Data Analysis and Interpretation
This part of the study discussed the findings based on the collated information on the survey and interview conducted by the researcher. The primary objective of this study is directed towards the analysis on the effectiveness of Lean Manufacturing and Outsourcing among International Business Organisations in the electronics industry. The study intends to investigate the effects of lean manufacturing and outsourcing to international electronic business industry. For this study, primary research and secondary research was used. Primary research was conducted using anonymous questionnaires that were sent to selected individuals in different organisations. The researcher also be conducting focus group interview with managers and administrators. The questionnaires were used to collect quantitative data and the interviews were used to provide qualitative insights into the data collected. This study was divided into several parts. The first part shall provide a general description of the respondents. Particularly, it conversed to the respondents’ age, gender, civil status, educational attainment and occupation. The second part discussed the perception of employees pertaining to the status of lean manufacturing and outsourcing. The third part discusses the perception of the interviewed respondents regarding lean manufacturing and outsourcing. And lastly the final part of the study discussed the analysis of the collated data that includes the discussion of problems and solution and statistical analysis. The researcher place figures for greater clarity on the discussions.
Part I. Profile of Respondents
This part of the chapter shall be discussing the general profile of the respondents. The first to be taken into consideration is the age of the respondents. The responses are summarised in the figure below. The exhibit shows that a major part of the respondents are rather mature (31 above), consisting of 65%. This might be reflected by the fact that the predominant positions of the respondents are in the managerial level, which requires a considerable amount of working experience. This is further asserted by the 37% who were in their early thirties and the 35% in their late twenties.
Exhibit 1. Age of Respondents
The next to be taken into consideration is the gender of the respondents. Apparently, a major part of the respondents constitute the male gender. This also states that majority of the respondents related to electronic industry adheres to more masculine perspectives. Nevertheless, a 47% of the respondents are female. On the other hand, with the seemingly patriarchal culture in organisation, it could be posited that females were not that good in the position.
Exhibit 2. Gender of Respondents
Exhibit 3. Civil Status of Respondents
Exhibit 3. The above illustration shows the civil status of the respondents. 33% of the total respondents, which is the dominated response is single. There are only 43% who are married from the overall respondents. As the figure was interpreted, there is a little percentage of respondents who are separated or widow. Likewise, the respondents were asked for their civil status and the report shows 33% of them are single and 43% are married. This is due to the large number of young adult in the sample as compared to those who are adult.
Exhibit 4. Educational Attainment of Respondents
Exhibit 4. Likewise, the respondents were asked for their educational attainment and the report shows 53 % of them are college level. The survey indicates that most of the respondents are college level that is engage to the study. The diversity of the population is further asserted when the respondents were asked regarding their professional history. This data illustrate the maturity of the respondents particularly in terms of experience. On the other hand, the apparent youthfulness of the respondents, provided by their age and their lack of professional experience could not be considered as deterrence to their responses considering that the researcher has made sure the respondents have been connected with the business industry for at least a month. Moreover, there is a noticeable distinction of the respective positions of the younger generations in their respective perceptions towards the impact of lean manufacturing and outsourcing to international electronic business industry.
Exhibit 5. Occupation of the Respondents
Occupation of the Respondents
%
Business Managers
16
Supervisors
20
Business Executive
25
Staff
33
Admin-assistant
5
Student
1
Exhibit 5. The above table shows the different occupation of the respondents. From the surveyed individuals, the researcher gathers 6 different positions of the respondents that are illustrated on the above table. The most dominated occupation according to the survey is the staff that is 33% of the total respondents. Followed by business executives that is only 25% of the surveyed individuals. The analysis shows the fair distribution of occupation. The table also indicates that most of the respondents were in the company because of their own business transaction. However, there were 1% respondents who were students. Meaning to say, most of the surveyed individuals are all knowledgeable about outsourcing. Some respondents are very much interested about lean manufacturing and outsourcing because they wanted to determine the possible impact of variables with respect to their business interests.
Part II. Perception of the Respondents
This part of the study illustrates the perception of surveyed respondents. As discussed in the previous chapters, a total of 150 respondents were surveyed. Their perception towards lean manufacturing and outsourcing were sought.
Exhibit 6. Survey Question Results
Statements
5
4
3
2
1
Weighted Mean
Interpretation
Lean practices are widely used in the electronics industry.
65
42
31
7
5
4.01
Agree
Outsourcing practices are widely used in the electronics industry.
44
64
28
12
2
3.93
Agree
Your company is satisfied with the current Lean tools implemented.
56
54
23
11
6
3.91
Agree
Your company is satisfied with the current outsourcing tools implemented.
48
59
31
12
0
3.95
Agree
The Lean tools of the company are advantageous to the operations of the system of the organisation.
68
36
36
10
0
4.08
Agree
The outsourcing tools of the company are advantageous to the operations of the system of the organisation.
59
36
22
18
15
3.61
Agree
The Lean tools of the company present disadvantages to the operations of the system of the organisation.
65
35
40
4
6
3.95
Agree
The outsourcing tools of the company present disadvantages to the operations of the system of the organisation.
54
39
31
16
10
3.67
Agree
The advantages of using Lean tools and strategies are more significant compared to its subsequent drawbacks.
58
59
32
1
0
4.16
Agree
The advantages of outsourcing tools and strategies are more significant compared to its subsequent drawbacks.
58
54
25
12
1
4.03
Agree
The disadvantages of using Lean strategies are more significant compared to its advantages.
1
6
18
56
69
1.30
Strongly Disagree
The disadvantages of using outsourcing strategies are more significant compared to its advantages.
5
5
32
52
56
1.63
Disagree
The perception regarding lean manufacturing and outsourcing and its impact on international marketing considering that the subjects are from different electronic industry were analysed and discussed.
The previous table shows the result of the survey statements of the respondents in regard to their perceptions. The columns five (5), four (4), three (3), two (2), and one (1) signify the number of respondents who answered on a particular ranking score. In statement number one, sixty-five respondents answered five, forty-two for four, thirty-one for three, seven for two, and five for one. The weighted mean column shows the mean answer of that particular question that is 4.01 and interpreted it as ‘agree’. The Table above shows that most of the respondents agreed on the given survey statements. All the statements from the survey were clear to the respondents. According to the respondents, lean practices are widely used in the electronics industry. There are several factors that affect the development of a certain business. In electronic industry, it is very important to determine if the tool used is effective. Based on the surveyed respondents, their current was satisfied with the current Lean tools implemented. In addition, the company is also satisfied their outsourcing tools. In fact, majority of the respondents agreed that the lean tools of the company are advantageous to the operations of the system of the organisation. Similar to the previous results in lean manufacturing, the outsourcing tools of the company were also advantageous as perceived by the selected respondents.
Although most of the surveyed individual agreed that lean and outsourcing tools shows several advantages, still majority of them agreed that these tools (i.e. lean manufacturing and outsourcing) has some disadvantages. Basically, there are also hitches and situations where these tools are not always the best approach to use. Actually, most respondents agreed that lean manufacturing is more difficult to implement when there are significant demand variations, major changes in the product mix or complex global supply chains. On the other hand, outsourcing in electronic industry has also weaknesses but most of them agreed that, the advantages of using lean and outsourcing tools and strategies are more significant compared to its subsequent drawbacks as shown in the previous table.
Part III. Interview Results
This part of the study discusses the perception of the interviewed respondents regarding lean manufacturing and outsourcing practices.
Section A: Lean Manufacturing and Outsourcing Practices
With regards to the response of the interviewed respondents, they mostly said that the success of an industry largely depends on its performance based on its human resources and skills, as well as the management and organisation approaches decided by the leaders in order for the company to continue its smooth function and accessibility to their clients and customers. At the same time, there is a need for each department within the organisation to operate efficiently and for each system within these departments to be carried out professionally and competently in order for the industry to be found as reliable and trustworthy in the eyes of their clients. Thus, lean manufacturing and Outsourcing tools should be considered since these tools directly affect the relationship of Original Equipment Manufacturers (OEM) and Electronic Manufacturing Service (EMS) providers in the Electronic Industry.
It is said the electronic business industries has changed the way contemporary businesses are being operated. With these lean manufacturing and outsourcing tools, many organisations especially those in the business field had been given the chance to evaluate their performance. In its application many industries had survive in the stiff competition within the marketplace. In addition, the application of lean manufacturing and outsourcing tools had given many industries the chance to implement a more strategic decision making due to the information that they have gathered. However, the management of these industries must always take into consideration the some ethical issues that can be faced. In this manner, the management must know how to handle such issues and provide ways in order to make their business more appealing to their target market. In general, it is important that the industry must be able to utilise this electronic business in accordance with their existing corporate culture so as to avoid further conflicts that may result in the industry’s downfall. Actually, building up effective information channel and create the basic “trust” are the key for handling the obstacles. From the interviewed subjects, all of them stated that their respective companies practice both lean manufacturing and outsourcing operations strategy because it offers excellent business process.
Section B: Obstacles and Problems in Utilising Lean Manufacturing and Outsourcing
In every organisation, lean manufacturing and outsourcing or any other method used to stimulate development and growth has still significant drawbacks. From the interviewed subjects related to electronic industry believes that business strategy is very important for maintaining the competitiveness in today’s fast moving market in the electronics industry. Therefore, the linkage and the lean manufacturing and outsourcing are very important. Company needs to think about how to build up a good relationship with the buyer and supplier and pay special attention on the data integration.
By using lean manufacturing and outsourcing practices, some of them argued that they can share the real time data with the supplier (EMS), they can use more accurate data to prepare their production and material requirement plan so as to have better inventory management. It is a kind of collaboration and strategic alliances model and company can not implement is smoothly without intimate relationship with the business partners.
Apparently, the world of lean manufacturing and outsourcing remains a constant source of confusion of high promise and gut-wrenching disappointment. According to the respondents, improving logistics operations will be hard, and there are plenty of opportunities for misfires along the way, but respondents are hoping that corporate goals will forever elude. They also believes that it take time, talent, energy, focus, money and guts to reach those goals–but that’s exactly what it took for the world’s best-run companies to make it to the top. It’s not easy, but it’s worth it. Despite the culture problem that respondents elaborate they still believe that they should focus a large amount of attention on whether one’s supply chain is being managed to optimum benefit. Thus, there is a need to enhance the relationship of OEM and EMS in accordance to outsourcing practices.
As companies expanded and outsourced more of their operations to third-party manufacturers and service providers, the need for visibility across the extended supply chain grew geometrically. But according to respondents are calling for a reduce in inventory and noting that supply chain management tools revealed a discrepancy between forecasts and historical data, according to them if they reduce their pipe line they can also reduce their liability in the management, they also noted that liability reduction is significant, in meaning there are literary millions of dollars of mitigated liability in the market.
Essentially, lean manufacturing is recognition of the direct link between planning and control of the manufacturing process and corporate competitiveness. It is seen by a growing number of business managers as the least explored and most promising avenue to competitive advantage available to companies in today’s business climate. It starts from the premise that such traditional areas for developing competitive strategies as marketing, finance, production, and design are yielding progressively declining results in terms of winning competitive advantage. In the other direction it holds that supply has been relatively unexploited as a competitive resource. According to respondents, what’s important in electronic industry today is collaboration and proactive event management, ability to relay information internally between groups and externally with partners in business. Even though some companies achieve impressive bottom-line results, such as a 50% inventory reduction with a 40% increase in on-time deliveries, there are reports of lean manufacturing initiatives that are blamed for profit shortfalls. According to some respondents, companies are becoming aware that lean manufacturing and outsourcing is complex and involves a new generation of technology, which does not solve existing barriers to successful implementation. Some of these barriers include organisational behavior, weak leadership, return on investment that is hard to measure, scope creep, integration of legacy systems, integration with small businesses, and poor data quality. In meaning, respondents are aware that companies have become cautious about supply chain investments. Instead of projects with large, long-term development cycles, companies are developing strategies that will result in lean manufacturing processes that are implemented as incremental, short-term, high value solutions while minimising risk.
On the other hand, the important considerations made by most companies to ensure the effective and efficient lean manufacturing and outsourcing practices are the following:
a.) Effective performance measurements,
b.) Better supplier relationship management,
c.) The capability of information system technology between supplier and buyer.
Actually, the advantages and benefits of lean manufacturing practices that affect the outsourcing practices among electronic companies is that companies can gain long-run competitive advantage by integrating, synchronising and collaborating the missing links through the business model of lean manufacturing practices. By doing this, electronic business can build up such intimate relationship so as work together, hand in hand to achieve the common objectives.
Section C: Management Practices to Overcome the Obstacles and Problems in the Production
From the interviewed respondents, there are several ways and management practices that their respective companies do in order to attain success in production. Basically, product or service management in electronic company includes a wide range of management activities, ranging from the time that there’s a new idea for a product to eventually providing ongoing support to customers who have purchased the new product. Every organisation conducts product management, whether it is done intentionally or unintentionally. Businesses can generate revenue from selling more of the current products to more of the current customers, more of the current products to new customers, new products to current customers, or new products to new customers. In other words, businesses can generate revenue through customer maximisation, customer development, product development, or diversification.
According to some interviewed managers, in order to boost up the production process and enhance the production management style, the company uses several management analyses to overcome the obstacles in business. According to them, production process is not only the factor in business success or failure, the company should also be aware to other variables. How does a company succeed in today’s business world? For all types of firms, large and small, manufacturing and service or even to electronic industry, the answer given today might very well be different than that given just a few years ago. These managers were also saying that the area of operations management is receiving more attention as a way to compete in the world arena, where recently such areas as marketing and finance were considered more important. Similarly, the types of managers who rise to the top positions of a company seem to run in cycles. When those managers from the ranks of marketing, for example, reach the top, they naturally give that area a greater weight in decision-making. Conversely, if a company feels that marketing is crucial to its success, this belief would tend to produce top managers from that field. Some of the areas traditionally emphasised in successfully competing would include: product innovation and entrepreneurship; marketing, advertising, and distribution; finance; and price.
The ‘‘better mousetrap’’ approach is a tried and true way to capture a market. Fad items would be included here, such as hula hoops and Rubik’s Cubes. However, in most stable industries it is also important to continue innovating. Computer companies are continually working to make faster, smaller products and to find new applications for their products. Even food producers continually strive for an edge through more convenient products. Finally, of course, there are those companies that take a leap by introducing entirely new products, such as copy machines, videocassette recorders, fax machines, and the whole array of products now taken for granted that didn’t exist a generation ago. It is apparent that the strategic weapon of innovation will continue to be a powerful one in worldwide competition. In electronic industry, innovation is also important in making successful business operations.
Aside from this, marketing is also an essential part of converting an innovative idea into a profitable product for a company. Also, in those industries where innovation comes more slowly, marketing has been necessary to differentiate one’s product from those of competitors. Indeed, to some extent it has been accepted that marketing can make up for deficiencies in other aspects of a company, resulting in continuing suboptimal results in these other areas.
Marketing can also be used as a strategic weapon in several ways. Marketing research can help to discover existing demands and to develop market segments that can then be pinpointed. Advertising can be used to differentiate products, to promote awareness of new products, and to provide information on the benefits of products. It can sell politicians as well as products and services. The distribution system can enhance the marketing effort by making it easy for customers to find and to purchase products and services. The location of retail outlets and the use of mail order are examples of distribution strategies for products. Mobile car washes and veterinarians are similar examples in service industries.
By providing an infusion of money for capital and for operating expenses, the finance area is also a strategical weapon. For example, a company may decide that it can enjoy certain economies by expansion. A company can ensure reliable supplies through vertical integration. Horizontal integration or simply building new facilities can provide for increased volume. Even without expansion a company can compete by purchasing more sophisticated or more efficient equipment. In any of these endeavours there are many financing avenues that must be explored.
Other things being equal, price is still probably the main competitive weapon available. In order to compete through price, a company must either keep its costs lower than its competitors or reduce its profit margin and make it up through high volume. The costs of providing a product or service are materials, labour, and overhead. Traditionally, companies have focused on improving their methods of producing a product or service, through automation, for example, and on reducing their labour costs, through such strategies as motivation, more efficient procedures, or finding a source of less expensive labour. Automobile plants are good examples of the use of improved methods to contain costs, while the clothing and electronics industries are examples of those that locate their plants in areas where wages are low. As opposed to the previously mentioned strategic weapons, these cost-cutting strategies do fall under the province of operations management. Along with the other strategies, they will continue to be important means of competing.
According to the interviewed subjects, in order to meet the competitive advantage that has been set to take full accountability of the mishaps that have been occurring. This means that there should be no room for bickering and pointing fingers as to should be responsible for the shortcomings that resulted to the problems they are facing. Only then can they go about on picking up where the left and attempt to finish everything themselves. Priorities must be set. For example, if the use of recent technology through internet media is not responding to the calls of the company as the internal people can do the job, then they must resort to foregoing within technology innovation to meet the demands of competition and immediately begin working on lay-outing themselves. After which, they would have to sacrifice more capital to the project for the purchase of the upgrades needed to set up for necessary changes at hand and that there must be continuous activities done in order to convince the writers and the management that their interests will be for the good of the company and maintain growth and stability.
Section D: Significance and Benefits of Lean Manufacturing and Outsourcing Practices
With regards to the production management executions, these managers stated that lean manufacturing and outsourcing practices are one of the contributing factors in business success. Basically, the interviewed subjects stated that they also adopts the lean manufacturing model, having a culture of democracy and civic responsibility, with high levels of education and skills, with highly coordinated labour relations, with the desire to maintain social cohesion, with job enrichment, with high levels of worker democracy and autonomy, and with union-management co-determination. The combination of these allowed their respective companies to establish, encourage and enhance teamwork, which is being used by the company in its competitive advantage.
On the other hand, outsourcing is also important to electronic industry since it is not a new phenomenon–although the subject has hit the headlines only recently. Many companies particularly in electronic industry started creating jobs overseas to gain access to foreign markets. Basically, the interviewed individuals stated that they audit, consult, and repair where customers are located. To put it mildly, they do not tell the overseas customers to come here. Moreover, many foreign markets are growing quickly as numerous domestic ones have become saturated. More than half of the employees in American information technology companies are estimated to originate overseas. That is not unique. In various industries–ranging from banking to consumer products to .job placement to aerospace-leading firms report that their overseas revenues exceed their domestic sales.
Remember, too, that some businesses hired specialised workers overseas to adjust to immigration limits. When they could not get those workers here, they had to send the work to them. While doing so, the companies learned how to use modern technology to shift the location of work economically. They become accustomed to taking advantage of lower costs, domestic and foreign. Telecommuting from employees’ homes may have paved the way for some enterprises to extend the process to new suppliers, at home and abroad.
Most fundamentally, a great many companies are focusing their efforts on their core competence. They subcontract out most of their activities to domestic suppliers. Viewed from that perspective, overseas sourcing is a minor part of the trend to decentralise business operations. In addition, these companies have learned that, in many cases, the higher productivity of workers offsets the wage differentials and other costs of operating overseas.
Outsourcing can help a company operate in an increasingly competitive global marketplace. Lower costs are the key to maintaining a firm’s position in the modern global economy. Outsourcing can enable a business to provide 24/7 coverage, especially for customers who need around-the-clock support. On the other hand, it is impractical for a firm to adopt a unilateral policy against outsourcing work—especially when its foreign and domestic competitors are doing it. The specific decisions are made on hard-nosed business grounds–including balancing productivity and labour costs.
Section E: Production Practices and Tools for Success in the Electronics Industry
(For the last part, the surveyed and interviewed subjects were asked regarding the most appropriate production practices or tools for supporting the success of electronic industry. Basically, there are several production practices and tools to enhance business practices. Actually, there are disadvantages that company’s practices encounter in utilising such lean manufacturing and outsourcing practices and tools. Some of the interviewed subjects believe that Information sharing and system integration between OEM and EMS are very costly and it is also involved very complex work flow to create the information platform and design the information networks. Other stated that Software and Hardware investment are the major concerns of lean manufacturing disadvantages. Also, the system integration, data synchronisation process are complicated, it involved extra manpower to monitor the whole process from time to time.
According to these individuals, productivity is one of the major keys in gaining competitive advantage. Those who have high quality production with the most production are generally those with higher profit margins and lower costs. This allows them to hold a larger market share, proving that productivity improvement efforts are worth the changes in operation, culture, and philosophy that such implementations incur.
Through the successes of productivity and quality leaders, electronic companies find that enhancing productivity (and quality) is based not only on resources, processes, and techniques but also a correct set of corporate attitudes and goals that recognise and incorporate this goal into its strategies.
In international electronic business industry, coordination among different divisions is very important. Manufacturing, marketing, distribution, logistics, security and other variables in business should have proper coordination. This coordination in the movement of independent divisions that is observed in TQM programs characterises the orchestration of activities in Supply Chain Management. It focuses on (1) inventory control and planning, (2) advanced planning and scheduling, (3) warehousing and distribution strategies, (4) product design for mass customisation and product postponement, (5) procurement/scouring, and (6) fleet management. Here, mutual competitive interests motivate a manufacturer to coordinate activities of suppliers and purchasers to get products on the market effectively.
In the case of surveyed managers, there are some suppliers and purchasers that deal with a manufacturer’s competitors, making the lines of cooperation and competition blurred in most cases. In this sense, Supply Chain Management uses the core competencies of these companies to reach a mutual well-being, a distinctly Japanese approach to business that has enabled them to compete with American businesses (single business vs. a strategic alliance that allows internal support to member companies). Through the alignment of these core competences, operations managers involve themselves with the upstream and downstream companies, using their inner workings in an integrated whole to develop a competitive advantage.
Innovation in the relationships between consumer-supplier is more notable in the JIT system in international electronic business industry. Using a system that is a variation of the “two-bin system”, they actuated a very real cost advantage over other beef manufacturers by arranging for their suppliers to deliver needed materials only shortly before they were actually. This eliminated bloated inventories, lowering their labour costs significantly compared to other global competitors of that time.
This “Kanban”, or more popularly known as the Just-in-time (JIT), inventory system made the buyers of the parts supremely dependent on their suppliers, integrating them into the international electronic business industry. in such a way that their traditional adversarial role was broken. The system was used by most of the leading electronic manufacturers in Japan where improvements in quality and productivity were noted in direct relation to the decrease in inventory size. In this system, suppliers need to be located that can meet the delivery cycles required, changing the way business was done between them.
The old approach of having multiple commodity sources has since shifted. While having multiple suppliers keeps competition on its toes between them and offers manufacturers lower prices in which to gain sales, this meant that buying would be in the form of solicited bids, often in annual basis. The exchange in suppliers and buyers were then laden with demands as the buyers drove to yield immediate cost savings by thriving on this competition between suppliers. The reduction of source base means that there must be a primary source for a commodity, building long-term supplier relationships based on trust.
Status of Lean Manufacturing and Outsourcing among International Business Organisations in Electronics Industry
From the given results of the interview and survey analysis, it seems that lean manufacturing and outsourcing among the said organisation play significant role to their development and success. Thus from this, the increased market competition identifies continuous adjustment and improvement in the production lines, outsourcing and supply chain management of companies.
Actually, both EMS and OEM among International Business Organisations were asked regarding the important aspect of lean manufacturing and outsourcing in the electronics industry. According to OEMs, lean manufacturing is a very important management tool and business strategy for the electronics industry since the industry is moving very fast, product life cycle is getting short and competition is very keen. In connection this, OEMs asserted that it is very difficult to face the competition if company do not have the suitable strategies to control the total cost as well as continuous improvement for the customer services level. In accordance to lean manufacturing practices of OEMs, they have different measurements to keep check the performance in different areas. However, according to them the most critical point is to use a right strategy and approach to integrate with upstream and downstream partners so as to create the synergy by using a collaboration business model. In accordance to these issues, most interviewed EMS respondents believes that lean manufacturing is a consumer driven management practice, satisfying the needs of consumers. In contrast to the response of OEM, EMS argued that the information flow within the supply chain is crucial to integrate diverse business functions and to co-ordinate activities across different organisations around the world. Today, most EMS can rely on a single party to fulfill the sophisticated needs of customers since they need a total commitment and full collaboration of all trading parties such as suppliers, manufacturers, distributors, etc.
Apparently, both OEM and EMS were asked regarding outsourcing practices. In this regard, outsourcing is not applicable to EMS but they believe that outsourcing strategy is one of key elements for driving the growth of electronics industry. Without the EMS support, OEM can not focus on his core competency and reduce the product development cycle time. Also, consumer can not enjoy such low cost product as EMS provider can enjoy the low cost production by using large production scale. For this part, OEM respondents asserted that most of them are using outsourcing strategy for both logistics (use 3PL) and manufacturing (use EMS) functions. In fact, outsourcing can support OEM business growth by using less investment as we can shared the risk with our suppliers (i.e. EMS). Also, OEM can focus on R&D, design and brand management rather than the details operations. It is good for most OEM to have better ROI and they can easily manage the inertial resources as well. Actually, interviewed OEMs understand that outsourcing strategy is vital for electronics industry, outsourcing is part of our lean manufacturing strategy and company needs focusing on the quick response to ever-changing market needs and shortened purchasing lead time, also adding value to increasingly demanding customers at the lowest cost and time, otherwise, they can remain competitive in today’s global economy.
Actually, there are some criteria set by both OEM and EMS to be able to provide efficient and effective lean manufacturing through outsourcing practices. For OEM they have cost saving, reduced the total cycle time for product development, better resources management and better ROI. On the other hand, most EMS considers time-to market, product development cycle time, and total cost saving.
Similarly, the selected respondents were also asked regarding their perception towards the outsourcing tools used in their respective companies. From the responses of the selected individuals, there are several benefits of outsourcing such as: cost and flexibility; lessens the need of an organisation to maintain in-house capability for activities having a high degree of technical specialisation and saves on overheads by maintaining flexibility in responding to internal and external fluctuations; and as a tool to extend product range, to test the market for new products, to supply short demand products and to avoid having to produce small batches of products themselves which could disrupt long-run production schedules. However, contrary to its benefits, outsourcing also has a number of drawbacks that would make organisations think twice before implementing the strategy. The drawbacks of outsourcing include: some organisations experience problems due to the complexity of the many activities that organisations outsource; it can take up to two years before an organisation starts to achieve any financial benefits from outsourcing and in some cases the process may be cost neutral; the main problems companies in contracting out activities, like quality of service, communication with suppliers, redundancy costs, co-coordinating different suppliers, reduced flexibility, dependence on a few suppliers, and communication with a few suppliers; problems that threatened the viability of the activity due to lack of strategic integration and poor senior manager communication; loss of control; difficult to reverse decision; long-term contracts can lead to a lack of flexibility; requires management of organisation / outsourcee alliance; outsourcers can put themselves at risk from lack of responsiveness, poor service, etc.; subject to new costs if changes are required; difficult to quantify advantages; and possibility of being locked into older technology.
From the surveyed and interviewed personalities, the summary of the responses of the respondents in accordance to the advantages and disadvantages of outsourcing and lean manufacturing are shown below.
Advantages and Disadvantages of Lean Manufacturing
Lean manufacturing Advantages:
According to the respondents Lean manufacturing
a) reduce the inventory cost,
b) provides better ROI,
c) improve the customer services,
d) reduce total logistic costs,
e) provides flexible manufacturing,
f) less inventory,
g) improve the cash flow ,
h) provides better product availability,
i) lower warehouse operation cost, shared risk with suppliers
j) flexible production planning,
k) reduce total material and inventory costs,
l) focus on core competencies,
m) provides faster time-to market,
n) less stock, and
o) less manpower
Lean manufacturing Disadvantages:
Here are the disadvantages of Lean manufacturing tools as perceived by the respondents.
a) effective supply based management is requested,
b) supplier shipment delay or quality issue will affect the production plan seriously
c) high risk on manufacturing and product distribution as there is no buffer stock and it is only rely on supplier managed inventory
d) too rely on supplier,
e) no safety stock for handling the uncertainness,
f) not easy to manage the supplier performance,
g) not easy to provide accurate forecast to supplier for planning the inventory level,
h) higher investment on IT system and data exchange,
i) inflexible for handling the unpredictable demand,
j) need to use more effort on building the relationship with the suppliers,
k) request effective data exchange platform,
l) need a superior management on warehouse operation,
m) too depending on 3PL’s support,
n) no capability to support the rush order and meet customer’s urgent requirements,
o) not easy to roll out the EDI with the business partners, and
p) need to spend more resources on building an effective communication interface with supplier.
Advantages and Disadvantages of Outsourcing
Advantages of Outsourcing
a) focus on company’s core competencies,
b) better Return On Investment (ROI),
c) better cost control,
d) more focus on R&D,
e) improved the performance of time-to-market,
f) no need to do the investment on buying new machines for making new products,
g) reduce total cost,
h) better product quality,
i) flexible manufacturing services,
j) less risk on releasing the new product to the market,
k) improve the services to the customer (Quick respond for sampling and mass production),
l) better product quality and reliability, and
m) less investment but faster lead time.
Disadvantages of Outsourcing
a) not easy to build up the trust with the supplier (EMS),
b) cannot own the manufacturing know-how,
a) relationship driven, need to spend more time on communication,
b) effective information flow is requested so as to ensure the information can flow properly,
c) need to spend more time on relationship development, (b) Not easy to have better communication,
d) complex information flow,
e) high cost on building up a comprehensive information network between OEM and EMS,
f) relationship-based,
g) need to share the product and process know-how to EMS provider,
h) effective data sharing process is needed,
i) high data integration cost,
j) product knowledge will be disclosed to the suppliers (EMS) ,
k) engineer needs to spend more time on communicate with the external suppliers, otherwise, the whole project maybe delay,
l) need to spend more time on long term relationship development,
m) need to spend more money on information sharing,
n) efficient information system is always requested to link with the supplier,
o) need to manage the relationship carefully,
p) high risk on sharing the product design knowledge with the suppliers, and
q) IT capability and reliability are requested.
Synthesis
A lot of factors have influenced the ever-increasing pressures that resulted to intense competition in the global electronic manufacturing industry. New trends in the business operations strategies, more interactive business relations among different market players as well as the customers’ increased involvement in maintaining the quality of products and services continue to demand efficient and productive measures among contract manufacturers and service providers. Manufacturing companies were able to answer and meet the specifications of their customer base by utilising the current technological advancements in the past decades. Innovations in computer features, networking strategies, and telecommunication products facilitated business organisations to invest on market researches, company development, and effective re-engineering measures to create quality products and provide efficient services.
As a result, lean manufacturing and outsourcing strategies have been widely accepted in order to reduce expenses, improve productivity, operations management, and delivery, and concentrate on upgrading the company’s technological expertise. As a result, the discussion how big business organisations which depend highly on efficient delivery and distribution procedures gain their success in the competitive market environment was carried out by examining the strategic implications of lean manufacturing and outsourcing and its benefits and costs as a more flexible and decentralised organisational business strategy. As a popular business strategy in the current global business environment, outsourcing and lean manufacturing was discussed in a holistic manner to justify the inevitable success it brings to business units.
With regards to the contribution of lean manufacturing and outsourcing to the development of international electronic industries, there are several measures used to determine the success of the said industry. Since there have been different methods to measure performance several companies question which method is the most effective to use. Considering that financial and non-financial approaches are two very different systems, applying one mechanism in place of the company’s existing performance and evaluation means will entail greater changes and adjustments. Moreover, some aspects in traditional systems are lacking in the non-financial systems and vice versa.
Performance measurement has long been used by the various firms to assess production practices of electronic companies. In general, lean manufacturing and outsourcing are being used to enhance business production. While these approaches have their own advantages and drawbacks, the goal of their application remains one and the same. Through the beneficial effects of performance, businesses are able to create successful strategies towards success.
Conclusion and Opportunities
This chapter intends to conclude the results of the study; the study also intends to give the implications of the said results. The study also intends to give recommendations based from the results of the data analysis. The focus of this study was to evaluate the effectiveness of lean manufacturing and outsourcing to international businesses particularly to electronics industry. In general, lean manufacturing and outsourcing are one of the factors to be considered in business success. As illustrated in literature review chapter, there were eight critical success factors to consider and they are procurement, product and service management, total quality management, inventory management, logistics and transportation management, facilities management, software configuration management and distribution channels. However, the limitation of study focuses its concentration to lean manufacturing and outsourcing issues present in international business organisations. In establishing a good business, one must be aware of the said factors and these will serve as guide in the proper handling and creation of a business. The general population for this study is composed of respondents from international business organisations whose company are doing electronic products. From this surveyed respondents, twelve (12) out of one hundred fifty (150) respondents were also interviewed. To determine the assessment of the respondents of international business sector in electronics industry, the researcher prepared a questionnaire and a set of guide questions for the interview that is asked to the intended respondents. The respondents graded each statement in the survey-questionnaire using a Likert scale with a five-response scale wherein respondents are given five response choices.
Concurrently, the study employed both qualitative and quantitative research methods to ensure a flexible and iterative approach. During data gathering the choice and design of methods are constantly modified, based on ongoing analysis. This allows investigation of important new issues and questions as they arise, and allows the investigators to drop unproductive areas of research from the original research plan. The researcher also uses percentage analysis to evaluate the collated data.
Summary
The study showed that the primary determinants of businesses commerce in international business of electronic industry remain to be lean manufacturing and outsourcing. On the other hand, overall quality in terms of operations is definitely the most important factor to consider. Quality however is being considered more than the price of the service/product in any business. In assessing the overall quality of business, two factors are considered: the reliability and durability of business.
Aside from the said factors to be considered by international business, TQM, technology and customers was also regarded by the respondents to be of utmost importance as evidenced by the interviewed managers. The result implied that the respondents also consider the marketing and advertisement in taking into consideration the operational procedure of their respective companies.
Based on the gathered information, the respondents asserted that the operation management stability in most international business involved in electronic manufacturing is in good condition however there is always a room for improvement. The qualitative interviews indicated that it is important for them to learn from multiple customers in order to enhance their performance. The interviews highlight the following two related points: The buyer is as an important source of valuable knowledge in terms of what they prefer, what they want in product or service, the price, the quality and the type of negotiation they want to take place.
Finally, with international businesses’ rapid economic growth in terms of business expansion, more technology-based consumer products are becoming available. This also applies in different businesses globally. The changing market structure of the transitional economy in countries makes it very difficult for consumers to choose products. This has also allowed them to be more critical on the quality and the price of the product they are buying especially in international businesses of electronic industry.
Part 1. Profile of the Respondents
The respondents were composed of the respondents at the different international business Industry of electronic companies. The apparent diversity of the maturity of the respondents reflects several implications in the study’s findings. Seventeen percent (17%) of the respondents were 25-31 years old, showing that most of them were already considered as young adult. Another seventeen percent (17%) of the respondents were between 32-38 years old. Twenty percent (20%) of the respondents were between 39-45 years old. In addition, another twenty percent (20%) of the respondents are in 46-52 years old status. Based on the results of the study, the number of the Male respondents (57%) is far to the female (43%). This result shows an unequal footing in terms of representation of gender regarding the perception of men in the performance of lean manufacturing and outsourcing among international business in electronic industry. The male respondents outnumber the female respondents by approximately 14%; this data provides a glimpse of the aggregate size of men in the workforce particularly of international business environment. In regards to the civil status of the respondents, majority of the surveyed respondents are single.
Part 2. Perception of the Respondents
According to the majority of surveyed individuals, there are several but little problems arises when in comes to international business industry of electronic organisations. One of the problems they encounter are in terms of business security, quality performance of staff and other TQM issues. Issues regarding lean manufacturing and outsourcing tens to be in good condition as illustrated by their responses in survey and interview. From the description in literature chapter, Total Quality is a description of the culture, attitude and organisation of a company that strives to provide customers with products and services that satisfy their needs. This culture requires quality in all aspects of the operation of international electronic organisations, with the process being done right the first time and defects and wastes eliminated from operations. In general, Total Quality Management or TQM is a combination of quality and management tools according to the surveyed and interviewed participant aimed at increasing business and reducing losses due to wasteful practices, and a method by which management and employees can become involved in the continuous improvement of the production of goods and services.
For these respondents, Total Quality Management or TQM is a management philosophy that may refer to any number of employee interventions and techniques used to improve quality, and may also be a basic business strategy to provide goods and services that completely satisfy the customers by utilising the employees’ talents while providing a positive financial return to the shareholders.
TQM in international electronic companies should guide any organisational interventions intended to improve quality. The first principle according to these respondents is to focus on work processes, for the quality of products and services depends most of all on the processes by which they are designed and produced. It is not adequate to only provide clear direction about hoped-for-outcomes, rather, the management must train and coach employees to assess, analyse, and improve work processes. The second principle is analysis of variability, for uncontrolled variance in processes or outcomes is the primary cause of quality problems and must be analysed and controlled by those who perform an organisation’s front-line work. Only when the root causes of variability have been identified are employees in a position to take appropriate steps to improve work processes. In addition, the central problem of management is to understand better the meaning of variation, and to extract the information contained in variation. The third principle is management by fact, for the process of Total Quality Management calls for the use of systematically collected data at every point in a problem-solving cycle, beginning from determining high-priority problems, through analysing their causes, to selecting and testing solutions. This quality-improvement program is based on collecting data, using statistics, and testing solutions through experiment. Lastly, the fourth principle is learning and continuous improvement, for the long-term health of an enterprise depends on treating quality improvement as a lifetime quest. Opportunities to develop better methods for carrying out work always exist, and a commitment to continuous improvement measures that people will never stop learning about the work they do.
With the guidance of the discussed principles, companies or business organisations that adopt and implement the concept of Total Quality Management will be in more advantaged than other companies, for TQM has several benefits. According to one of the interviewed respondents, through the application of total quality management in their company, the senior management empowered all levels of management, including self-management of the employees to manage quality system. These benefits are grouped into five key areas, namely, continuous improvement, multifunctional teams, reduction in variation, supplier integration, and education and training.
Applications and Implications
Every business is subject to factors that affect the firm’s function as a whole. These factors are the ones attributed for the success or even the failure of a business. It is said that the management system and the strategy imposed by the organisation is attributed as the factors which carries certain companies to success or even its failure. In the light of this, there are certain ways or techniques that can be considered in order to emerge and continue to be competitive within the market place. It is important that every individual in the business field should know how to manage or to handle situations in order for the business to achieve success. From the previous results and discussions, this part of the study illustrates the implication of quality management as part of lean manufacturing and outsourcing principles of international businesses in electronic industry.
One of the issues that have been pointed out to international businesses in electronic industry is their inability to establish good management strategy that would further enhance the business’ position to the business industry. Good management strategy will ensure international businesses in electronic industry growth if implemented properly. In this regard, the main target for total transformation for the company to achieve growth and competitiveness is its outsourcing procedure or human resource management. It is said that if the effective outsourcing or human resource management of most international businesses in electronic industry is efficient, then other members of the organisation will be inspired and motivated to work harder which may result in producing quality products and services. Hence, the problems that most international businesses in electronic industry should be in focus are on its TQM processes.
To be able to implement Total Quality Management and attain success in operations management, lean manufacturing and outsourcing, the international businesses in electronic industry should follow the following outline.
I. Introduction
A. Marketing Research.
First and foremost the company must know the current situation of the business. Hence, it is important that the company must be able to establish an internal marketing research to determine the factors to be changed and how Total Quality Management would be implemented.
B. Information Dissemination
The management of the company must be able to disseminate the information that the company will imposed some changes regarding TQM so that the employees will be aware in the situation.
C. Identifying the Project Team Leader and the Project Team Members
The project will not be able to meet its objective if the tasks are not allocated to the respective people who will implement the project. Task allocation is not simply a case of handing out the various tasks on final lists to the people available; it is far more delicate (and powerful) than that. In simple terms, consider what each member of your team is capable of and allocate sufficient complexity of tasks to match that (and to slightly stretch). The tasks allocated are not the ones on finals lists, they are adapted to better suit the needs of team’s development; tasks are moulded to fit people, which is far more effective than the other way around.
Herein, the leader who is chosen to implement the project must be committed to the concept of Total Quality. This is to ensure that the plan will work out well for the benefit of the organisation as a whole. In addition, the project team leaders and members must also be aware of the possible problems that they may encounter and that they must always have an alternative plan to anticipate such problems.
II. Identifying Total Quality Management Needs
A. Effective outsourcing
Effective outsourcing is considered as one of the main assets for every organisation. The proper management of Human Resources is significant in determining the success of a certain organisation. Making awareness of management value and the ability to manage the human resources in an organisation-wide will have great impact on progress results. Consequently, it is said that the philosophy of effective outsourcing is based on the simple belief that human resources are the most important asset in achieving and sustained business success. This realisation became the driving force behind the creation of effective outsourcing resulting in organisations taking a strategic technique to the management of their people.
The true worth of effective outsourcing is becoming more widely understood as effective outsourcing steadily interweaves all aspects of people management and development within the company.
This effective outsourcing plan is applicable to the implementation of the Total Quality Management among international businesses of electronic industry since it provides a long-term policy that would ensure equality among employees which in return would be able to motivate the employees to provide competitive performance for their benefits and the for sake of the whole company as well.
B. Human Resource Staffing
Staffing today is taken a lot more seriously and given a lot more
thought than it used to be. Gaining competent employees at all levels of the organisation is more than a matter of training. It stems from changes in recruitment and selection philosophy. Staffing the most competent employees for each and every organisation is continuous challenge for the effective outsourcing. Faced with the problem of conducting Staffing effort to fill critical position in any level of organisation, the effective outsourcing must create an Employee Staffing Policy to identify the critical activities in the recruitment process and monitor its results.
In order to create Employee Staffing Policy, planning is an important element of most aspects of effective outsourcing. Depending on the personnel function considered. Effective outsourcing often have very different ideas on how to go about the recruitment process and when it should be done. Staffing new employees to fill existing vacancies is an important function within effective outsourcing.
These routine dimensions of the Staffing process are integrated into the daily routine of many HR departments and once a system is established, there appears to be little need for additional planning or analysis with regard to how the Staffing process should proceed. From time to time, however, it is necessary to recruit a person to fill a high level vacancy. This is to ensure that the management is giving the most deserving employees the chance to hold higher positions. This must be done also in order to ensure quality management within the organisation which may result in creating quality products and quality service for the customer satisfaction.
III. Specific Processes to Successfully Implement the Lean manufacturing Plan
After the planning phase is over (and agreed), it is a signal of the doing phase begins. Once the project is in motion, it acquires a direction and momentum which is totally independent of anything that was predicted. The key elements to the control of a project are the milestones and established means of communication. The milestones are a mechanism to monitor progress; for the team, they are short-term goals which are far more tangible than the distant completion of the entire project. This maintains the momentum and encourages effort for the team; it allows the team to judge their progress and to celebrate achievement throughout the project rather than just at its end.
The simplest way to construct milestones is to take the timing information from the work breakdown structure and sequence diagram. When it has been guesstimated how long each sub-task will take and have strung them together, it can be identified by when each of these tasks will actually be completed. In order to apply the TQM to lean manufacturing of international business especially to be used in the its competition to the business industry, the management of the electronics industry must be able to accept the whole concept of the improvement, which means that all the people within the electronics industry must agree that there is a need for a total transformation especially for the quality of the products and services that electronics industry will be offered. Furthermore, the management should be willing to participate to all the improvement, value each and every ones opinion in order to achieve total quality management and provide a total quality operations and services to satisfy their customers.
Managers and experts disagree about how to effectively implement Total Quality Management to their organisations. Eventually, customer satisfaction has always been regarded as the driving force behind quality improvement; others suggest quality management is achieved by internal productivity or cost improvement programs. In other applications, Total Quality Management is regarded as a technique to introduce the context of participative type of management. Thus, the management should be more straightforward to provide the potential role of applying the Total Quality Management as an overall strategy of the electronics industries.
In addition, since Total quality management is based on internal or self-control, which is embedded in every element of the work system (technology and people), the employees or the people behind the production and other employees that are responsible for the effective outsourcing purposes must be able to determine the problems beforehand, to anticipate its occurrences. In applying total quality management and the effective outsourcing plan, international business organisations must be able to combine it with the core strategy of the industries; this does not mean that international business organisations related to electronic industries must have total changes. It is important that in application of the Total Quality Management Plan to international business organisations must also consider that an appropriate strategy should be used in order to produce total quality products that would satisfy all clients and customers.
IV. Dangers in review
There are dangers avoiding this project reviews, it is either too frequent or too drastic. The lack of sustainability to the project can lead to plan revisions which shake the team’s confidence in any particular version destroying the stability of the project designed. Decide objectively, and explain beforehand, when the review phases will occur and make this a scheduled milestone in itself.
Even though the situation may have changed since the last review, it is important to recognise the work which has been accomplished during the provisional. First, the organisation do not want to abandon the project since the team will be demotivated feeling that they have achieved nothing. Secondly, this work itself is part of the new situation which has been done, it should provide a foundation for the next step or at least the basis of a lesson well learnt. Existing achievements of team should always be building up.
V. Time
Time is sometimes one of the problems since there are companies that are demanding for unrealistic time. For this project, realistic schedule viewed by the team should be imposed. Outside world are not allowed to deflect team form what knows to be practical. If the impose a deadline upon which is impossible, the team will clearly state this and give reasons. For this instance, the project teams must determine the most appropriate time to start the implementation of the project; the sooner, the better.
VI. Planning for error
One of the most common errors in planning is that assuming there will be no errors in the implementation which in effect, the schedule is not based on the plan. On the other hand, recognising that errors will occur is the reason for implementing a monitoring strategy on the project. However, by cautiously considering errors in advance can make changes to the original plan to enhance its tolerance.
The team that would implement Total Quality Management Project must try to predict where the errors will occur by examining the activities’ list. The risky areas might then be given a less strict time-scale – actually planning-in time for the mistakes. Another option is to apply a different strategy, or more resources, to such activities to minimise the disorder in the project.
Conclusion
As mentioned on the result of the previous chapter, international business organisations in the electronics industry are doing ways to assess the critical success factors of their business operations. In addition to this, most of them are giving enough consideration to TQM in lean manufacturing and outsourcing since these factors affects and contributes to their operational success. Most international business organisations in the electronics industry wanted to maintain the loyalty of the customers; they are willing to do anything for the benefit of the customers and for them to stay loyal to the company. International business organisations in the electronics industry believe that the customer should be their first priority; they also want the customers to remain loyal to the company. By focusing on the customer’s needs and wants international business organisations in the electronics industry is getting more loyalty from the consumers. As mentioned on the result chapter, international business organisations in the electronics industry are continuously changing their strategy for the success of operations management of their business.
The international business organisations in the electronics industry are doing these things to maintain its consumers and have more loyal consumers. Basically, the international business organisations in the electronics industry is offering the best service it can. They also updating the standards of services they offer to customers. Based on the findings of this study, the researcher concludes the following:
1. The respondents who took part in this study are already mature in age, responsible and reliable. They are also aware of what’s happening in international business organisations in the electronics industry and are deeply concerned about the improvement of operations management in their respective companies.
2. The respondents have given an overall rating of “Agree” to each of the criteria. Most of the respondents believe that operational management has something to do with his business strategies. This shows that they are satisfied with the current state of things in the international business organisations and the electronics industry.
3. There are several factors affecting the rise and fall of some business establishments in international business organisations in the electronics industry. We also have to consider the political and security issues in these countries since these are one of the biggest factors to consider.
4. Aside from lean manufacturing and outsourcing, the other factors that affect the success of international business organisations in the electronics industry are Procurement, Product and Service Management, Total Quality Management, Inventory Management, Logistics and Transportation Management, Facilities Management, Software Configuration Management, and Distribution Channels.
5. From the analysis of results of related literature and data from the respondents, it is reliable to state that international business organisations in the electronics industry are in good condition considering the factors in operation (i.e. lean manufacturing and outsourcing).
6. The study also reveals that all the variables in operation should be consider in attaining the great results in business progress. It is also important to have trainings of staff in international business organisations in the electronics industry.
Recommendations
The general, long-term development of these businesses is one characterised by a series of evolutionary periods that at times can best be described as revolutionary in nature. In line with this observation, international business organisations in the electronics industry need to constantly be on the lookout for strategies which would help in maintaining their market leadership. Problems in the industry today appear from so many angles, at so many levels and in so many directions that their pursuit without a regular path will soon become lost in details. Different business model can help any organisation to determine the direction in which they are going to take through. Using this tool, international business organisations in the electronics industry, as well as other firms, is challenged to understand an industry’s profit potential and the strategy necessary to establish a defensible competitive position, given the industry’s structural characteristics. Overall, international business organisations in the electronics industry are highly attractive industry which contributes a large share of the total profits. With the intensity of rivalry kept in check by the business giants, high threat of industry entry, low supplier and buyer power, prospects for business holds much promise.
All things considered, there is still no substitute for good management in the strategic positioning and implementation process of international business organisations in the electronics industry. That means:
Ø targeting markets that are large and growing and increasingly concentrated, where the firms has a shot at being one of the dominant players;
Ø knitting together those markets that extract the maximum value from scale and scope linkages that may exist.
Ø setting up change management teams to handle the change management aspect of the potential alliances.
Based on the foregoing summary of findings and conclusion, the researcher recommends the following:
1. Update the facilities, equipment, and training strategies to their respective international business organisations in the electronics industry. Moreover, there should be a strict implementation of the training programs pertaining to enhancement of operations management.
2. Maintain open communication lines between the management, administration and employee.
3. Review the program of the each of the company and update the content to increase the standard of the company. Employee must also be given stricter training requirements to ensure that they understand their job well.
4. Industries open communication lines between employees and administrators especially in disseminating information and communication. This is to ensure that the employees know what the administration is up to and vice-versa.
Credit:ivythesis.typepad.com
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