of the
company to the transformations occurring in its surroundings. Innovativeness
should become
a fundamental objective, and a leading function of the companies. This
indicates demand for designing new forms of enterprise management and constant
up-lift in the qualifications of human resources.
The only
strategy of action able to secure the company’s success is the one directed at
innovations in its technology, techniques and organization. Organizational
transformations very often condition the proper utilization of the existing
technical and technological potential. They also allow for creation of a system
of rapid response to the occurring opportunities and threats. The advantage
stems from the knowledge, crucial for effective usage of the constantly
emerging new technologies in manufacturing, supported by innovative techniques
and tools in production management.
Innovativeness
for enterprises is generally described as the ability and motivation of these
enterprises to incessant search and practical usage of the research results,
new ideas and inventions. Companies that are considered innovative, within
a researched period of time – usually three years – are able to create, absorb
and obtain new products (services),
new or improved process, or are characterized by the ability to constantly
adapt to transformations occurring in their surroundings [1, 3].
For the means
of this research, as innovative companies were accepted these, which undertake,
with various frequency (irregularly),
incremental transformations, adaptations of best practices, and which are less
prone to engage themselves in conducting original research and
technical/technological works. They are more focused on searching and absorbing
innovations solving their problems concerning market or production areas,
rather than the company’s organization.
In order to
undertake individual research, by designing and implementing new production or
work organization, the company needs to have high-level technical, technological
and organizational competences and skills to acquire desired knowledge. This
competency is demonstrated only by big enterprises, of adequate scale of human
capital and financial, material and information resources. In companies
possessing limited human capital, and in particular financial resources (these are mostly small and medium-sized
enterprises, in short SME), the innovation processes run heterogeneously
and differently than in the big enterprises.
It is difficult to assess a company’s innovativeness, especially if it
belongs in a small and medium-sized sector. There is a general lack of profound
information concerning this area. General information (concerning
the level of research and development funding, the number of products introduced
to the market, level of modernisation
and training funding etc.), can be obtained through the Central
Statistical Office. Unfortunately they only concern the biggest enterprises. It
is a considerable weakness of statistical data that they lack systematic
monitoring of small and medium-sized enterprises (comprising 98,6% of the total number of enterprises), concerning
innovation and modernisation.
Problems encountered by a small entrepreneur and a manager of a big
enterprise are alike and the differences concern the quantity rather than
quality. In big enterprises specialist knowledge is usually shared among many
employees, which is not possible in case of small companies. An owner of a
small business is forced to be well knowledgeable in all company’s functions,
in order to survive and develop within the market, through achieving
competitive advantage. The chances for survival in the conditions of growing
market competition and substantial requirements of the customer, will only
belong to these entrepreneurs or managers, who realize that success depends, to
a large extent, on the company’s contemporary dimension and the level of
knowledge of the managerial personnel, and in particular - the practical use of
this knowledge.
Initial identification of the conditions shaping the level of
innovativeness in the Polish small and medium-sized enterprises justifies
posing the following questions:
-
Does the existence of the Polish
companies on the European internal market forces them in an effective way (due to limited financial resources) to
implement organizational innovations in the form of techniques and tools in
production management?
-
What is the practice of implementing
modern techniques and tools in production management within manufacturing
companies?
-
How do the companies satisfy the
customer’s specified needs and requirements when supply dominates demand?
Obtaining answers to the above poised questions is not an easy task, due
to the ambiguous information at the Central Statistical Office, as well as the heterogeneous
character of the flow of innovative processes in small and medium-sized
enterprises. What is more, results of the study conducted in 58 highly
innovative enterprises in the area of
The carried out study showed no concurrence between the companies’
self-assessment and their real innovative activity, which should constitute the
fundamental objective of management.
This led to resignation from
questionnaire-type research referring to self-assessment of the innovative
activities in the companies.
2.
Research process
Taking into consideration unquestionable importance of small and medium-sized
enterprises for economy, with their limited financial resources, it is worth
realizing the demand for research concerning the actual level of implementation
of innovation ensuring survival and development of these companies on the
market.
Due to the interest of the author regarding the problematic of practical
implementation of organizational innovations – product, as well as technical
and technological innovations were excluded from the scope of research.
Research concern modern techniques and tools supporting production
management, in the areas of:
-
actual preparation of the employees
for the practical use,
-
barriers hindering implementation,
-
the size of the lap between the
theoretical knowledge and practice realized in the companies.
Fourteen enterprises from the
Presented above, the characteristic of interrelations between spin-off
companies – sub-contractors of the final product manufacturers, served as a
basis for assumption, that these will create good examples for research of
practical use of modern techniques and tools in production management.
The research of these fourteen enterprises was conducted in 2006 and
first half of
Average age of employees in these companies (30-35 years old) shows natural susceptibility to training and
introducing innovative solutions. Management and middle-level supervisors
comprises of employees with higher education, which is not always convergent
with the characteristic of the performed tasks and responsibilities (these employees comprise 40% of total
employment in each of the researched enterprises). Virtually all employees
have been trained only within the operations performed by them in the parent
enterprises. In a few companies, making up for approximately 20% of the total,
managers had additional trainings concerning transformations or modifications
introduced in the utilized software. Most of these companies (approximately 75%) might be considered
independent in terms of organizational innovations.
Direct interviews enabled drawing conclusions in terms of accuracy and
correctness of applied techniques and tools supporting production management.
Basic conditions influencing organization of the production processes in
researched companies are presented in table 1.
Table
1. Conditions shaping organization of the
production processes
|
Specification of conditions |
Sample average |
|
Diversity of parts produced for assembly |
ca 20 |
|
Number of changes in the established schedule of shipments in a
month |
12 - 20 |
|
Number of re-adaptations of work stations |
12 - 20 |
|
Utilization of production work stations (%) |
65 - 75 |
Insignificant diversification of produced parts (approximately
20), distinctive for each of the researched companies, as well as a 3-year
practice of deliveries to the final product manufacturer, authorizes
presumption, that favourable conditions have occurred for developing
appropriate organization of cooperation. Substantial amount of changes
introduced to the previously established schedule by the receiving company (3-5
per week), indicates the existence of organizational conditions, which are
not favourable for rewarding cooperation, as well as incurring unfounded costs,
due to the re-adaptation of work stations, and their practical utilization.
3.
Practical utilization of organizational solutions
Table
2 presents identified organizational solutions, used in practice by researched
companies, in order to secure shipments particularly problematic in terms of
deadlines.
If the recipient
introduces several changes in the shipping schedule every few days, sometimes a
few hours before the agreed deadline, it leads to accumulating spontaneous
stock, resulting from:
-
necessity of continuation and
accepting raw materials for production ordered previously according to the
schedule,
-
raw materials ordered for production,
which are still in transit to the manufacturer,
-
the need to stop the production of
parts according to shipping schedule for other recipients.
Table 2. Applied solutions securing shipping schedule
in researched companies
|
Specification
of solutions |
Application
Percentage in the sample |
|
|
Warehouse stock
of raw materials for production |
100,0 |
|
|
Warehouse
stock of parts ready for assembly |
92,8 |
|
|
Extended
working hours of the employees |
85,7 |
|
|
Multifunctionality
of employees |
85,7 |
|
|
Production
capacity reserves |
71,4 |
|
|
Outsourcing
|
21,4 |
|
Source: Individual study, based on
conducted research
All researched enterprises develop warehouse stock of parts ready for
assembly, in order to secure punctuality of deliveries. This is a customary
solution and results in suspension of current assets through warehousing costs,
eventually leading to the reduction in price competitiveness of the produced
parts.
Another customary solution,
applied by approximately 80% of researched enterprises, is extending the time
of work. This accumulates additional
costs diminishing price competitiveness of the produced parts.
Moreover, a
commonly applied solution for creating production reserves in case of increased
demand, combined with less efficient use of work stations due to their frequent
re-adaptation, is a source of unfounded costs.
To conclude,
the above mentioned traditional solutions, aiming at securing punctuality of
deliveries, constitute customary areas of mismanagement and are far from modern
techniques and tools of production management originating from Lean Manufacturing
[4].
In this situation, numerous conversations were held with all managers of
the sub-suppliers, as well as with some middle-level supervisors, conducted
according to the developed “key” set of questions. Answers were given verbally,
without the possibility of their verification, in the form of a registry in
specified documents, manuals and standard operating procedures. They concerned
the level of the managers’ knowledge about the size of mismanagement, which was
a resultant of currently applied organizational solutions, as well as their
knowledge of the solutions minimizing costs. The results of the research are
presented in Table 3.
Table 3. Justifications for applied organizational
solutions
|
Specification |
Percentage
of answers in the sample |
|
|
Consequences
of unpunctual delivery determine every solution |
100,0 |
|
|
Lack of
awareness of existence of unfounded costs |
92,8 |
|
|
Lack of
knowledge about the value of the product, from the point of view of a
customer |
92,8 |
|
|
Lack of
identification of activities not adding any value |
92,8 |
|
|
Lack of
knowledge concerning the structure and value of the incurred costs |
85,7 |
|
|
Justification
for the need of improvisation |
85,7 |
|
|
Resistance
of managers towards searching for “risky” solutions |
78,6 |
|
|
Unwillingness
to admit the lack of organizational competences |
64,4 |
|
|
Objections
concerning practical utility of available literature |
57,1 |
|
|
Objections
to conformity between training and practice |
42,8 |
|
|
Solving
current problems as a barrier for innovation |
35,7 |
|
Source: Individual study, based on
conducted research
Reconnaissance
research concerning organizational solutions applied in the above described
companies resulted in following conclusions:
1.
Financial consequences of the
unpunctual delivery constitute a significant psychological barrier in searching
for more effective organizational solutions (100% of answers in the sample).
2.
Problems concerning organizational
solutions and their influence on economic efficiency of production processes
should receive a higher priority in the profile of engineer training (92,8%
of answers in the sample).
3.
Lack of knowledge about possibilities
and efficiency of modern techniques and tools in production management,
originating from Lean Manufacturing concept (92,8% of answers in the
sample).
4.
Resistance of interviewees towards
admitting to the lack of familiarity with organizational solutions improving
the efficiency of production management, ensuring a minimum level of security
of deliveries (64,4% of answers in the sample).
4.
Conclusion
The conclusions form the research conducted in fourteen „spin-off”
enterprises, producing and delivering parts for assembly directly to recipients
using in practice contemporary concepts of production management, are as
follows:
1.
Cooperation with a big, modern
enterprise is not always motivating to implement organizational innovations,
due to the risk of breaking the terms of cooperation.
2.
Low awareness and resistance of
managerial staff towards accepting the existence of a significant lap between
theoretical knowledge on one side, and practice applied by them in production
management on the other, based on improvisation, randomness and routine.
3.
Available literature lacks solid
connection to economic practice, which is a crucial barrier in dynamic implementation
of organizational innovations.
4.
Limited financial resources of small
and medium-sized enterprises act as a natural incentive to implement
practically verified organizational innovations.
5.
The fundamental objective and leading
function of small and medium-sized enterprises should be its organizational
innovativeness, which is realized in a much more complex way than
contemporary technologies or technical solutions, as essential transformations
need to be made in the employees’ awareness and work behaviours.
|
[1] [2] [3] [4] [5] |
K.
Matusiak (red), Innowacje i transfer technologii. Słownik pojęć, [Innovations and Transfer of Technologies.
Glossary.], PARP Warszawa 2005, p.
133-135 E.
Stawasz, Charakterystyka i potrzeby firm
wysoko innowacyjnych E.
Stawasz, Innowacje a mała
firma.[Innovations and a Small J.P.
Womack, D.T. Jonas, Odchudzanie firm
– Eliminacja marnotrawstwa kluczem do sukcesu. [Leaning of an |
Key words: Lean
Manufacturing
BARRIERS
IN USAGE OF MODERN TOOLS OF PRODUCTION MANAGEMENT IN RESEARCHED SMALL ALD
MEDIUM COMPANIES
Abstract: Research
concern the practical implementation (utilization)
of modern techniques and tools in production management in small and
medium-sized companies. Research was made in fourteen “spin-off” companies that
are producers and sub-suppliers to big manufacturers of final products, which
utilize techniques and tools of Lean Manufacturing. The obtained results
demonstrate the gap between level of their utilization by sub-suppliers and
level of organisation of parts recipients.
[1] Chair of Production Management, Technical University of