The world is a radically different place to that which existed 20 years ago. The pace of change has been fast and the scope enormous. These changes have occurred on all fronts - social, political, technological, scientific, and economic. All organizations have experienced the effects of change, but it seems highly likely that more significant changes are yet to come.
Many manufacturing enterprises have been radically transformed over the past twenty years, so much so that people now talk about a new paradigm, which is referred to by different names such as lean production, or post Fordism, or mass cutomisation, etc. However, a number of factors are pointing towards a further paradigm shift that will take manufacturing enterprises beyond the current models (lean, mass customisation, etc.). There is a growing interest among researchers, consultants and leading edge industrialists in this idea, but little information available which clearly defines the issues or describes what the Next Generation Manufacturing Enterprise (NGME) paradigm might be like.
The topic of Next Generation Manufacturing Enterprise (NGME) is concerned with looking beyond current best practice in manufacturing and exploring the emerging frontier of solutions to tomorrow's industrial needs and problems. NGME is also concerned with discontinuities in the change process - both in terms of responding to these discontinuities and exploiting them for competitive advantage. Discontinuities are defined as non-linearities in the change process that either render aspects of current best practices inappropriate or which provide new opportunities or open up entirely new ways of working. Given this focus on looking beyond current best practice in manufacturing, it is necessary to define with some clarity the subject area, in so far as this is possible given the current state of knowledge about this emerging field. However, this is not a straightforward matter.
A number of significant difficulties are evident. First, trying to second guess the future is a dangerous business and provides a lot of opportunity for engaging in fantasies and generating unrealistic scenarios. Second, a big problem at the present time is that concepts such as agile enterprise mix up current best practices with longer term issues, resulting in a lot of confusion. Third, another difficulty is that issues vary from industry to industry and between large firms and small enterprises. Therefore, generalizations, which are what one tends to find in the literature, while very useful, can add further to the confusion.
Creating a NGME model is therefore not a straightforward task. To produce a NGME model one needs to adopt an evolutionary approach - one that allows for further developments as understandings grow and new concepts and information come to light. The model should therefore be judged with this in mind and seen as an early (possibly even the first) attempt to add some clarity to area largely devoid of any well defined structure and theory.
The NGME model described in this report is structured in two parts:
1. A generic description of NGME - a model that covers the main matter, but independent of specific industrial sectors or firms;
2. Architectural and process views of NGME - corporate architectural and high level business process views of a NGME.
Some important observations that arise from the model are also presented, along with some industry specific issues which must be addressed when attempting to apply the general model to specific sectors or firms.
The creation of the NGME model first arose as an effort to provide a framework for thinking about the future of manufacturing towards the end of the first decade of the 21st century. Further developments of the model were stimulated in response to, what appear to be intellectually weak efforts to deal with Next Generation Manufacturing Enterprises that have been attempted both in the UK and the USA. Both the UK and the US projects seem to have failed to properly deal with the topic. The big flaw in both these efforts seems to be the underlying assumption that the future can be predicted based on a linear extrapolation from the present day situation. The basic underlying assumption behind the NGME model presented in this report is that one cannot extrapolate from the present to the future because the curves are nonlinear - discontinuities are present which render today's conditions a poor guide to the future. It is the presence of these discontinuities which must be taken as a starting point for any effort to look beyond current practices to attempt to define what a manufacturing enterprise might look like in 15 years time.
The specific objectives in creating this NGME model were to:
The NGME model has been designed to help people explore and understand the emerging and developing area concerned with post-mass production enterprise. The ultimate aim is to create a model that provides a holistic view, addressing such issues as:
as well as the interrelationships between these issues.
The NGME model does not address what innovative and leading edge companies are doing today - current best practices. The focus is instead on the medium and longer term as defined below:
The NGME model deals with basic issues, problems and concepts and the use of buzzwords and jargon has been avoided, wherever possible. Words like agility, fractals, holonics, virtual enterprises, etc do not appear very often in the model. The primary reasons for this are that such buzzwords:
The model also points to the beginnings of a holistic view of the enterprise that unifies different aspects of work being undertaken by a few leading thinkers.
The purpose of creating a generic description of a NGME is to provide a well defined and clear model that covers the main matter that needs to be addressed, but in a way that is independent of specific industrial sectors or firms. It is hoped that a generic description will help people to grasp core problems, issues, concepts and principles, and to understand the primary differences between today's best practice concerns and the field of Next Generation Manufacturing Enterprises.
The generic description of the model has three dimensions:
The main assumption on which the concept of NGME is based is that of major discontinuities with the past. Technological, social and economic development trajectories are beginning to show signs of a significant divergence from what could reasonably have been expected based on past and current experience. The result is the creation of a new order, one that is radically different from the past.
These discontinuities are rendering both old and current assumptions and practices invalid and inappropriate. This makes extrapolating into the future based on past and present data an exercise of little value. To quote Charles Handy:
"When change is discontinuous, the success stories of yesterday have little relevance to the problems of tomorrow; they might even be damaging. The world, at every level, has to be reinvented to some extent."
A key point is that the consequences of these discontinuities have yet to be fully realised. Although manufacturing industry has undergone many significant changes since the mid 1980s, these are only a foretaste of what is to come. The main effects of the discontinuities have yet to be felt and mostly lie in the future, in the first decade of the 21st century. New discontinuities will also continue to appear in the future.
Another key assumption for NGME is that of dynamics. The dimensions of the model described, that is the drivers and issues and the dominant features of the paradigm shift, will be in a state of flux, continuously changing over the next few decades as different drivers and issues assume greater importance. Consequently, the dimensions of the model will be continuously developing over the period from medium term to longer term.
The main drivers and issues facing businesses which result in pressure for enterprise changes can be grouped under factors such as:
The main drivers and issues are:
of goods and services
Green and safe products
High value added products
Shorter life cycles
Reconfigurable products to meet changing needs
Information and knowledge-based products
Substitution of services for goods
and economic integration
Shift of economic power to Asia-Pacific region
Diversity of global markets
Customization and customer choice
human rights (health, food, shelter)
Democratization of the world
Distribution of resources
Emergence of participatory democracy in Western nations
Peacemaking and disarmament
Relevance of nation states
Re-emergence of local cultural identities
Re-emergence of federalism
values and norms
Changing population mix
Growing readiness of ordinary citizens to engage in direct action
Quality of life
Growing disillusionment with materialism, science and technology
Pace of change
Potential for substitution
Technology as an enabler for new enterprise practices
Environmentally friendly technologies
Safe waste management and disposal
Global environment and planetary management
Development of non-fossil fuel based society
A paradigm is a set of core beliefs and assumptions that are largely shared by people and organizations. These are taken for granted assumptions about what is acceptable, what individuals and companies should be doing, etc. An important point is that people who adhere to a paradigm do not see it as problematic. Thus challenging, looking beyond and radically modifying paradigms is difficult because paradigms are more than intellectual, they are also political in the sense that they embody assumptions about power, authority and what is right.
NGME can be described by four paradigms:
Enterprise paradigm refers to key concepts and principles that describe the emerging pattern that characterises a post-mass production enterprise.
It has been evident since the 1970s that mass production economies have been in crisis. Since 1970 observers and thinkers have been describing the emergence of a post-mass production economy and the associated characteristics of a post-mass production enterprise. Whilst these characteristics are complex, they can all be subsumed under three interrelated features:
These three interrelated features are a condensation of the key things discussed in the literature since the early 1970s. They, of course, need to be carefully interpreted in the context of industrial sectors, particular companies, different market conditions, etc.
In addition three important principles can be stated that capture the essence of post-mass production thinking. These principles are:
Combination of opposites is essentially what mass customization (cost efficient production of individually customized goods and services) is about. The principle that the whole is contained in the parts is one of the key aspects of the holonic perspective, where a nested, rather than a hierarchical enterprise architecture is envisaged. The enterprise as part of a total system based on processes is essentially what the business process view is about.
The notion of a product paradigm refers to the concept of what constitutes a product. During the 20th century many manufacturing companies have engaged in a process of replacing services and labour with goods. In doing so they have created a need for new services such as insurance, repairs and maintenance, supply of spare parts and accessories, etc. Yet people who own and use goods still use the services they were designed to replace. So ownership of goods is just one way that people chose to satisfy their needs. In fact, at different moments people have distinctive needs which they satisfy with a shifting mix of different goods and services. These needs potentially change from day to day, maybe even from hour to hour, or minute to minute.
Ironically, as manufacturing has become less profitable, many manufacturing firms have begun to shift into service delivery, perhaps indicating that the advanced industrial economies are turning full circle, only with a different level of technology and social conditions and service needs.
The product concept associated with the era of mass production is based on providing distinctive goods which are only partial solutions to customers' needs. NGME product concepts will be based on offering individual customers, total solutions tailored to their exact needs. These solutions will be configured and reconfigured instantaneously to meet customer requirements that could, in theory, change on short time scales of the order of minutes.
Environmental paradigm refers to the attitude people display towards the planet and the environment.
Mass production goes hand in hand with mass consumption. This has also meant mass waste in many senses - literally in the waste material produced by industry, the squandering of non-renewable energy sources through inefficient processes, throwaway packaging, the scrapping of products at the end of their useful life, and the artificial stimulation of growth through the proliferation of trivial goods that people may want to buy, but which they do not really need.
The environmental paradigm associated with the mass production era has been one that has treated the earth as a resource to be owned and exploited. NGME needs to be built on a sustainable environmental paradigm - a paradigm based on stewardship of the planet and harmony with the environment. This will be manifested through several different techniques such as:
A significant feature of the shift from mass production enterprise to NGME will be the move from a seller's market - take what is on offer - to a buyer's market - provide exactly what the customer wants. Often portrayed as a demand side driven change - more diverse life styles and so on - the shift to a customer driven approach has also been driven by supply side changes such as increased competition.
The move to providing individually customized goods and services packaged as total solutions within an environmental paradigm of sustainable growth will move the customer/supplier relationship into a new sphere of operation. This will involve an on-going interaction where the customer is integrated into the process of both designing new products and delivering goods and services. This implies a close cooperation between supplier and customer - a virtually seamless interface between the two.
Solutions configured instantaneously to meet fast changing customer needs. Supply chains reconfigured to respond to unpredictable events. Outsourcing of design to suppliers. Collaboration between firms to develop new technologies. All these things, and more, point to conceptualising the enterprise or corporation as a network capable of reconfiguring itself and self adapting as the business environment changes.
The corporate architecture of the 20th century was based on a hierarchical model. First functional in nature, then divisional and then based on a matrix. The corporate architecture for the early part of the 21st century may well be more like a network than a hierarchy.
Enterprises and corporations in the 20th century, whether based on functional, divisional or matrix models, resembled a pyramid with several layers. At the very top were the stock holders. These stock holders owned shares in one (often large, sometimes multinational) corporation which was in effect, a holding company. Under the umbrella of the holding company were many other companies. Typically the corporation was divided into corporate divisions, under which were grouped several operating companies. Some of these operating companies may in turn have owned subsidiary companies.
The network enterprise or corporation will look very different. The hierarch of ownership referred to above is likely to be significantly changed through a process of corporate disassembly, so that stock holders own shares in (what might be) several legally independent corporations. Instead of viewing the corporation as a hierarchy, we will see what looks like a network. Once this network is created, fields of operation are more likely to be extended through co-operation than through mergers and acquisitions.
Co-operation between similarly structured networked corporations is likely to predominate. Both stable joint ventures and close relationships (outsourcing) as well as more dynamic relationships are likely to be found. In the latter case companies will come together for a short duration to fulfil a need or the resolve a problem or to respond to an opportunity (niche enterprise issues).
A key requirement for designing a network architecture may well be the identification and development of core competencies (a knowledge-based enterprise issue). A core competency can be defined as knowledge, technology or capabilities that possess three characteristics. They:
The important point about core competencies is that they can be packaged together in different ways to form different products and services. The variety of packages can be increased by combing core competencies from several sources. Hence the importance of core competencies to creating network organizations - they provide the building blocks that can be put together in different combinations using joint ventures between enterprises that have distinctive and complementary core competencies.
This form of collaboration allows access to areas which would otherwise be difficult or impossible to enter. Probably the most important aspect of network organizations, is that when combined with adaptive or agile capabilities, they can be created and disassembled very rapidly in response to market opportunities - a fundamental requirement when the enterprise shifts from providing products to offering solutions.
The NGME process model is a high level business process view of a NGME. In the context of NGME, nine major business processes can be defined which reflect the paradigms described above. The first five processes are fairly standard:
Four additional new major processes can be defined:
Critical points to note are:
A general point covering all nine major business processes concerns the details of process operation. Many subtle aspects of the current paradigm are defined in terms of process operation. An important step in understanding a paradigm shift is the realization that the existing processes may look quite different in 15 years time to the form that exists today.
One important message about features is that we are not, in general, talking about a shift from one set of characteristics that can be found to day, to a completely new set of different characteristics (ie, from/to and either/or constructs). Often new features co-exist with sometimes contradictory ones (A and B constructs which are often oxymorons). Oxymorons are clearly evident in the following description of process features. Identifying and finding ways to resolve these paradoxes is one of the main research areas to be addressed over the coming years.
Some points about process features. Firstly a general point. These processes are very unlikely to be based solely on stage-wise models of workflow. The spiral workflow model is probably the most appropriate form, which is in fact a combination of stage-wise and evolutionary models (an example of an A and B construct).
With regard to the strategy development process, everyone potentially has a role to play, so the process is both top-down and bottom-up. Strategies are also likely to be developed in advance of implementation and during implementation. Strategies will also be developed at both the global and local levels.
In new product development it is likely that in order to respond to change, uncertainty and unpredictability during the course of new product development projects, the process will need to be designed to be reconfigurable. To satisfy the needs of diverse markets the new product development process will probably also need to be globally distributed across multiple sites and multiple enterprises. Decisions about the details of new product designs will be both simultaneously delayed and rapidly converged to final solutions.
With regard to the order acquisition process, the customer design and support process and the order fulfilment process, the expectation is that customers will be integrated into theses processes and the processes themselves will be reconfigured to meet each customer's exact needs. These processes will also be globally distributed across multiple sites and multiple enterprises.
The customer relationship management process will play a key role in identifying customers' future needs and opportunities and translating these into new strategies, new products, customized designs and new orders. This new process will be significant because it will enable firms to deal with the limitations of current market research techniques, which are not likely to prove to be very effective in an environment where new technological developments (discontinuities) will open up new product opportunities that customers will find very difficult to visualise and to react to without some form of deeper and more meaningful involvement in the market assessment process.
The enterprise adaptation process will be the prime means by which companies develop and improve their adaptive (agile) capabilities, and will take on the role of systematically designing and redesigning the enterprise to cope with the increasing levels of change, uncertainty and unpredictability in the business environment. This process will also take on board responsibility for reconfiguring the enterprise in response to inputs from other processes (eg the strategy development process) to meet new needs. (Changing the assumptions which underlie the way enterprises are put together is a fundamental enabler, otherwise this process will not be able to operate effectively within tight time and cost constraints).
The product take-back process will be put in place in response to both public concern and future legislative requirements for firms to take responsibility for their products over the full life cycle, from concept to final disposal. The process may also take a part in reconfiguring products to meet changing customer needs and retrofitting these products in line with changing legal standards and technologies.
Finally the knowledge management process encapsulates all the other processes indicating its importance as a central process in which everyone in the organization participates. It incorporates what today is called continuous improvement, but also explicitly recognizes the need to share throughout the organization, in some effective way, knowledge both explicit and formalised as well as tacit.
The generic description of the model and the process view represent an effort to describe in the most general terms a NGE. The problem with the generic description and the process view is that they ignore differences between sectors and between firms. For example, the textile and garment sector is very different to the automotive sector. The issues faced by textile/garment companies with product life cycles counted in terms of weeks and simple products involving relatively simple manufacturing technologies are quite distinct from a sector like automotive with longer life cycles and development times, complex products, high capital investment costs, and long term relationships with suppliers.
The generic description of the model and the process view set the scene for the future. Real interest and meaning is generated in people's minds when one starts considering specific details of sectors and individual firms. However, to apply the model to specific sectors one needs to take account of the complexity factors which effectively differentiate one sector from another, and also which differentiate between firms within each sector. These complexity factors are so called because they take account of the complexity of specific situations and also because they add further complexity to the model, hence moving it beyond relatively simple generalizations, which may or may not be valid in a specific situation.
Several complexity factors can be identified. They are grouped under the following headings:
supply chain characteristics;
Capital intensity of new product development
Time scales for new product development
Importance of customers' perception of product integrity
New or established product concepts
Services or goods or a mixture
Manufacturing processes and technologies
Complexity of manufacturing
Customer decoupling point (assemble-to-stock, assemble-to-order, etc)
Production volumes and batch sizes
Number of companies involved
Position in supply chain
After market needs
Nature of transactions
Intensity of competition
Degree of market fragmentation
Type of market (commodity etc)
Global diversity of markets
Opportunities for greater segmentation
Degree of specialization
The utility of a NGME model lies in its potential to move beyond rhetoric, generalizations, buzzwords and theory towards realization.
The generic description should help to make clear that NGME involves much deeper issues than can possibly be conveyed by, for example, things such as Enriching Customers; Mastering Change and Uncertainty; Cooperating to Enhance Competitiveness; Leveraging the Impact of People and Information. What is more, the generic description, because it goes down to the level of fundamental principles and root issues and assumptions, is not subject to the problem of differing interpretations which is a major difficulty with buzzwords like virtual enterprise, mass customization and the like.
The process view provides a very clear picture of how a NGME differs in process and process features from current best practice enterprises. It would only be small step to use this process view to begin to chart out an agenda that will help firms move towards realization.
Most significantly, the representations of a NGME point towards a strategic method for migrating towards a NGME. At a strategic level, enterprises need to develop a strategy with three core elements:
By linking these strategies to the high level business process view it would be possible to prioritise the development of the different business processes represented, based on the results of the strategic analysis. All that needs to be done to achieve this is to provide more detailed sub-models for each aspect of a NGME (niche production, knowledge-based and adaptive enterprises), and to define the interrelationships between the three (which can largely be framed in terms of needs and opportunities).
Paul T Kidd has spent the last 17 years working as an international researcher and consultant at the leading edge of efforts to define, develop and implement new enterprise paradigms. His company, Cheshire Henbury, provides methods, tools and expertise to help companies implement 21st century business practices. Paul can be contacted at Cheshire Henbury, Tamworth House, PO Box 103, Macclesfield, SK11 8UW. Phone: +44 (0)1625 619313; Fax: +44 (0)1625 619060; E-mail: firstname.lastname@example.org; Web site: http://www.cheshirehenbury.com
© 2001, Cheshire Henbury, Created by Paul T. Kidd, Revised January 2001