Preamble to Industrial competitiveness and Operations management

The President’s Commission on Industrial competitiveness states: Universities need to improve the quality and quantity of their manufacturing related curriculums. We need more technical courses in process-related subjects and more emphasis on courses in manufacturing management. We heartily agree and the purpose is to provide effective teaching material to help achieve these objectives. The evidence concerning our global competitiveness indicates that in order to become competitive, we must manage our productive systems more effectively. This means top management must place greater emphasis on the operations function, understand it more effectively, and put higher priority on incorporating it into the enterprise strategy.

Sleeping giants begin to move as corporations throughout United States realize the importance of production or operations functions to the success of their businesses; that is the strategic importance of producing value for the market place. This realization has been the result of competition. While competition has always been a potent force in free economies, in recent years its scope has expanded, as over 70% of goods must now operate in a global marketplace.

News stories concerning the loss of market share and jobs to foreign competition have been commonplace in the 1980s, particularly competition from Japanese manufacturers. Not only has the scope of competition become global, but much of the devastating intrusion into both U.S and foreign markets formerly dominated by U.S producers has been based on the abilities of foreign companies to manufacture at lower costs products of higher quality than American manufacturers could achieve. Costs and quality are characteristics that must be designed into product in the first place, but achieving them in the final product is the result of carefully managing the productive resources of a company and that is what production and operations management is all about.

The Industrial Competitiveness Commission reports that productivity growth since 1960 in the United States has been dismal; they have been outstripped by almost all their trading partners. U.S productivity growth was actually negative in 1980. From 1960 to 1983, productivity growth in Japan was five times that in United States, and Japan’s actual physical productivity now exceeds that of the United States in steel, transportation equipment, general electrical equipment, and precision machinery.

Related to the productivity record is the commission finding that manufacturing technology needs more emphasis.

Perhaps the most glaring deficiency in America’s technological capabilities has been failure to devote enough attention to manufacturing or “process” technology. It does us a little good to design state of the art products, if within a short time foreign competitors can manufacture them more cheaply. Robots, automation, and statistical quality control were all first developed in the United States, but in recent years they have been more effectively applied elsewhere.

The record with respect to robotics indicates that the United States is lagging sadly behind Japan and Sweden. Finally the commission report states, “Countries that invest more tend to be those with the highest rates of growth in productivity.” The United States trails behind its major competitors in capital formation (fixed investment as a percentage of GNP), and the relationship between capital formation and productivity growth is unmistakable. The effect of large and up to date capital investment is to provide work force with the plants and equipments it needs to keep pace with productivity improvements of competitors.

Now Productivity improvements are made all over the world including Asia and even Africa. Once up on a time considered as laggards like India and China have overtaken U.S, Western European countries and Japan in many facets of manufacturing including state of the art Technology. IT globally is synonymous with India. All these developments could take place because of efficient Operations management in respective sectors be it manufacturing, IT, HR or even other service sectors. India is being sought after even for research areas in Pharmaceuticals, Bio-technology, Construction Engineering and alike.