Book Reviews

Shifting Paradigms: Reshaping the Future of Industry

by Dave Garwood and Michael Bane
Copyright 1990, Dogwood Publishing Company, Inc.

Reviewed by Sandy Friedman, CFPIM, CIRM

Dave Garwood, one of today's leading manufacturing consultants, and Michael Bane, present their findings regarding the problems in American Manufacturing, and offer a unique and insightful view towards understanding the underlying causes and adjoining solutions that are necessary for American manufacturing companies to be able to compete on a World Class scale. Shifting Paradigms refers to the shifting frame of reference that has occurred in the world's markets, and hence must also occur within the minds of American manufacturing companies in order to continue to compete. A term appropriately borrowed from the field of psychology, a paradigm is a frame of reference which identifies the rules and constraints against which a behavior may be observed, studied, or evaluated. As the paradigm shifts, so must the respective behavior and the interpretation of that behavior. As economic conditions change and markets become more sophisticated, corporations must comply by changing their paradigms in like fashion, so that they may continue to serve those markets. The marketplace then becomes "the ultimate performance measurement."

The strides gained by Japanese Manufacturing in quality improvement and cost reduction are well-known -- not because of automation or computers, but by an acknowledgment in the shift of paradigms (from the "old" paradigm to the "new") toward meeting increasingly sophisticated customer expectations. Garwood and Bane state that, "...the implications of a customer-driven business represent nothing short of a revolution for many companies." American auto makers, for example, were late in recognizing the shift from the old to the new paradigm, and hence were crushed in the market. Garwood and Bane write, "Times are changing and changing quickly. The manufacturing industry has moved from the 1960's when we probably succeeded despite ourselves, to today's supersonic times of unprecedented challenges in a global economy... the way we viewed the world [via the "old" paradigm] limited us in progressing... we struggled for a long time to learn to effectively use the computer horsepower; unfortunately, we often just computerized outmoded practices... What we did was mortgage our future in search of short-term bottom-line results." Garwood and Bane cite the well-known studies of Toyota Manufacturing in Japan, in which the JIT Kanban pull strategy as well as achievements in attaining zero inventories and zero defects in the manufacture of Toyota vehicles are described. A tremendous attention to detail is expended with respect to the product itself, as well as product support including sales and service, long after the sales transaction has been completed. Total Quality might well be defined as the "portfolio" of contacts between the company and the customer, from advertising, sales, to service and repair, as the summation of experiences that is ultimately assessed by the customer as being of acceptable or expected quality. The "old" paradigm restricted our perception of quality being only that which is visible or attributable to the product itself, and did not include timely delivery or product durability (i.e., "planned obsolescence").

Garwood and Bane spend much of the book citing cases to illustrate the development from the "old" to the "new" paradigms. The old paradigm is frequently characterized by, "...low quality, high costs, slow response. An inability to respond quickly to shifts in product mix or to changing market conditions. Slow time to market for new products. Institutionalized inefficiencies that led us to the next major problem: a lousy bottom line." Many conceptions of the old paradigm included the notion that quality was "correction, not prevention." The old paradigm conception of the Purchasing function focused solely on price and how to lower it -- even if large, unneeded quantities were required to achieve it. Inventory was viewed as an asset and suppliers as enemies. The new paradigm eroded these concepts and allowed for the development of single-sourcing, improved supplier relationships, and quality at the source. Similarly, the old paradigm concept of Machine Utilization emphasized the minimization of setup times and maximization of run times, and the measurement of efficiencies -- even if large WIP inventories were generated as a result.

Labor utilization often confused activity vs. productivity. Active workers were not necessarily being productive if they were not working on the item that was needed next, or needed at all. The old paradigm hindered the development of modern performance measures and accounting practices. Short-term paybacks, direct labor, and [invisible] overhead rates must give way to long-term investment considerations, activity based costing, and accurate measurement of benefits as [visible] justifications of new investments.

The old paradigm obscured the need for accurate inventory and bill of material databases, or for adherence to sales forecasts and master schedules. New paradigms call for sharing of company data across traditional departmental lines, achieving by means of data leverage what is called "Integrated Resource Management" in the APICS body of knowledge. The benefits of shared data are most evident with the use of Concurrent Engineering in which product development is performed simultaneously by different departmental participants, producing a manufacturable and maintainable product in less time. "New product development ... should be an activity that draws resources from every part of the company, concurrent development rather than concurrent engineering." The new paradigm also calls for recognition of the contribution made by the floor workers, and obliteration of the existing adversarial relationships between workers and management. "In the long run, there have probably been no more damaging words to American industry than 'I just work here.' We are willing to spend millions of dollars on new equipment, hardware, software, yet we blanch when it comes to spending money on people... workers didn't have brains in the old paradigm." Garwood and Bane describe two success stories in which autonomous work groups were formed and allotted the power to set their times, responsibilities, shifts, schedules, vacation, overtime, and in hiring and firing of group members.

Flexibility has become a key competitive element. Speed and flexibility with reference to market penetration are rapidly becoming the cutting edge for World Class companies. Garwood and Bane define flexibility as being essential, "...to make full use of our most valuable resource, our people, when and where we need them. Yet strict job classifications and a rigid hierarchy work against us. The old paradigm -- us vs. them -- simply will not work."

The last chapter explains the importance of educating the work force for accomplishing change, the nature of the resistance established by the work force against change, and how to overcome these barriers. Garwood and Bane recognize the difference between training a work force and instructing them how to change their paradigm: how to build, manage, deliver and support the product line, and listen to their customers. The most common barrier is the failure to plant the seeds of change in the minds of the employees to expunge the natural fear of change that we all experience. Most in-house training programs present just facts, e.g., just the nuts-and-bolts of MRP II systems, or the elements of JIT environments. The participants typically nod their heads in agreement, then return to their jobs, performing them exactly as before. The seeds of change had not been planted, nor was there a company champion to lead them through this change process. Very few managers have been instructed how to comprehend the importance of process and cultural change, or even to perform this type of training, which requires strong interpersonal, listening, and cultural skills not commonly taught in business schools or management training programs. The Executive level must adequately budget both time and money (as well as patience and dedication) to successfully implement needed paradigm shifts.

This book is designed to be used as a learning tool in a classroom setting by company presidents and executives, but can also be useful as an introduction to APICS principles including MRP II, Integrated Resource Management, P&IM principles, and TQM/JIT, to a more general audience. The impact of this book is similar to that of Wight's Executive's Guide to MRP or Goldratt's The Goal and The Race. Each chapter begins with a hypothetical situation, discussion, and then presents some actual case excerpts which both illustrate the chapter principles and evaluate the solutions that were opted by the company. Each chapter ends with some thoughtful questions for discussion. The style of the book is written with a very colloquial flair, sometimes simple-minded, entertaining, witty, often condescending, but also very instructional and communicative. "How can we become World Class producers? That's what Shifting Paradigms is all about. What we hope to achieve is paradigm shifts in quality, new product development, supplier relationships, factory/plant floor operations, planning, organizational responsibilities, performance measurement, and accounting systems." Paradigm shifting must become a proactive process -- requiring a mindset for continuous process improvement at all levels within the organization.