MANUFACTURING INVESTMENT PAYS OFF IN BETTER BUSINESS PERFORMANCE

COLUMBUS, Ohio -- In many firms, manufacturing takes a back seat to marketing and finance functions when it comes to long-range planning and investment.

But that may be a mistake. A new study of 60 firms in five industries found that the best performing companies tended to be those that were pro-active in making manufacturing a company priority.

The study found that successful firms invested in new manufacturing technologies and also did one or both of the following: emphasized programs that empower workers or actively involved manufacturing executives in strategic planning for the firm.

For example, of the firms which put strong emphasis on investing in new technology and involving manufacturing executives in decision making, 76 percent were among the high performers in sales growth and market share. Only 30 percent of firms that put low emphasis on these strategies were high performers.

"Manufacturing often takes a subordinate role in firms

because more concentration is placed on what the company can sell rather than what it can produce," said Peter Ward, co-author of the study and assistant professor of management science at Ohio State University's Max M. Fisher College of Business.

"But successful firms don't ignore manufacturing; they are pro-active in making manufacturing decisions."

Ward conducted the study with G. Keong Leong, an associate professor of management science, and Kenneth Boyer, a graduate student, both at Ohio State. Their study was published in a recent issue of the journal Decision Sciences.

The study involved manufacturing firms that had plants located in Ohio with at least 150 employees. The firms' primary product was in one of five industries: hand tools, fabricated metal products, plating and polishing, current carrying wire devices, and industrial controls.

The researchers surveyed each firm's general manager, plant manager, marketing manager, and manufacturing engineering manager. The managers were asked how much emphasis the firm placed on these three strategies:

_ Involving manufacturing executives in the company's strategic planning, including decisions about long-term investments, operating philosophy, and strategies for growth.

_ Investment in new manufacturing technology such as robotics and computer-aided manufacturing.

_ Investment in worker empowerment tactics such as improving labor training and giving workers more planning responsibility.

The researchers then matched those answers to figures on the firms' market share and sales growth.

"We found that successful firms need to adopt at least two of the three strategies, and preferably all three, to be successful," Ward said. "Investing in new technology was the one strategy that nearly all successful firms used."

Ward said many business observers have recognized that manufacturing is not given proper attention at many firms, and they often suggest better communication between manufacturing and other units of the firm.

While good communication is important, it is not enough to make a company a top performer, Ward said. "It takes more than just listening to what manufacturing executives say. There has to be an investment in technology."

The results also emphasize the importance of investing in employees. "Successful technological programs also require significant investments in people," he said. "For example, employees need to be trained to properly use new technology when it is introduced in the workplace."

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Contact: Peter Ward, (614) 292-5294

Written by Jeff Grabmeier, (614) 292-8457