We in the United States, with our technical ability and resources, ought then to be able to duplicate it. Although many other retail stores turned off their lights at night to save on energy costs, Yanai sent a message to store managers as they started to reopen: Keep outdoor UNIQLO signs on. It is that simple—and that difficult. But the kind of organizational skills that were needed for catching up are probably not appropriate for being at the cutting edge. But where do Japanese managers find time to be so thorough? Managers also think quality in by recognizing that even the most carefully designed and stable production process cannot maintain high quality if the materials that enter the process are defective. Instead, we must compete with the Japanese as they do with us: by always putting our best resources and talent to work doing the basic things a little better, every day, over a long period of time. During these periods of high demand, they stretch out their lead times and they raise prices. In fact, machines often operated at slower rates than they were designed for—and at less than the usual rate in U.S. factories. Given the size of the labor force allocated to these product lines and the expected life of the products, each engineer was several times more productive than each production worker and generated savings far in excess of his or her cost to the company. The Japanese will have none of this. I compare the performance of Western Electric workers with that of workers at five of the largest Japanese electronics manufacturers: Matsushita Electric Industrial Co., Hitachi Ltd., Fujitsu Ltd., Nippon Electric Co., Ltd., and Mitsubishi Electric Corp. More to the point, the same manager informed us, “We always need machines when business conditions are good—which is when everybody else wants machines. As demonstrated after the 2011 earthquake and tsunami, Japanese businesses have a unique capability ... [+] for long-term survival. This is what aircraft manufacturers have done. Keeping their workplaces and machines in good order was a responsibility assigned to the workers themselves, along with maintaining output and quality and helping fellow workers. (See the sidebar for a list of related reading.) At Companies B and D, employee suggestions in 1981 saved $1,987 and $2,160 per employee, respectively. At the same time, promotions to top corporate positions have increasingly favored specialists in finance, marketing, accounting, and law. Finally, I did not observe the use of uniform compensation systems. Successful Japanese electronics manufacturers hire very selectively and recruit the elite of the Japanese labor force. Such investments, if made boldly, can create enough uncertainty about the future of the industry that the community of Japanese decision makers is unable to tolerate the level of risk. Among the reasons: wages in Japan are much higher, by a factor of between 20 and 30 times. The fact that Japanese companies tend to favor nearby suppliers reinforced this tight linkage. This is why their example will be so hard for American companies—and American managers—to emulate. Instead, I will focus simply on how the Japanese manage their manufacturing functions. Even today, less than a third of all Japanese workers are lifetime employees. Each of the Japanese manufacturers I studied has longstanding relationships with high school teachers and counselors. This has resulted in production jobs that are repetitive and uninteresting, while the skilled jobs are centralized and moved away from the production floor where they are needed and where corrective action must be taken.”. American managers usually operate quite differently. The basis of this system is not simply an appropriate arrangement of people and machines. In contrast, consider the pay schedule at Company A. Motivate workers through pay and promotion policies that reward high performance. In the factories I saw, the sense of order also resulted from an almost total absence of inventory on the plant floor. One manifestation of these ownership patterns is that Japanese production workers are supported by extensive investments in equipment. Exhibit II Quit rates of newly hired workers. An experienced Japanese male worker who changes jobs is quite unusual. Incidentally, the high investment in equipment contrasts sharply with low investment in plant. They work meticulously, knowing that any defects arising from their operation will be spotted and ultimately—and embarrassingly—tracked to them. Everybody feels very proud when you produce only perfect products.”. Our best managerial talent has been directed toward fast tracks that often do not include direct manufacturing experience.

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